XAO Technical Analysis

willow · 1 January 2008

Re: XAO Analysis

We are above the 38% level and nearing the 50% level on this pullback from it's most recent high. Note the dominant candle, (dominant candles must have high volume as apposed to a long candle). Anybody who is a keen candle fan will know that the open close and middle part of these candles can often be areas of support or resistance, price is near this level. We also have a 26 day ema, notice it has acted as support and resistance several times on this chart. And I won't forget to mention the head and shoulders neckline. After observing and trading these patterns over the years I have found they will usually do one of two things, either drop like a stone from around here, after spending a short amount of time near the neckline, and that time could be slightly above or below the neckline or may start ranging in that area for a while before heading in either direction. There is also an internal trendline which I haven't added where the price is now sitting under.
I used to post charts using internal trendlines for I have found them valuable at times but if someone feels like being a critic they can't resist to reply about such a line and I didn't want to clutter the chart with every thing I see. All charts in log scale. Cheers

Uncle Festivus, Thanks for your reply and top chart. I have to admit I look at the monthlies sometimes even though I trade off the dailies, would also like to add 1 hour and 5 minute charts to the collection, one day. Cheers

Sean K · 3 January 2008

Re: XAO Analysis

Start of 5th leg down EW ers?

willow · 3 January 2008

Re: XAO Analysis

Santa may have come after all, he,s just circled the globe from the other end this time.

1-Stall, 2-Fall, 3-and nothing small, that,s all.

I believe number one has been achieved and looks like no2 also, now we want 3. Cheers.

wavepicker · 3 January 2008

Re: XAO Analysis

In the following thread post #93

https://www.aussiestockforums.com/forums/showthread.php?t=6953&page=5

looked at the XAO from an EW perspective with 2 probable Ending Diagonal patterns. This suggested one final leg up(not necessarily to new highs) to suggest this pattern had completed.

The date range for this cycle to complete was 10/01/08- 31/03/08.

Just looking at the DJIA it too is tracing out a similar pattern that would look more convincing with one last rally toward 14000. If this happened it would most likely be an abc leg up.

A break below the last low of 12707 pts would suggest the Ending Diagonal is already completed and the market is very bearish and that last leg up to 14000 will not happen. So if we are going to have low for a rally for the pattern to complete it would have to find support in the next 2 trading days.

Cheers

Kauri · 3 January 2008

Re: XAO Analysis

Trying to keep it simple.. (not too hard for me : ) ...
Cheers
.........Kauri

Trader Paul · 3 January 2008

Re: XAO Analysis

Hi folks,

XAO/XJO astroanalysis ... both use the same time cycles and
the critical dates for 2008 should be, as follows:

07012008 ... minor and positive

14012008 ... significant and positive

18-21012008 ... minor and positive news

1801-08022008 ... an underlying negative cycle, for
hitechs and biotechs, particularly???

06-08022008 ... 3 cycles to bring positive news/moves.

03-06032008 ... news should trigger a STRONG move

07032008 ... negative spotlight on XJO

25-26032008 ... 2 cycles with negative news

04-07042008 ... positive spotlight on XJO ...

11042008 ... positive news driving now

14042008 ... difficult cycle here

21042008 ... positive cycle ... forex-driven ???

25042008 ... difficult news expected = flat trading???

More later .....

happy days

paul

=====

nikki · 3 January 2008

Re: XAO Analysis

willow said:
Santa may have come after all, he,s just circled the globe from the other end this time.

1-Stall, 2-Fall, 3-and nothing small, that,s all.

I believe number one has been achieved and looks like no2 also, now we want 3. Cheers.

hi willow, thanks for the earlier ref to the dow theory. i had read the guy you had referred to but his assessment uses the intraday low as confirmation of a bearish move on the DJIA. a lot of his arguments rides on that observation!

i tried to make sense of your comments above and i need more help - do not understand santa talk at the best of times.

thanks to you and wavepicker for your charts. i appreciate reading your different perspectives.

willow · 3 January 2008

Re: XAO Analysis

nikki said:
hi willow, thanks for the earlier ref to the dow theory. i had read the guy you had referred to but his assessment uses the intraday low as confirmation of a bearish move on the DJIA. a lot of his arguments rides on that observation!

i tried to make sense of your comments above and i need more help - do not understand santa talk at the best of times.

thanks to you and wavepicker for your charts. i appreciate reading your different perspectives.

