Blood on the floor.

[OneUp]

Hi SEC, any companies you are watching inparticular?

Personally like IMD.

[SEC]

1up, I stick to stocks that fulfil all of the following criteria:
1. In medium/long term uptrend.
2. On the ASX300.
3. Those I can margin lend against.
4. Quick trades worth $60K don't move the market.

These criteria cuts the watchlist down to a manageable size.

Non-commodity stocks I'm watching in particular that are close to target prices include CSL, BOL, SHL, the banks, and topping up RCD and RHC.

SEC

[Packersoldkidney]

I think the US indicies are looking to base at the moment, they have come of substantially....but looking forward to the end of the year in the US it is interesting to note that in virtually all mature bull runs that the peak of the stock market falls about a month before the last official tightening of interest rates. The Fed is due to decide about interest rates very soon, and is surely near the end of this tightening run. In other words the US stock market may move higher, from here but not substantially so. Remember US stocks had all the things going for them in 2005 (sitting on large amounts of cash etc), and then some, that they do in 2006 (still sitting on cash, but now face an interest rate affected economy etc), but I think the indicies over there only went ahead by a couple of percent in most cases, by years end in 2005.

Bear Stearn's analyst Francois Trahan has lowered his expectations of the S & P 500 by about 11% or so for the end of the year. Trahan has been the most accurate of forecasters for the US indicies in recent time. Reckons that the US economy is going to be in for a 'soft landing', provided the Fed manages things correctly, and that in such a scenario 2007 is looking bullish for the US markets.

Given that, and a reasonably stable growth in the world over the next few years, demand for Australian resources will still be strong, but it is difficult to see some stocks at the speculative end being able to reproduce what they have since 2004/5. SEC's plan above thus looks to me to be a good one.

I also think that a couple of 'ex-specs' will be very very shortable from now on....its a shame the ASX shorting list is so short, so to speak, because there are several not on the list but are big enough to be that are exhibiting 'classic' shorting profiles right now.

[kura]

I am still wary of current market, and only day trade a few swings, just not confident enough to hold.

[GB]

Ditto- GB scalping at the mo

[SEC]

quote:Originally posted by SEC

Mr Kidney the problem with 'waiting until things settle' is that there is every chance it'll spring upward again before you know it and you curse that you've missed the juiciest buy opportunities for several months.

The underlying factors behind this ASX 'correction' don't look much different from those of April and October 05, and as such I reckon we'll see another similar size correction. We're down 6.3% already and the previous two corrections took 7 - 8% off the index. So not far to go now I reckon, 5000 will be sorely tested. If so, a fall near 4900 might be on the cards but it won't stay below 5000 for long.

SEC


Looks like the correction this time was 7%, similar to those in 05. Thanks to my purchases last week (which have averaged 16% return to date) and WOR's outperformance (my largest holding), my shares+cash position has returned to pre-correction levels. It's as if the May correction never happened!

The SEC wallet is now CLOSED until further notice.

SEC

[Packersoldkidney]

quote:Originally posted by SEC


quote:Originally posted by SEC

Mr Kidney the problem with 'waiting until things settle' is that there is every chance it'll spring upward again before you know it and you curse that you've missed the juiciest buy opportunities for several months.

The underlying factors behind this ASX 'correction' don't look much different from those of April and October 05, and as such I reckon we'll see another similar size correction. We're down 6.3% already and the previous two corrections took 7 - 8% off the index. So not far to go now I reckon, 5000 will be sorely tested. If so, a fall near 4900 might be on the cards but it won't stay below 5000 for long.

SEC


Looks like the correction this time was 7%, similar to those in 05. Thanks to my purchases last week (which have averaged 16% return to date) and WOR's outperformance (my largest holding), my shares+cash position has returned to pre-correction levels. It's as if the May correction never happened!

The SEC wallet is now CLOSED until further notice.

SEC


Good return - beats me. My return from buying in the recent downdip is 11.947%, some of which is already in cash.

My wallet is definitely open on the trading side of things.

[Packersoldkidney]

Wall St plunges and we follow

Michael Evans
June 7, 2006
Related coverage


WALL Street's biggest fall in nearly six months amid fresh concerns about US interest rates and economic growth has spurred nervous Australian investors into another sell-off of the Australian sharemarket.

In the US on Monday, the Dow fell 199 points or 2 per cent after US Federal Reserve chairman Ben Bernanke warned that US interest rates could keep rising despite a slowing economy.

Here, yesterday, the ASX 200 fell 83.9 points or 1.6 per cent to 5036.1 points: the seventh time in the past month the Australian sharemarket has slumped more than 1 per cent after a seemingly invincible three-year resources-led bull run that doubled the value of the local market.

Europe, too, followed the trend, with all but two exchanges down more than 1 per cent in early trading last night.

There are fears the increasing volatility may encourage local investors to cash in their chips.

"Confidence in the market is waning every day," Goldman Sachs JBWere trader Richard Coppleson said. "The market is unlikely to sustain a major advance in the short term.

"Unlike previous 8 per cent falls in May and October 2005, the market this time cannot regain its former glory."

The frequency of recent sell-offs meant "even the super bulls must be getting worried".

"We have seen more falls in the last three weeks than we have seen since the bull market began three years ago," he said.

Despite posting its worst month in three years in May and having fallen about 7 per cent from record highs a month ago, the market remains up more than 5 per cent in 2006.

Mr Bernanke's warning that US authorities would continue to be vigilant on inflation came despite acknowledging the expected slowdown in US.

Investors now fear US rates may rise for a 17th successive time when authorities meet this month, further slowing growth.

"Markets are running scared of inflation and interest rate fears and any pronouncements like that [from Bernanke] will always upset markets," said Bob Van Munster, head of equities at Tyndall Investment Management.

Local markets should expect more upheaval, he said.

"I think volatility is the order of the day. There's just this tug and pull about US growth and US inflation and until we get a really better understanding on where the trends are, you're going to see a period of significant volatility."

Australian stocks exposed to US earnings were amongst the biggest losers yesterday.

Rinker fell 4 per cent to $17.31 and James Hardie fell 4 per cent to $8.20.

Weaker commodity prices also weighed on miners. BHP fell 83c or 3 per cent to $28.02 and Rio Tinto fell $2.39 or 3 per cent to $77.50.

All the major banks also fell.

http://www.smh.com.au/news/business/wall-st-plunges-and-we-follow/2006/06/06/1149359746405.html

[tommy]

Thanx PAK, very informative article.

I'm loving this volatility though, these ups and downs are a great opportunity to buy quality stocks on the cheap[}:)]

Had to radically restructure my position last month but am I crazy for now having only 10% cash in my portfolio and the rest in shares?

I expect this to continue into the beginning of July but can't see the stock market going down forever. The money has got to go somewhere, especially all that money for super funds.

[ananda77]

tommy:

...with US-interest rising and USD rising as well, bonds(etc) will be the name of the game for some time...not shares

...anyway, what's the problem with waiting till the whole scenario turns actually positive again???...

Kind Regards

[tommy]

Hi ananda,

Very valid points you make there, highly appreciate your comments.

I don't think the stock market will CRASH... and I actually expect SOME sectors of the stock market to recover, especially the tech and biotech sectors which have been totally ignored in the latest resources boom.

That said, I could be completely wrong... the bears are certainly gaining force in the market.

[Packersoldkidney]

Hey, Tommy and Ananda.

Things are not looking the best for world markets at the moment: bull markets generally last for around 3 years, and we are currently stretching that time period at the moment.

I have a fair slab of my money in cash: the frequency of the down days is something I find disquieting, and is perhaps a sign we are at the mature end of this bull run. I'm still trading, but have only executed two trades on the long side in the last week: both of which went against me. Only two weeks or so ago I was still reasonably bullish in the short term on the ASX, but as I said it is becoming more and more difficult to hold that line.

The US markets have breeched support levels, and are looking crook from where I'm standing. The markets are at a fractious level and it would only take a terrorist scare or something similar to send them over the edge.

I'm definitely not short the market at this stage: the time to go short is when the market is well past its top, and not before.

I do think we have at least a rally in us yet, though: Bernanke's comments were meant to prep world markets for another possible rate rise, and that has been priced into the markets now with the recent falls after he made his statement.

If the markets do turn bearish, I can't see it lasting long, especially in the resource sector, as fundamentals, and the laws of supply and demand, don't go away in a matter of months, and in many cases take years to come into equilibrium. There are too many supply shortfalls in the resource sector for the long term outlook in that sector not to look rosy. It's just that at the moment, sentiment has changed, and bearish sentiment can go a long way to wiping away a lot of the gains made in the previous bull run.

[ananda77]

tommy:

...agree with you, the market will not crash, but remember:

...the Dow is (according to Collin Twiggs, Incredible Charts)

-bullish above 11000 (still in primary up-trend)
-neutral between 10000 and 11000 (still in primary up-trend)
-bearish below 10000 (primary up-trend ends)

...consequently, in this higher interest environment it's more unlikely that the Dow is heading for new highs above 11650 for some time and rather seeking support anywhere between 10000 and 11000 (next major support point is around 10700)

Kind Regards

[OneUp]

Ananda....

Why does it matter so much what the Dow is doing?

Notice the Aussie market has been in a massive bull market for years while the US markets have gone sideways.

The reason "everyone" is focused on the Dow at the moment is that we are in the 4th quarter and aren't getting much company specific news. So the "wall of worry" comes up. One year it's Sars. Next it's inflation. Focus on investing in good companies with growing profits and trading at reasonable valuations and...by August all will be right with the world. I note those companies with good news coming out have generally held up well or even advanced during the market decline. All IMHO of course.

[ananda77]

Packersoldkidney:

The US markets have breeched support levels, and are looking crook from where I'm standing.

...actually, I would not agree with you. On the contrary, the Dow has respected 11000 now twice (including yesterday's close) and 11050 also twice so far.

......however, with the possibility of further interest rate hikes, the Dow will loose it's bullish shine for some time...

...but right now and till such time when the Dow closes below 11000 it's still possible (but less likely) that we might see a rebound of the Dow tonight

...be prepared

Kind Regards

[ananda77]

One Up:

Focus on investing in good companies with growing profits and trading at reasonable valuations and...

...exactly, I am just not convinced, we have the most reasonable entry prices at our hands yet

Kind Regards

[Packersoldkidney]

I'm bearish on the US markets, Ananda, as I've said previously on other threads: so I guess that is where I'm at with it. The technical set up for the DOW is not looking rosy from where I'm at, but that is not to say it won't rally tonight.

It is fundamental factors, though, that are the main force at work on the US markets: writing that is pointing out the obvious. Rising inflation and rising interest rates are anathema to bullish markets, and that is what is happening now. Though it is interesting to read something that has the complete opposite view to this: you'll find one such article at elliottwave.com. It's free to sign into the website, and then you can access the article featured on the right corner of the front page called: "What Really Moves the Markets." (the view of the article, which it backs up with a battery of facts, is that it isn't the economy, inflation etc. Really a very interesting read)

There are wider forces at work than technical ones on the US market, and they've been brewing for sometime.

Remember: cyclical stocks peak last in cyclical bull markets, and ALL stocks fall once the top is in.

The market is falling because of the FED-induced looming recession, and one can expect the cyclical and commodity sectors to lead the way down.

It has happened at the end of all bull markets previously, and it seems to be happening now.

Is there any reason why this bull market will be any different to every other one that has preceded it?

[ananda77]

...cheers, Packersoldkidney

[Packersoldkidney]

"The consensus appears to be that the long term expansion in the credit supply will continue or even intensify under the Fed chairmanship of Ben Bernanke. One reason many people share this belief is their recollection of Bernanke’s November 2002 speech, “Deflation: Making Sure ‘It’ Doesn’t Happen Here,” in which he likens the Fed’s printing press option to dropping money from helicopters. There are reasons to believe, however, that the outcome will not be as the majority expects.

"One reason that Bernanke is likely to preside over a deflation in credit is that everyone believes the opposite. Investors have poured money into commodities, precious metals, stocks and property in the belief that if anything is certain, it is death, taxes and inflation. When the majority of investors thinks one way, it is likely to be wrong. This is basic market analysis.

