Way of the $XJO

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paddy

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Tuesday, July 15, 2008 - 08:58 pm:

Dean : I have started a new thread to keep data sub-divided into the individual indices . I seem to have annoyed several people with my numbers so I shall refrain from posting in "their" threads and apparently disturbing them . Must be a dreary life when a few numbers upsets one . Anyways here anyone can post the good,the bad and the ugly
about matters that pertain to the XJO.

Here is my update for July 16, 2008

As noted the XJO is at a, perhaps critical, point in the correction.

By the numbers we should see a test of 4798 .

Fib and R / S Levels for 7 / 16 / 2008

-----------F-4898
------------R1-4892
------------F-4870
------------F-4853

-----------PP-4844

------------F-4842
------------F-4825

------------4815.7 Close 7/15/2008

------------F-4798 Also LBB intraday 5' chart
------------F-4781
-----------S1-4767
------------F-4753 See note below
------------F-4658
------------F-4600
------------F-4505

Notes F-4753,by my numbers, represents a 38.2% correction. This is a Level where one could expect to see a counter-trend Correction [rally] . The recent down trending channel has been defined, on the top, by the EMA 9 . I would expect to see this act as the Upper Limit of such a "rally" should one occur. EMA 9 is now at 4972. And would you be looking at that - Heavens to Murgatroyd it's almost identical to a Fib - 4970

"May the face of every good news and the back of every bad news be towards us."

Regards,

Paddy

(Message edited by paddy on July 15, 2008)

paddy

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Wednesday, July 16, 2008 - 01:10 pm:

Dean: I think that nothing will really happen until 4825 is taken out convincingly . Like with a solid Close below 4798 or above 4842.

Regards,

Paddy

rdumas

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Wednesday, July 16, 2008 - 04:58 pm:

Hi Paddy,

Just to make sure that I have not been misinterpreted I want to assure you that I was not concerned (or upset) about your strings of support and resistance levels. I actually enjoy your input on the Daily Bread thread even if it tends to be a bit on the Grim Reaperish side.

When I asked you those three questions (especially the one about the strings of fib levels) I was trying to draw out of you your 'best guess' medium to longer term market bottom and potential rally level scenarios.

Your response was legitimate in that only the gods know where they will appear and you didn't want to put yourself in the shoes of the gods. Your string of support and resistance levels are of use to the short term traders like Dean. The Daily Bread thread has a few short term traders like Dean who also looks at the fundamental issues at play but in the main the thread comprises medium term and to a lessor extent long term traders. To those time frame investors the strings of short term fib levels don't offer much.

Your comments in the above post relating to the 38.2% correction level where one could expect to see a counter-trend Correction rally is the sort of observation that the medium term investor is interest in.

Just to make a contribution to your XJO thread I offer the 2.5 year weekly chart in order to provide a chart with less short term noise so that we can see the more general medium term price action. The only unfortunate thing about a weekly chart posted on a Wednesday is that the current week's action is not shown however you already know that we bottomed out at 4787 and have rebounded somewhat today. This currently gives us a candle that spiked through the 4800 weekly support level (shown in orange). We certainly appear to be heading to a bounce level especially since the S&P500 (refer to my post on the Daily Bread thread) appears to be heading for a significant bounce either later this week or early next week.

paddy

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Thursday, July 17, 2008 - 02:05 am:

Rudy : And here I thought you were going to think about setting forth on a voyage of discovery on the SS Swine .

On a more serious note the news is not Grim , Disastrous or whatever adjectives the 'prophets" use to bias the message . I noticed that MarketWatch used the word "GRIM" but then changed it to "Awful".

What is Grim is the lack of acceptance that the force of gravity is the major determiner as to direction of the Markets. There is a major Correction underway and there is too much use of the word "HOPE". Everything will be normal as long as the INDU stays above 9875. Below that then it gets serious.

Grim news today was how the report of lower earnings but beat the street swung Dow from big negative to positive . I guess that news sidelined the small problem of Freddie / Fannie.

Have a good one

Paddy

paddy

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Sunday, July 27, 2008 - 09:53 am:

Support and Resistance Levels for $XJO-ASX

---------------------Daily---------------Weekly
-----Level--------July 28---------July 28-Aug 1

Breakout-----------5504--------------5775

R2-----------------5222--------------5307

R1-----------------5096--------------5139

PP-----------------5018--------------4989

S1-----------------4982--------------4821

S2-----------------4814--------------4671

Breakout-----------4484--------------4185

The Friday Close of 4970.5 coincides with a Fib leve; @ 4970. Immediate Fib levels are as follows:

F5059 - F5014 - F4987 - Close 4970 - F4942 -

F4870 - F4825 - F4753

Regards,

Paddy

paddy

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Friday, August 01, 2008 - 12:53 pm:

Best get off da Bread thread before Sway tries to make me toast:

Triangle in 5 minute chart ending @ 10:50 gives a target of 4927-14 = 4913

Target of 4925 achieved @11:40 with Close of 4922 Next target 4915

=============

Lordy be 4915 and 4913 taken out @ 11:50. Now with Close below 4915 targets are 4906 and 4898.

=========

12:05 L=4903 C= 4903 Next target 4898 . If it falls then could see test of 4870.

Paddy

(Message edited by paddy on August 01, 2008)

(Message edited by paddy on August 01, 2008)

paddy

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Saturday, August 02, 2008 - 07:42 am:

Support and Resistance levels for XJO

Category------Month--------Week-------Daily

=======August ===Aug 4-9=====Aug 4

Breakout ----6053 ------- 5398 ------ 5180
R2 --------- 5420 ------- 5109 ------ 5025
R1 --------- 5199 ------- 5006 ------ 4964

PP --------- 4999 ------- 4913 ------ 4917

S1 --------- 4772 ------- 4810 ------ 4856
S2 --------- 4566 ------- 4717 ------ 4809
Breakout --- 3918 ------- 4418 ------ 4640

look for a test of 4870 Monday.

Regards,

Paddy

deanrosario

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Saturday, August 02, 2008 - 03:12 pm:

G'day Paddy

Just noticed this thread and will read your thoughts and add my own, henceforth.

Are you an intraday trader - as am I - or do you hold positions overnight?

Also I take it you mainly trade global indices?

As you probably are aware, I solely concentrate on trying trading the intraday swings on the Aussie Index using CFDs.

Have a good w/e.
Dean

"Never commit yourself to anything you can't walk away from in 30 seconds." Neil McCauley (played by Robert de Niro) in 'Heat'.

"Hope is a dangerous thing. Hope can drive a man insane." Ellis Boyd "Red" Redding, played by Morgan Freeman, in 'The Shawshank Redemption'.

captain_chaza

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Sunday, August 03, 2008 - 07:00 pm:

Ahoy Deano

Now that you have come out of the protection of your Baker's thread

Could you please tell me how you can make a dollar trading the XJO as IMHO all the movement/meat in the candle is always anticipated on the open and therefore, there is nothing left for an Intra-day trader like yourself

What I am saying is that after the role call on the XJO say ~15-20 mins the day has gone for anyone to make any dollars on the XJO

Any Experienced campaigner knows that the Index charts are wrong in that they DON"T take into consideration of the Daily Opening Gap

Crikey! It can make some intra-day charts look tradable when in-fact THEY ARE NOT!

