The Big Short

[KW]

Since the market is in the doldrums, it is probably a good time to play the downside. So what are you shorting (in practice, or just in your head if you cant get access to short sales).

I have started with CBA - broke its 200 day MA, rallied back to it but failed to get back over it, broke down again as a result. I'd expect a retest of the this year's low at $73. The 200 weekly MA is around $72 so that should provide support (otherwise it really is game on!)

I picked CBA over the other banks as it had performed the best of the four in the run up, the price had held up the longest, and thus probably has further to fall than its peers.

7403

[stoploss]

Since the market is in the doldrums, it is probably a good time to play the downside. So what are you shorting (in practice, or just in your head if you cant get access to short sales).

I have started with CBA - broke its 200 day MA, rallied back to it but failed to get back over it, broke down again as a result. I'd expect a retest of the this year's low at $73. The 200 weekly MA is around $72 so that should provide support (otherwise it really is game on!)

I picked CBA over the other banks as it had performed the best of the four in the run up, the price had held up the longest, and thus probably has further to fall than its peers.

7403

I'm Short the ASX 200 via CFD.

[blackcap]

I'm short it via the BEAR.

Im going to short it via Citiwarrants or Puts :)

If we all go short it will be a self fulfilling prophesy.

[dingoNZ]

ASX200 has shed 300+ points in the past 8 days, isn't looking pretty atm...

[duncan22]

How do you short shares KW? CFDs?

[dingoNZ]

Any full service broker will offer it, the likes of e-trade and discount brokers usually will not, I'm not too sure if Commsec do or not

[stoploss]

ASX200 has shed 300+ points in the past 8 days, isn't looking pretty atm...

Been smashed since the close tonight as well ....

[Joshuatree]

WES and WOW gotta be considered.

[noodles]

I'm Short the ASX 200 via CFD.

Ditto......

[percy]

WARNING>>
Don't SHORT KME.
I am very long with it.
The upward trajectory is onwards and upwards.
GO LONG.! lol.

[nextbigthing]

Good thread KW.

Sorry it's not asx but I was thinking about looking into shorting the Chinese market at some stage. Up 180% in a year! That's going to come down hard.

[stoploss]

WARNING>>
Don't SHORT KME.
I am very long with it.
The upward trajectory is onwards and upwards.
GO LONG.! lol.
don't worry Percy the Asx short is some sort of a hedge against KME, MBE . I hope
they continue the upward momentum .

[noodles]

Some good long term shorting ideas in this report on disruption. (banks included)

http://wfunds.com.au/wp-content/uploads/2015/04/The-Leading-Edge-March-2015.pdf

[noodles]

Good thread KW.

Sorry it's not asx but I was thinking about looking into shorting the Chinese market at some stage. Up 180% in a year! That's going to come down hard.
I agree. But be careful in the short term. Inclusion in the MSCI index is an upside risk.
http://www.marketwatch.com/story/will-chinas-stock-market-explode-on-wednesday-2015-06-07

[noodles]

WARNING>>
Don't SHORT KME.
I am very long with it.
The upward trajectory is onwards and upwards.
GO LONG.! lol.
No one is willing sell (let alone short sell). #multi-bag

[nextbigthing]

Top traders say never go short in an uptrending market - you have to go with the market trend, so only sort a falling stock in a falling market. Trying to go against the flow is a recipe for losses as irrational exuberance can last longer than you can remain solvent.

Agreed. Hence the 'look into it' and 'at some stage' so when it does go, I'm clued up and ready to act, as I suspect if it has gone up that fast, it will come back very quickly. I do like the idea of buying a put so losses are minimal if it was just a small correction.

[nextbigthing]

up 180% for the year and still trading with a PE less than SP 500.

Very interesting Snaps cheers. Will have to look into their respective accounting methods.

[dingoNZ]

irrational exuberance can last longer than you can remain solvent.


One of the best pieces of advice I've ever been given was this from one of the most knowledgeable people I've ever came across in the investment field. Words of wisdom there.

[blackcap]

One of the best pieces of advice I've ever been given was this from one of the most knowledgeable people I've ever came across in the investment field. Words of wisdom there.

Agreed, glad I learnt that as a youngster. Cost me a lot then but it sure as hell saved me a lot later.

[blackcap]

yes the more TA I learn the better investor I become.....and there is a lot to learn

Its interesting, when I attended university about 20 years ago and completed a finance degree we learned a lot about fundamental investing, DCF, WACC , Capital Asset Pricing Models, and the EMH by Fama et al. We covered technical analysis in about one lecture (more of a history of and that it exists thus we needed to know about it) with the conclusion that this was "wizardry" best left to the fools who think that past pricing behaviour can predict the future. Mathematical models and theorem was used to back this up and it made a lot of sense to us young impressionable minds at the time.
However being a market participant, I have seen (anecdotal evidence at best as I have not researched the phenomena) that there is some merit in following the "charts". Could any of you followers of this "wizardry" enlighten a poor deluded maths soul why it actually does work and does it in fact give you a positive Alpha? (ie does trading using the charts produce a better than market return in the long run both in bull and bear markets)

[PSE]

apparently TA indicates the physiological thoughts and patterns of investors....that's why it is so dam accurate as human nature, once a pattern is formed, is very predictable.......not just on the charts either.
The problems I see with this approach are based on the fact that rather than following the performance of a business you are trailing human sentiment, which is fickle.
You will never be able to get in at the bottom, only after the price has recovered but I can't say there is any way to pick the nadir in shareprice so this is a minor complaint.
What catches people following momentum is when they buy bad companies, companies who stumble in a turnaround/recovery or they buy good companies but pay too much.
I prefer to view the short term fluctuations as meaningless, people watching the stars or the charts rather than the business.

[PSE]

TA people seem to me like sheep jumping over an obstacle, the first one jumps then the others keep jumping even after the obstacle is gone. I am the black sheep running in the other direction, that's why value investing works - because often the sheep get overexcited and are not known as calm rational observers and analysts of events.
My favourite Einstein quote is about war but it equally applies to investing and other fields of human endeavour.

http://www.brainyquote.com/quotes/quotes/a/alberteins161980.html

[PSE]

Inasmuch as y'all think like value investors you do OK, but Technical Analysis is opposite they are not complimentary methods but mutually exclusive.

[Nasi Goreng]

Good thread. ASX 200 below 200 day avg in the last few days. A nice trade for next week is to short ASX200 with a stop just above 200 day (around 5600). I'm also shorting the US ten year along with the rest of the world it seems. If the bond sell of continues and yields get to 2.6%, it is likely to put more pressure on US stocks which should flow through to ASX. I think some good buying opportunities will present themselves by about August.

[BlackPeter]

TA people seem to me like sheep jumping over an obstacle, the first one jumps then the others keep jumping even after the obstacle is gone. I am the black sheep running in the other direction, that's why value investing works - because often the sheep get overexcited and are not known as calm rational observers and analysts of events.
My favourite Einstein quote is about war but it equally applies to investing and other fields of human endeavour.

http://www.brainyquote.com/quotes/quotes/a/alberteins161980.html

Not quite sure whether the comparison fits. TA people are not the sheep, but they try to describe (and often quite well) what the flock of sheep is likely to do next.

