Australian Financial Sector - Long Term update

In the previous long term XFJ update the index appeared to be correcting as a large Triangle for wave B circle. So far, the wave B triangle is continuing to unfold as highlighted almost a year ago with four legs of the triangle completed. The last, wave 'e' is now underway and needs to push higher to the 4000 levels or slightly higher. Once completed, the next major leg down will be underway and take the index down to unprecedented levels.

Perhaps this trader understands what is really going on as opposed to the mainstream media who pick out of a hat the suggestions on why the markets moved the way they did. Notice the high use of the default verb "hope" in many financial headlines as the international markets continue to remain volatile and "unpredictable".

Gold update

In the previous Gold post there was a view that a top in gold could be at hand, however, a slightly higher high formed before a significant decline occurred. The decline does not appear to be a 5 wave decline and indicates one more push up is now needed. The view is for a larger degree wave structure to form and with the MACD at an extreme for this thrust - it implies a wave 4 is unfolding (or has already completed). Charts in next post.

XAO Update

In the last XAO update the view was for a decline to finish wave 'b' of a flat before an upwards climb back up to the 4400 region to complete wave 'c' of the larger wave '2'. This market action is playing out as described (so far) and I will assume because wave 'b' retraced 85% of wave 'a', then there is a good chance wave 'c' up will retrace almost all of wave 'b' and hit 4375+.

It's also interesting to note how the MSM are reporting the latest declines - when in doubt:  pick a country and the headline will read something like "Market falls on Greece worry". When the market turns up the next day - "Investors have high hopes for Greece". Pure rubbish.

Short Term XAO update

The last XAO short term post indicated the end of wave 2 was imminent, however, an aggressive push downwards has failed to materialise to indicate the next leg down is clearly underway. The wave structure does also not appear to be moving in 5 waves down (yet) and this evidence implies wave 2 is unfolding as a flat correction.

At this stage in the wave development, the structure of wave 'a' and the unfolding 'b' wave appear to be 3 wave moves, indicating corrective action in both directions for the short term. This most likely indicates a flat for wave 2 is in the process of unfolding. 

Australian Interest Rates

The 90 day bill rate has declined slightly to 4.77%, hence the rationale for an increase of the RBA cash rate target is non-existent. However, there is strong rationale for the RBA to do nothing and perhaps some rationale to drop the cash rate target by 0.25%. Let see what the nouns and adjectives in the RBA meeting minutes provide.

Gold - Is the top in?

For those that have been following along, a significant top in Gold has been expected and the question now is: Is the top in?

It appears a  5 wave decline from the "Top" has occurred and more aggressive downside action needs to occur soon, thus completing wave '2' up. The long term chart is here and provides a multi year view. As you can see, gold broke above the top  multi-year trend channel and instability quickly set in with a $200 decline - however, Gold is yet to drop back down to that trendline. This is anticipated very soon.

XAO Short Term update

It's been a long time coming.....

The current wave up is being interpreted as a wave '2' for the reasons outlined in the chart. A break below the trend-line is anticipated very soon. The XAO cannot go above the end of wave 'E' in the chart as this would invalidate the short and medium term views. We therefore have a very defined scope of where the index is allowed to go before breaking specific limits one would put in place to manage risk.