Salute and Gods' speed

PS Why don't you post chart without the First 15-20 mins which was un-tradable

"While we stop and think, we often miss our opportunity." Publilius Syrus, 1st century B.C.

"I believe the future is only the past again, entered through another gate."
Sir Arthur Wing Pinero 1893

"There are two times in a man's life when he should not speculate: When he can't afford it, and when he can." Mark Twain, 1897

deanrosario

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Sunday, August 03, 2008 - 08:30 pm:

Charles, I am not sure I understand what you are asking.

What you have to realise is that most traders who are trading the Aussie index are actually trading "XJO futures" (or related derivative product), and, as far as I'm concerned, there are tradeable patterns right from the opening bell on the intraday SPI, although my system does not allow me to ever take a position before 1010 a.m.

I suggest you refer to SPI intraday charts - rather than the daily XJO candle - to discover the secrets to intraday Index trading.

It has taken me too long and cost me too much money over the years to "hand out the information" for free!

The secrets are there for anyone willing to look and, of course, one needs the discipline to follow defined rules.

It's not for everyone.

Best of luck with whatever system works for you.
Dean

PS: I rarely recall seeing you post any charts to validate your cryptic calls to "buy and sell", so I find it incredibly amusing whenever I hear you instruct others to "post charts"!

captain_chaza

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Sunday, August 03, 2008 - 08:53 pm:

Ahoy Deano

I think you know exactly what I mean!!

When did you Last see/Trade an Intraday candlestick that was worth trading on any Risk /Reward basis?

All I am saying is that your type of trading died ages ago when the Anticipated Opening Price was only available to a select few

Crikey!
Almost everyone anticipates the Gaps nowadays AND with some accuracy

What I am asking is HOW can you make an Intra-day dollar when ~all of the move has been achieved in the overnight gap ?

Salute and Gods' speed

captain_chaza

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Sunday, August 03, 2008 - 09:10 pm:

SURELY, IN THIS MODERN ERA?

There is much more to be said about the "Overnight-Trader" than that of the prehistoric minute Intra-day strategy?

Salute and Gods' speed

deanrosario

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Sunday, August 03, 2008 - 09:34 pm:

CC - this will get boring and time consuming if we go back and forth with differing opinions and, to be honest, I haven't got the interest or the energy to pursue the matter any further.

Intraday trading works very well for me; and, from what you constantly tell everyone on the forum, your style works well for you.

What more can we want
Dean

captain_chaza

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Monday, August 04, 2008 - 01:19 am:

Crikey! Deano

All I want to do is to establish whether you are a ...............

As you can well appreciate

Safety at Sea is Paramount!

Salute and Gods' speed

(Message edited by colin_twiggs on August 04, 2008)

deanrosario

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Monday, August 04, 2008 - 10:28 am:

CC, as usual, you have proven yourself to be a poster for whom I:

(a) have no regard
(b) no respect and, above all,
(c) no interest in engaging in dialogue

Best of luck with your trading and I hope life treats you well.

Dean

colin_twiggs

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Monday, August 04, 2008 - 12:54 pm:

Charles,

That was unnecessary.
I believe that you should apologize to Dean.

deanrosario

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Monday, August 04, 2008 - 01:06 pm:

Thanks for the support, Colin.

But, my experience in life has taught me it is best to ignore persons who display the personal traits that Charles regularly displays on this forum.

I've found life tends to treat people the way they treat others, and, therefore, I can only feel extreme pity for Charles rather than any stronger emotion.

Again, thank you for the support.
Dean

(Message edited by deanrosario on August 04, 2008)

exile7

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Monday, August 04, 2008 - 01:18 pm:

I agree... We should not criticize anyones trading methods as long as it works for them and they are happy with the risk/rewards.....

paddy

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Tuesday, August 05, 2008 - 11:55 am:

ex capitán Chancho de el HMASS SWINE:

I take offense as to you using this thread for your bloody name calling . Please refrain from doing so again or I will have to get up a petition to have you keel hauled.

Calm seas,

Paddy

paddy

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Tuesday, August 05, 2008 - 12:43 pm:

Dean : XJO at the cross roads. Close below 4781, in my opinion, just about guarantees a test of 4753. drop through 4753.

The way I see it 4781, looking at a 15 minute chart, is a v very special number . In my calculations it is a sub-F0.618 . The last support before 4753.

Also 4781 was not tested . I expect to see a test as I don't think a bounce off of the level is a real test. I may be wrong.

Lots of time today to find out.

Regards,

Paddy

paddy

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Tuesday, August 05, 2008 - 12:58 pm:

Dean : Saw your down in the dumps posting on the Bread.

Break below 4753 [our numbers are CLOSE] then watch for :

4658 -- 4600 -- 4505 -- 4352 -- 4104. I'll leave it their on an optimistic outlook . when we get to 4104 I'll post the next set of Levels.

Dean : read your last post . Interesting that you determine your levels of support, etc from a chart. I have a table of numbers . Two different methods and very Close agreement in Levels .

4781 is not going without a fight- so to speak. Hell don't want a rout - just a mild stampede of lemmings over a cliff.

Regards,

Paddy

(Message edited by paddy on August 05, 2008)

deanrosario

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Tuesday, August 05, 2008 - 12:58 pm:

Paddy - thanks for your insights.

Let's see how the next intraday swing down plays.

Looking at the XJO daily chart you have to go back to Jun-06 to see such levels on the XJO, and, below 4758 it gets scary.

I see nothing to hold up the XJO until 4680ish!

Could that happen today ... unlikely but you never know.

paddy

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Tuesday, August 05, 2008 - 01:59 pm:

4672 is a sub F0.618 level . The last chance for Support before 4658 . Below 4658 and a very good chance that 4600 will be reachable rapidly.

rdumas

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Tuesday, August 05, 2008 - 03:34 pm:

Hey Paddy,

You're doing great work on this and your other thread.

Looks like the Fibs are still working then. Currently the lower boundary of the 28 year bull market channel is at 4423 on the All Ords (which translates to around 4356 on the XJO). Is 4356 anywhere near a Fib support level?

captain_chaza

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Tuesday, August 05, 2008 - 04:16 pm:

Ahoy there Deano

I apologise in good faith

I just assumed that YOU as a professional trader would have read this thread well before you admitted you just read it?

I agreed with you when you asked Paddy if he was a REAL trader and question the useless intra-day nature of Paddy's 0.01% description of the movements of an index

As I remember Captain Fibonacci ~1000 years ago wasted his life determining a mathematical ratio for the growth of leaves

Nowhere did he ever investigate the shrinkage rate of leaves as they age!!!!

It certainly makes a NON SENCE of this Son of Fib's figures
Surely one of them was right?

Crikey! Is it just me?
I just can't find it

'Nuf Sed

paddy

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Tuesday, August 05, 2008 - 11:13 pm:

Rudy : On XJO, by my numbers 4352 is the last strong level of potential support . Break that level and 4104 becomes a Target.

Question : How does one eliminate scum from a thread?

Paddy

paddy

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Wednesday, August 06, 2008 - 01:12 pm:

Dean EMA 20 = 4970 , also Fib level

XJO, by my Fib rules could rise above 4976.5 but nhad to Close below so that the next Fib level did not become a target.