"A more complex answer begins with the understanding that analysts constantly confuse credit creation with money creation. In fact, just today an essay became available on the Internet that includes a presumptuous edit of a statement by the dean of Austrian economics, Ludwig von Mises. In Human Action (p.572), Mises said, “There is no means of avoiding the final collapse of a boom brought about by credit expansion.” This statement is true and undoubtedly reads as intended. Yet the author of the article felt compelled to explain von Mises, with the following insertions: “There is no means of avoiding the final collapse of a boom brought about by [bank] credit [and therefore money] expansion.” First, a credit boom does not have to be financed by banks. As Jim Grant recently chronicled, railroad companies financed one of America’s greatest land booms, which, as Mises predicted, went bust. Second, credit is not money. Economists speak of “the money supply” as if they were referring to money, but they are not; for the most part, they are referring to credit. The actual supply of dollar-denominated money, legally defined in today’s world, is Federal Reserve Notes (FRNs), i.e. greenback cash. That money provides a basis for issuing credit. Credit may seem like money because once extended, it becomes deposited as if it were cash, and the depositor’s account is credited with that amount of money. But observe: the account is only credited with that amount of money; the actual money upon which that credit is based is not in the account. Every bank account is an I.O.U. for cash, not cash itself. Needless to say, the $64.3 billion in cash in U.S. bank vaults and at the Fed is insufficient backing for the 38 trillion dollars worth of dollar-denominated credit outstanding, not to mention at least twice that amount in the implied promises of derivatives. The ratio is about 1 to 600. This ratio has grown exponentially under the easy-credit policies of the Fed and the banking system.

"When credit expands beyond an economy’s ability to pay the interest and principal, the trend toward expansion reverses, and the amount of outstanding credit contracts as debtors pay off their loans or default. The resulting drop in the credit supply is deflation. While it seems sensible to say that all the Fed need do is to create more money, i.e. FRNs, to 'combat deflation' it is sensible only in a world in which a vacuum replaces the actual forces that any such policy would encounter. If investors worldwide were to become informed, or even suspicious, that the Fed would follow the ’copter course, it would divest itself of dollar-denominated debt assets, causing a collapse in the value of dollar-denominated bonds, notes and bills. This collapse would be deflation. It would be a collapse in the dollar value of the outstanding credit supply.

"Contrary to popular belief, neither the government nor the Fed would wish such a thing to happen. The U.S. government does not want its bonds to attain (official) junk status, because its borrowing power is one of the only two powers over money that it has, the first being taxation. The Fed would commit suicide by hyper-inflating, because Federal government bonds

[OneUp]

I can't begin to comment on the logic of Austrian economics. All I was ever fed was Neo-Classical and Keynesian.

Anyway, if the world banking and credit system as we know it implodes, we all better start learning how to fish.

So long as a company's profits are on the up (and will be so even in tougher times) and valuation is reasonable I'm comfortable holding.

But assumed growth rates in the DCF valuations used to justify the prices of many Aussie companies have highly questionable long term growth rates (4-5%, against 3% where they should be).

[tommy]

Interesting article again POK, cheers for that.

I would hate to think what would happen if the credit bubble in the USA bursted... It took more than a decade for Japan to recover from the bubble i.e. clean up trillions in bad debt of major banks and get out of the deflation cycle.

But then again, USA could start another war to jump-start its economy again to postpone the pain[|)]

[Packersoldkidney]

quote:Originally posted by OneUp

I can't begin to comment on the logic of Austrian economics. All I was ever fed was Neo-Classical and Keynesian.

Anyway, if the world banking and credit system as we know it implodes, we all better start learning how to fish.

So long as a company's profits are on the up (and will be so even in tougher times) and valuation is reasonable I'm comfortable holding.

But assumed growth rates in the DCF valuations used to justify the prices of many Aussie companies have highly questionable long term growth rates (4-5%, against 3% where they should be).



Tommy: no problems for that. That's what the internet is for.

Oneup: interestingly I first came across Von Mises when I was doing a short thesis on Max Weber....he had quite a bit to say on Weber's 'way of looking at things' for want of a better word. I have sociological training, which before I started I thought was a bit of a w ank fest, but in different areas of thought it is funny to see that there are so many parallels between one school and other schools. Cutting edge physics, for instance, is now used widely at the cutting edge of philosophy.

There are strong links between sociology and economics, and also strong links between economics, sociology and psychology.....and thereon to the mindset of trading and investing.

[kura]

Gee POK, esoteric stuff !
Will we get logical rationale behind Yogis astrotrading next ?

[Cooper]

quote:Originally posted by Packersoldkidney
There are strong links between sociology and economics, and also strong links between economics, sociology and psychology.....and thereon to the mindset of trading and investing.


You're dead right POK. Its quite striking really. At the heart of most subjects is the study of humanity (stretched in the case of physics... but there you're constrained by the human ability to understand). At the w-nkfest end of the spectrum is the idea that everything is a human construct. The result is that everything has that commonality of being human-centric, directly or indirectly.

But I probably enjoy the w@nky stuff more than most.

[Moonshine]

DOW currently -112pts.

Tomorrow is going to be awful.

[Moonshine]

quote:Originally posted by Moonshine

DOW currently -112pts.

Tomorrow is going to be awful.


As if to up the stakes even more as the markets are precariously balanced over the edge of a precipice... but... closed 8pts up, great recovery!

Today could go either way...

[nelehdine]

Dow rallied to a fraction up ... metals got seriously bashed , what to buy in the first hour is now the question for me. OXR,ZFX,BHP,SBM, ...the list goes on !!

[ananda77]

...sailing into calmer waters after the squall...

<center>http://img.villagephotos.com/p/2004-12/905046/US30AUSSPX200.gif</center>

...started picking on ncm, ogd, mgx...

Kind Regards

[Halebop]

The good news so far is that the secondary uptrend has been respected twice...

http://img206.imageshack.us/img206/103/xaoax08dec04to10jun064on.png

RSI in recent times says BUY but at some point physics have to win over endless booms. So who will win this round, greed or fear?

[Halebop]

Ouchy start to the day. If it doesn't claw this back then I think June could give up another 300 points.

[port hills]

Mr ugly comes to town! [}:)]

[port hills]

What the ASX tanks and no one wants to talk about it?

All eyes on New York tonight, in between the soccer that is.

If the Dow drops a couple of hundred tonight, where will the ASX be tomorrow? :(

[Dazza]

tank mania man &gt;&lt;

im down 25% on my portfolio, with a few down 50% or so.

picked up some cheapie ZFX @ $9 should be good this one, though i c support at 8 maybe

[Footsie]

ASX in meltdown.... 2.6% is a massive fall

Commodities correction, but its not the big one...

I think the market has another 5-6% to fall over the next 6 weeks before a rally in july/august.

[Halebop]

Now broken both secondary uptrends. The primary from February 2003 still remains in good shape. This is currently sitting at 4,500. If we assume the market falls for another week or two around 4,550 will be an interesting number to watch for support or not...

http://img100.imageshack.us/img100/9466/xaoax09jun05to15jun060hg.png

A fall below 4,550 would be scary but I think less likely than a recovery despite some uncertainty right now. There is a lot of money floating around Australia / the ASX and looking for a home despite record asset prices. A correction is what the doctor ordered and I'm happy to be cashed up and awaiting opportunities.

[Heavy Metal]

Might be worth while pointing out old resistance/support lines as well as trendlines. 4750 looks like support (Jan/Feb lows), as does 4600 (Sep/Nov highs).

[Mick100]

quote:Originally posted by Heavy Metal

Might be worth while pointing out old resistance/support lines as well as trendlines. 4750 looks like support (Jan/Feb lows), as does 4600 (Sep/Nov highs).


And the 200 day MA at about 4750

[port hills]

Overnight;
gold down 7%
silver down 10%
oil down 2.5%

**** to hit fan on ASX today, again.

[kura]

I put in several lowish buy orders late yesterday (none traded) but have just pulled them, on the basis that will drop further today, with Dow down again last night.

Little ditty to tune of "Click go the Shears"
Down goes the Dow boys, down, down ,down

[OutToLunch]

Interesting blip on the ASX yesterday. If you look at the trading for many of the the major stocks you'll see there was a sudden spike to well above prevailing market prices, on high volume, at about 1.40 pm (eg look at RIO, BHP, CBA, WBC, ANZ... even PDN, OXR and no doubt loads of others too). What was that all about? A big player scooping up some bargains, or....??

[ananda77]

...a 20% fall of index regarded as a "bear market"...a 10% fall of index regarded as a "correction"...

US30(150 MA weighted): ~8.3% down from May high...

AUSSPX200(100MA weighted): ~11.6% down from May high...

<center>http://img.villagephotos.com/p/2004-12/905046/US30AussieSPX200.gif</center>

Kind Regards

[Halebop]

http://www.theaustralian.news.com.au/story/0,20867,19464448-643,00.html

Gotta love it. According to Kevin Andrusiak at the Australian, the "official end to the bull run" is marked when the index falls 10% from its high. Is there a special school for learning this crap?

[skinny]

Have taken the day off work to do some research, my nose is twitching, sitting on a pile of cash and it seems like there are bargains galore on planet earth!

Check out this article on global shipping companies for example:

http://www.fool.com/news/commentary/2006/commentary06061320.htm?source=eptyholnk303100&logvisit=y&npu=y&bounce=y&bounce2=y

Trailing p/e's for this group are under 6 and a couple have dividend yields close to 20%!! Profitability in the sector is under pressure, but even so, expected fwd dividend yields are still well over 10% and p/e ratios stabilise in their low teens...

I posted yesterday on the US E&P sector (DVN, APC, APA etc), companies that have similarly low p/e ratios (around 7), little debt, rising dividend payouts and just massive free cash flows which are in no sign of threat even if oil prices tumble down to $50 or so.

Asian ETFs are looking cheap on a historic p/e basis and juicy for a trade (EWY, EWJ, EWT) - all around 30% off year highs.

In Australia of course the resources sector has been hit hard and I have some averaging down to do in AED, lol.

But I think there are actually cheaper commodity plays in US and Canadian markets (with the possible exception of the coal stocks, be interested to hear if anyone is looking at them) and am thinking more about the bet up retail sector on the ASX -- latest employment figures for Oz were really good and concentrated in the populous states of NSW and VIC, tax cuts effects are coming through, and property prices look like they are starting to come up a bit here too.

[ananda77]

quote:Originally posted by Halebop

http://www.theaustralian.news.com.au/story/0,20867,19464448-643,00.html

Gotta love it. According to Kevin Andrusiak at the Australian, the "official end to the bull run" is marked when the index falls 10% from its high. Is there a special school for learning this crap?


...don't get worked up, please...he's got it wrong...

[JBmurc]

sell in the boom april06 buy in the gloom june 06
hindsights a great thing (was very close to selling down all my holdings early may would have been 50,000 better off now[V][V]

[ananda77]

JBmurc:

...this is just a big misconception -the hindsight thing-

...EVERYBODY (and I am talking formost of myself here) even with only the slightest idea or only the most rudimentary knowledge of TA would have chucked it in long before the cows came home...

Kind Regards

[ananda77]

quote:Originally posted by ananda77

JBmurc:

...this is just a big misconception -the hindsight thing-

...EVERYBODY (and I am talking formost of myself here) even with only the slightest idea or only the most rudimentary knowledge of TA would have chucked it in long before the cows came home...

Kind Regards


...now anyone who doubts the merits of TA (!!!???)...let's play a game

...by now, we all know the indices are down but what is more important right now is:

-when to buy in again-

Kind Regards

[Halebop]

Hey JBmurc, I've been out and in cash for a little while but I'm not sure the longer term charts really helped me here. It was more concerns of inflation and interest rates that popped my bubble.

At the moment the primary February 2003 uptrend is still intact, the ASX is still tracking above its 200 Day moving average, OBV would have a long way to fall before it breaks trend etc. If you are a longer term holder you haven't been sent many sell signals yet dispite the pain.

I personally think the market will test the long term Feb 2003 uptrend and bounce back up off it, maybe as early as July but I think there is enough negative sentiment and mixed signals out there to take as long as September / October to play out. Whatever happens I'll be waiting for the charts to confirm it rather than leaping in...

[backtobasics]

I’m losing my life savings. Bought into commodity and gold shares about 3 months ago. All the reports were that we had just started the biggest gold bull run in history and that commodities were the stocks to be in.

Now I’ve lost 65% on my original life saving investment and its going to get worse.

