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XAO Technical Analysis

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Re: XAO Analysis


Damn, you really are a permabear arent you Uncle?

A rate cut would fuel the santa claus rally like no 2mrw.
 
Re: XAO Analysis

Uncle Festivus said:
Should be a couple of days of strong gains ahead, then back to the bear.
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Although I have a bearish bias myself and I have been previously bearish the market(months ago), I don't think this will be the case.

The market looks to be churning at present and will be probably reverse here to put in one final leg above to approx 7100 by Feb/March 2008 before turning bearish. I had earmarked a low for the current leg down for either 15th Nov Or 20th Nov but it came late again by 6-8 trading days for both the XAO and SP500.

If this does actually unfold this way, it will setup up nicely for the mother of all EW Ending Diagonal Patterns next year(DJI and SP500) which may setup a very large move down and. I so I have actually been long this market on some stocks since 15th of November and went long some others last week, but in the back of my mind I have Feb/March timeframe which I will be paying close attention to.

Cheers
 
Re: XAO Analysis

nizar said:
Damn, you really are a permabear arent you Uncle?

A rate cut would fuel the santa claus rally like no 2mrw.
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Couldn't care less about a 'label' being applied as to view oneself as either a bull or a bear limits your objectivity when investing/trading. I am bearish.

If we are going to call the shot's then the bears have quite a bit of ammo up their collective sleeves; it's just I havn't seen a convincing argument for the bull these day's .

Rate cut's? Another one step forward, two steps backward again as far as the US goes. The Aussie market is a different story - for now at least? Still tradeable either way; everything is tradeable?
 
Re: XAO Analysis

I could fall either way, as I see the XAO declining within a bullflag and when it breaks up it breaks up. One of many buy signals for me.

Being 95% in cash I would prefer to see price rise 95 today, hit the the flag top and give us one last leg down toward 6200/6300, and offer a significant candle tail to show it's time to get back in.

Is my optimism showing?
 
Re: XAO Analysis

wavepicker:

really like your analysis only because it confirms what i read somewhere else, re expect the DJIA to test new highs in this current rally only to realise the impact of currency devaluations (caused by drops in interest rate) and bad fundamentals, etc. means stocks are seriously overvalued. this will then lead to a significant drop in value in S&P and DJIA like 2000/2001.

this translates well in terms of what you say because December/January/February are usually the best months for the Aussie indexes - perhaps it will be time to reinvest in cash come february??
 
Re: XAO Analysis

lately I have only been trading FX,

But the xjo today caught my eye, I am long from this afternoon.

looks the deal to me, support found around the 38% fib point we have a higher low moved though down trend line, CCI just above zero price above 21 MA. XAO had a nice volume bar yesterday.

Dow also meting some of my entry requirements.

this ticked off so many boxes I decided to take up a long position. my stop is under the 50% point of the last three bars.

I am thinking the us may be red tonight. don't want any plunges!
 

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Re: XAO Analysis

I'm with you Nyden - I just wish a few more were de-sensitised to the Dow. With our squillions of super dollars looking for a home and China & India going gangbusters I think we should just occasionally be looking at the US rather than following religiously, certainly from a resource stock perspective and probably across a few more sectors.

It's interesting though watching the sub-prime debacle unfold - anyone have any views on when the majority of the bad news will have outed and we can try and put some of this volatility behind us? Perhaps when the major US banks complete their year-ends and we can all have a look at their financials in full (if anyone can understand 'em)?
 
Re: XAO Analysis

no way are we finished with bad news - but i have noticed that as soon as markets are feeling like they are oversold the media start looking for more good news stories and make a big deal out of them?

it is like the august turn around when suddenly bad news stories were ignored because the market was oversold and who cared billions were being written-off!!!!
 
Re: XAO Analysis

gilbo said:
It's interesting though watching the sub-prime debacle unfold - anyone have any views on when the majority of the bad news will have outed and we can try and put some of this volatility behind us?
Click to expand...

That's the dangerous misconception that the current volatility is ephemeral and all will be back to normal after Bush & Paulson do their magic. The reality is there is a huge disconnection between the financial markets and the real economy in the US. The markets may rally on each rate cut but the intrinsic momentum will be to revert to negative adjustments over time.


Yes, someone has to balance the stary eyed ramping journos .
I give it next Friday, the ramifications of the rate cut will surface and reality will dictate a judicious shorting strategy eg CBA?
 
Re: XAO Analysis

Despite XAO holding up very well, the internals of the market is pretty average. It is a stock picker's environment.
 

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Re: XAO Analysis

kennas said:
EWers could put some more detail in the 5 wave down on this probably but wonder if the 6450 ish will hold?
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6450 ish proved to be support and end of a W5. Now perhaps in a W5 up approaching resistance around the 6750/6800 level and maybe time for a breather. I'd expect the potential 50 point rate but to provide a significant bounce, however, what if it's just 25 points and this is factored in? Potential turnaround point perhaps. Crystal ball is looking at a potential double top with a 6000 ish target. MACD says next step down to me but hard to see 6200 breaking....
 