Hi Nikki, I think you meant to write that he uses the closing price to pick the low and not the intra day low, I,m not sure. But I think the reason he uses the closing price is Dow himself probably did, I believe line charts were more popular then, than they are now. This is all I can think of. In any case if Tim has done all his other analysis going back a hundred years on Dow theory using closing prices and has come up with the odds of 10 to 1 for the DJIA to now see a significant decline then I think it doesn't matter as long as he was consistant and stayed with the closing prices. I have not the resources to check it out myself but if I had I think it would be worth doing.

The Santa comment was just about the bullish rally most of us expect to see this time of year called the Santa rally but like everything else in the stockmarket it can do something else instead. I have heard the odds are high for this rally to happen at around Xmas. I was just making a joke to insinuate the shorts may be seeing Santa this year.

Because of other peoples analysis such as Wavepickers and being on the wrong side of the market many times, as happens with most of us. I try not to marry an opinion, in case Wavepicker is right and that Santa might come for the bulls after all. If I don't have a strong opinion I am better prepared to get out quick if I am wrong. It is good that an Elliotwave practitioner or a Fundamentalist or people like me who are more orientated to indicators and whoever else, can all have differing opinions and make a living from trading at the same time. There is obviously something else at work here.
My expectation is to see the head and shoulders pattern to reach it's measured target but in the end we can only take what the market will give us.
And thanks for your appreciation of our charts. It's good to here this at times. Cheers.

chops_a_must · 5 January 2008

Re: XAO Analysis

wavepicker said:
Just looking at the DJIA it too is tracing out a similar pattern that would look more convincing with one last rally toward 14000. If this happened it would most likely be an abc leg up.

A break below the last low of 12707 pts would suggest the Ending Diagonal is already completed and the market is very bearish and that last leg up to 14000 will not happen. So if we are going to have low for a rally for the pattern to complete it would have to find support in the next 2 trading days.

Cheers

Looks like we are going to be there sooner rather than later WP. Rejections of the December lows from the DOW, which I have been a broken record about, and now from the S&P as well, points to something pretty nasty I feel. Negative Novembers through January historically point to shocking future market behaviour apparently.

Just furious I haven't been able to trade off the analysis (so far) I've been spruiking here recently. Just about every market met my parameters for massive shorts tonight. Ah well... at least I know they work!

wavepicker · 5 January 2008

Re: XAO Analysis

chops_a_must said:
Looks like we are going to be there sooner rather than later WP. Rejections of the December lows from the DOW, which I have been a broken record about, and now from the S&P as well, points to something pretty nasty I feel. Negative Novembers through January historically point to shocking future market behaviour apparently.

Just furious I haven't been able to trade off the analysis (so far) I've been spruiking here recently. Just about every market met my parameters for massive shorts tonight. Ah well... at least I know they work!

You might be right. I have not taken any positions long or short in the DJI or XAO, have been waiting instead.

The bullish scenario still has not been invalidated and if there is any chance of this happening then it must start next week and the lower converging trendline on the DJI chart will act as support together with a time cycle low which comes into play between now and tuesday. Even so, any rally that will eventuate will probabaly carry below the previous highs.

So for now waiting till next week to make decisions

Cheers

slix_88 · 5 January 2008

Re: XAO Analysis

Hmm, considering list nights Bearish attitude in the US markets after reports on weaker than expected job growths and a rise in unemplyment...would anyone say the aussie indexes are in trouble on monday?

Considering the sharp declines in the NASDAQ (~3.8%) and DJIA (~2%), the XAO is also in doubt of a sharp fall...

However, would the effect be that great considering how the jobless growth is America's problem, compared to the low unemployment we have in AUS? I personally am going for a flight to safety and am going to re-enter after everything has bottomed out.

M34N · 5 January 2008

Re: XAO Analysis

slix_88 said:
Hmm, considering list nights Bearish attitude in the US markets after reports on weaker than expected job growths and a rise in unemplyment...would anyone say the aussie indexes are in trouble on monday?