So far that has held with combinations [ High / Close ] of 4978 / 4976; 4978 / 4972 and 4977 / 4965.

See what happens.

Regards,

Paddy

rdumas

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Wednesday, August 06, 2008 - 04:39 pm:

Hi Paddy,

Wow, let's hope that we don't have to deal with a move down to 4104.

Regarding your question people are free to post on any IC thread as long as they obey the IC Forum rules which are detailed on http://www.incrediblecharts.com/chart_forum_rules.php

If ever you feel that someone is not obeying those rules then you simply press the 'Report Abuse' button and state your objection to a particular post.

deanrosario

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Thursday, August 07, 2008 - 10:28 am:

G'day Paddy

I reckon the opening on the XJO will be critical.

XJO futures closed at 4986, which equates to an XJO cash price of around 5010.

As the above chart shows - I've used the XJO 4-hour chart to eliminate some of the "intraday noise" - there's a bit of recent intraday resistance at the 5010-ish level.

If the XJO can hold above 5010ish there's little to stop a retesting of 5100.

However, given the lack of any clear direction from the US-market overnight, my "gut feeling" is:

the XJO will initially ease back towards 4950 this morning.

Then, at 1130 a.m. Aussie unemployment figures for Jul-08 will be released, and that should give the market a nice kick - in either direction.

Either up or down - doesn't bother me if I'm holding the right position!

Dean

paddy

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Thursday, August 07, 2008 - 12:13 pm:

Dean : If I have yesterdays Close correct at 4969 and change then there has to be a Test of 4942 on the menu.

Today the open "rally" fizzled out at exactly the right value - 5005. Any higher and 5014 or more would have been set for a test.

Now need a close lower than 4959 to set up 4942.

Looking like going to play 4970 game.

See what happens.

Paddy

deanrosario

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Thursday, August 07, 2008 - 02:29 pm:

Paddy you are uncanny!

XJO just hit 4940.5!

Keep up the good work.
Dean

paddy

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Friday, August 08, 2008 - 01:04 am:

Dean : Today may be interesting . Yesterdays Close at 4983 suggests that 4987 is yet to be tested. I don't know the High for the last minute. 4987 could have been tested and the Close represents a failed test. That would mean that, again 4970 - 4942 will be tested and perhaps much lower.

The reason I say that is that there is, in my opinion, a test of 4753 on the menu. On August 5th the High was 4888 , Low was 4758 and Close 4820. Had a failed test of 4887 and No Real Test of 4753. Perhaps today, although that would entail a drop from 4983 to 4753 . That's a lot - get to sub 4900 then it becomes a possibility but may take more than one day.
Later today I will see if I've been in the sun too long.

Paddy

paddy

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Friday, August 08, 2008 - 11:54 pm:

Dean: Yesterday I wrote : "Yesterdays Close at 4983 suggests that 4987 is yet to be tested." Took all day but it happened.
In shorT :

10:15 ---positive test F4915 ---Target F4942

11:00 ---positive test 4942 ---Target F4970

13:45 ---positive test 4970 ---Target 4987

15:00 ---positive test 4987 ---Target 5000

15:15 --- negative test 4987 ---Target -- 4970

16:00 CLOSE 4986.2 - need to know High and Low for final 15 minutes to determine next possible move.

If UP then Target = 4987 - 5000 ; if DOWN then Target = 4970 - 4942 - 4915.

Other far ranging predictions put on back burner for now .

Regards,

Paddy

paddy

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Wednesday, August 13, 2008 - 11:57 am:

Candlesticks still 'lighting" the Way. The 10:05 Low and Close of 4986 set up the test for 4970 which fell by the wayside @ 10:40 . Now with a Low of 4948 and a Close of 4956 there should be a test of 4942.

Paddy

paddy

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Wednesday, August 13, 2008 - 02:24 pm:

$XJO : 5 Minute Chart

11:00 Candlestick with Low of 4934 and Close of 4941

Signals a test of 4925 and probably 4915 before any, if any, significant upside occurs.

Regards,

Paddy

pse

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Wednesday, August 13, 2008 - 09:17 pm:

captain_chaza wrote on Sunday, August 03, 2008 - 06:00 pm:
Could you please tell me how you can make a dollar trading the XJO as IMHO all the movement/meat in the candle is always anticipated on the open and therefore, there is nothing left for an Intra-day trader like yourself

What I am saying is that after the role call on the XJO say ~15-20 mins the day has gone for anyone to make any dollars on the XJO

Any Experienced campaigner knows that the Index charts are wrong in that they DON"T take into consideration of the Daily Opening Gap

Crikey! It can make some intra-day charts look tradable when in-fact THEY ARE NOT!

Charles, each circle represents a trade signal on the SPI today. Each range bar is 21pnts.
Many, many opportunities, if you know "how".

"TRADE WHAT IS, NOT WHAT MIGHT BE"

paddy

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Friday, August 15, 2008 - 02:01 pm:

By my numbers Test of 4942 indicated at 10:05 . Still appears to be a possibility. Index will bounce between 4987 and 4942 until 4942 is tested .

Paddy

paddy

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Monday, August 18, 2008 - 11:25 am:

On Friday at 10:05 AM I stated that a " Test of 4942 was indicated.

At 10:10 AM , today the level 4942 was Tested . While XJO is back up to 4950 believe that 4925 has to be tested .

Paddy

paddy

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Tuesday, August 19, 2008 - 11:43 am:

And at 10:05 4925 was Tested -ively . Will not be surprised to see 4870 tested .

Paddy

paddy

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Wednesday, August 20, 2008 - 12:03 am:

They left it to the last minute but with a drop of 16 points in last minute the level 4870 was broken to the downside with a Close of 4866 .

Now, by my numbers, there will be a test of 4853. If that fails and I have the feeling that it will then 4842 and 4825 become the Targets.

Paddy

paddy

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Thursday, October 09, 2008 - 12:25 pm:

Dean : Thought I'd post my ramblings here . Going by lack of activity on da Bread there must be a few folks in "denial". How could this happen to Us? We are a Resource based Market. The BDI was a clear "warning" that all is not well.

Alcoa's Klauss got clobbered

Forecast for 100,000+ tonnes Cu surplus and price down to $2.45 / lb

Nickel now below $6 / lb

Zinc and lead in really bad shape $0.65 and $0.71 / lb

Al $1.01 / lb

Missed when BHP announced 14% reduction in Pilbara ops [ in Sept.]

On it goes as all the "bad" news will be issued now that prices are so Low.

By my numbers XJO below 4352 will give rise to a visit to 4257 and then 4104. That is how i see it.

Regards,

Paddy

paddy

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Thursday, May 07, 2009 - 12:11 pm:

Rudy : thought I would put my ramblings under the title .

Your potential turning points for the XJO.

3981

By my numbers the turn point can be anywhere between 3980 and 3995 . The Index can spike to 3995 but the Close must be below 3990.

4285

By my numbers the turn point can be anywhere between 4259 and 4281 . The Index can spike to 4281 but the Close must be below 4272.

I realize that I have a spread of 15 to 22 points for the turn points. I can only chalk that up to the fact that I have misplaced my "water walking" shoes.

Yours-Confined to dry land

Paddy

rdumas

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Thursday, May 07, 2009 - 05:57 pm:

Hi Paddy,

As you can see from my post on ODB this morning I was being very broad brush about the methodology. My main aim was to provide people with the concept of using ranges to predict future turning points.