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Re: XAO Analysis


Hi Kennas,
I'm having a classic schitzophrenic moment... can't decide which way I think it will go, watching, and waiting, for me....
Cheers
..........Kauri
 

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Re: XAO Analysis

hacheln_mice said:
Despite XAO holding up very well, the internals of the market is pretty average. It is a stock picker's environment.
Click to expand...
Nice work. Thanks very much for the chart hacheln, a decline in market breadth is characteristic of a fifth wave in EW and signals the advent of a corrective sequence.

A similar type of divergence is referred to in Dow Theory as well, if I recall correctly, as 'non-confirmation' (DJIA vs Transports). There may well be divergence bw the major Aussie index (XJO/XAO) and the corresponding 'transports' here (ie a local 'non-confirmation' parallel per Dow Theory), I wonder if anyone in the local market has studied this aspect of internal weakness religiously over the long term.

The question is really- have we reached the end of the final minor degree impulsive sequence? Using timing tools will be very useful now as the final wave may shoot away before it collapses. The end is in sight for this degree of trend if the AD line is any clue. A weekly line chart of the same study since the start of this bullmarket should confirm this- especially in relation to the greater breadth in Wave 3 of the same degree. Wavepicker would know more about the nuances of this indicator.
 
Re: XAO Analysis

Interesting stat from Inside business yesterday - if you take out BHP, RIO and the top 25, the market has so far this year returned minus 1%. Looks like there is a lot riding on those 27 companies for our super returns, going forward as they say?
 
Re: XAO Analysis

Hope I'm wrong here as I am 50% into the market, but I see the XAO forming a small bear flag pattern, not a very bullish sign as I see it.

Any opinions to the contrary ?
 
Re: XAO Analysis

Hello, I noticed someone mentioned Dow theory on this thread recently. For those interested an interesting article on the Financial Sense website www.financialsense.com/Market/wrapup.htm showing a compelling bit of evidence that this bull run may be very well over. According to the article a primary trend change has been confirmed on the DJIA using Dow theory. These bearish primary trend changes apparently have only had 3 false readings out of 30 since Dow came up with the theory over 100 years ago. It's also interesting some Elliot Wave people are saying this could be the end on the 5th wave.
The chart I posted shows the only 4 divergences on the longterm stochastic momentum indicator I use, one is recent and has yet to be confirmed by the XJO. The prior 3 all happened at market corrections including the major bear market before this bull run and the time of the Sept 11th correction. The turning of this longterm momentum indicator comes a bit late for my liking but has so far proved very reliable. The pullback to the smoothed RSI trendline gives a clear warning of possible trouble and helps with an earlier signal, this has happened on all 3 occasions. A break of the RSI trendline first then a diverging pullback second, in conjuction with a divergence of a very longterm momentum indicator. At the end of the chart we now have a similar scenario yet to be proven. The latest RSI divergence doesn.t look a pretty picture either.
Of course my latest trendline could prove incorrect and the bull run may go further but used in conjuntion with Dow theory and a possible end of a 5th wave I will be backing off on long trades for the time being. Hope this helps. Cheers.
 

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Re: XAO Analysis


Looking at the chart you have posted I only really see one incident when it could of signalled trouble that being late 02 falls where it put in lower lows. The other times it didn't put in lower lows but just pull backs in the uptrend.
I know the times where you are talking about but in the context of a long term weekly chart they are just pull backs to the trend line not exactly a major correction as seen in a weekly time frame.
 
Re: XAO Analysis

Quote; Looking at the chart you have posted I only really see one incident when it could of signalled trouble that being late 02 falls where it put in lower lows. The other times it didn't put in lower lows but just pull backs in the uptrend.
I know the times where you are talking about but in the context of a long term weekly chart they are just pull backs to the trend line not exactly a major correction as seen in a weekly time frame.

Hello Trembling Hand. I myself would call a fall from 3500 to 2700 a major correction, that is the major correction I speak of, others may call it differently and that's OK with me. My post was mainly for those who are not interested in being involved on any pullback or correction whatsoever. If someone wants to wait for a series of lower lows and highs on the weekly chart before taking action then that's ok with me too. I trade more shorter term than that so I often hold off on trading when things are starting to look iffy. Even a pullback on a weekly chart to me is trouble. And at the moment with experts on Dow theory having the odds being in their favor and the weak longterm technichals then I'm backing off until evidence and time reveals itself a bit more. I look for only what I think are the best short term trades and only trade them on a limited scale or stand aside at times like this then jump back in on new evidence of a trend developing. The weeklies help with the longterm picture. Hope this explains things a bit better. A lot of misunderstanding comes from the different timeframes one uses, on forums. Cheers.
 
Re: XAO Analysis

Hi Willow, thanks for sharing these ideas with us. I appreciate it.

The interesting thing is that you confirm your views using the Dow theory article you refer to. I have a problem with that particular reading of the Dow Theory for two reasons:

(1) if you look at the utilities it had new highs last week before the pull back. for some dow theorists this suggests that the transport will move to new highs next followed by the industrials. this is very different to the particular dow theory that the article you refer to uses.

(2) the article uses the closing low (rather than intraday) as an indicator of the low established back in august. i think this is convenient if you want the november low to be a lower low.

So, i am new to all this stuff but the fact that the MACD on the DJIA is showing potential upward move with some good news i for one would not be shorting the market in Aus at the moment. Having said that i trade mostly small caps and i am doing pretty badly at the moment anyway??????
 
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