Compare investing (or share trading) to the position of a cave man hunter killing animals for meat. A good hunter knows where the best feed for the animals (s)he is hunting is and where they find their water. (S)he knows as well about their breeding behaviour and in which times of the year they are easier to hunt. Lets call this fundamental analysis. Very useful input.

However - the animals are not just driven by above. If something freights them than they are likely to run away from the (sometimes just perceived) danger, even if this brings them neither to their source of food nor water. If you are hunting a herd of buffaloes or antelopes or whatever, than actually you can predict in which direction the herd will move, just by observing where they have been a minute ago and where they are now. It is a good idea to monitor the volume (which percentage of the herd is running), speed and acceleration (or some already slowing down or speeding up). Obviously - the further you go into the future, the less accurate your prediction will be. So - our cave man is doing as well some technical analysis of where his prey is moving.

To be really successful, he will do both (fundamental and technical analysis) and so should we.

Both technical analysis as well as fundamental analysis help us to predict (with limited accuracy) what the SP will do. As we all know, the accuracy of these predictions is often less than desirable, however - if you combine the two tools, than your overall accuracy will improve. Obviously - you never reach 100%, but it will help you to get closer.

[PSE]

fair enough.....don't get me wrong I am not a TA wizz and personally never use TA solely to make my decisions.......... a combination of TA and FA works for me and I personally favour FA over TA every time.
But in saying that TA is a very very helpful tool and has saved my ass many many times.
Also don't forget many investors have several different portfolios with separate criteria.
I have a short term trading portfolio, TA is a must for this, I have a high risk portfolio, a medium hold portfolio and a long term value portfolio.....it is great to keep them separate and do not necessarily use TA so much on the medium and long term value plays...that's more about focusing on the business fundimentals.

Whatever works for you is all good with me. For myself I think using TA would have made me miss many of my best opportunities and cloud my judgment.

[PSE]

Not quite sure whether the comparison fits. TA people are not the sheep, but they try to describe (and often quite well) what the flock of sheep is likely to do next.

Compare investing (or share trading) to the position of a cave man hunter killing animals for meat. A good hunter knows where the best feed for the animals (s)he is hunting is and where they find their water. (S)he knows as well about their breeding behaviour and in which times of the year they are easier to hunt. Lets call this fundamental analysis. Very useful input.

However - the animals are not just driven by above. If something freights them than they are likely to run away from the (sometimes just perceived) danger, even if this brings them neither to their source of food nor water. If you are hunting a herd of buffaloes or antelopes or whatever, than actually you can predict in which direction the herd will move, just by observing where they have been a minute ago and where they are now. It is a good idea to monitor the volume (which percentage of the herd is running), speed and acceleration (or some already slowing down or speeding up). Obviously - the further you go into the future, the less accurate your prediction will be. So - our cave man is doing as well some technical analysis of where his prey is moving.

To be really successful, he will do both (fundamental and technical analysis) and so should we.

Both technical analysis as well as fundamental analysis help us to predict (with limited accuracy) what the SP will do. As we all know, the accuracy of these predictions is often less than desirable, however - if you combine the two tools, than your overall accuracy will improve. Obviously - you never reach 100%, but it will help you to get closer.

I don't mean to insult people by calling them sheep. I don't think I will carry analogies further but to say that the fundamental and technical analysis are what everyone is doing.
To do better than everyone else by following the same methods is not reliable, your competition in this field is full time professional analysts.
FA and TA as you describe are attempts to predict the future (maybe skillfully). Because predicting the future is impossible the success rate is nothing close to 100%.
People are rational calculating machines but also emotional. When they see a company's shareprice collapse or take off they get jittery or irrationally exuberant. The TA is buying because others are buying, they may prove right or wrong and pessimistic or optimistic.
It's hard to stay calm after a shareprice tanks (not for me but I understand for other people).
I would use value investing combined with FA by your definition, mainly looking for companies with short term problems that will survive. I often buy on the basis of analyst sell reports when I can feel the fear clouding their judgement. I am the exact opposite of a TA and also from your definition of FA, although I appreciate and use their reports and take a longer view.

[PSE]

No, People in general are like sheep. TA simply allows you to exploit that phenomena. It allows you to take the pulse of the market so that you know its safe to be in the market or a stock, or if you should get out of the market or that stock. Value investing gets a lot of press when it comes to buying stocks, but no-one talks about value selling. How do you know when to get out before you lose 20-40% of your capital? To quote the biggest value investor there is, Warren Buffet, "the first rule of investing is to not lose money. The second rule is to not forget rule #1." Seems people seem to think value investing is buying and holding while you lose all your profits from the previous years, and a fair chunk of your capital to boot. Its a mugs game.

TA tells you that market sentiment has turned - the herd are either becoming greedy or fearful. Get out of their way or you will be trampled trying to run in the opposite direction. TA does not tell you which stock to buy, or which stock to sell - just that once you have picked a good candidate whether the time is right to buy or sell that stock. I dont spend months or years sitting on a stock waiting for the market to discover its "value" while the share price goes nowhere, I buy it when the market jumps on board with it. I dont sit and watch all my profits and capital disappear while convincing myself the stock is still "undervalued", I sell it when the market signals something is seriously wrong with it.

I protect my capital. It is either gainfully employed in accumulating profits while a stock is running hot, or it is sitting on the sidelines waiting for a stock to stop falling and reverse trend (or shorting the falling stocks). Does this give me alpha - bloody oath it does.

At some point my portfolio will be too big to use TA - I will not be able to move large positions in and out of a stock easily and in a timely manner. But until then, its the best tool in the tool box I have.

I wonder if all those opposed to TA would ignore it in the housing market? When you go to buy a house, do you analyse it independently of the market in order to get a price, or do you look at past house sales in the area, its prior price, whether area prices are rising or falling, the number of sales, average days on market, auction clearance rates, average discount to asking price etc. If house prices are plummeting in an area, would you wade in blythely and say oh this house is great value by my calculations? The market dictates prices - not some logical mathematical equation. The market consists of humans in either fear or greed mode. How well your investment will work out will depend on whether you bought or sold at the right time, in accordance with market conditions. Ignore that at your cost.

TA does not predict anything either. It simply tells you on which side the balance of probabilities your proposed trade lies (the greedy side or the fearful side). You have a greater chance of making money if your stock is in an uptrend, and a greater chance of losing it if its in a downtrend. You place your bets accordingly.

Sorry for hijacking your excellent thread KW. I think you are right about CBA and the markets being overvalued. If your TA got you to this conclusion that's great.
Not everyone wants to hold a stock for years like the boring old value investors (and pretenders).

[PSE]

Few more points KW.
I bought my house in 2011 when prices were "falling" and have paid it off since then with "buy and hold".
Buffet is not actually the original value investor but one of his protoges. What he does is 90% value investing but he also identifies growth stocks which I don't buy.
If a shareprice falls the patient value investor doesn't lose money but tops up if the business case is still good.
Selling and buying is easy, buy when the market is negative and sell when it is overoptimistic. Like with the Australian banks at the moment.

