Action has been extremely choppy since I last wrote one of these long things. Profitable, Educational and still awfully addictive, lol. Lovin it large...
This has turned into quite a long post... so for those that want an excuitve summary, see the bottom of the Post.
HotCopper Waffle
Hotcopper seems to have settled a bit, less angst than two months ago... seemingly more sharing, and interesting that there appears to be more of a trading mentality creeping in.
An awesome new thread has started (The Day Trading Diaries) which hopefully might get its own forum, though it does appear to be working okay in the ASX general section. Huge Kudos to Nikk0, the instigator of the diaries, and HighLandLad, those two have created early morning "reports" that I beleive are a must read, and the thread has attracted some very good traders, has a good sharing attitude, with a pleasent mix of fundamental and technical analysis. A lot of watchers as well, so education appears to be occurring too. Long may it continue.
I hope positivity and community spirit continue to grow, in this, my beloved Hotcopper... It is my intention to be a little less aggressive as a poster this year.. might even remove my pic form my sig in a couple of weeks to reduce the "scarey" (how I wish, lol) factor and concentrate a little more on sharing as I learn... However, I must confess I have enjoyed some of the more fiery "conversations"I have had here, and the role of peacekeeper, though attractive, eludes me. There is plenty of room for more wisdom in this rough head of mine.
Market Waffle
It has been an interesting time, lower volume, with, I beleive the "big Boys" playing an interesting role, and possibly taking advantage of light volume. A couple of interesting things have happened on the SFE (SPI unleveraged Futures) with two major spikes after cash close.
Manipulation? meh, as much wiser heads have pointed out on this XJO thread and others, Markets are a rort, always have been and probably always will be.
This does not just apply to the financial/stock/commodity markets discussed here. Accepting that a market is a rort in my opinion is an important step to being able to make a living from it. Understand the game you are in and you have a greater chance of succeeding a the game.. and also understanding that a market game is actually quite a complex and dynamic thing.
I have been an active trader in flea markets in the past, and "rortiness" occurs there as well. How you define rort though really depends on whether you win or lose, and why you are involved in the market in the first place.
I remember as a young trader, being amazed by the gnarly old heads who would be there early in the morning as traders set up, buying before the majority of punters arrived... By the time the punters were there, often enough, the gnarly ones would have their own stalls stocked with goods bought earlier in the morning, with an appropriate mark up which, they would sell to the punters during the course of the market day... if they didn't sell that day they were quite content to hold until the next market day or the next until their goods sold. In the meantime, the early sellers were down at the pub, enjoying themselves from the money they received from the gnarly ones...
Some of the early traders might wander back during the day and see stuff they had sold being on sold at a higher price and be sad, some of the punters would see that they could only buy from the gnarly ones as there were not any other sellers and question why the gnarlys always had the stuff they wanted at almost always the limit they were prepared to buy at and be sad.
However.. some punters learnt to get up early and get to the markets and buy at the same time as the gnarlys... some of the early traders were rapt that they got to sell all their stuff nice and early and could have a life outside of the markets, and some of the early traders became gnarly ones and learnt how to create an income from WITHIN the markets.
Ultimately though... the guys who organised the markets and collected fees for stalls and hired trestle tables were always happy. The guys that provided food and coffee to be eaten at the market always did well, and the pub did a roaring trade on market days. (Market makers, brokers and service providers all made a good living)
Crazy markets huh?
T/A waffle
now that more market participants are coming back after the holidays, I am hoping we will see a little more action in terms of concerted trends, and here's hoping there's a chance we can all profit from them.
Hokeliey Dokely... I'm gonna charge in and see what I can do about analysing what's going on on the XJO...
XJO
Orright.. for a start, I'll take a look at the daily...
On my last major post, I put in thoughts for upside and thoughts for downside... Downside target... back to november lows and possibly more... Upside target 4100 ish...
I didn't put in anything for the possibility of relatively flat.. so what do we get, a relatively flat rangebound index, LOL... damn markets... Grrrrr.
The daily XJO chart as she stands: (Note, this is based on IGMarkets Australia 200 Cash data.... this is a MarketMaker equivalent of the XJO index. The IGAuscash200 is a calculated value that is primaraly based on the XJO Futures price. Price movement follows the XJO thoug price levels may vary.)
In reference to the above Market Waffle comments, the blue arrows show some interesting spikes, particularly the last one which I think occurred over a one hour period and isa huge range. Supposedly a "trader mistake" strangely enough, the SFE (Sydney Futures Exchange) honoured the trades on this spike.
The main things I want to point out here though is the serial divergence, first based on the MACD histograms (paired red lines) then followed by the MACD Moving Averages (Paired Green Lines). For those of you that are familiar with my work, this is a so-called complete set of Whooska signals and heralds an expected rapid move to the upside.
For those of you unfamiliar with the Whooshka, this is basically a particular bit of momentum Technical Analysis that I have named, based on a large amount of research by myself purely on the MACD.
In summary form the Whooshka Formula is: Divergence between price and MACD Histograms followed by Divergence in price and MACD Moving averages (same direction for divergence) results in an (often rapid) move of price IN THE DIRECTION OF THE MACD SIGNALS, or opposite to prices current trend.
I use the Whooshka formula to trade with success, intraday moves on indices, commodoties and forex.
I have observed that it occurs with equities, and I beleive it works on larger time spans...
It can be hard to trade and I do not recommend doing so without other t/a backup.