What is going on????!!!!!!!! Where is this bull run and the commodity run.

*uck.

[Halebop]

That sucks BtB.

Commodity and Gold shares are both volatile and cyclical. Small commodity and gold shares tend to exaggerate these features. 65% is a far greater loss than the general market or even Gold / Oil etc sub indices. I'm picking you are exposed to smaller and speculative ventures? A correction like this reveals risk and reduces tolerance for the same. In a flight to quality these issues lose out to cash and defensive investments.

Nobody can say with certainty if the market will recover or keep falling so we cannot know if your losses are permanent. But have a look to the structure of your portfolio, your time frames, your reasons for investing and your selection criteria. Something has gone wrong with your process for you to lose that much in such a short time. Learning something from this will be the best investment you make.

[backtobasics]

quote:Originally posted by Halebop

That sucks BtB.


Learning something from this will be the best investment you make.


Learning something!!! The only thing I have learnt is that my money is disappearing. What am I going to do now!!

[Halebop]

quote:Originally posted by backtobasics

Learning something!!! The only thing I have learnt is that my money is disappearing. What am I going to do now!!


What are you going to do now?

You really only have two choices...

[1] Do nothing
[2] Take action

My advice would be the later. Even taking action might result in no action at all but the place to start is...

Analyse outcomes
Make decisions
Take Action

...rinse and repeat forever...

Everyone has to endure set backs. Losses are horrible no matter the quantum. The difference between winners and also rans occurs during the worst of times, not the best of times. Work out where you went wrong. Work out what you will do differently. Implement it.

The hardest decision you might need to take now is selling assets at a loss. Keep in mind that their price today is what they are worth. Not the price you paid. Not their "intrinsic" value. What is the prospect and time frames of making profits at todays prices? Will sentiment be enough to sink any of them further? Have they been temporarily oversold? I'd be astounded if there was one same answer for each share you own (unless you only own one company!).

[lanenz]

IMO, this is a very healthy sign for the markets. The ASX has been overheated for sometime and a correction of some sort was in order.

Nobody likes to lose money and its a timely reminder that the ones who think they can make 25% plus every year are kidding themselves. Some might make a lot more over a 2, 3 or 4 year period but over a longer term (10 or more years) anything over 10 return is fairly good going.

Lets just hope this little sell of doesnt trigger a bigger sell off otherwise i might start having to sing for my dinner. And i cant bloody sing

[Bel]

Now would be a great time to have plenty of cash available to take advantage of cheap shares. Just make sure you don't get in to early.

One way to look at it Btb is that now is not that youve lost money but rather that now is not the time to sell. (we passed that point weeks ago). As long as the fundamentals are right in the company youve invested in the bounce will see back in the black as there is a lot of money out there that has to go somewhere and lets face it, all we are witnessing today is a stampeding herd of frightened sheep.

Just don't panic react, wait for your emotions to cool before taking action.

[skinny]

Asian bourses all up today, has to be a +ve sign that the contagion is not spreading.

http://finance.yahoo.com/intlindices?e=asia

[Halebop]

quote:Originally posted by skinny

Asian bourses all up today, has to be a +ve sign that the contagion is not spreading.

Perhaps a vote for commodity users rather than commodity producers?

[lanenz]

KW. Except when dont know if the where the bottom is. Could bounce off at these levels or retract another 5% plus.

[kura]

Think the bounce has started, purchased some ZFX this morning, (down 10%) but they have now recovered that loss.

For btb, don't take it too hard, I started investing a few months before 9/11, and took a real good hit at the time, it just made me determined to work smarter.

[ASXIOU]

Major recovery underway..... Could see a massive rise in the index tommorrow if the US behaves itself tonight?

[Revhead]

Feel for your situation BTB - been there done that!

In your case, you say you have lost 65% of your dough, then perhaps you should consider hunkering down and riding it out. Hopefully you chose quality company's, and while they will have been savaged in recent week or so, they will also be the first to bounce back quickly once metal prices stabilise.

Unfortunately gold still going down so some more blood to be spilt yet, but remember the US$ is knackered. I tend to think metal prices will rise again sooner, rather than later.

Look at the company's you have bought shares in - if they all have rock solid fundamentals then there is probably no reason to sell. They will come back...

If ever there is a lesson in all this - it is don't invest money in the sharemarket that one cannot afford to lose, or you will need to call on in the short term. If you have time on your side, you can ride it out.

Rev

[bushbasher]

quote:Originally posted by ASXIOU

Major recovery underway..... Could see a massive rise in the index tommorrow if the US behaves itself tonight?
Likely to be a dead cat bounce tomorrow. Not sure if the market has hit bottom. I agree this was a much needed shake-out, but could be volatile for a few more weeks before market get's a feel for where the Fed's going to go.

I still feel the fundamentals for commodities are pretty good in medium to long term. I wouldn't lose faith yet.

[Bel]

http://www.investmentrarities.com/06-12-06.html

Raises eyebrows.

[kura]

quote:Originally posted by Revhead

Feel for your situation BTB - been there done that!

If ever there is a lesson in all this - it is don't invest money in the sharemarket that one cannot afford to lose, or you will need to call on in the short term. If you have time on your side, you can ride it out.

Rev


Years ago, I had most of my spare "readies" parked in the sharemarket, but went off one weekend to look at this farm for sale, I liked it that much, I purchased it, (knowing I would need to sell shares, to go towards purchase) and was driving home Monday, listening to radio (feeling verry smug with myself) and a newsflash came over radio that Saddam Hussien had just invaded Kuwait, and worldwide sharemarkets were plummeting. (I had to sell, unconditional contracts was signed, etc) I was "gunshy" of the sharemarket for many years after that experience.

[Halebop]

quote:Originally posted by cantab

BTB, remember that the market price today is not what your shares are worth. Your shares are worth either less or more than what they are selling at today. Today is just a snapshot in time, and sentiment is very negative, so I'd think very hard indeed before selling out. If some of your companies are solid with good prospects and you realise your loss then you will feel even worse later when they recover. With dogs though, the best time to sell is now.

So with the dogs what price do you sell at? I'd have thought that would be todays price. In which case, your good ones are only worth todays price as well.

[tricha]

Back to Basics

I have only one thing to say - hang in there, this correction in resources has gone way past the mark. I have been through this a few times in the past two years, its like riding a rollercaoster.
That's what the resourse market is all about, greed :D and fear :(.

Fear struck today in a huge way, blind panic.

If China had fallen over, yeah sure! But, China is still roaring.

Cheers not so [B)][}:)]

[kura]

quote:Originally posted by Halebop


quote:Originally posted by cantab

BTB, remember that the market price today is not what your shares are worth. Your shares are worth either less or more than what they are selling at today. Today is just a snapshot in time, and sentiment is very negative, so I'd think very hard indeed before selling out. If some of your companies are solid with good prospects and you realise your loss then you will feel even worse later when they recover. With dogs though, the best time to sell is now.

So with the dogs what price do you sell at? I'd have thought that would be todays price. In which case, your good ones are only worth todays price as well.


I thought shares were worth the same a property, namely what someone else was prepared to pay for them at the time? If thats not current market value, then what is the magical formula ? Is one supposed to hang on to their dogs forever, with the belief that I haven't really lost anything untill I sell ? (Been there done that also)

[kura]

quote:Originally posted by cantab

As I said "the market price today is not what your shares are worth. Your shares are worth either less or more than what they are selling at today"

The dogs are worth less than todays price which is why they should be sold today, the good ones are worth more, that's why they should be retained.

Sorry Cantab, I think you are loosing it, your rationale makes no sense, Crusaders must have overloaded the braincells :)

[Halebop]

quote:Originally posted by cantab

The dogs are worth less than todays price which is why they should be sold today, the good ones are worth more, that's why they should be retained.

How would you know the good ones are worth more? If the market hits a secular bear cycle all securities are priced on lower assumptions via higher discount rates. A share like any asset at any given time is only worth what someone is willing to pay for it. You can't extract $1.50 of instrinsic value by selling at $1.00 of market value. A loss (or a profit!), be it 65% or 5%, is no guarantee that further losses are at an end, irrespective of the perceived quality of the investments.

Having your "original reason" for holding an investment still stand is not a logical argument for proving that you have not lost money. Your Westpac shares are down 15% you said. Down 15% from where? The answer is down 15% from what someone was previously willing to pay for them. If the market value isn't the score card how could you even track your historical returns and performance? Even Buffett marks his historical investments to market in his annual letter to shareholders (Not to be confused with his financial reporting). This is because there is no other meaningful number.

[kura]

Don't bother Halebop, we both know Cantabs, logic don't make any sense (possibly afflicted by recent snowfalls "settling on the brain" ? )
Goodnight All

[Bel]

Lets say a companiess SP was 50c due to panic selling from threat of higher interest rates yet each share bought you $2 in tangible assets, 10c in liabilities and a EPS of 20c with good growth prospects.

Question is do you stay with the herd (Baaaaa) and stay clear of the market or do you buy part of this company?

What is the value of this company in your books? Are you the type of investor that makes your profits on the buy or the sell?

[Halebop]

quote:Originally posted by Bel

Lets say a companiess SP was 50c due to panic selling from threat of higher interest rates yet each share bought you $2 in tangible assets, 10c in liabilities and a EPS of 20c with good growth prospects.

...and if it then falls to 25 cents?

[Halebop]

quote:Originally posted by cantab

Based on your logic there is no such thing as a good or bad buy or a bargain when buying a car or a house, or a share. That's great news as the bank wont need a valuation report because the house is worth what I paid for it. Take AED, it traded between $104.5 and $1.22 and closed at $1.20. The value (worth) of AED did not change during the day, only the price did.

Well in Auckland they do at least teach us the English language and logic. Value fluctuates. Value does not mean worth. You are confusing the inexact science of valuing an asset with the exact science of market value.

The price of AED fluctuated because of supply and demand, fear and greed. This had nothing to do with intrinsic value which is exactly the point. Those shares could be bought or sold only for what someone was willing to sell or buy them for.

[Wossname]

quote:Originally posted by backtobasics

I’m losing my life savings. Bought into commodity and gold shares about 3 months ago. All the reports were that we had just started the biggest gold bull run in history and that commodities were the stocks to be in.

Now I’ve lost 65% on my original life saving investment and its going to get worse.

What is going on????!!!!!!!! Where is this bull run and the commodity run.

*uck.



BtB,

What's going on is a correction.

Meanwhile, the driver for the bull run in commodities is a decade-plus of moribund mining development, and that will probably take years to redress. It would take a full-blown world recession to threaten the commodity boom, and that is not what has happened so far.

Likewise, the driver for gold to increase in price remains strong and durable. Gold is historically regarded as the premier store of worldly value, bar none. When other stores of value become suspect, gold is the object of greed and the refuge of fear. In other words, investors buy it and send the price up. The main store of value in the world at the moment is the USD, and it is being relentlessly diluted in value by overprinting. Harder times are coming for paper currencies generally, and as this plays out over coming months and years gold will be the beneficiary. The investment advantage of gold over base metals is that it tends to do best in hard times.

There is a great temptation to sell during corrections. Lots of investors are feeling pain at the moment. I know I am. However, if a stock has sound growth prospects and/or value, and lies in a solid sector like gold, oil, uranium, etc, then it's often best to grit your teeth and hang on. Corrections are common at this time of year, and often all you have to do is wait for rich American investors to return from summer holidays.

On the bright side, this sort of disturbance is a good motivator for improving investment skills.

I'm not an investment advisor. I could easily be wrong. Do your own research.

Hey, wasn't that...er...Wossname?

[stevieb]

quote:Originally posted by Halebop


quote:Originally posted by Bel

Lets say a companiess SP was 50c due to panic selling from threat of higher interest rates yet each share bought you $2 in tangible assets, 10c in liabilities and a EPS of 20c with good growth prospects.

...and if it then falls to 25 cents?



Isn't this exactly the point Bel is trying to make here, if the company has a share price of 25 cents but $2 or so in assets and an EPS of 20c (and each of these is genuine) then odds on someon eis eventually going to realise this and buy the company and sell off the assets (GPG would be a good bet) and make a profit. Sure it may be priced at 50c or even 25c today but over time a company with fundamentals such as these will eventually tend to move to reflect the underlying value rather than current price.