Considering the sharp declines in the NASDAQ (~3.8%) and DJIA (~2%), the XAO is also in doubt of a sharp fall...

However, would the effect be that great considering how the jobless growth is America's problem, compared to the low unemployment we have in AUS? I personally am going for a flight to safety and am going to re-enter after everything has bottomed out.

SPI shows -141 points, which is -2.2%, suggesting that would be the kind of fall we're in for on Monday. I have a feeling though it may be worse, lower commodity prices, which has been the only thing really lifting the market lately, have gone down, and I would tip something closer to -160 points at the least, maybe -200 if the sellers really move in. The bad Centro news after the close yesterday, and the NAB/ANZ lifting their lending rates without the RBA doing it for them will only add to the bad news come Monday.

I think it's clear from here, if there is no big rate cut at the next FOMC meeting in the US, at least 0.5%, then the only way for the market will be down. The US is clearly heading for a big downturn, possible recession, so a big cut is needed, and that will be the only thing that will lift these markets. Until then, I don't see much reason to buy in, maybe some speculative gold/oil stocks, which will spike on a lower US dollar leading to the next FOMC meeting.

dhukka · 5 January 2008

Re: XAO Analysis

M34N said:
I think it's clear from here, if there is no big rate cut at the next FOMC meeting in the US, at least 0.5%, then the only way for the market will be down. The US is clearly heading for a big downturn, possible recession, so a big cut is needed, and that will be the only thing that will lift these markets. Until then, I don't see much reason to buy in, maybe some speculative gold/oil stocks, which will spike on a lower US dollar leading to the next FOMC meeting.

I'm surprised that people think Fed Funds rate cuts will turn the markets around over any period of time except in the very short term. The Fed has cut 100 bps so far, what has that accomplished for the direction for the stockmarket? What did it accomplish in 2001-02?

The chart below shows that shortly after the Fed lowered rates for the first time on January 3rd 2001 the S&P500 staged a short rally before falling precipitously through Feb & Mar. By the time the S&P500 had rallied back to the 1315 level in May 2001 the Fed had cut interest rates 250 basis points. The S&P500 then fell off a cliff to the end of August rallied again in October holding up into early 2002 before completely rolling over by Jul 2002 staying depressed right through until June 2003. By the time the Fed was done they had cut 500 basis points in 2 and half years and the S&P500 had fallen almost 50%.

Not saying that this time will be the same but just pointing out that Fed rate cuts don't have a good track record in preventing stock market declines.

vishalt · 5 January 2008

Re: XAO Analysis

dhukka said:
Not saying that this time will be the same but just pointing out that Fed rate cuts don't have a good track record in preventing stock market declines.

Do you have analysis from any other timeframes?

I think its also important to keep in mind those cuts happened when there were a multiple of things: NASDAQ Crash, 9/11, and a confidence shock in corporate America (Enron/Worldcom)

M34N · 5 January 2008

Re: XAO Analysis

dhukka said:
I'm surprised that people think Fed Funds rate cuts will turn the markets around over any period of time except in the very short term. The Fed has cut 100 bps so far, what has that accomplished for the direction for the stockmarket? What did it accomplish in 2001-02?

I still believe the market can go higher and continue this bull run we've had, but it will take some serious action from the FOMC to do so. They can head off a recession by lowering rates and encouraging employment, lending, housing prices, etc, but it's going to take time for these to flow through and for confidence to be restored. The latest employment figures from the US is very disturbing in my opinion, and if nothing drastic is done, things will get much worse. Business confidence has fallen, consumer spending is falling, business spending is down, employment lower, lower housing prices, tighter lending practices, higher number of defaults - the writing is on the wall.

But you're right, a rate cut will mostly lead to a short term rally, but the actions of the past few rate cuts should flow through soon, and that should hopefully help restore some confidence in the market, reduce tensions with the credit crisis and help prevent a recession.