[PSE]

Actually Fundamental Analysis told me the markets were over-valued ages ago - I've been expecting a correction for yonks now. TA has told me its finally arrived! :t_up: I'm only excited because I really want to practice shorting, as most of the famous traders always made much more money going short than going long. I'm not that thrilled at having to exit a lot of my long positions.

CBA was a pick based on industry fundamentals (declining in this instance) and TA told me the market agrees with me and its more likely than not that the CBA price will continue to decline. For how long it will do so is anyone's guess - TA will not provide a time frame. But when it stops, and the price momentum changes back to the upside, TA will tell me its happened so that I can quickly close out my short positions (if I havent already done so).

I hope it works out well for you, can't say if you are right or wrong as I don't use or understand TA.

[blackcap]

Behavioural Economics (and its subset Behavioural Finance) had not been recognised back then. Now it is taught in most business schools.
https://en.wikipedia.org/wiki/Behavioral_economics

Thanks for the link KW. Very interesting reading. I had heard of both, and I feel that Behavioural Finance is probably more accepted than Behavioural Economics, but that is by the by. I can understand how TA can help with timing (buying and selling) but I would be loath to use it to purchase a stock just because a chart said so. I would first do the FA on the stock and then combine that with the TA to get in (or out). But that said, I am not really a trader but more of a buy hold proponent. Trading is more a side hobby with "play" money.

[blackcap]

And I think people should stop thinking "buy and hold", and start thinking "buy and hold until something changes". Holding a losing position is also a route to the poor house, albeit one that takes longer.

Do not quite agree with your statement there however if you are referring to buy and hold indefinitely then yes. I know a fellow investor who literally cannot sell a stock and that has caused him a huge amount of loss and pain in the past.
I am a "find good company and buy... then hold till that company is no longer "good". Is that what you are referring to?
I will generally not sell out of "good" company just because its currently trending down. But if fundamentals change I will. Case in point is MTU, still holding after initial purchase at 38 cents, although there have been some "down trends" along the way I still believe in the growth of the company, both in EBITDA and Dividends.

[noodles]

KW,

Thanks for starting the thread.

I've been shorting stocks for about 10 years. I have had some modest success. I have always kept very tight stops.

However, there are a few things that make shorting less desirable than going long.

1.Banning shorting. When things really get desperate, governments will ban shorting. This happened during the GFC on the ASX. So this means that shorting is not a great hedge when there is a panic or crash.
2.No 10 baggers. With longs, you can find 10 baggers (like MNF.AX). You can only find 1 baggers in the shorting world
3.You can only short the bigger stocks. Unlike going long, your stock selection is often limited to larger stocks. Not only does this reduce your stock universe, but it also means that these stocks are covered by analysts meaning that pricing anomalies are less likely (over small caps).

Of course, there are some great benefits to going short. It provides a hedge for your long portfolio when those nasty corrections come along and can provide profits in any market.

I'm not saying that shorting is not a valid trading strategy, just that it is less desirable than going long.

noodles

[PSE]

And that is EXACTLY how you should use it. I spent a few months trying to trade stocks based on TA alone (short term momentum trading, breakouts etc) and I lost a bucket load. I do not recommend it, other than as a quick route to the poor house.

And I think people should stop thinking "buy and hold", and start thinking "buy and hold until something changes". Holding a losing position is also a route to the poor house, albeit one that takes longer.

Right I never supported that strategy, I took losses when I was learning. Now that I know what I am doing I don't find myself with that problem. Could happen.if the shareprice falls and the company is still doing ok I always back up the truck and the market comes to it's senses eventually.

[PSE]

KW,

Thanks for starting the thread.

I've been shorting stocks for about 10 years. I have had some modest success. I have always kept very tight stops.

However, there are a few things that make shorting less desirable than going long.

1.Banning shorting. When things really get desperate, governments will ban shorting. This happened during the GFC on the ASX. So this means that shorting is not a great hedge when there is a panic or crash.
2.No 10 baggers. With longs, you can find 10 baggers (like MNF.AX). You can only find 1 baggers in the shorting world
3.You can only short the bigger stocks. Unlike going long, your stock selection is often limited to larger stocks. Not only does this reduce your stock universe, but it also means that these stocks are covered by analysts meaning that pricing anomalies are less likely (over small caps).

Of course, there are some great benefits to going short. It provides a hedge for your long portfolio when those nasty corrections come along and can provide profits in any market.

I'm not saying that shorting is not a valid trading strategy, just that it is less desirable than going long.

noodles
I think they shouldn't ban shorting as it accelerates price discovery. Like to watch what Jim chanos says - he started shorting China in 09.
Costs and leverage, I am not into leverage myself.

[PSE]

Do not quite agree with your statement there however if you are referring to buy and hold indefinitely then yes. I know a fellow investor who literally cannot sell a stock and that has caused him a huge amount of loss and pain in the past.
I am a "find good company and buy... then hold till that company is no longer "good". Is that what you are referring to?
I will generally not sell out of "good" company just because its currently trending down. But if fundamentals change I will. Case in point is MTU, still holding after initial purchase at 38 cents, although there have been some "down trends" along the way I still believe in the growth of the company, both in EBITDA and Dividends.
I bought MTU and sold ages ago for a relatively small gain. You really need to know the company if a 4k investment turns into 160k.
By definition growth is away from security, but very well done blacktcap.

[noodles]

I don't mean to insult people by calling them sheep. I don't think I will carry analogies further but to say that the fundamental and technical analysis are what everyone is doing.
To do better than everyone else by following the same methods is not reliable, your competition in this field is full time professional analysts.
FA and TA as you describe are attempts to predict the future (maybe skillfully). Because predicting the future is impossible the success rate is nothing close to 100%.
People are rational calculating machines but also emotional. When they see a company's shareprice collapse or take off they get jittery or irrationally exuberant. The TA is buying because others are buying, they may prove right or wrong and pessimistic or optimistic.
It's hard to stay calm after a shareprice tanks (not for me but I understand for other people).
I would use value investing combined with FA by your definition, mainly looking for companies with short term problems that will survive. I often buy on the basis of analyst sell reports when I can feel the fear clouding their judgement. I am the exact opposite of a TA and also from your definition of FA, although I appreciate and use their reports and take a longer view.
This contrarian value investing approach that you take is similar to a book I read called "the Dhando Investor". Have you read it?
Also, I wonder if you could tell us some of your success stories using this approach.

