XJO--What if the majority are wrong?--Maybe this isn't the top!

[It's Snake Pliskin]

Re: XJO--What if the majority are wrong?--Maybe this isnt the top!

They all gapped down...horribly is a subjective term. But unless you are short or waiting to be short no gap down can be contrued as a positive thing.

I was more or less waiting for this moment to reassess what I was doing anyhow. In equities a purge of the portfolio from time to time can be a good thing

I totally agree Mr Gorilla.

I copped a gaping wound today with ANZ. Total of 3 positions offloaded all together.

 

[tech/a]

Re: XJO--What if the majority are wrong?--Maybe this isnt the top!

I'd be interested to see the analysis as to why you've done this. I'm gathering it's based off the EW work you've been doing?

Initially from an Elliott Wave perspective see posts #127.
Secondly from an E/W perspective there are a few on the boards around here and there who I respect from their analysis skills and although they havent been absolutley specific they are very much favouring this as a top or very close to it.Their analysis has been confirming my own.

From a conventional analysis view.
It was/is obvious thet the 6170 level was support,Was tested once and held
Resistance was 6440ish which was tested many times but never convincingly challenged.
This topping patterned seemed to be held up by distribution.
Finally the decision was made on yesterdays bar.Very strong trading through support---as if it wasnt there.

Not to mention strong divergence in Price and Oscillator/s.The retests of the top were getting weaker and weaker.

(1) I watched price action all day and at times there was genuine buying--infact I saw reversals of selling 3 times---significantly.
However.
(2) This was met buy increased selling which eventually kept price below 6170 infact well below.
(3) The bar is a wide range Bar after 2 bars of reasonable range but as important the volume is increasing Friday was Very high.---So I wasnt alone.
Infact the real pros have been selling well before me!

From a Fundamental view.
Interest rates likely to rise.---due to inflation.
US looks like the credit mania is about to become unstuck.
AUD came off considerably.

I have 3 discretionary trades 2 Resourse and 1 BSG All but one in the red but not dramatically.

I'm happy to watch and prepare for future trading.

 

[Awesomandy]

Re: XJO--What if the majority are wrong?--Maybe this isnt the top!

Infact the real pros have been selling well before me!

That is very true. In fact, they've started offloading a few weeks earlier all over the world. Of course, I'm forbidden to say anything about that earlier (work confidentiality agreement), at least not before anyone has worked it out anyway - from the eventual correction which has just happened.

Now that the dow is down another 200 points, what I would suggest now is to grab your textbooks out, and look for fundamentally sound companies. With the increase of negative equity in the US and probably interest rate rises, there isn't any space for the weaker companies. Even after a crash of >10-20% (and I'm not saying that it will happen), the best stocks always bounce back relatively quickly, within 12-24 months.

 

[Kauri]

Re: XJO--What if the majority are wrong?--Maybe this isnt the top!

One of the things I watch is the relationship between the ASX200 (XJO) and the All Ords(XAO)... historically the XJO close has led the XAO by several points over 90% of the recent bull leg.... over the past few weeks the XJO has sold off to be consistently lower than the XAO, it's now around 45 points lower ... it suggests to me that the larger, better informed players who would normally be invested primarily in the XJO constituents have been quietly selling off for a while now.... I'll watch with interest in the future to see if the eventual turn from this correction/trend change? is accompanied by volume and a decreasing spread between the two....
Cheers
..........Kauri

 

[CFD]

Re: XJO--What if the majority are wrong?--Maybe this isnt the top!

Nice one Kauri.
Need a recovery necessarily start with xjo stocks?
Is it possible to get a chart of the axo with the xjo content removed?

 

[Uncle Festivus]

Re: XJO--What if the majority are wrong?--Maybe this isnt the top!

One of the things I watch is the relationship between the ASX200 (XJO) and the All Ords(XAO)... historically the XJO close has led the XAO by several points over 90% of the recent bull leg.... over the past few weeks the XJO has sold off to be consistently lower than the XAO, it's now around 45 points lower ... it suggests to me that the larger, better informed players who would normally be invested primarily in the XJO constituents have been quietly selling off for a while now.... I'll watch with interest in the future to see if the eventual turn from this correction/trend change? is accompanied by volume and a decreasing spread between the two....
Cheers
..........Kauri

Kauri, I would even go one more level and compare the ASX20 with the XJO. I find, for daytrading, that this is where the market moving action is so it would be interesting to see how they compare also. I don't have acces to my charting program atm so only assuming it may shed some light as to possible ahead of the trend, trend?

 

[theasxgorilla]

Re: XJO--What if the majority are wrong?--Maybe this isnt the top!