[JBmurc]

;)is this the start of the recovery;)
GOLD-570
CRUDE OIL-69

best of all my portfilo back up 10,000 last couple days

brought- MRS 26c BHP 26.00 today

[tricha]

Sure looks like it JBmurc, China is smoking![:p]

Yeah I was lucky enough to top up with 40,000 BMO at 25.5c and 25,000 ARUO at 12.5c yesterday.
Followed ARUO up to 15.5 with the un filled 5000 today, no suckers today.

Copper Rebounds on Speculation Drop Was Exaggerated (Correct)
(Corrects industrial production in second paragraph.)

June 14 (Bloomberg) -- Copper rose for the first day in five in London, leading other metals such as aluminum and zinc higher on speculation an earlier decline was exaggerated.

China, the largest consumer of metals including copper and aluminum, said today its industrial production rose 17.9 percent in May, the biggest gain in two years. Metals fell yesterday on concern that rising global interest rates may curb economic growth and the demand for industrial raw materials.

``Nothing goes in a straight line,'' said Jeremy Goldwyn, global head of industrial commodities at Sucden U.K. Plc in London. ``We would expect pockets of corrections and support.''

Copper for delivery in three months on the LME rose as much as $155, or 2.4 percent, to $6,725 a metric ton, after earlier falling as much as 2.4 percent. The metal traded at $6,685 as of 8:58 a.m. London time.

Zinc rose $40, or 1.4 percent, to $3,000 a ton, nickel gained $325 to $17,850 and aluminum added $11 to $2,466. Tin was unchanged at $7,700 and lead dropped $10 to $985.

[Sharpie]

Dow storming late in the day back over 11000.

Those prices 2-3 days ago look very good now although I think there is a good chance of another little drop before July. But hey the gains are there.

Have a good one.

[Heavy Metal]

quote:Originally posted by Heavy Metal

Might be worth while pointing out old resistance/support lines as well as trendlines. 4750 looks like support (Jan/Feb lows), as does 4600 (Sep/Nov highs).


Re inlation jitters, sell on rumour, buy on fact. ASX200 futures today up 106 points. Correction over. Low point was just below 4750.

[Halebop]

I suspect today will represent a chance to sell and lock in profits rather than buy. The volatility isn't over yet. The DOW reads like a bear trap to me.

[ananda77]

quote:Originally posted by Halebop

I suspect today will represent a chance to sell and lock in profits rather than buy. The volatility isn't over yet. The DOW reads like a bear trap to me.


...yes, if it's a turn, it NEEDS to be confirmed...that's the time to get in...patience, patience, patience...but it's good short-term fun on the indices...

Kind Regards

[tricha]

Monkey see Monkey do, more blood on the floor tomorrow

[Moonshine]

Anyone care to elaborate on why the XAO is holding up so well after a 130pt fall on the DOW on Friday?

This goes against all recent index dependencies.

[stevieb]

quote:Originally posted by Moonshine

Anyone care to elaborate on why the XAO is holding up so well after a 130pt fall on the DOW on Friday?

This goes against all recent index dependencies.



Probably realised it doesn't have to be dependant on the Dow and is striking out on it's own. This is largely a serious comment, while clearly a weak US economy is a risk, the Australian economy has done remarkably well in the last few years despite a week(ish) US economy and may well continue to do so.

[tricha]

Monkey see Monkey do, more blood on the floor tomorrow

Well I'll be blowed, will have to eat my hat on that one. Confounded me

[tommy]

We might have some positive signs on DOW:

http://money.cnn.com/2006/07/10/markets/stockswatch/index.htm


Stocks hope to earn gains
U.S. markets set to open higher as investors await first of the June quarter results.
July 10 2006: 7:58 AM EDT

NEW YORK (CNNMoney.com) -- U.S. stocks were poised for a higher start Monday as investors await the first of the June-quarter corporate reports that will show just how strong the economy is.

At 8 a.m. ET, S&P and Nasdaq futures pointed to a higher start for the major indexes.

While the results schedule for the week is relatively light, it does include two Dow Jones industrial average components: Alcoa (Charts), after Monday's close, and General Electric (Charts), before Thursday's open.

Peter Cardillo, chief market strategist at SW Bach, said anticipation of strong earnings and the sense that U.S. markets oversold Friday were lifting futures in early trading.

"I'm expecting a good earnings season, but the key is guidance; that will set the tone," he said. Rising interest rates and high energy prices could put a crimp in earnings guidance, he said.

"I don't expect the earnings season to kick-off a new bull run," Cardillo added. "The best case scenario is we get a higher trading range."

Lower oil could also help the markets early Monday. U.S. light crude was down 54 cents to $73.55 a barrel in electronic trading, while Brent crude was 76 cents lower in London trading at $72.75.

Oil was trading lower after a report in the Wall Street Journal that Saudi Arabia is testing a technique that could unlock its hard-to-tap reservoirs of heavy crude.

The paper reports that the effort could add significantly to Saudi oil reserves and give tight energy markets some of the slack that has been missing for more than a year, helping to keep prices high.

Treasury prices were little changed, with the yield on the 10-year note near the 5.13 percent level reached late Friday.

Stocks in Asia closed mostly higher after a report on Japanese machinery orders, a key gauge of corporate capital spending, came in better than expected. But major indexes in Europe were lower in early trading.

Among stocks to watch is Walt Disney (Charts) after a record-setting $132 million weekend for "Pirates of the Caribbean: Dead Man's Chest."

Published reports say Kraft Foods (Charts) has agreed to buy United Biscuits of the United Kingdom, in a deal that could be announced as soon as Monday. Kraft already owns 25 percent of the British company, which makes Kraft products such as Ritz crackers and Oreo cookies under license in Europe.

The two economic reports due Monday are readings on wholesale inventories and consumer credit.

The 10 a.m. ET wholesale inventory report is forecast to show a 0.5 percent increase in May, according to economists surveyed by Briefing.com, slower than the 0.9 percent rise reported in April. Top of page

[JBmurc]

[quote]Originally posted by JBmurc

;)is this the start of the recovery;)
GOLD-570
CRUDE OIL-69

;)yes it was-
GOLD-642
CRUDE OIL-74

[Moonshine]

How will it play out today??

Metals = UP, UP, UP

DOW = DOWN, DOWN, DOWN

Now what will the XAO see as the greater influence?

One would hope that as the US Economy slowly crumbles, economists in OZ will start to see the wood from the trees and dis-engage the correlation between the Commodities driven Aussie mkt and the debt ridden US mkt.

Impossible to pick atm.

[Mick100]

quote:Originally posted by Moonshine



One would hope that as the US Economy slowly crumbles, economists in OZ will start to see the wood from the trees and dis-engage the correlation between the Commodities driven Aussie mkt and the debt ridden US mkt.




I don't know when this will happen Moonshine but it will happen.
.

[clearasmud]

quote:Originally posted by Mick100


quote:Originally posted by Moonshine



One would hope that as the US Economy slowly crumbles, economists in OZ will start to see the wood from the trees and dis-engage the correlation between the Commodities driven Aussie mkt and the debt ridden US mkt.




I don't know when this will happen Moonshine but it will happen.
.


Seems to be happening now.
The all ords is still stuck near 5050 but my 35 stock portfolio of
mostly commodity stocks is near its high and up 8% :D

[port hills]

Oil up DOW hammered an interesting day on the ASX

Currently - NYMEX oil $76.65
- DOW down 162 at 10850

[tricha]

Monkey see Monkey do, more blood on the floor today, I'll get it right today, ASX down 80 points!

[winner69]

quote:Originally posted by tricha

Monkey see Monkey do, more blood on the floor today, I'll get it right today, ASX down 80 points!


Bit of an underestimate there mate .... down 111 oe 2.2%

One of the biggest one day falls for a while .... nervous weekend for many?

[tommy]

quote:Originally posted by winner69


quote:Originally posted by tricha

Monkey see Monkey do, more blood on the floor today, I'll get it right today, ASX down 80 points!


Bit of an underestimate there mate .... down 111 oe 2.2%

One of the biggest one day falls for a while .... nervous weekend for many?


Luckily my portfolio was unaffected (picked up a few bargains hehehe) but I hope no "black monday" scenario unfolds on the back of the current shaky investor sentiment in the U.S.

Might be worth keeping an eye on DOW tonight:

http://money.cnn.com/data/premarket/

[Packersoldkidney]

Try this, Tommy: will give you the DOW in real time.

http://www.marketwatch.com/tools/quotes/quotes.asp?symb=$INDU&siteid=mktw

[tommy]

quote:Originally posted by Packersoldkidney

Try this, Tommy: will give you the DOW in real time.

http://www.marketwatch.com/tools/quotes/quotes.asp?symb=$INDU&siteid=mktw


Thanks POK, cool live quote function[8D]

Have a great weekend all, let's hope the market stops bleeding next week!

[Packersoldkidney]

Same to you, and yes I hope it goes green next week as well!

[k1w1]

Well I took a kicking today, dont know about anyone else.

[croesus]

Kicking or not, congrats on a 1000 posts
cheers Croesus

[clearasmud]

quote:Originally posted by k1w1

Well I took a kicking today, dont know about anyone else.


I'm down 1.3%. Cue was the worst.

[tommy]

Hi all,

Looks like we're not having the best weekend considering all the gloomy global news waiting to affect the market on Monday:

Israel, Hezbollah continue strikes
http://www.cnn.com/2006/WORLD/meast/07/15/mideast/index.html

Abe: Japan still wants NK sanction
http://www.cnn.com/2006/WORLD/asiapcf/07/14/japan.korea/index.html

Political tension is likely to further undermine the already-shaky sentiment in US markets, so we might be in for a roller-coaster ride for the coming weeks. I won't get out of the stock market yet because I guess there will be lots of opportunities to pick up good quality stocks on the cheap and I believe good companies will sooner or later bounce back regardless of the general market sentiment... am I being suicidal for taking this contrarian approach?

At times like this, I wonder which sectors are relatively detached from the volatility of the market in general; my portfolio is now heavily exposed to techs, media, energy and consumer discretionary... and I'm thinking of adding biotechs to this list. Anyone else have any suggestions regarding sectors that deserve exposure? Thanks in advance
[:I]

[tricha]

Be an interesting day tomorrow, my guess is 30 points down for the ASX

Tommy I see you have not got any gold, neither did I till a year ago when it decoupled from the $US.
Not that it has done me much good so far, but it's my insurance policy, if things do go real bad.

Energy which you have, I rate #1, not that I practice it as #1.

Biotechs, too risky for my likening.

Cheers not so [B)][}:)]

[Mick100]

I'm picking that the ASX will be up tomorrow

PS,tricha - I don't like red

[SEC]

Tricha, SPI futures indicate ~25 down at the start, but I'm also predicting green by the close. The difference with this correction and May-June is that commodity prices are still red-hot. Resource stock prices can't decouple from underlying commodity prices even in the medium term.

SEC

[stevieb]

quote:Originally posted by Mick100


I'm picking that the ASX will be up tomorrow


You may yet be right, depite being down 1% at midday it seems to be tracking back up now.

[ananda77]

...before any major upward move, the Ordinaries will HAVE to test 4800...if 4800 holds and finds solid volume support, I might convince myself to go long again...

Kind Regards

[tommy]

Tomorrow might be a good day on ASX with DOW recovering:

http://money.cnn.com/2006/07/18/markets/markets_nyopen/index.htm

Stocks bounce on earnings
Upbeat quarterly results from Coke, United Tech help market recover after recent battering; mild inflation reading adds support, too.
July 18 2006: 9:51 AM EDT

NEW YORK (CNNMoney.com) -- Upbeat earnings reports from Coca-Cola and Merrill Lynch and a mild reading on inflation were among the factors boosting stocks Tuesday morning.

The Dow Jones Industrial average (up 12.24 to 10,759.60, Charts) added 0.5 percent in the early going, while the broader Standard & Poor's 500 (up 3.65 to 1,238.14, Charts) index rose 0.4 percent. The tech-fueled Nasdaq composite (up 12.08 to 2,049.80, Charts) gained 0.5 percent.

Stocks slumped for three straight sessions and then meandered Monday as investors considered rocketing oil prices amid escalating violence between Israel and Lebanon's Hezbollah.

These concerns didn't disappear Tuesday morning, but found some competition in the form of the earnings and economic news.