[PSE]

No I started with "the intelligent investor" by Benjamin Graham. First version 1950 he kept updating it I read the 1971 version.
Dated in parts but the important aspects are the philosophy.
I think this philosophy has saved me from a lot of dumb mistakes, so that I made money despite myself.
I bought MQG at $17 and sold for $50, TSE at 0.8 to 1.4.
GNE float stag, MELCA 0.9 to 1.6. NZR $1.6 to $2.3.
When the market was real cheap I was happy to be mainly in index ETFs, now I am trying to be selective as the market is overvalued.
I am embarrassed to list more mistakes like these :)
I started posting on here late 2014, this record is verifiable. QBE at 11, STO at $7.35, NWF at 0.05, CAV at 0.45, WOR at $9, TPI at 0.8, CDD at $3.
I made a mistake on CAV, this is because I didn't follow the guidelines the company is too small and indebted. It drags down my portfolio for now but I am still outperforming the ASX.
In a few years time it will be much more than a few percentage points though, maybe y'all can judge me then.
Ben Graham was investing through the great depression so value investing is fantastically conservative. No risk, no debt etc. The idea is to have a margin of safety in the price against an uncertain future.

[PSE]

an answer to your less desirable 1,2,3
1. In reality how often has shorting been banned.....once in the last 20 years

2. I short via CFD's this is a leveraged product and have had many 3,5 and 1x 8 and 1 x 10 baggers.

3. The platform I trade with lets me short 800 ASX stocks including companies down to a worth of 19m....so you can most diffidently can short more than just the bigger companies.
The same platform lets me short thousands of stocks on dozens of exchanges around the world.

It was stopped just when you would really want to be into it though snaps. There were plenty of companies going bankrupt during the GFC. Rather than admit there was a problem the regulators were saying lets pretend everything is OK.
Going bankrupt more quickly, shorters were doing the market a favour.
I don't short but if I did I would be looking for companies very likely to die. Like Peabody Energy at the moment.

[noodles]

3. The platform I trade with lets me short 800 ASX stocks including companies down to a worth of 19m....so you most diffidently can short more than just the bigger companies.
The same platform lets me short thousands of stocks on dozens of exchanges around the world.
what platform is that? I use IG.

[winner69]

The biggest short ever in the next 2 weeks is HUR

[Crackity]

HUR being the mighty Hurricanes winner?

[noodles]

CBA approaching resistance at $86-87 and 200 EMA at $85. Current price $84... Crunch time.
KW, where is your stop?

[robbo24]

interesting play with CBA short KW.
I would have thought that the charts indicate that CBA has been in a long term bull run and although has come of a peak still sits on the long term up trend.
I would of also thought that CBA would get a lot of support around current levels due to the 5.2% divi

Good instincts snappy :D

I guess it's kind of hard not to think the world is collapsing with all the news media going on...

Did you know the IMF default procedure takes two years to work through? You don't often hear that in the news.

It's funny though, snaps, people are quick to say once the media says everything is bright and cheery that it's too late to buy.

Is it equally true that when the news media starts crying bust that it's too late to short?

:D

[robbo24]

Depends doesnt it? Whether you believe this is a 2 week correction, or the start of a 2 year bear market :-)

Indeed, probably good fodder for another thread :D

[robbo24]

I will take the time to teach you something.
have a look at the 2 year chart.............. then draw a line from two years ago till now....
you will notice this line is in an up trend......actually the line indicates a very strong unbroken long term up trend.
You also shorted a stock at a level that has shown solid resistance on the way up in the past........ which is almost guaranteed to turn into solid support on the way down........hence your losing position.
I am most diffidently am not a chart expert but this one stuck out like bull balls....hence my comment soon after you mentioned your position.
Always good to set stops.
I like where your stop is set 86-87 is just above the top of the short term range bound trend line....could also be forming the last leg of a head and shoulders pattern....very bearish but 78 needs to be broken for this to be confirmed.

I use the monthly candlestick with all data for long term check ups.

I am mindful that QE has skewed most stocks upwards, and you always have to be careful of where share issues have occurred a-la what the mcap is/has been over the years.

US:Yang could be fun the day in the indeterminate future when Chinese panic hits.

[robbo24]

so true........QE and continued low interest rates have had the world chasing yield........5-6% divi yield looks bloody attractive considering most countries bank interest rate for term deposits.
jeez I can only get 2.6% on a 6 month term deposit in AUD.
Quite scary when you look back and see the long term acceptable divi yield valuations compared to what is considered acceptable now....won't last for ever.

Winner69's girlfriend isn't quite as happy as some pundits believed she would be. No US rate hike this time round. Some say September for a hike, but I'm not convinced. Status quo for now anyway!

[winner69]

Winner69's girlfriend isn't quite as happy as some pundits believed she would be. No US rate hike this time round. Some say September for a hike, but I'm not convinced. Status quo for now anyway!

Janet doing as she is told, she doing a good job.

Keep them on tenterhooks but no increases until after the election ... Or at worse so small nobody will notice

[dingoNZ]

What broker are you using to establish short positions KW?

[ozzie]

Anyone using CMC to short with CFD's? They tend to offer better margins than IG (also seem to have a bigger range of shortable stocks.)

[Nasi Goreng]

I have CMC account which is all I use now for trading. Low fees and access to lots of markets.

I'm a bit cautious around shorts on individual stocks though, it is a totally different game to going long. I often have short position on index but getting into a short on individual stocks is quite rare. Thought about it a few times in recent months with FMG as its been range bound but they are a very viable buy out so I keep away from that one.

[dingoNZ]

I have CMC account which is all I use now for trading. Low fees and access to lots of markets.

I'm a bit cautious around shorts on individual stocks though, it is a totally different game to going long. I often have short position on index but getting into a short on individual stocks is quite rare. Thought about it a few times in recent months with FMG as its been range bound but they are a very viable buy out so I keep away from that one.


How does that work when stocks say go ex dividend, does it reduce your stop loss to the 'new value'? Curious as to how it works, and what are the spreads like?

[Nasi Goreng]

When stocks go ex dividend, your account gets credited with the dividend amount. There is no notification other than a credit in your account history so you need to be attentive or you may not know you have been paid.

I don't know what happens to stop losses, you may need to adjust these manually.

[ozzie]

Free-to-air tv is on the nose currently, I've been shorting SWM and SKT for some months now. Also FXJ recently. And I went short on FXL yesterday as it was sold off on massive volume, finishing at the day's low - apparently some fund manager knows something negative about the stock.

[ozzie]

Yeah I have been looking at FXJ too :-)

FXL dropped on the resignation of its CEO but it did reaffirm guidance. Its been a bit of a basket case for a while though.

SWM also reaffirmed guidance - not working for them either :)
Also started shorting RCR recently - if only I'd got onto the mining services story a couple of years ago...

[DarkHorse]

Yeah I have been looking at FXJ too :-)

FXL dropped on the resignation of its CEO but it did reaffirm guidance. Its been a bit of a basket case for a while though.

FXL looks cheap as chips on forecast PE c10, having had steady growth for the past 4 years and forecasting similar for the next couple. As a holder I'd be keen to hear of any concerns (other than obvious technical weakness and CEO's departure)
thanks :) DH

[BlackPeter]

Well, isn't this exciting!!!!

Downtrend intact, with new lower low today. Might be time to reopen that bank short :D

Are we ready for the real fear and panic?

