Technical Analysis - Dow Up but All Ords Crawling

There has been a lot of talk of a two speed economy in Australia but perhaps there is a bigger two speed economy when we look at the world as a whole. The developed world which has slumped during the GFC is showing signs of recovery, slowly but surely. The high-flying GFC defying developing economies led by China and dragging a resource economy like Australia (it's more relevant here to classify Australia as a resource economy than a developed economy for our current argument), are showing signs of braking due to overheating. Let's look at our usual comparison of Gann angle charts for Dow and All Ords to compare.

Looking at the Dow first, today's news announced the Dow has doubled its GFC low, meaning it's now over 12000 while the GFC low was 6000. This has much less importance though than the half way point between the Peak and Trough of the GFC. Roughly, the Peak-Trough is 14000-6600 = 7400. Half of this is 3700, but clearly, the DOW is way above 6600 + 3700 = 10,300. So the half way point is clearly broken and not relevant now.

What is interesting from the Gann angles is that the current rise in the Dow sits very nicely at the Gann +10 line and has been doing so since mid 2010. The mid 2010 point, from our previous analysis, was where it looked like it was a double top. Since then the Dow has powered ahead. There are no visible signs of breaking any angles.

Going on to the All Ords, our previous review stated that a triple top has been confirmed. This was the right call but since then it has reversed quickly. The result for the All Ords is however a bit lack lustre. Since the reversion from the triple top, the All Ords has climbed but only very slowly. At the moment it is at the level similar to the peak of the triple tops between Oct 2009 and mid 2010. In fact the current All Ords is hugging the top of the Bollinger Band and there is no evidence of violating any Gann angles soon.

So what do we make of all this? Though the All Ords is moving very slowly, both All Ords and Dow are still on a very firm positive trend. Unless there is any reason to doubt, we can play the market with the continuing trend but keep your fingers on the button since it can turn absolutely at any moment.

All Ord Triple Top Re-Confirmed, and Dow Jones does not resist

Source: http://ozstock.blogspot.com

Usually the charts are done at the end of the week to get the full weekly picture but since the dramatic drop over the last few days, the last point on these weekly charts end in the middle of the week.

In the last post, the All Ords were on the verge of confirming a triple top but the Dow did not show any similar patterns. For over the last month, the All Ords had been fighting the Triple Top and showed signs of successfully resisting a Triple Top plunge as it climbed up from the 4300 level. However, things changed in the last week and as of today, it seemed the market is plunging back down. In fact the closing of today has broken the previous month's low of 4325. The chart also shows that it has broken through an important Gann angle. At this point the signs are now quite strong for further downtrend.

In terms of the Dow Jones where previously, it was not near any support or resistance, the lastest chart shown here indicates that it is touching the Gann (brown) angle. The minor recovery over the last month followed by the subsequent downtrend provides strength to break this Gann angle. When a Gann angle is broken, the trend will continue in that direction until the next angle is found. The fundamentals of the world economy and sentiment also provide strength to the downside.

Whereas before the Dow and All Ords seem not to coincide with each other, the current downtrend is supported by both indices and may be a confirmation of strength in the current direction.

Dow and All Ords go separate ways?

(source: http://ozstock.blogspot.com )

Despite a few hiccups, the market has been going quite steadily upwards. Even news of volcanoes, civil unrest and the Goldman suit could not hold the market down. This is true for both the Dow Jones and the All Ords up until last week.

Looking at the weekly charts below, the Dow is powering on quite strongly. Looking at the Gann chart below, it has clearly moved part the resistant Gann-5 angle and is between two other Gann angles. There is no indication that it will hit a higher resistant angle soon.

The All Ords present a slightly different story. OVer the last week, daily trades showed symptoms of nervousness. The week ended slightly lower. While one down point does not determine a change in trend, the current position of the All Ords looks as if it is forming the third peak of a triple top. To confirm a triple top we need to wait for it to pass the bottom of the triple top formation which is around 4500.

If a triple top does form for the All Ords, it will represent a strong decline. At this moment with the Dow heading up strongly, the notion of the Dow and All Ords going in opposite direction is difficult to imagine. The other likely option is that one of these two will have to change its direction.

Technical Analysis - All Ords Double Top, Dow faces Gann Resistance

All Ords Double Top - Dow faces Gann Resistance

This is very exciting times, not because of my investing position, but because of what's coming ahead. I will explain why it is time to go short. But before that, I'll candidly reveal that for the past 2 weeks I went long thinking that the correction was minor and will turn upwards as we have seen previously over the last few months. So that was my mistake, not too costly if I get out soon, because the pattern after just last week is almost a classic double top setup.

Anyone who has been following David Bowden or Gann's techniques realise the double top or double bottoms are among the easiest signals to trade because a few things need to occur before we can conclude the double tops or bottoms.

The Aussie All Ords has just form a double top at the end of last week, in fact it is on the down-leg. The double top setup consist of the first top, around early October, then hit a low around November and climbed to a top in early January. Since then it has declined with full force and the current position is slightly lower than the tip of the double top. This shows the second top has a down leg which has broken an important support position. If this double top is like most others, given current position, the only way is an emphatic downward move. If it goes a little further to break the brown Gann angle support, then it will go down further.

Interestingly, the Dow Index does not show a double top. What it does show is that it had just broken back down the Gann-5 angle. Not too long ago, the Dow powered upwards and broke the Gann-5 angle, but that was short lived. It then reversed and came down to break the Gann-5 angle and now it seems the Gann-5 has become a strong resistance. Although we should wait a while, and Gann himself would suggest we wait, the trend is now on the downwards.