On this topic of XJO, XAO, ASX20 etc. They're capitalisation weighted indexes, right? So the more correct statement might be that the top end leads the index...perhaps not the market. Big moves in the top end RIO/BHP etc. moves the XAO/XJO the most due to market cap. It takes less money
flow to move the Small Ords, for example.

Index moves on Friday (High low range):

Small Ords 3.00%
ASX20 2.83%
XJO 2.81%
XAO 2.77%
MidCap50 2.73%

I think that the top end was sold down heavily, particulary BHP and RIO, which is why the XJO was moved so much, and the SmallOrds moved most due to the fact that it takes less money flow to move those stocks, in either direction. But if you want to see where the money has been escaping from, or at least not flowing into, check the MidCap50 chart. No sideways here...lower highs and finally, capitulation.

Read into that what you will.

 

[Captain_Chaza]

Re: XJO--What if the majority are wrong?--Maybe this isnt the top!

Breakdown each Index and you will slowly work out what a real farse they are1

I did it once !
That was enough for me!
I will not do it again !
Please DYOR
It is worth the time taken

The Trick/ Propaganda/Spin is what is included in each and then the weighting

I was truly shocked when I did this lengthy exercise

Salute and Gods Speed

 

[theasxgorilla]

Re: XJO--What if the majority are wrong?--Maybe this isnt the top!

Wonderful Captain...the truth is out there...thanks for not sharing it with us.

 

[>Apocalypto<]

Re: XJO--What if the majority are wrong?--Maybe this isnt the top!

On this topic of XJO, XAO, ASX20 etc. They're capitalisation weighted indexes, right? So the more correct statement might be that the top end leads the index...perhaps not the market. Big moves in the top end RIO/BHP etc. moves the XAO/XJO the most due to market cap. It takes less money
flow to move the Small Ords, for example.

Index moves on Friday (High low range):

Small Ords 3.00%
ASX20 2.83%
XJO 2.81%
XAO 2.77%
MidCap50 2.73%

I think that the top end was sold down heavily, particulary BHP and RIO, which is why the XJO was moved so much, and the SmallOrds moved most due to the fact that it takes less money flow to move those stocks, in either direction. But if you want to see where the money has been escaping from, or at least not flowing into, check the MidCap50 chart. No sideways here...lower highs and finally, capitulation.

Read into that what you will.

Now on that chart ASX. does it tell us distribution was taking place as Insiders were leaving the seen & preparing to short?

 

[Chief Wigam]

Re: XJO--What if the majority are wrong?--Maybe this isnt the top!

I think this is similar to the Feb correction and healthy for the bull run to continue. Nothing fundamentally has changed. The US sub prime issue has been known for months.

Seems to me this is a technical correction only and too late to sell out now. So I am holding. Why give my potential profits to someone else. The smart money has sold out prior to this and will be buying in again once the dust settles.

 

[wayneL]

Re: XJO--What if the majority are wrong?--Maybe this isnt the top!

Nothing fundamentally has changed. The US sub prime issue has been known for months.

Better have a closer look.

 

[theasxgorilla]

Re: XJO--What if the majority are wrong?--Maybe this isnt the top!

Now on that chart ASX. does it tell us distribution was taking place as Insiders were leaving the seen & preparing to short?

I think there were divergences within the market. Namely the financials sector pulling back whilst the materials (particularly BHP and RIO) gave the appearance that the broader indexes (XAO/XJO) were range bound and trading sideways...even making new all-time-highs on the odd occasion. Curiously though, if you look at volume since the beginning of the year an interesting story appears.

Whilst index gains slowed in early May volume continue to swell in many sectors leading into June 30th, this was particularly pronounced in the financials sector. But the financials peaked in May and never made another new all-time-high, unlike the broader index. My conclusion is that canny players might have been taking advantage of the volume bouying the market to offload large positions.

Materials was and has been a different story. Volume peaked into the March low and has been steadily subsiding since. In other words, RIO has gone past $100 and BHP to almost $40 on what is essentially subsiding volume. The Energy sector has shown a similar phenomena. New all-time-highs, subsiding volume since the March lows.

My limited understanding of VSA suggests that this is bullish in itself. Its also the reason why I still favour materials and energy and hold a position in each...but in the short term I don't think either will weather whats coming. In the mid to long term though I dont think the story for the materials or energy sector will be changing and this is why I remain bullish for the market over that timeframe.

I see more signs than ever that this is a signficant point in the market. Not only due to factors like the expanding flat that Wave Picker and the EW community identified. The internals of the market (volume) and the timing of this drop are enough to convince me to stand aside for a while and reassess. As WayneL has said, just another day for swingers...but that's not my style.


