Wednesday, March 16, 2011

Crisis Averted

Under the Alternative Count 1
The All Ordinaries has declined and passed the first retracement level described in the previous post at 4565 before climbing back above the 61.8% retracement.

Since many will correlate the recent XAO decline on the 11th March Japanese earthquake, the occurrence of the earthquake has had little impact on the sharemarket: In total, a 92 point decline since the earthquake,  but prior to the 11th there had been a 297 point decline. Hence, the relevance of the earthquake is negligible on the All Ords,  but the mainstream will talk up the slightest of correlations:
Sharemarket hits new three-month low

Our market stumbles as Japan falls

only to find today:

Asian, local share markets rebound despite Japan earthquake

Where to?
Fives waves down appears complete and has reached the 61.8% retracement level. The XAO should commence a corrective climb (with an intervening 'X' wave) to new intermediate highs. The short term risk in this assessment is that a drop to 4350 level may still be a possibility until a upwards breakout of the trendline (not shown) is evident in waves of 5.

Alternative count 2 is also still valid and would see the XAO aggressively drive downwards through the 4350 level.

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