Yes, my BEAR is doing at current quite nicely :t_up:

Not sure however whether I expect at this stage the world as we know it to end. I assume that at some stage the markets will realize that the total GDP of Greece amounts to roughly 1% of the GDP of the US .... or roughly 0.2% of the world GDP. A cold winter in the US would have a larger impact on the financial markets than Greece collapsing. Looking however forward to a couple of volatile weeks. Golden times for traders, I suppose.

[BlackPeter]

Its not Greece that is the problem. Its the German, Dutch and French banks who have been funding Greece. They will be the ones left holding the baby. No one actually cares about Greece, including Greece itself so it seems, but another financial crisis, this time involving the big Euro banks, that's another story. Another credit freeze as Euro banks stop lending to each other because they don't know where the penny dropped will trigger a GFC part deux.

Yes, but ... the overwhelming amount of the Greek debt (more than 90%, if my cursory counting is correct) comes interestingly either from "planet earth" (like foreign governments, IMF, world bank, EU) or from Greece itself (fair enough ...). They owe European banks (outside of Greece) only 6 to 7% of their overall state debt (still some 25 billion Euro). So - I am not sure whether I expect a bank crash ... it will just end up with a lot of European and other countries realizing their bad debts.

Here is an interesting website - a "must see", if you can't imagine what a truck load of money means: http://demonocracy.info/infographics/eu/debt_greek/debt_greek.html

[BlackPeter]

Its not just the State debt - its the private debt too. The Euro banks will take some massive writeoffs if Greek businesses cannot repay their loans. They think they can handle the defaults, that they are prepared for it, but really, you dont know if you are adequately prepared until the **** actually hits the fan.
http://www.reuters.com/article/2015/01/06/us-eurozone-greece-banking-exposure-idUSKBN0KE16H20150106

But if you remember from the GFC, it was simply fear of the unknown that froze the credit markets. Purely a psychological response as parties chose not to deal with each other, than to expose themselves to any future risk. That could happen again. Greece could be the Lehman Brothers of the Euro economy. Just the start.

sounds like you recommend to focus on BEAR (and gold?) ... I shall keep them on my watchlist ;).

[mark100]

Macrobusiness summed up the options:
1. A clean Greek exit


European banks have prepared appropriately and the shock lasts six weeks. Global share markets correct 10%, peripheral bond yield jump higher but QE holds them together;


2. A moderate Greek exit


Some European financial entities have punted long on Greek bonds and are suddenly insolvent. Global share markets fall 20% as the European financial system part freezes and QE only holds back outright panic;

3. A Graccident


losses are sufficient to push the European financial system into crisis and it spreads worldwide. Global share markets plunge 50% and all peripheral global bond yields shunt higher. ECBQE is rendered moot;


I would be surprised to see the DOW fall 10% on a clean exit. As for a greater than 20% fall in the DOW over this, I view it as highly unlikely. Markets fell 50% in the GFC after years of excess, poor lending practices in the US, collapse and near collapse of some of the worlds largest banks and recession in the worlds largest economy.

Even if every Greek debt, public or private, was held by private banks (and it's not) I can't see it causing a 50% fall in world markets. If anything it may cause the Fed to delay hiking rates which might boost the market!

[Beagle]

Its not just the State debt - its the private debt too. The Euro banks will take some massive writeoffs if Greek businesses cannot repay their loans. They think they can handle the defaults, that they are prepared for it, but really, you dont know if you are adequately prepared until the **** actually hits the fan.
http://www.reuters.com/article/2015/01/06/us-eurozone-greece-banking-exposure-idUSKBN0KE16H20150106

But if you remember from the GFC, it was simply fear of the unknown that froze the credit markets. Purely a psychological response as parties chose not to deal with each other, than to expose themselves to any future risk. That could happen again. Greece could be the Lehman Brothers of the Euro economy. Just the start.

The doom and gloom merchants are having a field day aren't they !! I think you're forgetting that Lehman had 800:1 leverage in the derivative markets and therefore had to be bailed out otherwise the entire derivative market would have collapsed. Argentina defaulted on $132b of debt and the world carried on fine...some perspective for you https://en.wikipedia.org/wiki/1998%E2%80%932002_Argentine_great_depression

[Beagle]

Wasn't Lehman bros absorbed into Goldman Sachs ?...but yeah I get your point but there were a million and one excesses in the system, (basically if you could mist up a mirror with your breath you could get a loan to buy a house..didn't really matter even if you had a totally delinquent credit score...someone even got a loan for her dog for its own house...thought that would appeal to you), just waiting for any excuse to come to a head i.e. the snow was perfectly positioned for an avalanche.

[mark100]

Lehman wasnt bailed out, it collapsed, and triggered the interbank liquidity freeze that started the whole GFC rolling. What was a minor problem (US housing market) turned into a global catastrophe. So it pays to not underestimate the importance or not of Greece - it only takes a snowflake to trigger an avalanche :eek2:

I know what you're saying KW, got to be careful of the snowflakes but I just don't see Greece as been the snowflake that causes an avalanche. Bear Stearns, Lehman etc, were at the centre of the US financial system. You never know though...

[stoploss]

Wasn't Lehman bros absorbed into Goldman Sachs ?...but yeah I get your point but there were a million and one excesses in the system, (basically if you could mist up a mirror with your breath you could get a loan to buy a house..didn't really matter even if you had a totally delinquent credit score...someone even got a loan for her dog for its own house...thought that would appeal to you), just waiting for any excuse to come to a head i.e. the snow was perfectly positioned for an avalanche.

no to GS, to the dismay of the CEO they let it go ...
http://www.investopedia.com/articles/economics/09/lehman-brothers-collapse.asp

[Beagle]

Fair enough I stand corrected. They were certainly interesting times...recall how even with all their so called expertise even Standard and Poors couldn't ascribe the correct credit rating to all the junk CDO's flooding the market.
I guess if you lend money to a bunch of muppets with the occasional beagle dog thrown in for good measure :) it doesn't matter how well diversified the loan portfolio is does it !!

[neopoleII]

KW..... thank you for the zerohedge link..... very interesting.
reading the comments from the sites readers is quite eye opening.
have spent an hour or so on this site and find it intriguing.
and this other link was a novel way to show what other peoples money looks like.
http://demonocracy.info/infographics/eu/debt_greek/debt_greek.html

cheers

[winner69]

http://www.theguardian.com/business/2015/jun/28/greece-crisis-eurozone-sarajevo-moment

[Joshuatree]

Bulbuls knew and tried to warn us
Red-whiskered Bulbul bird singing - YouTube (https://www.google.co.nz/url?sa=t&rct=j&q=&esrc=s&source=web&cd=7&ved=0CEMQtwIwBg&url=http%3A%2F%2Fwww.youtube.com%2Fwatch%3Fv%3D3Ar SlD6jKjI&ei=gxWRVauWHYmh8QWE4r9Y&usg=AFQjCNHKPiilrXinYsEcIy7cTxAi2zf4Uw&bvm=bv.96783405,d.dGc)

.Implied open for the DOW re negative 160 :scared:

[winner69]

Great book

Modus operandi hasnt changed - the rape and pillage of Greece all going to plan?

http://www.economichitman.com/

[BlackPeter]

Great book

Modus operandi hasnt changed - the rape and pillage of Greece all going to plan?

http://www.economichitman.com/

Rape and pillage of Greece? You must be kidding.