Thanks for checking out your Fib numbers at those levels. Much appreciated.

"...if one tortures a dataset long enough, it will confess to anything!"

- Andrew Lo

hailoh

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Tuesday, May 26, 2009 - 03:28 pm:

Colin noted in his most recent Trading Diary that the XAO is testing support, as is the SPX. He noted too that while a break below support was likely, based on TMF, a bull trap could also be sprung.

My question is : how high does experience suggest a bull trap could go?

XJO daily

The descending trend lines mark the broad channel since the bear market began. The ascending wedge is the current rally. Recent daily action on the XJO suggests there could be a double bottom developing around 3720 that could predispose a rise to around 3950. That would take the index beyond the upper bear market trend line and would presumably also be of sufficient magnitude to satisfy a bull trap, if that is how the pattern finally develops.

Does this seem a reasonable hypothesis, or would experienced traders familiar with bull traps expect something more dramatic, such as a test of the upper wedge boundary?

rdumas

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Tuesday, May 26, 2009 - 04:32 pm:

Hi Hailoh,

I will answer your question from an Elliott Wave perspective and will use the following charts of typical past market crashes. Just a bit of a primer on EW first. The basic idealised Elliott Wave is an 8 wave pattern where in the case of a bull trend the market goes up for 5 waves and is followed by a bear market correction which causes the market to trend in a downward direction in 3 waves (1 wave down, a rallying wave up and then the final 3rd wave down to complete the corrective 3 wave move).

The current bear market is following a multi-decade bull market and this bear market (as with all corrective waves) comprises 3 (idealised) waves. These waves are labeled A, B and C. In the XJO, the A wave (first wave down) started on the 1st November 2007 and completed on the 6th March 2009. We are currently in the rallying wave B.

Now typical examples of the 3 wave corrective moves are shown in the following 3 bear market corrections. The first example is the 1929 bear market for the Dow Jones index. In this correction the A wave dropped around 50%. The following B wave rally went up fractionally more that 50%.

In example 2 we have the 2000 Nasdaq crash were wave A dropped around 40% and the following B wave rally went up around 61.6% (another Fibonacci level).

And in the 3rd example we have the Nikkei bear market in the 1990's. In this example the A wave went down around 63.5% whilst the B wave rally went up around 38.2% (yet another Fibonacci level).

We can see from the above examples that there were significant B wave rallies in all cases and the rallying B wave retraced the A wave decline by between 38.2% and 61.6%. How far the B wave rally goes depends on the pattern of the A wave. The pattern of the current bear market wave A was in the form of a 5 wave impulse down. That warns us that the current rally cannot be greater than 70% but has a higher probability of retracing wave A by between 38.2% (4546) and 50.0% (4987).

Note from the examples above that the bigger the drop in wave A, the smaller the percentage retracement in wave B. That appears logical because obviously the larger the initial drop, the bigger the problems that led to the drop so one would expect that the 'optimistic wave B rally' would not be as strong as in the case where the problems were not as severe. As we dropped around 54% with our wave A, I would expect our B wave rally to be towards the lower end of the retracement range (ie 30%~38%)

Another Elliott Wave guideline is that the retracing B wave will often terminate at the termination point of wave 4 of wave A. That level happens to be close to around 4300. My best guess is that we should end up somewhere between the 4300 ~ 4500 level at the completion of wave B.

As a bit of additional information, the current wave B is also a 3 wave pattern (we can label these 3 sub-waves a, b and c). Now wave 'a' went from the 10th March 2009 to the 11th May 2009. We are currently in the 'b' wave down. Depending on the particular pattern that this 3 wave (a,b,c) pattern makes it can retrace anywhere between 20% and 138.2% of wave A. We have already retraced a little over 28% of the range of wave A so it could legitimately continue the rally at any time. I suspect however that we will probably get a retracement of between 50.0% and 61.8% of the 'a' wave rally.

I hope that answers the question you asked.

Probably the most important observation to make about the previous market crashes is not the A and B waves but rather the 3rd C wave which is often a real doozy.

"...if one tortures a dataset long enough, it will confess to anything!"

- Andrew Lo

hailoh

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Tuesday, May 26, 2009 - 05:04 pm:

Rdumas, thank you for the reply. Pity I am going to be out of touch for a while because it raises many more questions, as much to do about time scales as the mechanics involved. The market never fails to entertain - whether you wake up with sigh of satisfaction or a nasty hangover is the stuff of legend.

paddy

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Monday, June 15, 2009 - 12:54 pm:

Baysider : Re your question about target levels for the XJO.

Rudy is the master of this Index . Rudy uses EW analysis whereas I use some EW data -[ namely start and end points of the waves. In addition I use Fibonacci data for determining potential target levels.

I leave the EW analysis to Rudy as I do believe, at times, I drove him to distraction with my unorthodox labeling of the waves.

Now this study is subject to : " Is EW B(B) the real thing? I'm sure you are aware of much of this data generated from EW data from Rudy's posts. I use the same numbers so we are in agreement

Start at the beginning A WE : 6852 - 3120.80 = 3731.2

**** NOTE A WE used [ letters reversed ] as , for some unknown reason, the IC system would not permit letters used in normal fashion . EW B okay but not the above.

EW B : The potential target levels can be estimated using EW rules and guidelines.

EW B : [0.3 x A] + 3120.80 = 4240.16

Fibonacci level 4246.77
OR

EW B : [ A ] + = 4546.19*

Fibonacci level 4540.63

Thus we have two potential target levels for EW B determined by two very different methods. The value with an asterisk is Rudy's choice. I don't discount it . For me it comes into play after 4240 is broken to the upside.

Now EW B is composed of three sub-waves.

EW B(A) Range : 3120.80 - 3960.4 = 839.6

EW B(B) From chart 3960.4 - 3723 = 237.4

Estimation of EW B(B) by EW methods:

Best fit EW B(B) : 3960.4 - [0.3 x 839.6] = 3708.52

Fibonacci sub-level : 3724.22

and 3723.72

So we have an apparent,until proven otherwise, an actual value of 3723 with estimated values of 3708, 3723 and 3724 .

If we accept that EW B(B) ended at 3723 we can calculate a potential for EW B(C) using the value for EW B(A) of 839.6.

EW B(C) : [ 0.618 x 839.6 ] + 3723 = 4241.87

Fibonacci levels 4246.77
and sub levels 4241.52, 4247.81

OR

[ 839.6 + 3723 ]= 4562.6

Fibonacci levels 4540.63
and sub level 4552.69

Hope this has answered your question. Yes I agree with Rudy on the two levels .

I am sure that Rudy with his daily posts to ODB will keep you aware of any drastic changes in the course of the XJO.

Regards,

Paddy

paddy

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Tuesday, June 16, 2009 - 12:17 pm:

Rudy :

The "important" Support Levels must have been sleeping when the Index dropped like WTC #7 . By my calculations it dropped through two more before halting and rebounding at Support Level 3975.65 .

I was beginning to think that today we would find out if EW B(B) is the real thing.

Now to see how far up it will climb. Stopped by 4000.

Maybe we will.

Support Levels,by my calculations, below 3975 are :

3965-3955-3944-3938-3925-3918-3905-3884-3872-3851 .