But like vishalt just said before, 2001-02 was a very volatile period and a different time with a different set of circumstances. Terrorism, global security and corporate collapses can't be solved with reduced lending rates. The majority of problems occurring now can be solved with a FOMC rate cut, but again, only time will tell.

dhukka · 5 January 2008

Re: XAO Analysis

vishalt said:
Do you have analysis from any other timeframes?

I think its also important to keep in mind those cuts happened when there were a multiple of things: NASDAQ Crash, 9/11, and a confidence shock in corporate America (Enron/Worldcom)

Granted every recession and downturn is characterized by different circumstances. The last recession saw stocks at extremely high multiples however no housing bubble and no significant slowdown in consumer spending Incidentally the Fed had done the majority of their cutting (350bps) prior to 9/11.

The early 90's recession was not half as bad for the stockmarket as 2001 although the first 150bps of cuts had little effect.

The Fed began cutting interest rates in July 1990, by October of that year the S&P was -20% lower, the Fed had only cut twice (50bps) by this time. By January 1991 the Fed had cut 150 bps, the S&P was still -16% lower than July 1990.

In February the S&P rallied back to the previous high in July and then traded sideways for the bulk of the year finally rallying in December 1992 to a level about 10% higher than July 1990. The Fed had cut 425 bps by that time.

The Fed stopped cutting by Sep 1992, 525 bps in total, the S&P had traded sideways for 9 months still about 10 -11% above July 1990.

chops_a_must · 5 January 2008

Re: XAO Analysis

vishalt said:
I think its also important to keep in mind those cuts happened when there were a multiple of things: NASDAQ Crash, 9/11, and a confidence shock in corporate America (Enron/Worldcom)

We have a housing crash, you can replace Enron/ Worldcom with Bear Stearns this time around (with others sure to come in this down turn). All you need now is a freak political event, and it's the same scenario.

dhukka · 5 January 2008

Re: XAO Analysis

M34N said:
I still believe the market can go higher and continue this bull run we've had, but it will take some serious action from the FOMC to do so. They can head off a recession by lowering rates and encouraging employment, lending, housing prices, etc, but it's going to take time for these to flow through and for confidence to be restored. The latest employment figures from the US is very disturbing in my opinion, and if nothing drastic is done, things will get much worse. Business confidence has fallen, consumer spending is falling, business spending is down, employment lower, lower housing prices, tighter lending practices, higher number of defaults - the writing is on the wall.

But you're right, a rate cut will mostly lead to a short term rally, but the actions of the past few rate cuts should flow through soon, and that should hopefully help restore some confidence in the market, reduce tensions with the credit crisis and help prevent a recession.

But like vishalt just said before, 2001-02 was a very volatile period and a different time with a different set of circumstances. Terrorism, global security and corporate collapses can't be solved with reduced lending rates. The majority of problems occurring now can be solved with a FOMC rate cut, but again, only time will tell.

IMHO practically none of the current problems can be solved by Fed easing. Whatever the Fed does from here will be too little too late. The US has never avoided recession when the unemployment rate rose 0.5%. After yesterday the US unemployment rate has risen 0.6% from it's trough.

Yes the Fed can address liquidity concerns but liiquidity is not the problem, it's solvency. Home prices are falling, with the largest whack of mortgage resets yet to come. Commerical Real Estate is starting to tip over. Consumers are stretched and now defaults on consumer loans of all types are rising. Manufacturing is contracting, corporate earnings are negative. The Fed is now reaping the consequences of pursuing an asymmetric approach to monetary policy and asset bubbles.

willow · 5 January 2008

Re: XAO Analysis

Re-posting the chart I posted on the 17th of december showing the RSI signals where they topped out from under their trendlines in line with the market topping out. While the RSI was diverging with price it had also formed a head and shoulders pattern in most of these situations, and was actually pulling back to the neck-line of the head and shoulders when the market topped out.

I have now added the decline times and the percentage falls from the market high to the low and a vertical line at the end of the chart, where I had pointed out on the 17th this latest signal. I know these times may be irrelevant to what to expect this time because of other observations such as the steeper rise as like the one we had in 1987, where a 50% decline was recorded. But they are of interest. This rise has not been as steep as 87 but is steep all the same. Only a 10% decline reached at this stage.