Dow components Coca-Cola, United Technologies and Johnson & Johnson all reported quarterly earnings that rose from a year earlier and beat estimates.

Coca-Cola (up $0.55 to $43.25, Charts) shares gained more than 2 percent at the open, as did those of United Technologies (up $1.49 to $59.45, Charts). J&J (down $0.05 to $60.86, Charts) shares inched lower.

Merrill Lynch (down $0.27 to $68.00, Charts) also reported quarterly earnings that rose from a year earlier and beat estimates. Shares were modestly higher at the open.

In other news, prices at the wholesale level rose more than expected in June, and more than they rose in May, according to a government report. Yet June prices excluding volatile food and energy - the report's key inflation indicator - rose in line with estimates and less than in May.

U.S. light crude oil for August delivery gained 82 cents to $76.12 a barrel in electronic trading. On Friday, oil settled at a record high of $77.03 a barrel, after hitting a trading high of $78.40.

COMEX gold for August delivery slipped $3.90 to $648 an ounce.

Treasury prices slumped, lifting the yield on the benchmark 10-year note to 5.12 percent from around 5.06 percent late Monday.

[Opine]

Hi Ananda...just a little confused on differentiating perceived from real.SERIOUSLY!

[Opine]

I`m from the school of `you need more than one`.Hope you can do your best to explain.

[Bel]

quote:Originally posted by ananda77

...before any major upward move, the Ordinaries will HAVE to test 4800...if 4800 holds and finds solid volume support, I might convince myself to go long again...

Kind Regards


Hmmmm do you believe that the number 4800 holds some magical properties? That the volume of buyers and sellers changes once that number is reached? What if we used a hexidecimal system, would 4800 still be magical?

What am i missing here that prevents me understanding what TA means by support levels etc etc? Isn't all those calls made in hindsight and offers no prediction at all other than an overview of what the trend is?

For every TA chart showing a breach in a support level indicating a future SP about to plummet I can show a chart having done the opposite.

[ananda77]

...no magic numbers and no certainties, but definitely increasing probabilities...

...support/resistance points are 'unwritten' agreements by market participants to act in certain ways. Price actions create support/resistance points over a certain period of time.

...certain rules apply:

-after a down-trend, a price becomes a support point when all successive price action are at or above that price point.

-a price point needs to be confirmed to become a support (one time is allright, three times is better).

-usually, trading near or at support points an increase in volumes can be observed.

-support/resistance points vary according to the timeframes used for analysis (timeframes are one of the most important features when using TA - the right time is often more important than the right price-).

...as far as the Ordinaries is concerned 4800 is such a support point.

...from a psychological perspective, price actions near support/resistance points may act as islands of calmness/certainty in times of HIGH VOLATILITY (the present is such a time), points where certainty may be restored in the midst of chaos.

...therefore...the big picture in my mind -the 'SHORT' one- takes dominance over the 'LONG' one. This means that although I may trade long on certain days, the time frame is usually no konger than a day...

Kind Regards

[Bel]

Cheers for that info in easy to understand language ananda :D

[ananda77]

...the DOW, after braeking it's two-month downtrend and unable to break above 11300 dived back below 11100 and closed at 11079 yesterday

...in particular, the break-out happened on anaemic volume

...of course anything can happen in this game...but I am extremely careful...and again cashed up, because I think the DOW will be heading for another test to 10700

...the Aussie Index, being a good foot soldier, will of course follow suit

Kind Regards

[ananda77]

<center>http://img.villagephotos.com/p/2004-12/905046/DJIIA.gif</center>

[Mick100]

I see a double bottom

What do others see ?
,

[duncan macgregor]

quote:Originally posted by Mick100


I see a double bottom

What do others see ?
,
I am with you MICK its a BUM MARKET. macdunk

[Mick100]

quote:Originally posted by duncan macgregor


quote:Originally posted by Mick100


I see a double bottom

What do others see ?
,
I am with you MICK its a BUM MARKET. macdunk


:D
.

[clearasmud]

The 3 year bull market may still be intact...

http://www2.shawstockbroking.com.au/egoli/ParitechChart2.asp?myState=redraw&lastPriceDisplay=line&symbol=xjo&symbol2=&symbol3=&time=4yr&PriceIndicator=none&freq=1dy&VolumeIndicator=vol&PriceDisplay=line&param1=11&param2=31&comparisonDrawButton=Update+Chart

[ananda77]

Mick:

...does a 'double bottom' exist if you see one?????

Kind Regards

[ananda77]

...'double bottom' allright and go long at 10700 is the right thing to do, but...

Like anything else in TA, this formation also needs to be confirmed...with a break-out above the point where it started, around 11260

Initially, price action went above the resistance, but the break happened on low volume and the momentum could not be sustained...price action receded below support at 11100

As a result, price action did not confirm the bullish double bottom and the DOW remains in it's 4-month downtrend

...that's why I am looking for another test at 10700; a 'trible bottom' probably more appropriate in these uncertain times, in which indices seem to be driven by deperados

<center>http://img.villagephotos.com/p/2004-12/905046/DJIA.gif</center>

[Ricky99]

I'm even with where I was at the begining of May, but if I look at it month by month I've had a few grim ones.

What I look at instead is how am I doing compared to this time last year and I am 113% up, and then I look at quarter by quarter results. If I look at those the last quarter was a bit grim but at I still made money for the quarter (2.7%).

So all in all I've had a few down months but the trend of the last four years that I have been seriously in this market is still okay, and I haven't gone backwards yet on a quarter by quarter basis.

[mark100]

A bit of good news on US inflation tonight.

The PPI index for the month came in at 0.1% against expectations of 0.4% and the core PPI (which excludes food and energy) actually declined 0.3% against exopectations of a 0.2% rise

Personally, I still think we have further inflation worries to come but short term this news might give the US market (and therefore the ASX) a reason to rally?

[winner69]

todays paper .........

With underlying inflation high and apparently rising, Mr Costello told reporters yesterday that the country faced a "great" risk of repeating the economic mess that followed the 1970s oil shocks.

[mark100]

True, the oil shock and Peak Oil when it arrives (it may have already arrived) will cause all sorts of problems.

Although we all know Costello is talking things down at present because he doesn't want to see another interest rate rise.

[ananda77]

...did not get the 'trible bottom'...

...Dow closed above 11300 last night; 11600+ (new High) may be in the cards...

...personally, will wait for confirmation of the break-out before taking a more medium-term 'long' position

Kind Regards

[ananda77]

Australian Break-Out:

<center>http://img.villagephotos.com/p/2004-12/905046/AllOrdinaries.gif</center>

...have a good weekend...

Kind Regards

[stevieb]

Yep, agreed. Looks like the bulls have won this particular battle, but have they won the war?

[tricha]

Come in Packer. Miss your informative articles!

More blood on the floor on Monday, looks like the US has got a bit of the flu.:(
Can't work out why the DOW is not 10,500 points. Maybe its back on the way there now.

I'm bloody glad I sold gold and oil stocks 2 weeks ago, took some loses, but it would have been much worse hanging on.
And yep paid off one housing mortgage with the proceeds, my nerve has finally broken.

Gold looks like it has stabilised somewhat, the USA looks a bit un-stabilised so I taken a punt and re-entered on BMO.
Running at a major lose on them, but it could have been a lot worse.

Cheers not quite so [B)][}:)]

[tricha]

Well, everyone having a quiet weekend and licking their wounds. The prelude to the OZ weak! more wound licking.

MARKET DATA - 10:18 UK
FTSE 100 5822.3 -74.40
Dax 5883.3 -78.71
Cac 40 5142.0 -66.37
Dow Jones 11508.1 -25.13
Nasdaq 2218.9 -18.82
S&P 500 1314.8 -3.25
BBC Global 30 5475.9 -31.23
Marketwatch ticker

[tricha]

SUMMER RALLY IS LIKELY TOPPING
Major Decline is Likely Aheadby Bob Bronson
Bronson Capital Markets Research
September 7, 2006

History and economic logic show that during the 12- to 20-year periods of underperformance in the stock market that we call Supercycle bear market periods,[1] an economic slowdown almost always develops into a full-fledged recession that is at least twice as severe as recessions during Supercycle bull market periods.[2] The weight of evidence, a sampling of which is discussed in this commentary, continues to support our long-standing forecast that the current economic slowdown is well on the way to becoming a particularly severe recession that, when fully priced into the stock market,

will result in the devastating market decline that is characteristic of the second downleg of a Supercycle bear market.

This is a bit old, might have been posted before somewhere, but it makes sense and is well worth reading the whole story.
http://www.financialsense.com/editorials/bronson/2006/0907.html

[WASL]

History is not always the same. While this prediction may be correct it does not appear to take into account the two new phenomenal influences over the past few years - China and India.
This posted before reading the whole article which I will do. Thanks for the "heads up" on this Tricha

Regards
WASL

[Heavy Metal]

quote:Originally posted by tricha

This is a bit old, might have been posted before somewhere, but it makes sense and is well worth reading the whole story.
http://www.financialsense.com/editorials/bronson/2006/0907.html



A typical Financial (Non)Sense story/joke, and they always end with the same punchline:

THE END IS NIGH, YOU MUST BUY GOLD.

I thought you knew better than to post this crap Tricha, particularly since you've recently sold gold.

[nelehdine]

With the NZD buying over A0.88c and BHP at 2417 the combo was just too tempting ... back into BHP with my biggest single purchase for 12 months !! ( 4000 shares )

[soulman]

Money is awash in the Australian sharemarket ATM, with dividends increasing by 20 percent this financial reporting season and nearly all will be payable this coming October. Plus, everything seems to be taken over, creating more surplus funds. Also superannuation funds. Money everywhere to be put back in the market.

[stevieb]

quote:Originally posted by soulman

Money is awash in the Australian sharemarket ATM, with dividends increasing by 20 percent this financial reporting season and nearly all will be payable this coming October. Plus, everything seems to be taken over, creating more surplus funds. Also superannuation funds. Money everywhere to be put back in the market.

I just wish they'd take Coles out of their misery then even more money to invest back in the market.

[soulman]

Yes, CML will be huge and then you got Mayne, Colorado, OAMPS, Hardman, even a little bit of Unitab, DCA and others that I can't think of now.

[stevieb]

Maybe it's just luck but out of 12 shares I picked up in June/July/August, 3 have since had takeover offers. Looks like plenty of action out there to me!

[soulman]

Wow Tricha Bear, could you be ever wrong on your Sept 24th prediction. DOW nearly all time high and FTSE as well.

Neleh, BHP has serve you well. Looks like you bought right at the bottom.

[Bel]

One has to wonder why do many many people takes dips (such as the recent one) seriously when all geniune investments always bounce straight back.

At least thats been my experience over the last year.

Rick: "Oh look my shares have crashed %20 *yawn* i guess i wont be selling this month".

[ananda77]

Bel:

...useless to try logic reasoning, especially in hindsight;

...because there is money to be made in that dips -that's why-

Kind Regards

[nelehdine]

Thanks Soulman, with BHP now at 2538 I am looking sweet for the moment ... even the Kiwi $ has come off half a cent !! CHOICE !!

[Mick100]

quote:Originally posted by KW

Yup. As I said before, by the time you realise the world isnt ending its too late. You've probably been one of the idiots who has sold low and bought high.
I jumped in and bought WPL at its low point of $35.95. So far so good :-)


I wouldn't get too cocky until october's out of the way!

,

[tricha]

Can anyone please tell me what the average P.E ratio is for USA companies [?][?][?]

Why, to get a better picture of the US economy.

Cheers.

P.S Does anyone know where Packer has gone[?]

[Mick100]

quote:Originally posted by tricha

Can anyone please tell me what the average P.E ratio is for USA companies [?][?][?]

Why, to get a better picture of the US economy.

Cheers.

P.S Does anyone know where Packer has gone[?]


I think the large caps are in the high teens which is alot lower than they were six yrs ago and close to their long term average.
.

[winner69]

quote:Originally posted by major
.

While the PE is getting up a bit, the forecast earnings growth is 13.4% as against a historical of 9.6%.


That forecast earnings is the biggest problem (and unknown) because profit margins at the moment are at historically high levels, and when this happens been followed by tepid profit growth over the following 5-year period.

