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Oz Stock Trading ReportElliott Wave Analysis of All Ordinaries Index Nov 04, 2011
Nov 05, 2011 © Harry P. Schlanger
The All Ordinaries Index may be correcting prices before resuming the downtrend. Or, the XAO may pierce through stiff resistance on the upside.
Elliott Wave analysis of the All Ordinaries Index (XAO) shows in Figure 1 that since the false break of April 2011 (label B), the market has completed
a five-wave movement down to 3905 on October 4, 2011. There has been a rally up to the top of the trendline.
The Big Picture for the XAO
Labelling of waves as shown suggests the correction that started with the 2008 collapse has now completed as three waves A-B-C.
However, this scenario is subject to review depending on market resolution as discussed below.
Upper Trendline Penetration
Currently, the XAO is delicately poised, a situation that will be resolved in the next few days.
The upper trendline has been penetrated on the basis of the closing price.
If the market now makes a new high, this would confirm that current price action since
the low is impulsive and prices are heading higher. Conversely, should price action return to below the trendline, this will confirm that the downtrend has
resumed and down wave C is likely to be subject to a higher order correction.
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Fig. 1 Elliott Wave Analysis of All Ordinaries Index Nov 04, 2011
(click image to enlarge)
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Elliott Wave Analysis of XAO
Wave C is complete. Component subwaves 1, 3, and 5 (as labelled) are impulsive and wave 3 is the longest wave. The intervening corrective waves
are wave 2 (18 days) and wave 4 (19 days).
Note the similarities in time for the corrective waves and also that if there is a higher order correction to wave C down, then its time must
be larger that this by at least a factor 0.618.
Note, the hammer candlestick formed by the bottom of subwave 3 normally signals support and market reversal. However, as pointed out before, the
XAO weekly chart revealed non-confirmation, giving early warning to a continuation of the downtrend.
This forecast has come to pass.
Trading Stocks from the All Ordinaries
For educational purposes only: Conservative investors going long should wait until the market has made a new high (4400 close) and preferably
when the wave 1 level (4500 close) has been penetrated. This is a region of high resistance. The next resistance level is the previous high of 5060.
References:
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Introducing the Elliott Wave Principle: How Ralph Elliott's Stock Market Cycle Theory Came About
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Basic Tenets of the Elliott Wave Principle: Understanding Market Waves and Learning the Rules of Construction
The copyright of the article Oz Stock Trading Report: Elliott Wave Analysis of All Ordinaries Index Nov 04, 2011 is owned by Harry P. Schlanger. Permission to republish in print or online must be granted by the author in writing.
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