Wednesday, December 29, 2010

XAO Elliott Wave Alternative counts

As implied in the last post, the lack of clarity in the short term wave counts and the Christmas holiday period has been working against the primary short term XAO Elliott Wave count.

In the chart below there are two counts that I would consider of equal weighting at this stage until some break out of the trend lines occurs. It should be noted that there is divergence on the RSI (oversold)  and the MACD price oscillator on the daily charts since mid December, implying a correction should soon be at hand (or something else to support the 2nd Alternate count). Using volume is a little hard atm as there tends to be a reduction in volume over the holiday period.

Alternate count 1 supports more upside with wave 'B' circle yet to complete. The push higher needs to be in corrective waves and should exceed wave (A). The (A)-(B)-(C) correction is a flat with a B wave failure.

Alternate count 2 supports the downside but wave '2' must not break above wave 'B' circle. My only concern is that wave '2' is taking a very long time to complete v's the initial down leg - although perfectly legal, there may be something else unfolding - hence the alternative counts in this post.

As you can see, there interpretation of the initial leg down from this high can be read as a 3 or a 5 wave move depending on how you count the wave structure.

Monday, December 13, 2010

The Downtrend ready for a run?

On the bearish count, I'm a little cautious around Christmas as the holiday mood is usually positive for stocks and the short term wave count hasn't been clear and a break above the 76.8% retracement of wave (i) down has occurred (although perfectly legal).

The anticipated  A-B-C (circle) correction currently underway (or finished), doesn't have clarity as the C wave needs 5 waves up. However, on the very short term, one can count an ending diagonal pattern which is evident in wave 5's and wave C's of flat corrections.

Under this count wave (ii) should have finished today (or one more small push upwards is needed) and the down trend should resume. Breaking above the Wave '2' high at 4885 will invalidate the count on the short and possibly medium term outlook.

Thursday, December 2, 2010

XAO Very Short Term update

Five waves down from the top of Wave '2' appears complete and a wave (ii) correction has been unfolding and should be near complete - the downtrend should resume in the next couple of days.

However, the 5 wave decline isn't a smooth one and there are other interpretations that should be considered that lead to further upside potential.

For the bearish count as shown: Wave (ii) has just pushed over a 50% retrace and is in a good position to complete with the MACD price oscillator on the 15min chart (not shown) being divergent. Pushing past 76.8% retrace @ 4828 would be a key indicator to watch for and imply an alternative could be unfolding.

Note: I'm also missing some data due to an ASX upgrade - the missing data is in the 'A' circle leg of the wave (ii) correction. I haven't looked closely at the impact to any wave counts as yet.