One report out has the current price/earnings ratio for the S&P 500 (net trailing earnings)at a 17.6, but if normalised profit margins were prevailing the P/E would be approximately 25. on the basis of normalized profit margins. Another interesting bit of hisotry is that when profit margins have been this high the P/E has been about 9.

meaning share prices in the USA (haven't moved much over the last few years have they)have only recently started to refelct high profits (which a cyclical) .... the warning is that as profit margins turn down so will the market

[tricha]

Thanks for that guys - what you focus on magnifies!

Sat's Finical Review, quote - The US sharemarket trades at just under 15 times estimated 2006 calender-year earnings.
On a 12 month forward earnings basis, the market is trading at just over 14 times, which is a discount to the 5 year average of 16.5.

The OZ market is trading at just over 15 times and about 13.5 forward 12 monthes.

The largest companies in the US are on track to deliver one of the longest periods of quarterly double digit growth since 1950, but the dash to a new record face strong headwinds from a rising tide of profit warnings.
.................................................. ....................

Sounds like you are right HeavyMetal, what I posted could be crap - http://www.financialsense.com/editorials/bronson/2006/0907.html

The US will not turn turtle any time too soon. But as an insurance policy, a little bit of gold isn't a bad option in the right company.

So I bought a gold stock back and it should still do OK.

Cheers not quite so [B)][}:)]

[winner69]

This from an US commentator -

“The rally in big-caps has been deceptively narrow. As of Thursday's close, with the DJ Average within just a few points of a new all-time high, none of the 30 components rose to new all-time highs. Further, 63.3% of the components showed losses of -20% or more from their individual all-time highs, and 43.3% showed losses of -40% or more. As of Thursday's close, 5.7% of domestic common stocks rose to new 52-week highs, while 26.7% already show losses of -20% or more. A concern for the future is that this degree of selectivity has typically been found near major market tops.”

On one hand, substantial market breaks often occur within about 6 months of oncoming recessions, and it's possible that we're within that window. On the other hand, we can't rule out the possibility that investors will run with the existing “theme” for a while longer. Until inflation or earnings news actually derails expectations, investors may continue to load expectations of a so-called “Goldilocks” (ugh) economy into the market.

In any event, it's important to recognize that, despite the apparent excitement of marginal new highs, the market continues to make very limited progress from one intermediate peak to the next.

[tricha]

Who's going to be cocky today [?] Ouch!
--------------------------------------------------------------------------------
Originally posted by KW

Yup. As I said before, by the time you realise the world isnt ending its too late. You've probably been one of the idiots who has sold low and bought high.
I jumped in and bought WPL at its low point of $35.95. So far so good :-)

--------------------------------------------------------------------------------


Mick100 "I wouldn't get too cocky until october's out of the way"

[bull....]

I feel the asx oil and material sectors are way over valued at the moment and have not declined enough in comparison to the decline in the price of oil and metal prices ignoring uranium at the moment.
The only sector holding up the asx at the moment is finance and industrials but if US slows down they will feel the winds of course.

[Mick100]

quote:Originally posted by bull....

I feel the asx oil and material sectors are way over valued at the moment and have not declined enough in comparison to the decline in the price of oil and metal prices ignoring uranium at the moment.



The reason why the decline in oil and metal stocks is small relative to the decline oil, gold and silver is because the high prices of these commodities was never factored into the shareprices in the first place. I would argue that at the end of april, oil stocks particuarly, were grossly undervalued relative to the oil price and I would add that most of them are still undervalued relative to $60 oil at the moment.
.

[SEC]

5-month report card (incl dividends) for purchases made in the May-June blood-letting sell-off:

IGO: +123%
KZL: +104%
ERA: +16% (sold a while ago)
RIN: -8% (sold today)
Average: +59%

Blood on the floor = maximum number of opportunities. I find the key to taking advantage of these buy opportunities is to always have spare cash available. This takes discipline. The margin loan helps. I recycle the cash by selling non-core or medium-term underperforming stocks in the portfolio like ERA and RIN.

SEC

[MrDevine]

Does anybody see a correction looming – perhaps? The Markets have run hard over the past 4 weeks.

Sold profit on MCR after 111% gain since February. Looking to re-enter perhaps ZFX but a lot of stocks (mining especially) running at all time highs.

Or has this been fueled (no pun intended) by the drop in oil prices recently?

Best

MrD

[ananda77]

...considering everything is in a flux and in a flow...

...US30 in a strong medium- to long-term uptrend as indicated by the weekly and monthly DMI-system

...short-term, the index has been driven hard and now starting to boil...however,

...under continuing favorable conditions (geo-politically and economically, there could be more short-term up-side

...personally, not exposed in the market with all I've got (taken profit), just maybe a bit more cream on the cake

...ASX needs to brake through 300 with a big margin to get me interested medium- to long-term again

<center>http://img.villagephotos.com/p/2004-12/905046/US304.gif</center>

Kind Regards

[SEC]

quote:Originally posted by Mick100

I wouldn't get too cocky until october's out of the way!

,


Well October is out of the way and it has been my best month ever. Glad I stayed in the market this month and ignored the doomsayers out there.

[Mick100]

quote:Originally posted by SEC


quote:Originally posted by Mick100

I wouldn't get too cocky until october's out of the way!

,


Well October is out of the way and it has been my best month ever. Glad I stayed in the market this month and ignored the doomsayers out there.


I hope your not reffering to myself SEC

I too have been fully invested throughout this yr

I wouldn't say that oct has been my best month ever

I still have a bit of catching up to do to get bck to
where I was at the end of april this yr.
.

[soulman]

Good share you have there SEC. I noted IGO and KZL, flying in straight line ATM. It looks like you had 4 of the best performing shares there is in the market. The bad news is, tell us, how much did you sell ERA and RIN for? We can't really feel bad for you because IGO and KZL are flying, along with ZFX.

[SEC]

quote:Originally posted by soulman

Good share you have there SEC. I noted IGO and KZL, flying in straight line ATM. It looks like you had 4 of the best performing shares there is in the market. The bad news is, tell us, how much did you sell ERA and RIN for? We can't really feel bad for you because IGO and KZL are flying, along with ZFX.


Yeeeeeees the timing to buy these star stocks was good but the timing to sell has been mediocre. I sold ERA for $13 a while ago, it is way overpriced at the moment, the $60 spot price of uranium will do very little for ERA as some 85% of its production has been hedged at about $10 for the next few years - management refuses to say exactly how long. Then there are the production problems and the question of paying back the uranium it borrowed this year to meet production commitments..... As for RIN, sold 2 weeks prior to the takeover bid, missed out on 26% gain, yeah well I could recognise an undervalued stock when I saw one, just didn't hold for long enough... But since IGO KZL MCR and ZFX all went up over 26% in the past month the RIN loss seems like market noise at the moment.

[SEC]

Skinny, do you still have an interest in AII?

[skinny]

Keeping an eye on it but no interest in AII currently. Based on the experience of Ivernia, Abra is likely to face prod'n costs that are at least 50c lb given their relatively low grade inferred resource (so far) and the levels it occurs at. Perhaps economic with lead prices over 70c, but it would make them a very high cost producer. In addition, they will need a huge ammount of CAPEX yet to develop the mine. Might be worth a punt but far safer to play existing producers I think.

[pago]

hi ,likely retrace on the dow coming up,oz resources are strong but take your position,cheers pago.

[edison]

ASX dropped 31 points ....

Nikkei dropped 1% ....

Mid-term election almost over ..... Lets see what happens in the US market .....

ASX has run hard recent weeks, so is Dow (both in record territory). Could be another correction?

[tommy]

I've been locking in profits lately to prepare for a market correction after a long hard run of ASX... surely it needs a breather soon?

http://bigcharts.marketwatch.com/interchart/interchart.asp?symb=AU%3Axao&draw.x=0&draw.y=0

Am I the only idiot that's selling stocks to be cashed up????

I don't like having so much cash around because when I do... I want to spend it[|)]

[ananda77]

tommy:

...after the last two days, one could have the impression, doomsday is just around the corner -and who knows, it probably is- :)

...however, the Ordinaries bounced off ~5330 strongly!! The index did not even make it to 5320, an important support level for the index.
If 5320 would have been seriously tested or even taken out altogether, then I would share your sentiment...

...consequently, my take is that the index is rallying to a new high, after the Aussie, typically, displayed a nasty shake-out scenario for the last two days

...be careful though...one could argue, because 5320 has not been seriously tested yet, the test is still to come; therefore if you do not trade intra-day during those volatile days, you could wait till the indicators turn positive again

Kind Regards

[Mick100]

quote:Originally posted by tommy

I've been locking in profits lately to prepare for a market correction after a long hard run of ASX... surely it needs a breather soon?




Harden up Tommy

http://www.youtube.com/watch?v=2GaAvpB_ZTk

,

[Harry7]

nice one Mick, like it

[Wossname]

Whilst the price-to-earnings ratio of the S&P 500 companies in the US may not seem too high at the moment, US stockmarkets could nonetheless be at risk of a fall. The risk could come if the denominator of the ratio, company earnings, falls. The earnings of companies in the retail, housing and financial sectors make up an outsized segment of total US company earnings, and earnings in these sectors are at risk if the buying of real estate and other stuff continues to slow.

In addition, the DOW seems technically overbought after recent rises.

When might such a fall happen, and how much would any such fall be mirrored here? I don't know, but given the way our interest rates have been rising, the discretionary retail, financial and building-related stocks on the ASX will have to do without me for now.

[winner69]

quote:Originally posted by Wossname

Whilst the price-to-earnings ratio of the S&P 500 companies in the US may not seem too high at the moment, US stockmarkets could nonetheless be at risk of a fall. The risk could come if the denominator of the ratio, company earnings, falls. The earnings of companies in the retail, housing and financial sectors make up an outsized segment of total US company earnings, and earnings in these sectors are at risk if the buying of real estate and other stuff continues to slow.

In addition, the DOW seems technically overbought after recent rises.

When might such a fall happen, and how much would any such fall be mirrored here? I don't know, but given the way our interest rates have been rising, the discretionary retail, financial and building-related stocks on the ASX will have to do without me for now.



Trouble is the current PE based on earnings at a peak of the cycle at a time of record profit margins. High profit margins tend to normalize over the full economic cycle. The recent upswing in margins has been unusually strong and some say just as temporary.

If profit margins were anywhere near historical norms the PE would be about 23, still on record earnings.

Meaning ....... likely small long term future returns from the US markets

[Wossname]

Hi KW and Winner69,

KW,

Re financial planners, mining servicers and IT, well done, but even they seem too exposed for my tastes. Precious metals and PM stocks for me.

Winner69,

With real P/E at 23-ish, lack-lustre earnings outlook, and other dominos arguably teetering, "small long term future returns" may well be the absolute best that can be hoped for.

[tommy]

Looks like the start of a minor correction to me, or not yet??
(I might be the only one looking forward to a bloodbath...hehehe)

http://bigcharts.marketwatch.com/interchart/interchart.asp?symb=AU%3Axao&draw.x=0&draw.y=0

[Wossname]

quote:Originally posted by tommy

Looks like the start of a minor correction to me, or not yet??
(I might be the only one looking forward to a bloodbath...hehehe)

http://bigcharts.marketwatch.com/interchart/interchart.asp?symb=AU%3Axao&draw.x=0&draw.y=0




Come on in, the water's fine...you know you want to...the big fin is just a dolphin...

[Wossname]

err...mind you, it's an awfully BIG dolphin..and why is it circling like that...?

[Wossname]

I hope I'm not being taken awry. If I'm mocking anyone it's myself. I've got out of the water so many times to no purpose, that now I'm content to lose a toe or so before I head for the shallows...

My only contingency plan is a subscription to that old lifeguard Richard Russell...

[Wossname]

Hel-l-l-pp! Somebody say something! Don't make me take the water metaphor any further! It's all dried up! Somebody? Anybody? I'm drowning here!

Meanwhile, on a serious note, Lowry's, who advertise themselves as "the oldest continuously published Technical Investment Advisory in the United States", sell a research study on bull market tops at http://www.lowrysreports.com/research_studies.cfm. The blurb is as follows:

"An Exploration Of The Nature of Bull Market Tops

Dated January 14, 2006

Almost every investor harbors the secret wish of being able to sell out on the exact top day of a bull market. The bragging rights would last a lifetime..