< 3841 Will the real EW B(B) identify yourself?

Adios

Paddy

(Message edited by paddy on June 16, 2009)

rdumas

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Tuesday, June 16, 2009 - 12:38 pm:

Hi Paddy,

You may have read my post on ODB this morning about the S&P500. On the XJO this morning we have a similar thing occurring. We appear to have had 3 waves down. Whether we bounce up now or create a wave 4 and 5 scenario for an impulse will no doubt be revealed this afternoon.

For the impulse wave to remain 'intact' we cannot bounce into the price range of wave 1 (4033). The small retracement at the beginning of the current third wave may also be an indication of an extension to wave 3. I look forward to seeing how things pan out this afternoon.

"...if one tortures a dataset long enough, it will confess to anything!"

- Andrew Lo

rdumas

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Tuesday, June 16, 2009 - 02:51 pm:

Hi Paddy,

We are progressing well on our impulse wave on the XJO.

Since this snapshot was taken it has fallen further.

"...if one tortures a dataset long enough, it will confess to anything!"

- Andrew Lo

paddy

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Wednesday, June 17, 2009 - 03:18 am:

Hi Rudy Yes you will have an UPside for starters . My calculated Fibonacci points correlate just fine with your EW points . Correct that EW 3 should be greater than 125 ?

Range ------- End point ----- Fibonacci Value

4079-4037 ---- 1 ------------ 4038

4037-4059 ---- 2 ------------ 4059

4059-3976 ---- 3 ------------ 3976

3976-4001 ---- 4 ------------ 4000

4001-3954 ---- 5 ------------ 3955

Adios

Paddy

rdumas

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Friday, July 31, 2009 - 12:05 pm:

Hi Paddy,

Today's early range for the XJO reached equality with the previous major range. I would say that we have possibly reached an interim top for the XJO.

"...if one tortures a dataset long enough, it will confess to anything!"

- Andrew Lo

paddy

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Friday, July 31, 2009 - 12:38 pm:

Hi Rudy : You might be right or wrong. All depends on what the MM decide is best for their own interests. Indicators, to me, look like they still have some upside but then I could be wrong on this one.

XJO-ASX Daily Chart - Snap shot

bib

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Sunday, August 02, 2009 - 10:05 pm:

Looks toppy but often the market can be toppy for some time before receeding. I guess that's why they say 'tighten stops'.
One certain thing is that at some stage we will see some retrace - the market always comes back to bite.

gdd3

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Friday, January 22, 2010 - 04:35 pm:

Decision Time on the XJO...

First chart below shown the trading channels and horizontal supports for the XJO and you will note that today's action came close to approaching the valley trough of a confluence of trend support lines(approx'ly at 4695).

How traders/investors view this level will probably shape the direction for the next few months. Just looking at a price chart some T/A's would say it represents a low risk entry/re-entry level. Others, viewing momentum indicators, would argue that this level is eminently going to break as most(momentum indicators)are already breaking down(take a look at RSI, MACD, T.M.F. etc).

I'm with the latter, so assuming 4695 is about to break the question really is 'what will that mean'? Initially we would have to factor in a move towards that top orange support line at abt 4515 or even lower at abt 4450(to factor in balance of our recent 'false' breakout above the 2009 yearly high...Oct.09). If we accept that this is going to happen then many will see that as we have broken our 2009 uptrend channel support we are very likely in the early stages of resuming the mega GFC caused Bear Market Downtrend and start preparing ourselves with at the very least an attack on the Mar.09 lows. Well not so fast!

One can not rule out that the action from the Oct.09 yearly high to now is just a consolidation period of last year's upmove. Just maybe we are in a wave(c) of abc for a wave(4)...see the 2nd chart below....and therefore we still have another upleg to go to new yearly highs. To negate this view the XJO would have to break well down below 4450. Alternatively, wave(iv) may have been completed at the 9th of Dec.09 low(exactly 180cd out from the Mar.09 low) and we have therefore already completed a 'stunted' wave(5) up to the recent 4955 high on Jan 11th(coincidently 1 trading day after the 300cd anniversary and 180+pts from the March.low...T. & P. squaring). A solid break of 4450 should then factor in a move towards the 4080-4010 being trend support(lower orange line) and 50% retracement level of all of last years upmove. However at these lower levels I would think would be excellent areas to start topping up my super funds.

Interesting times, aye. One thing that is for sure, next weeks action will be exciting and maybe clarify a bit more.

Cheers
Dolphin

P.S. Keys dates for me are now 1st of Feb.(+-1day)for that possible wave 4 low(or 1st corrective wave down) and Mar.8th -11th for the top of wave 5 or corrective A-wave low.

rdumas

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Friday, January 22, 2010 - 05:41 pm:

Hi gdd3,

I have a slightly (but significantly) different view of what has happened in the XJO during what I call the bear market rally which started in March 2009.

The implication in your wave count is that the rally was an impulse wave up because you label the legs waves 1, 2, 3, 4 and 5. I will give reasons below as to why that is unlikely.

Let me just back up a little. There is some argument amongst the most well known EW analysts in the world as to which Super Cycle level wave we find ourselves in. Prechter suggests that we peaked in the market in late 2007 to complete a very large wave 5 of 5 and that the move down from that market top to the March low was a wave 1 of an impulse wave down that will be cataclysmic for share markets around the world. He then says that the multi-month rally that we experienced from the beginning of March 2009 was wave 2 of this large impulse wave and that we have now entered wave 3 down to share market hell.

The other main view (held by Robert McHugh for one) is that the 2007 peak was the end of a very large wave 5 of 3 and that all the moves that have occurred since then are part of a wave 4 in this huge super cycle pattern. I tend to lean towards the second scenario.

Okay, that deals with the 'big picture' so now we go to the next level down. If the current bear market is creating this wave 4 of the 'big picture' then wave A of that big picture wave 4 was the move from late 2007 to March 2009 and wave B of wave 4 was the multi-month rally that started in March 2009 and probably completed on the 11th January 2010. As you know wave B's of wave 4's are always corrective and hence must form a corrective pattern of some kind, they cannot be an impulse wave.

We can see from the above scenario that the multi-month rally then was not an impulse but rather a corrective wave. Now since this corrective wave did have 5 legs it had to be a Triple 3 complex corrective wave as shown in the following chart.

Triple 3 corrective waves are similar to impulse waves in that they have 5 legs but the difference is that Triple 3s comprise legs that are corrective rather than having waves 1, 3 and 5 as impulse waves or leading/ending diagonal waves (in the case of waves 1 and 5) which is what happens with impulse waves.

A close study of wave 1 for example clearly shows that the wave pattern is not an impulse. It breaches rules relating to impulses.

For interest sake the chart below is my wave count for the final leg Z as of the 8th January 2010. I believe that wave 5 of this pattern completed on the 11th January 2010 at 4955.1.

If my count is correct then the multi-month rally is over and we have started wave C of the corrective pattern.

I've given you my view based on what I know now. In another 5 minutes that view might change because of additional information. It's the best I can do - Rudy

gdd3

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Friday, January 22, 2010 - 09:39 pm:

Hi Rdumas,

Yep, can't argue with the possibilities of either Long-term views, whether Prechters or your preferred one. Both suggest that the immediate direction from here is down(i.e. the uptrend channel support that I have shown on my chart above is going to be broken). This at least we agree on as all three 'counts' suggest our short-term scenarios are in sync and point to a down market from here.