I posted this chart before it had become obvious that the latest high had failed on the weekly chart. I suggested the next day after posting it in a reply to a poster that it is a good time to step aside and in a sense prepare to short. I did both of these because of my analysis of this chart, and other charts I posted in the daily time-frames, and because I also noticed it had become increasingly difficult to pull a dollar out of long positions. And of course I used Tim Wood's Dow theory analysis.

The day after I posted the latest daily chart on this thread ( 1st jan p96 ). I loaded up with shorts expecting the 50% fib and the mid section of the dominant candle to prove strong resistance with the neck-line of the head and shoulders pattern, I added to these shorts on the following day when my expectations were confirmed, and getting in at the right price on that day was not an easy task, I missed at least half planned trades but managed to enter some of those yesterday. The day on the 2nd when the market rose throughout the day proved the best time to purchase and if I was wrong i was able to have all my stops close by. All this commitment without knowing a thing about fundamentals and nearly as much about Elliotwave or anything else, just plain technical analysis, patterns and indicators and using different time-frames. And don't get me wrong I am not knocking these disciplines. I just believe there is some valuable stuff here for those who choose to learn it.

I have also put in the divergence line (in orange ) on the RSI at the end of the chart. When I see a steep divergence like that I never ever ignore it. Remember this is a smoothed long term momentum indicator, making it a more meaningful signal. These steep divergences can prove to be powerful signals.

As this market goes down I will take profit along the way and not hang around long for any powerful bounces and try to re-enter again at some stage. Cheers.

insider · 5 January 2008

Re: XAO Analysis

willow said:
Re-posting the chart I posted on the 17th of december showing the RSI signals where they topped out from under their trendlines in line with the market topping out. While the RSI was diverging with price it had also formed a head and shoulders pattern in most of these situations, and was actually pulling back to the neck-line of the head and shoulders when the market topped out.

I have now added the decline times and the percentage falls from the market high to the low and a vertical line at the end of the chart, where I had pointed out on the 17th this latest signal. I know these times may be irrelevant to what to expect this time because of other observations such as the steeper rise as like the one we had in 1987, where a 50% decline was recorded. But they are of interest. This rise has not been as steep as 87 but is steep all the same. Only a 10% decline reached at this stage.

I posted this chart before it had become obvious that the latest high had failed on the weekly chart. I suggested the next day after posting it in a reply to a poster that it is a good time to step aside and in a sense prepare to short. I did both of these because of my analysis of this chart, and other charts I posted in the daily time-frames, and because I also noticed it had become increasingly difficult to pull a dollar out of long positions. And of course I used Tim Wood's Dow theory analysis.

The day after I posted the latest daily chart on this thread ( 1st jan p96 ). I loaded up with shorts expecting the 50% fib and the mid section of the dominant candle to prove strong resistance with the neck-line of the head and shoulders pattern, I added to these shorts on the following day when my expectations were confirmed, and getting in at the right price on that day was not an easy task, I missed at least half planned trades but managed to enter some of those yesterday. The day on the 2nd when the market rose throughout the day proved the best time to purchase and if I was wrong i was able to have all my stops close by. All this commitment without knowing a thing about fundamentals and nearly as much about Elliotwave or anything else, just plain technical analysis, patterns and indicators and using different time-frames. And don't get me wrong I am not knocking these disciplines. I just believe there is some valuable stuff here for those who choose to learn it.

I have also put in the divergence line (in orange ) on the RSI at the end of the chart. When I see a steep divergence like that I never ever ignore it. Remember this is a smoothed long term momentum indicator, making it a more meaningful signal. These steep divergences can prove to be powerful signals.

As this market goes down I will take profit along the way and not hang around long for any powerful bounces and try to re-enter again at some stage. Cheers.

Hey Willow I appreciate the research you do. Its pretty good that you showed that typically there is an average of a 16.5% decline every time within a two month period regardless of a following bear market. For us to reach that 16.5% decline the All Ords needs to fall about 400 points to about 5900 points... Given the lack of good news coming out it is quite achievable. And Monday is still yet to respond to D. Jones' Friday night smashing...

The question maybe now; Is there going to be a Bear Market to follow?

XAO Technical Analysis

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