Same monthly template courtesy of “StockCharts.com” in order to look at XAO,SP500,DAX,SSEC & Brent Crude oil long term monthly technicals. My definition of a major trend change with any of the listed instruments is as follows :
XAO : End of Month (EOM) close of 20% or greater than the most recent highest high.We are only into the month of August and lots of things may/can change by the end of the month , which should also be noted. I am applying this ( 20% rule), for the simple reason that, we ( XAO) are not a high momentum market. Therefore if a 12 period SMA ( Simple Moving Average) is used we will see number of whipsaw signals which may be counter productive in analysis IMO.
Looking at XAO the most recent highest high, as can be seen on the chart is 5963.50. Therefore 5963.50 x 0.80 = 4770.80 or below EOM close will put us in a BEAR MARKET, if this trend change definition is applied. No where near there yet. Yes, there are bearish developments in the short term charts which may lead to that, but going from past few major corrections XAO is known to have around 12% (approx. figure this is) corrections, after any notable advance since 2013. Looking at this wonderful charting package at StockCharts.com, that allows us to apply TA at a higher level, one can and may calculate the prior corrections from the highest high’s as shown on the XAO chart at the top window if they wish. Why don’t we have a charting package like this in AU, I wonder ?
We should all remember, because of the subjective nature of TA, there is no one rule ( solution) fits all approach. That is what I have learnt since I became a student of TA any way.Therefore what we are seeing at the moment with XAO, which is a down trend in the daily/weekly if Dow Theory is applied is so far considered a correction rather than a major trend change in the monthly. It may ( major trend change) happen, but not as of this writing 09/08/2015.
I believe that any major trend change is highly dependant upon the financial sector (XFJ)performance within the XAO, which we have looked at yesterday.
Now to other markets SP500,DAX,SSEC and Brent Crude. Except the oil chart at the bottom window, all three are still trading above their 12 period SMA’s which is our measure of their MAJOR TREND. If and when a close (EOM) below the SMA occurs, using this approach in measuring the MAJOR TREND for those three markets, then we would call it a BEAR MARKET. Again as of this writing lots of warning signals intra month, but that evidence is not there as yet. It may be by the month’s end but a confirmation is a must, for me anyway.
The reason we look at oil , it had been a major contributing factor to some prior major bear markets, when the oil prices were high. At least that is not the case as of this writing, in fact the opposite can be said.
Depending on which chart and which time frame we look at, the down trends that we may/do see so far, if this TA long term trend analysis approach is applied ( XAO 20% rule rest EOM Close below their 12 period SMA’s) using monthly charts,so far it is a correction of the MAJOR TF MONTHLY. Any other method or time frame analysis may/will give different results.
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