Whether the Nov 07 high was a 5th of a 5th or the more favoured 5th of a 3rd is not of too much concern to me at this stage as it is going to take a lot more action/ history/time to clarify this. I, like you favour the latter. However, my understanding is that 'B waves' and '2-waves' are traditionally the longest(in time) and often the 'ugliest' to interpret of all the waves. Understandable when you accept its the phase in the market where there is most indecision. With this in mind my interpretation could suggest your B-wave rally(or wave 2 Prechters) is only wave 'a' of wave B(zig-zag?). Hence we go down from here for a 'b' of 'B' before heading higher for 'c' of 'B'. Either of my two short-term counts alternatives would satisfy this scenario.

I will also say this, Rdumas, my experience of long-term Elliott Wave counts have very rarely helped me to trade/invest....i.e. make money! From a traders perspective I believe the Elliott Wave method provides best service in merely identifying short-term wave 'personalities' ( is it impulsive or corrective). By that I mean looking at 2hr charts and less, especially in 'pure' markets(e.g. Nikkei and Swiss Franc). Clarification can then come from a daily chart for a broader picture. With this in mind have a look at the SPI200 2hrly(Futuresource.com provides it free if you haven't access to data) and again I believe it confirms what we are both saying in the near-term(we are just over abt the half way point of a wave 3 down. My guess is that either tonight offshore or on Monday we will find initial support around 4620-4600(remember SPI200 futures) before consolidating through Tues./Wednes(unfortunately coincides with Australia Day) before another leg down to the 4515-4450 levels mentioned in my post above...maybe around the 1st of Feb.

But, hey, I'll let the market reveal what it wants to as she unfolds. Whilst I'm very happy to 'lighten' off say 1/2 my exposure I'm certainly not going to liquidate everything yet as I'm still unsure how this is going to pan out, if or when it reaches the mid 4500's. By then, hopefully we will have a clearer long-term picture to rely on.

Rdumas, I do enjoy reading your views, looking at your charts and arguments(E.W) and sincerely hope it is helping you to meet your goals, whether monetary or otherwise.

Cheers
Dolphin

rdumas

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Saturday, January 23, 2010 - 08:34 am:

Hi Dolphin,

Please call me Rudy, rdumas sounds so formal

I agree with your comments in that I use EW in much the same way as you do in terms of identifying the smaller time frame patterns and generally determining whether we are in a corrective or impulsive phase. I do use EW in my investing but find that it is best used in conjunction with other methodologies. I do know some EW traders who actually specialise in only trading specific patterns. For example some only trade the C wave in a corrective pattern. I have done it myself with great success on a number of occasions. It is particularly powerful when used in conjunction with Fibonacci ranges.

For those not familiar with EW I can say that having an understanding of EW can alert a trader to the high likelihood of an impulse wave following the current pattern. Again, a number of EW traders use this as a good guide as to when a trading opportunity is just around the corner. An understanding of EW rules can greatly assist in determining where to put stop loss settings. There is no doubt that it is best to use EW along with a number of other methodologies to confirm any EW expectation within a current pattern.

As I run my own SMSF I use EW in a much larger time frame as well to help me determine when I should be 'out of the market' or 'in the market' as naturally enough most of my funds would be used to buy stocks that have a larger market capitalisation than those traded by many of the traders on IC. This is definitely a time cycle where a medium term investor with large portfolio who only plays the 'long' side of the market is best to be out of the market. Whilst there are some good technical indicators available, I don't know of any other methodology that provides you with a better pattern recognition system than that provided by EW.

I've given you my view based on what I know now. In another 5 minutes that view might change because of additional information. It's the best I can do - Rudy

mastersl46

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Sunday, January 24, 2010 - 03:15 am:

Hi Guys,
Very interesting to see your charts, also good to see other peoples opinions.
Anyone can answer this question if they want to.
If you decided to trade the SPI (XJO) relative to your advice above, what would you do right now?
Would you sell on Monday straight away & buy back at 4500?
Or do you think there will be some sort of corrective pattern around 4700 & wait for that to sell. Also Where would the stops be? I know that if the market goes above 4850 it has hit the first wave of the move which means that a new wave up would have commenced as any wave 4 cannot really hit wave 1.
Also do you think that if the XJO hits 4500 it will retest 4800 at least creating a second or the 5th that gdd3 has listed?
I have seen a lot of information from websites that they were certain that the XJO would retest 5000, then break it to go to around 5200 before starting its downward movement.
The break of 4800 most likely dismisses that as the moves down first appeared to be a 4th of the 5th wave up, thus coinciding with the 5200 target point.
One major question I would love to be answered is this.
I have only trade for a year but I have never seen the Dow Jones make a new high AFTER the XJO has. I look back at 2007 (Oct12 for DOW, Nov 2 for XJO) & every wave since then the XJO has finished its waves AFTER the DOW. This is the first time I have ever seen the XJO have a final high BEFORE the Dow has.
Have any of you seen the XJO & the FTSE make a major high BEFORE the Dow has?
Been watching Back to the Future series & would love to build a Time Machine to see what the market will do the next few weeks.
Much appreciated on anyones feedback and look forward to seeing more analysis!!

rdumas

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Sunday, January 24, 2010 - 10:56 am:

Hi Mastersl46,

I don't have much time so will only provide a short response to your questions. Looking at the price action on the XJO in the chart below I have provided one possible EW count. If the ASX200 futures contract is correct we should move down to around the 4664 level on Monday. I have provided a target box for the likely termination of wave 3 which will possibly occur on Monday.

If wave 3 does complete around that level then we should get a wave 4 bounce. Now under the EW guidelines of 'Alternation' there is a 61.8% chance that wave 4 will have a 'sharp' pattern because wave 3 had a 'flattish' pattern. That leads to the possibility that wave 4 may attempt to close the gap created in the recent down move.

Note the Fibonacci relationship that may be formed if wave 3 does complete at around the 4664 level. The range of wave 1 is around 102 points whereas the range of wave 3 would be around 266 points. That gives us a ratio of close to 1 to 2.61 (or 261%) which is very close to the 261.8% Fib ratio.

You will note that in the above chart I have suggested that the pattern being created is a medium term impulse wave (ie, 5 waves). I must stress that this is an assumption on my part at this stage. The format of waves 1, 2 and 3 is 5-3-5. If we put assumptions aside this pattern can be either of the following:

1) The first 3 waves of an impulse wave
2) A completed Zigzag pattern

Note that at the level indicated in the chart 1) is a part of an impulsive pattern and 2) is a completed corrective pattern. Depending on which it turns to actually be, these patterns will give us diametrically opposed future patterns. This is why one should always wait for enough of a pattern to be revealed before taking a trading position.

I hope the above commentary makes sense to you.

I've given you my view based on what I know now. In another 5 minutes that view might change because of additional information. It's the best I can do - Rudy

ingot54

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Sunday, January 24, 2010 - 11:50 am:

H Lee

There were hopes that the Australian stock-markets had matured, and would move independently of the USA.

Unfortunately the GFC intervened and fear took over, and we remain tied to Uncle Sam's apron strings, before that process was able to develop further.