The Greek people enjoyed for many years to spend more money than they earned. They used to have some of the highest salaries in Europe, and particularly a hugely inflated public sector paid themselves up to three times the salary somebody in the private sector would earn. Throw into that early retirement (some after 20 years of work, many with age 55) and a good government backed pension scheme after that - all funded by a consistent flow of credits coming in from around the world. Ah - and for the short periods in life they still used to work, they really liked to go on strike. They particularly like to go on strike during the tourist season (with tourists being their only real source of income, with the exception of credits they never intend to repay). Talk about biting the hand which feeds you.

If anybody is raped here, than it is the people who have been stupid enough to extend credit to Greece. Looks like most of the world did fall into this trap, but now that we know - why should anybody keep paying for the Greek lifestyle? If the Greek people enjoy their lazy lifestyle, than they should as well fund it by themselves.

[winner69]

Black Peter -
If anybody is raped here, than it is the people who have been stupid enough to extend credit to Greece. Looks like most of the world did fall into this trap, but now that we know - why should anybody keep paying for the Greek lifestyle? If the Greek people enjoy their lazy lifestyle, than they should as well fund it by themselves.

That was the plan .....now to continue beating the populus into submission and to keep on seizing all the ripe assets .....some good prizes here.

Why don't the Trioka worry about a bigger debt problem in Ukraine - whoops I forgot they instigated the unrest and whoops again don't the oil and gas pipelines to Europe go through Ukraine

[BlackPeter]

That was the plan .....now to continue beating the populus into submission and to keep on seizing all the ripe assets .....some good prizes here.

Why don't the Trioka worry about a bigger debt problem in Ukraine - whoops I forgot they instigated the unrest and whoops again don't the oil and gas pipelines to Europe go through Ukraine

So - lets assume for argument's sake that your conspiracy theory is right. What are you proposing? Throw more money into the bottomless Greek barrel? Who is going to fund this? What other barrels will open up (always more people prepared to take than to give)?

Winner - why don't you put your money where your mouth is. Just transfer all your funds to Greece to support the poor "raped" nation - I am sure they will be more than happy to not repay you either:D.

[winner69]

This explains everything!
https://www.youtube.com/watch?v=Zvl9N9GdraQ

(a bit of light relief)


Genius genius I think he said

[kiora]

:)http://www.nzherald.co.nz/nz/news/article.cfm?c_id=1&objectid=11474835

[winner69]

The biggest short ever in the next 2 weeks is HUR

Told you so

Was always good money taking them to lose

[ratkin]

Told you so

Was always good money taking them to lose

Will you be so keen to remind us next time you get something wrong :D

[winner69]

Will you be so keen to remind us next time you get something wrong :D

As always mate

ASX packing a sad today eh

[Nasi Goreng]

Looking at the ASX200 chart, it is almost inevitable that there will be a death cross in the next week. This is also supported by a strong downtrend from 6000 levels a few months ago which will mean it will be hard for index to break out above 5600.

It is highly probably that we may hit lower lows in the next 24 hours. It may take some time but there will eventually be support around 5100 and if it gets there, I think it will be a great buying opportunity.

[ozzie]

Here's a great short - SKT (Sky TV in NZ). SWM, NEC and TEN have all slumped, surely SKT must be next. They have a very similar problem in that they are all now competing with Facebook, Youtube and Netflix, all global juggernauts, for eyeballs and advertisers. SKT has the additional problem in that the population of NZ is much smaller than Oz. Sentiment in the whole sector is now very bad, and you don't want to bet against negative sentiment.

[ozzie]

Yes the world cup is probably the only thing propping up their sp right now. I see however that the sp was down a bit today when the ASX was up 100 points, so that's a nice little bear signal right there.

[webllinks]

Gone a bit quiet here. Youse got your shorts on still?

[ozzie]

Curious, my last post was a reply to a post which seems to have vanished :P
SKT looking more bearish than ever now - the XAO had big jumps last week on the 14th, 15th and 16th yet SKT managed to slide 7c during that period. It looks poised to catch up to NEC, SWM, PRT etc.
Are the Kiwis just lagging behind? :)

[winner69]

ASX200 - 6000 on the radar again

The worlds all fine again

[Nasi Goreng]

I tend to agree but its got to get through low 5700's first which is providing some resistance. 5700 is roughly 50% retracement from 6000 to 5400. It seems to be perfectly weighted at the moment... I think 6000 is way over value but 5400 does look to offer good opportunities.

[Crackity]

If I shorted shares I'd be seriously looking at shorting ORG ( Origin ) - they left far too much on the table with the Contact sale / looking like bankers are pressuring management and Contact was the easiest short term fix - what happens next year if O&G still in the doldrums? If you are a chartist it's not looking too flash either.....

nice thread title BTW KW - Got hooked on Michael Lewis ever since I read Liars Poker

[ozzie]

Apparently Genworth is the biggest short candidate going. Not in my IB list of available stock unfortunately, but others out there may have more luck.
Have you tried CMC KW? They'll let you short a bigger number of stocks than IB.

[ozzie]

Shorted DOW today at 4.01 - the outlook sounds so wonderfully grim! :)
Also been shorting ALQ, WOR and RCR in the mining services space for a while now - lots of fun for everyone! I intend
holding those positions for at least a year, probably more.
Held my position in SWM since 1.45 but I expect that to keep going down - people are deserting free to air tv for Netflix, Youtube etc in droves. Yum, Yum...
And a short position in FXL I've been holding since the big volume selloff on June 23 (shorted at 3.20). Moves like that usually means something is rotten
in the state of Denmark, especially in a stock that's been in a downtrend for a fair while.

[ozzie]

I have the large apartment builders - Lend Lease and Mirvac :-)

You see much downside for those two KW? LLC in particular looks like it may have topped out recently.

[ozzie]

I think they may find a bit of support around their earnings reports, which should be pretty good as 2014-2015 was the peak in the market. But the weight of the changes in the property sector will drag them down further - banks reducing investment mortgages, increasing costs of building and land development, slowing population growth (which might even go negative if unemployment kicks up and foreign workers leave for better economies), increasing interest rates, and the flood of new apartments that are still to hit the market in the next few years as all those high rises are completed. Along with the banks, I think the builders are the closest thing to a sure bet you get for a short position :-)

Yes I'm liking the looks of the banks for shorts too - just shorted MQG with cfd's today since they seem to be breaking down now.

[mark100]

No resources, miners or banks. Just focus on your small caps, their earnings, their individual chart and remember to trim your holding after a hard run. That's how I am prepared, actually that's just what I always do. Seems to work for me

[ozzie]

Yes shorts are a wonderful protection against a plunging market - I only wish I'd been shorting a few of the oil stocks recently. MQG had a nice gap down today on high volume as it tries to make up for lost time against the other banking stocks.