ASX.G

 

[tech/a]

Re: XJO--What if the majority are wrong?--Maybe this isnt the top!

Did you notice that from the days high on the DJIA to the days low was a 300point change of sentiment!

 

[theasxgorilla]

Re: XJO--What if the majority are wrong?--Maybe this isnt the top!

Did you notice that from the days high on the DJIA to the days low was a 300point change of sentiment!

Yep...wide range and a close way down on the low. I was watching TV just now and saw the UK was up 2.3%, Frankfurt 1.7% then DJIA down 1.1%...saw the chart and what do you know...lowest daily close on both DJIA and SPY since the beginning of May.

 

[tech/a]

Re: XJO--What if the majority are wrong?--Maybe this isnt the top!

Time to evalute where we are.

 

[krisbarry]

Re: XJO--What if the majority are wrong?--Maybe this isnt the top!

stop being so dramatic...base metals are looking OK, and the aussie market will be protected from major falls over coming weeks due to the reporting season.

I think you may have made a big mistake by selling up your whole portfolio and are trying to justify a fall, but it ain't gonna happen.

 

[theasxgorilla]

Re: XJO--What if the majority are wrong?--Maybe this isnt the top!

Price has been held up by a significant support level on the SPY, 1455. Over the last two days price activity on our market has looked alright. Frankly I'm having a hard time evaluating where we are...calm before the real storm...or a return to normality? Or maybe a real sideways market. Dunno, my jury is still out.

 

[>Apocalypto<]

Re: XJO--What if the majority are wrong?--Maybe this isnt the top!

stop being so dramatic...base metals are looking OK, and the aussie market will be protected from major falls over coming weeks due to the reporting season.

I think you may have made a big mistake by selling up your whole portfolio and are trying to justify a fall, but it ain't gonna happen.

LOL

now that is the morning humor i look for. from a guy that thinks markets are random and have no clear direction or cycle!

Mate its buyers like your self that cuase it to sell off in panics after the intial drop. you and all your buddys buy into minor rallies and poor it out once it breaks again.

look at the facts STC the market is telling u something, don't listen to its message at your own expense. the dow closed under a very significant short term support line, there is another clue. Demands can drop very quickly, there is never certainty in the markets, ride the change with open arms, rejecting it will only prove costly.

STC unless your a CFA, I would be careful in telling other members what they should and should not do with there money.

What a laugh!

 

[RichKid]

Re: XJO--What if the majority are wrong?--Maybe this isnt the top!

I think there were divergences within the market. Namely the financials sector pulling back whilst the materials (particularly BHP and RIO) gave the appearance that the broader indexes (XAO/XJO) were range bound and trading sideways...even making new all-time-highs on the odd occasion. Curiously though, if you look at volume since the beginning of the year an interesting story appears.

Whilst index gains slowed in early May volume continue to swell in many sectors leading into June 30th, this was particularly pronounced in the financials sector. But the financials peaked in May and never made another new all-time-high, unlike the broader index. My conclusion is that canny players might have been taking advantage of the volume bouying the market to offload large positions.

Materials was and has been a different story. Volume peaked into the March low and has been steadily subsiding since. In other words, RIO has gone past $100 and BHP to almost $40 on what is essentially subsiding volume. The Energy sector has shown a similar phenomena. New all-time-highs, subsiding volume since the March lows.

My limited understanding of VSA suggests that this is bullish in itself. Its also the reason why I still favour materials and energy and hold a position in each...but in the short term I don't think either will weather whats coming. In the mid to long term though I dont think the story for the materials or energy sector will be changing and this is why I remain bullish for the market over that timeframe.

I see more signs than ever that this is a signficant point in the market. Not only due to factors like the expanding flat that Wave Picker and the EW community identified. The internals of the market (volume) and the timing of this drop are enough to convince me to stand aside for a while and reassess. As WayneL has said, just another day for swingers...but that's not my style.


ASX.G

Great observations there ASX-G about the financials and Indices, cash flows related to the super rules, EFY etc?...about the materials, if we see increasing volume as prices rise to new highs then that would be bullish as we may surmise that demand is also increasing and that sellers are on the sidelines (unless we have wide ranging bars and low volume- supply has been taken out wholesale so prices rise freely)....haven't checked the charts yet but I'd say the materials are falling on high volume so sellers are about now- supply has entered in force. Will check the charts to confirm this, although warned of some sort of correction via the wave counts.

Whether this is a multi year or a short term correction doesn't matter- it is a test of our trading strategy and psychology, that is how I'm looking at it. After studying and practising risk mgmt for months in skirmishes we now get to see how well prepared we are in a real battle!