One reason given for this is that the Australian market (commodities-based) is seen as a safe haven, and many USA investors are 75% invested in "foreign stock-markets". (Source - Money and Markets)

Consequently, when investors in the USA pull their money from local markets, they "forget" they invested overseas for safety. They pull their money from those markets too, either through fear, or through thinking commodities are also going to take a bath. (Source: Me) This scenario would be valid if the idea of tightening in China has legs.

I surmise this because the Australian market is highly correlated with the USA markets, particularly the DOW. The Institutional money is "safe" in the bluest of blue chips, and when there is a flight, the "big money" is the first to move.

Whether the XJO moves ahead of the DOW would likely be dependent on the timing of any news from China, such as their interest rates rise of February 2007, which precipitated a fairly hefty market correction world-wide. (Markets had a full head of bullish steam, and this was the catalyst needed to trigger the safety valve.)

Currently we have all sorts of news coming from China. I have it from "The Daily Pfennig" that you can put an axe through most of the GDP figures coming from China to the extent that their figures for world-wide consumption are 50% over-stated.

Even so, it is clear to many that China is in trouble, and needs to choke back the "irrational exuberance" (read: bubbles) developing there in their property and stock-markets. We now see that when China sneezes, the world reaches for the cough-medicine just like we do when the USA sneezes.

As for your question about what to do on Monday morning, I can not offer a solution from the charts. At best charting offers skilled operators a probability of being right, but not the certainty.

We have had a lot of bullish pressure taken out of the markets this past week, and if it is the top of the dead-cat-bounce, then it is early as far as my ideas go. In another place I stated that I felt the markets would correct before the first week of March had closed, due to the ending of the bailout/toxic assets purchase programme in the USA by the USA Fed Reserve.

This was because much of that Fed money was not finding its way out to the consumer in the form of new loans, but the banks were betting the money in the stock-markets, thus pushing the recovery along artificially. If this is true, then the "big money" has left the building, and the herd will follow, as Stops are very close to triggering, after this 5% correction we had in past 3 days.

I had thought this process would not begin until late February, particularly as the USA has the pressure of residential real estate loans resetting to the norm, after the expiry of the honeymoon periods this year.

Many financial writers (See Bloomberg.com) forecast 2010 to be far worse than 2008/09 in terms of markets corrections for that reason (real estate woes). 2010 will be the year of residential property correction here in Australia, but that's off topic here, and although I have my reasons for saying that, it is another story.

Given the current tightening in China, it seems the money people may be pulling out early, having learned what happens if you stay in too long, from painful 2008 experiences.

Alan Hull recommends having a 20% trailing stop.

This avoids getting caught in a genuine correction, but keeps you invested during "noisy" market periods.

No one can tell you if this current correction is just noise, or my dead-cat-bounce top. In my case it is just a guess, based on what I have seen, and what I now see.

I simply don't know.

Your best scenario would be to work out your potential loss, and move to limit that to something you can sleep peacefully with.

One of my friends refused to sell RIO when it had dropped to $135 in late 2007, after peaking around $150. She was insisting it had "more to go". I asked her "when she thought she might take some money off the table." She sold at $60 with much pain.

RIO had formed a Head & Shoulders and was about to break the neckline at the same point required to fill an earlier gap.

Unfortunately I can not reconstruct the chart today because the data are corrupted, and I am unable to go back to Nov/Jan 2007/08 to show the period.

So I am taking my chart from one of my postings on another forum. This illustrates WHY you should have a target in mind for when you consider your trade to be mature. You should know in advance the set of conditions that would need to occur/exist, for you to close your position.

EDIT: Link removed because you would need to be a member of that forum to view that chart pic. Uploaded charts not available to "guests'.

I told the trader of this risk, but she just didn't see the danger.

Today she has learned TA, and is making a lot of that money back.

That off-topic diversion was put in as an illustration that no one can manage your trades for you. You alone call the shots. You have to sleep at night, and if you have an exposure now to a Monday morning catastrophe, then you need to do some serious work on trade management.

It's a hard one, and I wish you good luck.

RIO_08_01_2008

and two weeks later ...

RIO_18_01_2008

(Message edited by ingot54 on January 24, 2010)

Keep Smiling - Don't look back

Hell, there are no rules here - we're trying to accomplish something ~ Thomas A. Edison

Never believe that a few caring people can't change the world. For, indeed, that's all who ever have ~ Margaret Mead

sway

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Sunday, January 24, 2010 - 02:57 pm:

Thanks Ingot. Great post with some valuable lessons.

Cheers
Sway

This is not a recommendation or advice. As they say .... DYOR.

captain_chaza

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Sunday, January 24, 2010 - 05:01 pm:

Welcome back Bibs

Probably the worst expression you will ever see on any chart are the Terms
"Overbought and Oversold"

They are truly Traps for academics and beginners from an old century

They Should read Strong Winds and No winds at all
Sure Strong Winds are notorious for breaking masts but some thrive on strong winds and for long periods

As a Sailor
Would you prefer to have Strong Winds or No Winds at all and simply drift on the Ocean tides and Ocean Current?

Salute and Gods' speed

mastersl46

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Monday, January 25, 2010 - 02:15 am:

Hi Everyone!!
Thank you for your replies, all this information is always helpful for me.
I understand the wave count you have rdumas, I want to ask when gaps are created, is it imminent that will get closed in the future?
It's not easy to trade in a situation like we have now.
3 waves have been made so there are 2 distinct possibilities for now, a 3 wave correction or a 5th wave down.If it were a 3 wave correction, then if the market went under 4600, it wouldn't be part of the former move up.(eg a 2nd wave)
If it was a 4th that covered the gap, then 4850 is the line in the sand, but I was thinking that 4800 should be retested before heading down.
Anyway thanks for the replies
All the best.

rdumas

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Monday, January 25, 2010 - 09:02 am:

Hi mastersl46,

No.....gaps don't necessarily get closed in the near future but it does happen often enough to be wary of them when they appear. They do tend to act like magnets to the price action.

I am not quite clear on what you mean by your statement starting from "If it were a 3 wave correction, then if the market went under 4600, it wouldn't be part of the former move up.(eg a 2nd wave)" .

Could you please elaborate.

I've given you my view based on what I know now. In another 5 minutes that view might change because of additional information. It's the best I can do - Rudy

mastersl46

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Monday, January 25, 2010 - 06:19 pm:

Hi rdumas,
I was referring to the 5 wave move up starting at 4600 to 4960 from Dec to 2 weeks ago.
If assumed that this wave mentioned above was wave 1 of 5, then a 3 wave countertrend could be classed as wave 2 of 5, but if it were to break below 4600 (the starting point of the first wave) then it couldn't be a 2nd wave of the 5th and must be something else.
This view of the move of the 4600 - 4960 being a 1st of a 5th is very far fetched, only saying it could be a possibility as the 3 waves so far has roughly moved 61.8% (Fib level for 2nd wave) against the last move up.
So this count can be discarded if the index moves lower than 4600.
Only saying this as I sort of feel that 5000 could be retested again. Only my opinion & could be wrong but if it did go back to 5000 & the 3 wave correction took place now, then a 3rd of the 5th would pierce 5000, a 4th of the 5th retest 5000 & find support, then a 5th of the 5th to reach around 5200 - 5400.
This is just a thought if the index were to retest 5000. The funny thing for me is I have never seen the XJO make a high before the Dow has, so thats why I have a small feeling it could retest 5000. Very small feeling though!!
In 2007 we continued to move up a good 3 weeks after the Dow found its high at 14198. I suppose time is against us for the waves I have written to be true & it's also very hard to see the XJO do this if the Dow plummets once again which is almost sure to happen soon. The only way it could happen is if the Dow does a really long 2nd wave up to retest 10500 while the XJO skyrockets from now.
Hope this makes sense & let me know if it still doesnt.
All the best

rdumas

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Tuesday, January 26, 2010 - 10:26 am:

Hi masterls46,

I see what you mean now. Whilst it is a possibility I would consider it a fairly low probability. To assume that the move up from December was only wave 1 of a 5 wave impulse wave would have the completed impulse wave moving up a lot further than 5,000.