This paper is the result of an extensive study of each of the last 14 bull market tops over the 72-year period from 1929 through 2000.

The very surprising results should encourage all investors to carefully re-examine and modify their strategies for protecting portfolios in advance of the onset of cyclical bear markets.

The price for the 7-page An Exploration Of The Nature Of Bull Market Tops study is $10.00 USD."

I haven't read it myself yet, so I don't know how good it is, but it sounds topical.

Note that I have no affiliations with Lowry's. My only knowledge of them comes from reading their website and from references to them by others.

[Wossname]

Further to my previous post:

I've now read "An Exploration of the Nature of Bull Market Tops", and it's an interesting article. A major premise is that, by the time markets peak, the majority of individual stocks have already passed their peaks. To quote a striking example: by the time the Dow Jones Industrial Average reached its absolute high for the 1920s bull market, on 3 September 1929, the percentage of stocks making new 1929 highs that day was a tiny 2.30%. Surprising. One implication is that historical market earthquakes have given out a lot of prior tremors, and over a surprisingly long period. Now if only the next one has the same predictable characteristics...

Another article, one that mentions recently-activated harbingers of a market downturn, is at http://www.hussmanfunds.com/wmc/wmc061118.htm

[ananda77]

...after yesterday's stop-loss hunting/gathering 'happening' of all the Aussie hunters and gatherers

...and US-investors on burn-out recovery 'Thanks Giving Day'

...tommy's bloodbath has been avoided for now and the index is primed to make a new high -probably by the weekend-

Kind Regards

[ratkin]

Currently reading Market panic wild girations risks and opportunities in stock markets by steven vines. Very good read

[frostyboy]

Wossname,
found the free version googling the title

http://www.tsaasf.org/images/stories/Articles/The%20Nature%20of%20Bull%20Market%20Tops%20by%20Pa ul%20Desmond.pdf

i thought a really good/interesting article too, as im to focused on the buy. yeah applying
dow theory thing guess the auto industry is first to drop, i saw in the table the carmakers were the most off the highs. guess its still the leaders that drop first

i liked the parable of the starts and end of the cycle "a farmer usually plants all of his seeds at the same time in the Spring. However, not
all of the fruit reaches the point of peak ripeness at the same time. The ripe fruit must be
picked individually, rather than all at once. In the same way, investors must commit to
buying stocks quickly after a major market bottom, but must sell stocks one by one, as they
reach their individual peaks.

[tommy]

My apologies to all for crapping myself after looking at the charts the other day, anyway I am glad the bulls are charging ahead and the bloodbath has been avoided for the time being to my surprise:

http://bigcharts.marketwatch.com/interchart/interchart.asp?symb=AU%3Axao&draw.x=0&draw.y=0

All Ords reaching 5500 is a matter of time or what? What next[?]

This year has been another incredible year (so far)

[ananda77]

tommy:

...better safe than sorry...but to make money in this kind of market, one needs to incorporate some risk into a trading strategy...

...so what's next??? Do not know!!!...but I run two stops in the market:

-1 CRASH-STOP -in case of an absolute worst case scenario- buried deep enough to be safe from being stopped out prematurely

-2 SELL-STOP &gt;5500+

<center>http://img.villagephotos.com/p/2004-12/905046/aspasx4.gif</center>

Kind Regards

[Wossname]

quote:Originally posted by frostyboy

Wossname,
found the free version googling the title

http://www.tsaasf.org/images/stories/Articles/The%20Nature%20of%20Bull%20Market%20Tops%20by%20Pa ul%20Desmond.pdf

i thought a really good/interesting article too, as im to focused on the buy. yeah applying
dow theory thing guess the auto industry is first to drop, i saw in the table the carmakers were the most off the highs. guess its still the leaders that drop first

i liked the parable of the starts and end of the cycle "a farmer usually plants all of his seeds at the same time in the Spring. However, not
all of the fruit reaches the point of peak ripeness at the same time. The ripe fruit must be
picked individually, rather than all at once. In the same way, investors must commit to
buying stocks quickly after a major market bottom, but must sell stocks one by one, as they
reach their individual peaks.



Hi Frostyboy,

Thanks for researching a free source for the article.

I'm not sure I understand that bit about Dow Theory, market leaders, and carmakers. Are you saying that the order in which different companies peak is predictable? If so, how?

[frostyboy]

Wouldn’t say predictible but can help. part of the ideas is that stocks in the market can guess the future, in the same way that the market is a leader of economic activity

part of dow theory was that the rail roads lead the industrials, as raw materials need be moved before production & transport stocks also were lot more reliant economic activity.

once the dow jones industrial lagged the dow jones transportation, but now that transportation index has airlines in it, which arent such a ‘pure’ variable, you may want to make your index…

automobiles would tend to be the leader of economic activity, automobile sales ‘usually’ go up at start of cycle and down at end (at the end guess the consumer/producer hasn’t got much money left at this point or wants to delay a significant purchase cause they are scared, at the start of the cylce the opposite), guess this why wall st is so focused on autmobile sales. cause the economy has changed since then, the variables may not be the same as dows, but the principal and theory of watching the leaders will I think always be a useful indicator.

Jesse Livermore, also used this leader ‘theory’ in REMINISCENCES OF A STOCK OPERATOR he said stuff like “And there is another thing to remember, and that is that a market does not culminate in one grand blaze of glory. Neither does it end with a sudden revers al of form. A market can and
does often cease to be a bull market long before prices
generally begin to break. My long expected warning came to me
when I noticed that, one after another, those stocks which had
been the leaders of the market reacted several points from the
top and for the first time in many months -- did not come back.”

[ananda77]

...pure price action has always been the most up-to-date indicator of what is happening to a particular index or share

...why not use it extensively, instead of bothering with notoriously lagging trailing systems

...remember, Good Things must ALWAYS come Free!!!

...please note, for arguments sake I have assumed the 21-11-2006 to be the 30-11-2006

<center>http://img.villagephotos.com/p/2004-12/905046/US30-1.gif</center>

[Wossname]

Thanks for the informative post Frostyboy. I subscribe to Richard Russell's newsletter. You probably know that he is arguably the best known living exponent of Dow Theory. He's been wondering of late why no-one but he seems to care much that the transports haven't confirmed the recent Dow rises. He considers the lack of confirmation ominous for the sustainability of the recent Dow rise.

Speaking of transport, I've been watching GM and Ford stock prices, because I considered that these American flagship companies could be market-moving through their effect on American confidence. I also see them as reflecting the level of US consumerism. The GM and F stock prices peaked around 2000, and have been in a generally downward trend since. However, GM's price has rallied 40% since May this year, which, if sustainable, might be trendbreaking. I'd question whether the rally since May is fully rational, but what difference does that make these days?

For anyone interested, the NYSE codes are GM and F, and you can see a price plot for these stocks at http://finance.yahoo.com/q/bc?s=GM&t=my&l=off&z=l&q=l&c=F.

I wonder how useful it would be to track more specific predictors, be they stocks, sales figures, or indices. Maybe sales of firetrucks could be used for predicting insurance profits, as a semi-facetious example. Anyone know of stock advisors, here or in the US, who major on that approach?

[frostyboy]

Consider globalisation - toyota code is tm, it has 192.47B mkt cap (from yahoo today) and this chart may confirm?, vs gm’s 17.58B and f’s 16.26B...should gm and f should be leading indicators to the us markets? perhaps they could help with world markets. If wanna do the US only - what % the sales these 3 stocks make to the US / total sales and use that ratio based on the share price mvt or something. Wouldn’t recommend using an indicator like that think its to fidly and complicated. Anyway can automobile stocks be reliable i.e whether industry profit is dependent sales or is it toyotas efficiency? (I don’t know the answer)

[Wossname]

Yes, it may be too much work for too little certainty.

I wouldn't include TM on the grounds that it may not characterise US industrial capability and consumer spending as well as GM and F, and because it isn't a symbol to investors of US business dominance (or lack thereof).

Cheers

[pago]

hi,some anxiety building up re the usa,debt levels,housing decline,and the USA DOLLAR.the date 31/12/06 is a close off for usa tax reasons,imho its worth watching the usa news closely the next 2 weeks.i expect the xmas period to carry through but its anyones guess when a usa correction starts,1 month or 6 months.the timing is unpredictable and maybe my thoughts of a sharp correction in early 07 are too early given the ppt and credit pumping.wait and see or watch closely.any views? cheers pago.

[Mick100]

I tend to agree pago
US reccession begins to bite early in the new yr
Dollar takes a dive
Good for gold ,silver and oil - not so good for base metals.
.

[pago]

hi,anyone getting doubtful about how long this uptrend will continue.im up 10% in jan,cant see this all year,would like to see a few 5/10 year charts on the asx,cheers pago.

[tricha]

Is a real hard one Pago

Australia is awash with cash looking for a new home, especially in the Super Market. The PE ratio is still relatively low.

2007 looking great and greed returning to the market in full flight!
And I do not think we will have the wild corrections and buying opportunities as 2006.

But look out for the X factor, example, the US attacking Iran.

I'm backing John to being right! All the ducks are lining up again.

http://www.smartstox.com/interviews/a_john_kaiser.php

Cheers and great investing to all [B)][}:)]

[ananda77]

...the All Ordinaries...

...the steepness of the price action...SUSTAINABLE [?][?]

...think 'imminent correction'...not even guessing the extent of it...


<center>http://img.villagephotos.com/p/2004-12/905046/AllOrdinaries2.gif</center>

Kind Regards

[ananda77]

...steep price action is not necessarily a sign for a down correction

...shortly after last May'05 down correction, price action took a similar steep course as everybody hunted for long positions

...but the All Ordinaries currently being very close to the upper border of it's trend channel, the more likely course of action will be a downward move...how severe will have to be seen...

Kind Regards

[tommy]

I don't think ASX will experience a correction until March, although it would naturally depend on how many companies' half-year results turn out to be positive. Might be a good idea to cash in during/straight after the reporting season ends so that at least you get to keep the healthy gains of late. It helps to be cashed up if you want to storm in to buy all those quality stocks on the cheap when the market is bleeding (Bargain hunting time, yay[:p])

[ananda77]

pago:

...here are some trading ranges for the All Ordinaries using average 2-yr, 1-yr, and current price trends (please note: the average current price trend (red) not yet parallel to the 2-yr and 1-yr average until the end of this month)

...added also -in green- the upper channel border of a Standard Deviation Channel (2-standard deviations)

...again, wether we will see a correction or just a short retracement will have to be seen; but adding long positions now given the US and overall geo-political situation...[?][?]

<center>http://img.villagephotos.com/p/2004-12/905046/AllOrdinaries3.gif</center>

Kind Regards

[pago]

hi ananda,thanks,thats the chart,obliged to you for posting it.one day iwill find the time to learn to post charts,imo this is a simple but indicative chart,the breakout,warning in april,may 06 is clear and we are near the upper trading range now.too early to call it but the warning for caution is evident.im not a believer that because the correction in 06 occured in april/may then the same will occur in 07.the next 4/6 weeks will be interesting but its reasonable to expect if the resource prices hold and given the reporting season we will test/break through the upper trading range.cheers pago.

[ananda77]

pago:

...the next 4/6 weeks will be interesting but its reasonable to expect if the resource prices hold and given the reporting season we will test/break through the upper trading range.cheers pago.

...purely from a technical perspective agree completely about this possibility

...noticing the IMPORTANT April/May'05 break-out warning in the chart and connecting it to the current situation...you've read the chart very well indeed

Kind Regards

[ananda77]

...1987-current market shot: PREPARED???

<center>http://img.villagephotos.com/p/2004-12/905046/AllOrdinaries4.gif</center>

Kind Regards

[ananda77]

<center>http://dissidentvoice.org/Feb07/Cook18.htm</center>

Kind Regards

[ananda77]

...the China Central Bank and the Honkong Monetary Authority are the major US creditors and the US their major export market. The bilateral dependency buys the US time currently but...

