Hi friends,I'm reminded that sometimes we can do away with very...

Hi friends,

I'm reminded that sometimes we can do away with very sophisticated techniques and methods to try to uncover the stock market movements.

With that in mind,let's take a look at the XJO as a broad barometer of the ASX - this time not with the cycles- but with a simple linear regression channel and with a swing indicator.

Instead of being wishy washy, this very simple chart with basic indicators seems to provide clear, clean lines and suggests a defined opinion of the market, as marked on the chart.



Observations
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1. The XJO likes to bounce off from the lower channel lines when it is oversold and then again pulls back from the upper channel lines where it gets overbought.

2. Sometimes, it can have a entry signal or exit signal from off the mid band of the channel.

3. Whenever it has an entry or exit signal, it has a corresponding entry or exit signal on the swing indicator chart as shown.

4. You can read off the end of the price chart and the swing indicator chart to form a defined opinion of the XJO. What type of signal has we just achieved recently the last couple of days?

As long as the index does not fall below the lower channel lines and there is no corresponding exit signal at that same time, the uptrend is not expected to change. Perhaps what we really need is a big move to give confidence to its direction...either big up ( so that we are very sure we are uptrend ) or big down ( so that we know for sure we are in correction ). But right now, we can form a defined opinion - even if its an initial opinion of what the XJO is doing, by looking at the linear regression channel and its swing indicator.


Trade well, trade safe.