If for example you consider the range of the wave 1 move on the way down from November 2007, it moved through a range of 1813 points. Wave 3 terminated around 3634 points below the high of 6852. If you look at the relationship of the termination level for wave 1 versus the termination level of wave 3 it was 200% of the first range. Using a similar relationship in this case would put a wave 3 termination level for the XJO at 5305 and then you would have to add the 5th wave.

Whilst this scenario cannot be discounted, I would be looking at higher probability scenarios first.

I've given you my view based on what I know now. In another 5 minutes that view might change because of additional information. It's the best I can do - Rudy

rdumas

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Wednesday, January 27, 2010 - 01:42 pm:

I did post the following chart on the Our Daily Bread thread but feel that it is probably appropriate to also post it on this thread as it is specifically dedicated to the XJO.

The following is my current preferred EW count for the down move on the XJO as of this morning's price action.

I've given you my view based on what I know now. In another 5 minutes that view might change because of additional information. It's the best I can do - Rudy

gdd3

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Wednesday, January 27, 2010 - 02:37 pm:

Hi Rudy,

So far 'so right' for both of our 'short-term' E.W. counts. Of course the next question will be whether we are looking to buy nearing this 'projected' short-term low or 'sell' the rest of any current exposure on the imminent bounce?

Cheers
Dolphin

rdumas

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Wednesday, January 27, 2010 - 03:30 pm:

Hi Dolphin,

As you know it all depends on our personal investment/trading time frame and whether you play 'long', 'short' or both.

I've given you my view based on what I know now. In another 5 minutes that view might change because of additional information. It's the best I can do - Rudy

gdd3

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Friday, February 05, 2010 - 09:27 pm:

Hi Rudy...my 2nd attempt today to post this; 1st one early this arvo evidently wouldn't upload.

Just an update on our alternative Wave Counts we were discussing a couple of weeks ago I think we at least agreed that the move from the Jan.11 high was going to be 'impulsive' in nature and therefore we sort of had similar downside targets for this lesser degree count(mine 4515-4450). However, with that 'extended' wave(iii)...at 4524...I now have adjusted, basis a 120min chart of the SPI, that maybe we will see the XJO get down to between 4442 and 4420 B4 this 'impulse' move is over(I'm banking on that today's low was a 3rd of the wave(v).

I note that in the Our Daily Bread thread today you have also modified your count a little to suggest we may even see 4326 basis 50% of a measured zig-zag move you think we are now in. Well if this pans out to be correct at least we can eliminate my alternative A>B>C structure for a completion of a 4th wave from the mid Oct.09 high as it would be below the 4450/42/20 level I have mentioned as the last bastions for this alternative view to hold true.

There is no doubt that at present levels the XJO is coming into 'Crunch Time' for my alternative medium-term view to hold....i.e. a 5th wave up to take out the January 2010 high. I will repeat here what I had said in an earlier posting, that 2-waves and B-waves are usually the most complex and often the longest in time frame of all the waves. With this in mind I was keeping my option open as it may have been premature to suggest, as you have, that the "B-wave" in the next higher degree had concluded at the Jan.2010 high. You see, I'm implying that we may be playing out a A.B.C. Zig-Zag for the "B-wave" with doubt in the shorter-term if Wave A has yet finished. Hence the 5wave count out of the March. 09 low for a Wave A that I showed on my chart 2 weeks ago. This should all be clarified in the coming weeks I believe.

Now for the benefit of other readers we both(sort of)have a similar favoured Longer Term count (Super Cycle)...bottom chart(Monthly)...but the question here is whether Wave"B" has been complete. Well quite frankly, I don't know yet and thats what I am alluding too with the alternative short-term possibilities but feel the next fews weeks will help clarify this...that is eliminate any chance of taking out Jan.2010 highs for some time or not!!! Whilst on that Monthly chart(log) note the two parallel pink lines; co-incidences or what?

The First Chart shows my update daily chart posted two weeks ago showing counts that could still be valid. The Second Chart is, I believe, Rudy's current favoured count.

Cheers
Dolphin

rdumas

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Saturday, February 06, 2010 - 08:28 am:

Hi gdd3,

Your 2nd and 3rd charts do pretty much represent what my view is of the longer and medium term view of our market.

What I think is too early to determine is whether my wave C will become a catastrophic impulsive move or just the 3rd leg of a corrective ABCDE contracting triangle to complete the higher level wave 4 as shown below. The termination of leg E would also be the termination of the higher level wave 4.

Should the current leg down move way below the March 2009 market low then I would have to then discount the contracting triangle scenario.

I've given you my view based on what I know now. In another 5 minutes that view might change because of additional information. It's the best I can do - Rudy

gdd3

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Saturday, February 06, 2010 - 11:12 am:

Mornin' Rudy,

Yes, agree that the medium-term picture is still unclear...as you said its still too early to be "hard-n'-fast" on your(eithers)count.

And, yes, your possible contracting ABCDE triangle is yet another possibility over the medium-term. Even a more Bearish view for a possible "4" location is to change your AB leg into "a" of an "abcde" for a "B" before we have an even deeper plunge(and most likely take out the March.09 lows sometime in early 2012). However, that would mean she'll be below the monthly channel support??? I have shown in pink in the chart I included in my last post. That could happen anyway as 4th waves tend to do that often, right.

However, we could continue speculating at the present time of the possible medium-term direction(this year and next) but I believe this next few(3-4) week's action will go a long way to clarify the picture. A sharp impulse wave out of a probable low next week would really throw a 'cat amongst the pigeons', don't you agree?

At the moment good to be out of the market protecting the hard earned profits this financial year, into cash and simply monitoring the rest of the market participants.

Have a good weekend

Dolphin

rdumas

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Saturday, February 06, 2010 - 01:07 pm:

Hi Dolphin,

I have had a slight change of mind about where we are in the pattern from that which I mentioned on the Our Daily Bread thread. Based on an EW count that my friend Andrew suggested I now believe that we are only now about to start the b rally. Hence my idealised diagram has as in the following location.

The reason for the change of mind is the following EW count for the XJO.

Please note that whilst I have already labeled wave b in the above chart, this label will have to be moved to where ever the low is set on Monday.

If I am correct then we should get the sharp impulse move that you mention in your post. I would expect this to start some time on Monday and to last a few weeks.

I've given you my view based on what I know now. In another 5 minutes that view might change because of additional information. It's the best I can do - Rudy