So to play safe, we can wait a week or so to have confirmation of a major correction to come. Those who have the risk appetite may choose to go in soon.

Technical Analysis - Dow and All Ords

For those following the Dow Jones and the All Ords index closely, you would have noticed the week before last that as the Dow powered on upwards, the All Ords retreated slightly for a few days before following the Dow again. But be mindful that those are daily trends. So let's look at what the weekly trend show us, in particular concerning the small pullback we had a few days ago.

Alert: Gann date 20 Nov!

Indeed there has been a minor dip or change in trend leading up to this date. Is this a trigger for a major reversal?

The weekly chart of the Dow Jones below is quite interesting. See how it has just reached and touching the Gann-5 line. Gann analysis does not claim that it will bounce back down or break through. What it does show us is to get us prepared, if it breaks this line strongly, then go long. On the other hand if it tumbles from this line, it may be a shorting opportunity. The breaking of the Gann-10 angle in May 2009, shows an example of how it can break the Gann angle.

Errata: The weekly charts of the All Ords for previous posts has an error where the 20max envelope was shifted. The new graph here has been corrected.

Turning back towards the All Ords, if you look at a recent daily chart (not shown here), you will notice the formation of head - shoulder pattern with the peaks at early Oct, early Nov and during the last week where the last shoulder might be forming. Looking at the weekly chart, over the last few weeks, the trend has come off the Gann+50 angle. Not only that, but the 20max envelope has also tapered off its rise. This pattern has occurred once before in the bull trend started at March 09, and that happened in early July 09. If it does follow the July 09 pattern, it will power on ahead. On the other hand the recent movement may be a good setup for a strong decline.

Technical Analysis (Gann Charts) - Dow and All Ords Stumble

Source: http://ozstock.blogspot.com

Here is the next monthly update on the Dow and All Ords using Gann angles to analyse future trend. Before looking into the charts, a quick check of the Seasonal Time Periods from Gann shows that we are nowhere close to any important dates. We are now between the August 5th and the September 22 dates (see future blog for complete Seasonal Time Periods)

Firstly, looking at the All Ords, the last 4 weeks has clearly broken the Gann +1/2 angle, question is if it will drop down. The past 4 weeks have also convincing broken the Gann -32 downtrend line and has pushed the 20 day moving average envelope to the limits. So this has been a strong trend that may retrace back to the Gann +1/2 but currently there is no evidence to suggest a stronger, longer pullback although the news seem to suddenly turn negative in the media.



Secondly, the Dow show a similar behaviour, in the past 4 weeks, it convincingly broke the Gann -10 downtrend angle. It may still plunge towards the intersection of the Gann -10 and Gann +10 angles but there is no current evidence to support this. It is also between the two major uptrend Gann angle of Gann +10, Gann +20. Should the upward trend continue, the Gann -5 downtrend angle may be a good reference to look for.



This week will see many Australian companies release their annual results. This will truly test the sentiment and so even though the trend is strongly upward over the last 4 weeks, the fundamentals may have a say this week.

Technical Analysis (Gann Charts) - Dow and All Ords refuses to fall

Source: http://ozstock.blogspot.com

About a month ago, my article (in June) was titled "All Ords headed for June fall?" As you may have guessed, I am bearish, and in the market following my own advice last month. The market actually dropped for a few weeks as forecasted by previous blog, but my mistake was not using a stop loss. Over the last week the market surged strongly. Let's have a look at what the Gann angles say.



Looking at the All Ords graph first, I've added a new (Green line) angle of ratio 32:1 downwards from the 2007 all time high. The angle gradient of 32 is a power of 2, and I've tried others like 16:1, 8:1 and they were quite far off so I settled on 32:1. But see how it turn out to be a resistance angle to the previous rallies since Oct 2007?

Looking closely, it turns out the June fall hugged the 32:1 angle closely and the recent surge broke the resistance emphatically. In absolute terms, the rise is quite small, but the fact that it broke the line warrants further watch, or even good reason to speculate of further rise.




It's only now after the new green line (32:1) has been added to the All Ords, that I realize the Dow Jones chart's pink line marks out a very similar trend. In the Dow Jones chart, the June fall and mid-July rise follow the same pattern along the Gann -10 line as the All Ords. The resistance is not only broken but appears prominently on the up side.

In summary, if the current rise in the market can be sustain for at least two weeks, there is a good case for a strong rally in this bear market.

Technical Analysis - Gann weekly 12Jan09 on Dow Jones and All Ords

Following from my post in early January in which both the Dow Jones (DJIA) and Australian All Ordinaries (XAO) were sitting on turning points, recent movement may confirm a break in the trend.

The Dow seemed to have broken the support angle Gann20 coming from the bottom. If so it may be heading down to another support line, perhaps Gann10 from the bottom (which is not plotted yet). It may also find support at the downward angle Gann10 (yellow line). Both of these support are a long way off, suggesting we may have a large drop to go.



The All Ords, since late November, has actually went down, touched the Gann2.3 (pink) support but has bounced up since Christmas. Although it does not seem to have broken the support at this point, rather it is still close to the support angle and thus waiting for the next break-out, we should consider what's happening in the US. If so, the recent break downwards in the Dow, would suggest the All Ords is most likely to break the Gann support and head further downwards.