[ozzie]

Added some more shorts this week, now short ALQ, DUE, DOW, GWA, FXL, MQG, QBE, SUN, SWM, TPI, RCR and WOR. Might add to some positions on Monday if they don't plunge immediately.

[ozzie]

Any of them still to report? Earnings forecasts seem to be a catalyst for some good drops.

Yes, ALQ, MQG and WOR. I like to try and hold shorts for at least a year for tax purposes, and certainly the mining services sector should be in the doldrums for years to come.

[ozzie]

No resources, miners or banks. Just focus on your small caps, their earnings, their individual chart and remember to trim your holding after a hard run. That's how I am prepared, actually that's just what I always do. Seems to work for me

Yes I wouldn't buy in any of those three sectors you mentioned either, and would also include biotechs, retailers, mining services and education (too many people do it just for the love of it) stocks. I know you're a good investor mark100 - do you short any stocks?

[mark100]

Yes I wouldn't buy in any of those three sectors you mentioned either, and would also include biotechs, retailers, mining services and education (too many people do it just for the love of it) stocks. I know you're a good investor mark100 - do you short any stocks?

No I don't, I'm just not set up for it. Although in times like these I wish I did. In the past I have purchased index put options but the time decay hurts you if you don't get the timing right. I found I did best just to concentrate on what I know and let the cash levels rise when I'm uncertain of what is happening.

Definitely agree with the list you are shorting though. I am feeling a little caught out this weekend, my cash levels are just under 20% although really should be closer to 40% given what is going on. I have been distracted by reporting season and doing really well on the long side (even last week) but it will cost me tomorrow :(

[ozzie]

Index puts would have worked well lately :) There always seems to be a good theme to short, with recent ones being of course mining services, mining, oil and free to air tv. Now the banks, insurers, telcos and transports are joining in the fun. IT services are one of the few sectors bucking the trend.

[Daytr]

Correction or collapse?
When do the CBs pull the trigger to try & stop the melt down? What options do you think are at their disposal?
I'm wary of intervention to ensure this thing doesn't evolve into another 2008.
It was always the danger with CBs spending all their ammunition on zero interest rates & QE what happens if there is another collapse whilst they are still fixing the last. That's the problem when markets are propped up artificially & nothing is done to fix the underlying issues that caused the problem.

[Bobcat.]

There is always the BEAR and BBOZ - short ETFs you can buy on the ASX.

I'm holding BEAR.asx - was tempted to sell this morning but will be patient. Hadn't heard of BBOZ - traded managed funds as opposed to exchange traded funds (ETFs) ??

[Entrep]

Is there a leveraged long ASX index ETF?

[ozzie]

Closed out GWA, FXL and RCR early since they were all looking strong in yesterday's carnage. Keeping all my other positions for (hopefully) at least one year.

[Daytr]

No one seemed to see the structural issues in 2008 either KW.
What about oil? Its a pretty fundamental part of the global economy and there is a hell of a lot of debt & derivatives tied to it.
Let alone countries that rely on it. If I look at any one thing that could be the catalyst for this, its oil.
Thoughts?


I dont get the sense that this is a 2008 style catastrophe - there isnt anything structurally wrong with the market like back then. This is more a case of the market needing to factor in slower earnings growth for most of the world economies - expectations had been high and now we need to come back down to earth. So basically a P/E compression cycle. So more like 2011. I'm not too worried about it, other than the fact that no-one seems to be too worried about it, so that usually means this is not the bottom and we have a fair way to go.

Plan is to play the rallies, watch for the market to run into overhead resistance, reset shorts at that level in anticipation of a second leg down. But as always, if things change, be prepared to change your plan :-)

[Daytr]

Lets hope it doesn't get to that KW! haha
Good luck!

[ozzie]

Good chance this is just a bounce before heading south again. Anyone notice how bearish WHC - Whitehaven Coal - was today? I've shorted them in expectation of their downtrend continuing.

[Daytr]

Yep its been good, missed out today though tried to get short STO at higher levels again, but the lame duck couldn't muster enough buyers to get anywhere near my fill! Interesting times!

[h2so4]

I wouldn't short anything unless it was going to zero.

STO comes to mind and ARI might be another one.

[Lizard]

In addition to the BEAR and BBOZ I have also discovered that a US bear ETF (BBUS) has just been launched. Good timing!

BetaShares US Equities Strong Bear Hedge Fund – Currency Hedged (ASX: BBUS) aims to help investors profit from, or protect against, declines in the US share market. BBUS seeks to generate magnified returns that are negatively correlated to the returns of the U.S. share market.

Yes, I saw that too. Only thing is that it's already trading at 6 - 7% over NAV, which prices in about another 3% fall on the US market. Not that it seems unlikely at this point.

[noodles]

Yes, I saw that too. Only thing is that it's already trading at 6 - 7% over NAV, which prices in about another 3% fall on the US market. Not that it seems unlikely at this point.
Classic. I wonder if you could short the BBUS and arbitrage with a Index Short using a CFD. lol

[noodles]

In addition to the BEAR and BBOZ I have also discovered that a US bear ETF (BBUS) has just been launched. Good timing!

BetaShares US Equities Strong Bear Hedge Fund – Currency Hedged (ASX: BBUS) aims to help investors profit from, or protect against, declines in the US share market. BBUS seeks to generate magnified returns that are negatively correlated to the returns of the U.S. share market.
KW, Why do you choose to use an ETF rather than a Index CFD via IB?

[Daytr]

Oooh harsh, but fair haha!


I wouldn't short anything unless it was going to zero.

STO comes to mind and ARI might be another one.

[Daytr]

One of the issues shorting individual stocks is that the market is closed for 2/3rds of the day so when it re-opens it can gap substantially. Trading the index is safer in my view and as you are trading a future its open pretty much 24 hours. I do short stocks, but am always wary of that.

[arc]

In addition to the BEAR and BBOZ I have also discovered that a US bear ETF (BBUS) has just been launched. Good timing!

BetaShares US Equities Strong Bear Hedge Fund – Currency Hedged (ASX: BBUS) aims to help investors profit from, or protect against, declines in the US share market. BBUS seeks to generate magnified returns that are negatively correlated to the returns of the U.S. share market.

KW: I cant find asx:bbus or asx:bboz as listings, Does ibbus exist or is it still being "created"

[Bobcat.]

My best short by far has been the Australian dollar. Down below 70c today.

I closed out my shorts on the AUD soon after their GDP announcement today. Onward and upward from here I would say - there seems to be a lot of good psychological support around 70c. Futures on the US Equity markets being up 1% help.

If you have yet to close out your AUD shorts, you might want to. It's lifting nicely now along with the NZD (a nice set of global dairy prices announced just before 3am today).

I find it interesting the relationship between currencies and stock market movements. Still getting across it well enough to profit...but getting there.

Happy trading.

[Bobcat.]

KW: I cant find asx:bbus or asx:bboz as listings, Does ibbus exist or is it still being "created"

Look up "Beta Aust Str Bear - Trading Managed Fund Units Fully Paid" on the ASX website.