I beleive I have found something else very important about this Whooshka stuff of mine, though I cannot truly explain "Why" it works, in that I have found a methodology for targetting WHERE PRICE CAN BE EXPECTED TO GO (!!!!!!!)
This is freaky shizzle... only partially confirmed through recent observation on the smaller timeframes, but strangely enough aligns with support and resistance theories, and for which I must give HUGE thanks to JamesDoran for his shared observations on his posts on the XJO thread.
Got your attention yet? lol!
THis is what I am contending/postulating/theorising about...
(and I have decided to name this the Wink Whooshka Histogram Divergence Extreme Targetting Methodology)
It would appear that a legitimate target for price is shown by price levels historical to the point that the first signal Divergence between price and MACD Histograms occurs.
That is... a legitimate target is the next previous resistance met by price movement prior to the price bar that occurred where Histogram divergence began.
Wha??
'Kay I'll zoom in on the daily and add a few more lines and squiggles...
Check the right side of the chart.
I've added two ellipsese to help with identification. On the Histograms, where the one is, I have "ellipsed" the extreme histogram bar.. where Histogram divergence begins.
The vertical red line extending into price from this time as another elipse around it, and the horizontal redline shows the previous resistance price point. Price did kinda stop right there.
"But Wink, you bearded fool!" I hear you cry, "Price already went to this level on November the 6th, in fact it went beyond!"
It's all cool, mate... take a squizz at the next negative histo peak, which I have cunningly enumerated with "2". Hist divergance is still occurring, AND this is after the SECOND signal the divergence of price with MACD mavs...
I reckon the target's still good... we haven't fully played out this whooska yet.
"But what about that spike at december late" you could possibly shriek...
"I know", I calmly reply... "didn't hit the target line though did it?... woulda been a good play if one was on it though..."
So... what does this mean? It means I still beleive we have some legitimate relatively close timewise upside to the 4000 plus mark to go...
I don't think this current upside from November is fully done yet.
But... as we all know and have seen some bad calls of mine in the past... I can well be wrong.
AND.... there's some smaller time frame stuff on what could be happening with our beloved XJO index... Which I shall now pursue...
Straight Bang Smackeroonie to the hourly...First a larger timespan chart before I Zoom in to give you an idea of the time span I will be analysing:
The dotted orange rectangle now denotes the time span I will be concentrating on.
ANd here's the first level zoom Chart:
...Grrrr damn ITFinance charts (IGMarkets Charting Package) wont let me zoom in at the level I want but observe the two horizontal lines on the MACD..
Green for the high point of MACD MAvs Red for the High Pint of MACD Histos
The undeniable reality that I see here, is that we have had a divergence between price and the MACD histograms, based on the hourly chart... PRETTY MUCH FOR THE ENTIRETY OF THE UP MOVE FROM THE NOVEMBER LOW.
Adding a price target as per my above conjecture... (purple cross hairs):
This gives a downside Price target of 3270 (IGMarkets figure)... and strangely enough is why I went for 3200 in the XJO Guru Comp (Big Fat Fail, LOL).
I reckon the downside target is still to be played out... as as you can see... price has not even come close to this level since divergence began.
So... What's gonna happen first? the downside or the upside?
Ohhhh if only I knew... but lets take a closer look at recent price action, first on the 1 hourly zoomed to the right of the chart:...
I see a downside Whooshka.
The first signal, (Red line Pair) the histogram divergence is actually not that obvious, and Could well be wrong...I think it's valid.
THe second signal.. (green line pair), The Mavs divergence stands out like a standy out thing.
The thin blue line cross hairs give a downside target of around 3516 (IGMarkets).
A couple of other things could support this... and this is wink tradey/observey stuff, oft wrong but fun...
The dotted red Mav on price is the 200ma... I have often observed that price moves relatively equal distances upside or downside of the 200ma
The target downside of 3516 (ish) would be around about the same distance from the 200ma downwards as it reached in the peak up.
3wcs (three wave corrective structure) taking the peak from the 7th of december down to the curent ish price leve as the first wave then taking the current sideways as second wave , conceivably we could see a third wave taking us down to slightly above the same area.
Elliot wavey stuff If the down from the second peak is the wave one of a 5 wave sequence and the sideways is wave two, then the third wave down would be longer which would bring us closer to the Wink Whooska Divergence Histogram Extreme Targetting Methodology point.
AND I have just realised I have spent the last three hours compiling this... I need food and to attend to my cat... so this will do for the mo.
Executive summary...
So... Where does that leave us? The Usual caveat, I have no idea. Like all good traders, I am ready to trade the market as per what the market does and like all good analysts I'll hedge my analysis so I never appear wrong, lol.
I contend that we have a shortish term (days) downside target of 3516 ish to be played out, which will be followed by a longer term upside target of 4000 ish to be played out.
I have just looked at the 5 minute, the ten minute and the half hour of our last few days and I cannot see any specific direction there that I can analyse with confidence.
We have strong support around the current level, and we have strong resistance arond the 3750 level.. a break of either of those would be significant.
It is now that I have begun to realise that further methodologies must be studied by Wink... Cycles are beckoning, although they drove me mad before... i think I can handle them this time... I will start small.
Support and resistance studies are now being undertaken
Further momentum studies specifically The stochastic (thanks Treggs) are on the horizon.
The Whooshka is just about done methinks... stay tuned for Friday when I plan to close the chapter of the Whooshka and hopefully will be able to explain it for one last time.
Big love to you all.
;)
PS If anyone wants a pdf of this post to download let me know, and I'll sort it later tonight.
(20min delay)