But when I enter BBOZ into my IB trading screen, unlike for other asx stocks, it doesn't come up. Instead, I get a request to manage subscription data, so it may be that ETFs are not tradeable in IB under normal arrangements. ?

[Bobcat.]

I currently trade the BEAR through IB and can see BBUS, BBOZ and GGUS in IB and can buy/sell them.

Yes, I have them now - I needed to first click on "Free Delayed Data"...otherwise it's a $25 per month subscription charge for live data. I get the live data elsewhere.

[Bobcat.]

I think it has a bit further to fall - mainly because the Govt is going to have to cut interest rates to try and prevent Australia falling into a recession. GDP figures missed expectations by a country mile. Next quarter will likely be even worse as the only reason it wasnt negative was because the Govt purchase of 3 warships was included. Canada has a similar economy to Australia, and its just gone into recession. Slowly the dominos fall .....

You could be right, although I do see fairly solid support at 0.7005 against the USD. Re their Interest rates - IMO it's a bit soon to factor in a drop given they just formally announced yesterday no change at 2%.

Interesting about the warships. Their GDP missed expectations by only 2 points (0.2 c.f. 0.4) but yes, not far off being negative growth. More pain to come but it wouldn't surprise me to see a rebound short term. NZD will follow now that most of our bad news is out there (touch wood).

[Bobcat.]

New support (a higher low) for the AUD has just been established around 0.7020 USD. Time to close out IMO. I've just now gone long.

[nextbigthing]

Page two of this thread makes for interesting reading.

[Daytr]

Yeah I went long last night as well BC at 0.7012, although it goes against my trading philosophy of going against trend.
However commodities are having finding a bit of support and with the US & Chinese holidays coming up I think its not a bad bet.
That GDP number wasn't great though. 0.2% for the quarter.
The TA support you mentioned is there, but I wouldn't say its strong.
Looks like initial resistance is at 0.7070 & then a cent higher.
Any thoughts?



New support (a higher low) for the AUD has just been established around 0.7020 USD. Time to close out IMO. I've just now gone long.

[Daytr]

Not just a All Black great eh NBT. haha
But did you short? Or is this a case of would've, could've, should've?
The Chinese market is difficult to hold a position in due to the wild volatility and you could easily get knocked out even if you are right in the long run.
In saying that I am eying up a level to take a long position.


Page two of this thread makes for interesting reading.

[Bobcat.]

Yeah I went long last night as well BC at 0.7012, although it goes against my trading philosophy of going against trend.
However commodities are having finding a bit of support and with the US & Chinese holidays coming up I think its not a bad bet.
That GDP number wasn't great though. 0.2% for the quarter.
The TA support you mentioned is there, but I wouldn't say its strong.
Looks like initial resistance is at 0.7070 & then a cent higher.
Any thoughts?

Both the AUD and EUR normally drop off until around noon NZT, then strengthen. The NZD usually follows.

Having said that, Australia's retail sales figures get announced at 1:30 pm today - 0.4 improvement expected, down from 0.7 last time, so that could meanwhile weigh heavy on the AUD. Of course any large deviation from the 0.4 will move it sharply.

The bullish lift overnight in US Equity markets will probably lift the Hang Seng and other markets today, which will help further support the AUD but their Retail Sales figure is the big one.

[Bobcat.]

Daytr - trusting you didn't get greedy but closed your long position on the AUD this morning when it spiked through 0.7060 - ??

Trade Balance a bit better than expected but their Retail Sales were just pathetic (and not a good sign) - Negative 0.1% against an expected positive 0.4%.

It's just bounced off 70c USD but I think after this announcement it could now easily go lower from later today. Get out now if you haven't already...

[Daytr]

Haha I wasn't being greedy, but I don't watch it all the time either!
So I missed it.
To be honest I wouldn't be surprised to see the Aussie back to 0.7250ish at some stage, but maybe I'm talking my book. ;-)

[nextbigthing]

Not just a All Black great eh NBT. haha
But did you short? Or is this a case of would've, could've, should've?
The Chinese market is difficult to hold a position in due to the wild volatility and you could easily get knocked out even if you are right in the long run.
In saying that I am eying up a level to take a long position.

Not just a pretty face who prances around modelling underwear :p

[ozzie]

Anyone shorting any of the REIT's? Stock charts in the sector seem to have topped out and started down, and I know Roger Montgomery for one seems to be bearish on the sector (he seems to be better at picking macro trends than individual stocks, at least in the last few years.)

[catbert]

The Big Short movie trailer (https://www.youtube.com/watch?v=vgqG3ITMv1Q) :)

[Crackity]

Well that was a brilliant call :-) The arse dropped out of it today.

since the second arse fell out of it and Origin has gone for a swingeing cap raise I would recommend covering any short you may still have....I'm seriously considering going long during rights trading :)

[VL SNTCHR]

Both the XAO and XJO rallies capitulated by close today and failed to hold the 50 day MA level. Buying action also formed shooting star candle sticks (bearish signal at resistance levels). That combined with the falling volume each day during the rally over the last week (bearish divergence) suggests we might be at the end of it :t_up:

Would be cool if it was - I love it when the TA stuff actually works :)

(and for a bit of trivia, the last shooting star candle stick on the XJO and XAO was on the 13 April, at the ultimate market high of 5,996/5963 respectively. Spooky eh possums?)
Hi KW,
Just wondering what proxy you are using for XAO/XJO volume?

[gazprom1]

Long bow to draw KW. Maybe tougher times ahead for aussie banks but they are profitable and SC is not.

Discl: do not own any aussie bank shares or any UK bank shares

[ozzie]

I prefer "I see red, I see red, I see re-ed" (Split Enz)

Yes the banks are very much in bear market mode, only likely to get worse for them in the short to mid-term.

[BlackPeter]

"Hello darkness my old friend, I've come to talk with you again ..

Both the ANZ and NAB are now lower than they were on the August 25th crash. In fact the ANZ is now siting on a key line of support that's been in place for 10 years. Will it hold? Don't think so.

7711

True - bank stocks look interesting. ANZ just finished its best financial year in history and has as we speak a PE of 10 and trades at something like 1.2 * NTA. This would typically count as a jelling BUY. And still ... people are shorting ANZ?

Does this make sense to you, KW - or is this just following the trend?

[percy]

Profit wise, it looks as though this is as good as it gets for the banks, which is why they are being sold down. Need for more capital, macroprudential lending restrictions, increasing costs of wholesale borrowing, perilous housing market, increasing foreclosures in regional areas (due to property collapse there as the mining jobs evaporate) - all will put the brakes on the banks ability to beat the market. It is rumoured that their current dividend payout ratios are unsustainable as well, so that won't save them.

It remains to be seen how much exposure they have to the mining companies debts - chances are some of those loans are 'going to be written off.

People are focused on their forward P/E and yield now, not the past.

Meanwhile across the ditch here, one little old new NZ Bank keeps going from strength to strength.
Has excess capital.!!
No exposure to mining,Australian manufacturing,or Australian retail.
Short Aussie Banks,go long NZ bank.!!

[Whipmoney]

What platform are you guys using to place short positions? What tenure?