...at some stage, sooner rather then later (more war-less time)

***Asian Central banks and financial institutions dump USD$ and US treasury bonds

***once US treasuries remain unsold in Asian Central banks asset columns, the free falling USD$ will cause rapid inflation

***the Feds will have to prop up interest rates which will sent the US economy into a recession (depression)

***the ripples of stagnating exports into the US will sent shockwaves through the world economy

source:http://www.globalresearch.ca/index.php?context=viewArticle&code=LAU20051019&articleId=1110

Kind Regards

[trendy]

US mortgage crisis goes into meltdown
By Ambrose Evans-Pritchard
Last Updated: 1:15am GMT 24/02/2007

http://www.telegraph.co.uk/money/main.jhtml?xml=/money/2007/02/24/cnusecon24.xml

Panic has begun to sweep the sub-prime mortgage sector in the United States after the bankruptcy of 22 lenders over the past two months, setting off mass liquidation of housing loans packaged as securities.

Analysts say the housing bust is pulling America into recession, citing a 14.4pc drop in housing starts


The rapid deterioration could not come at a worse time for British bank HSBC, which has set aside $10.5bn (£5.4bn) to cover bad loans in the US.

The cost of insuring against default on these loans has rocketed in recent weeks, from 50 basis points over Libor to 1,200, raising fears that a credit crunch could spread to the rest of the property market.

Low-grade BBB-rated securities - measured by the ABX index - have crashed from near par of 100 in early November to 72.5 this week.

Peter Schiff, head of Euro Pacific Capital, said the sector was in an unstoppable meltdown. "It's a self-perpetuating spiral: as sub-prime companies tighten lending they create even more defaults," he said.

California's ResMae Mortgage filed for bankruptcy last week as it struggled to cope with defaults on a $7.7bn book of sub-prime loans issued last year, while Accredited Home Lenders in San Diego warned that bad debts had reached 7.18pc of its portfolio.

HSBC chief executive Michael Geoghegan, who stepped in to take control of the US division earlier this month claiming "The buck stops at my door", has ousted top executives. But the worst may not be over for Household International, the property arm it acquired for $14.4bn in 2003 to capitalise on the housing boom.

Rating agency Standard & Poor's is shifting its focus to the tier of debt above sub-prime, eyeing loans covering people viewed as better credit risks but who lack the steady income needed for prime status.

S&P has placed 11 loan packages worth $146m on watch for a possible downgrade this week, saying it was most worried about "piggyback" second mortgages. "There is a potential danger of default on these deals," said credit strategist Robert Pollson.

For now, the US Federal Reserve believes the damage can be contained. "I don't think there'll be a large impact on prime mortgages from the sub-prime market," said governor Susan Schmidt Bies.

However, she warned of a "hidden" problem caused by sellers pulling property off the market. " The percentage of homes where nobody is living in them is at a record level. So the potential for inventory correction is still very high," she said.

Nouriel Roubini, economics professor at New York University, says the housing bust is slowly pulling America into recession. He cites a 14.4pc drop in housing starts last month; an expected loss of 600,000 real estate jobs in 2007; a sharp fall in home equity withdrawals - down from 6pc of GDP at the top of the boom; and a squeeze as $1,000bn of mortgages are adjusted upwards this year to higher interest rates.

Mr Roubini said: "America faces a 'reverse cycle' where a credit crunch has hit before the slowdown, a rare pattern. Normally, recession comes first, setting off credit troubles in its wake. We have a housing recession, an auto recession, a manufacturing recession, and a real investment recession already present. If all this happening in what the consensus terms as a 'Goldilocks economy', what would happen if the economy slows down?"


I should add to this that Americans selling in the northern states traditionally place their properties on the market in spring once the grass green. So expect house glut to get worse in April/May.

[Heavy Metal]

quote:Originally posted by trendy

US mortgage crisis goes into meltdown
By Ambrose Evans-Pritchard
Last Updated: 1:15am GMT 24/02/2007

http://www.telegraph.co.uk/money/main.jhtml?xml=/money/2007/02/24/cnusecon24.xml



This article lost all credibility when it had to resort to a quote from Peter "THE END IS NIGH, YOU MUST BUY GOLD" Schiff.

[tricha]

Australia is awash with cash looking for a new home,

Why [?][?][?] the super rules have changed and this year u can still top up your super and get a huge tax advantage.

Two people at work have stated that they are not happy with their finanical advisors, as they have large amounts of cash sitting there waiting for this correction.
The media and brokers has been pumping a 10% correction in the last month.

If you look at the OZ market recently, it has decoupled from following the DOW.

So right now there are billions of $ waiting for a correction that I do not think is coming any time soon.

Now metals are away again, Greed will be on full flight again tomorrow!

Cheers [B)][}:)]

[pago]

hi tricha,im not so confident.

[pago]

hi ananda,hows the all ords(xoa)trade ranging chart looking,cheers pago,

[ananda77]

pago:

on 4-yr average price -exit: 5500

on 2-yr average price -exit: 5600

on 1-yr average price -exit: 5650

on 6-mth average price -exit: 5920

on 1-mth average price -exit 5950

...on all time frames -index in overbought territory

...although index reached record highs (probably the Americans have discovered/view Australia as a safe heaven to park their cash - AUD$ has been strong lately)

-money flow records substantial profit taking

...current technical indicators as well as the current geo-political/ geo-economic scenarios do not fit my risk profile to be more than 10% exposed to equities now...

Cheers and Kind Regards till Friday

[soulman]

What about the possibility of the QAN and CGJ sale? More cash will be looking for a home. All Ords to hit 6200 before correcting to 5900.

[tricha]

Correction, I do not think so, where are all those extra billions in super funds going to find a home.

Greed and inflation is in and the ASX has only one way to go.;)

7000 on the way!

[trendy]

Watch the DOW today.....

[bull....]

a big fall in aus today? needs a sell off to overbrought

[ruethewhirl]

This could be it people.

Today's going to be nasty.

Question is... how low can she go?

[Harry7]

A short correction we need to have, most analyst feel 5%/300 pts at a guess

[edison]

Could be more actually. Like at least 10%. The market is overvalued.

[trendy]

Liquidity everywhere....private equity are buying everything.....it has to unwind eventually.

[tommy]

Damn, today's market correction is painful or what[xx(]

Is this the equivalent of last year's May correction or the beginning of a serious crash?

Wondering how low the All Ordinaries will go to...

[tommy]

China and Taiwan seems to have bounced back...

http://finance.yahoo.com/intlindices?e=asia

[edison]

Tommy I think it has more to go.

Heng Seng, Singapore, Nikkei are all down significantly.

Shanghai and Taiwan is up very slightly. Not very convincing actually.

For news on HK market have a read on this:

http://home.boom.com.hk/index.html

[Flying Goat]

Good call Ananda, your timing was uncanny!!@!!!



FG

[tommy]

Slaughter continues in Europe...

http://finance.yahoo.com/intlindices?e=europe

But futures are up in USA:

http://money.cnn.com/data/premarket/index.html

Will be interesting to see how DOW reacts tonight when the entire world is wobbling! I'm gonna stay out of the market for a while until the shake up ends, I'm too much of a chicken to take the plunge back into the sharemarket at the moment[:o)]

[ruethewhirl]

Watching events closely as they unfold, I read an article
describing this as a profit taking exercise, not a correction.

I tend to agree.

There's no doubt things are very overvalued at the mo, but not
grossly overvalued.

Could be a rough week or two, but I think we'll come out of this
unscathed.

Question: How many of your holdings were not affected?

[tommy]

quote:Originally posted by ruethewhirl


Question: How many of your holdings were not affected?


Only one! Everything else got bumped off my portfolio by stoploss trigger, so all have now is 100k worth of RFG and the rest is cash.
It's time to go bargain hunting!!!!!!!!!!!!!!!!!!

[tommy]

DOW opens in green territory but still looks wobbly:

http://money.cnn.com/data/markets/

[Skol]

Well things seem to have settled down.

A big thank you to the person who sold me his MTN shares yesterday which I have just sold for a handsome profit.

[tommy]

quote:Originally posted by Skol

Well things seem to have settled down.

A big thank you to the person who sold me his MTN shares yesterday which I have just sold for a handsome profit.


Well done SKOL, buying in a nosediving market and making a profit requires a lot of guts and skill[:I]

Asian markets still look wobbly though despite rebound in DOW last night:

http://finance.yahoo.com/intlindices?e=asia

I'm staying on the sidelines for a while until the dust settles...

[tommy]

Shanghai down 3% now[:0]

Buckle up boyz, we might be in for another bloodbath... obviously DOW's dead cat bounce was no consolation...

[ruethewhirl]

Tommy,

I think we've all been Shanghai'd.

Watch the DOWWWWW!!!!

[ratkin]

Todays bounce now looking very weak. It not going to take much for the slide to accelerate

[edison]

Mate China will continue to go down. It is way too expensive and I would not be suprised if it goes down another 20%.

Remember Shanghai market went up 130% over last year, so some serious correction is required ......

[OneUp]

China grew fast during a long bear market for Chinese stocks.

[OneUp]

quote:Originally posted by OneUp

China grew fast during a long bear market for Chinese stocks.




The following makes my point a little better.

LONDON - European stocks rose Thursday after a rebound on Wall Street and upbeat comments from the U.S. Federal Reserve chairman, while the major Asian stock markets retreated for a third day amid persistent unease about the global economy.

ADVERTISEMENT

The U.K.'s benchmark FTSE 100 rose 0.7 percent to 6,211.4, while France's CAC 40 gained 0.2 percent to 5,516.82. Germany's DAX Index added 0.1 percent to 6,723.21.

On Wednesday, Wall Street rebounded from Tuesday's 416-point plunge in the Dow industrials after Fed Chairman Ben Bernanke said he still expects moderate U.S. economic growth. The Dow ended the day up 0.4 percent at 12,268.63.

"I think it's wholly psychological; nothing has actually changed," said Philip Manduca, managing partner at Titanium Capital in London. "The Chinese stock market is not an indicator of the Chinese economy. The Chinese economy is not an indicator of the world economy."

Still, investors will be closely watching U.S. stocks again Thursday to see if shares hold solid. A selloff could trigger more losses in Asia, said Yuji Nakagawa, head of derivatives at Toyo Securities in Tokyo.

"There is still a good chance that U.S. stocks will swing," Nakagawa said.

Shares in Japan, Australia, Taiwan, Hong Kong, Singapore and Malaysia all retreated mildly, while the Shanghai market — whose plunge Tuesday triggered a global sell-off — fell another 2.9 percent.

But markets in the Philippines, New Zealand, India and Indonesia rebounded.

The losses across much of Asia underlined lingering worries about the outlook for the U.S. and global economy as well as overvalued stock prices. While analysts said the global jolt was most likely a correction to cool surging markets, some said market volatility could persist for months.

But Asia, the epicenter of the meltdown, is seen as especially vulnerable because its markets have surged in recent months and its export-oriented economies rely heavily on U.S. demand.

"Asia and Japan are highly dependent on the U.S. economy," said Shun Maruyama, an equity strategist with Credit Suisse in Tokyo. "Stocks need some more time to return to a rising trend."

On the region's biggest bourse, the Tokyo Stock Exchange, the benchmark Nikkei 225 Index fell 0.9 percent to finish at 17,453.51 after being down by as much as 1.5 percent.

Hong Kong stocks fell 1.6 percent, while Malaysia's key index fell 1.3 percent. Australian shares shed 0.4 percent and Singapore closed down 0.4 percent. In Taiwan, which was closed Wednesday and missed the market selloff, the benchmark index plunged 2.8 percent.

On mainland China, stocks continued their roller-coaster ride, with the Shanghai Composite Index falling 2.9 percent to close at 2,797.19 on Thursday. The index had tumbled 8.8 percent Tuesday, sparking a global financial market sell-off, before rebounding nearly 4 percent Wednesday.

"Investors are becoming wary after the unexpected equity market turmoil earlier in the week, rendering the market particularly vulnerable to any news," said Zhang Yidong, an analyst at Industrial Securities in China.

Troubles began Tuesday as investors unloaded Chinese shares to lock in profits amid speculation about a fresh round of austerity measures from Beijing to slow the nation's sizzling economy. The selling spread later spread to Europe and New York.

[bull....]

things looking a bit ugly again at the moment big falls again tomorrow lets hope not

[tommy]

European markets bleeding

http://finance.yahoo.com/intlindices?e=europe

Futures also in the red in the USA

http://money.cnn.com/data/premarket/index.html

Don't get caught with your pants down[}:)]

It should be noted that China's stock market is NOT a leading indicator for world markets but the fact is that it now has enough media value to shake that market sentiment overseas when it plumments. Do not understimate the media-fueled herd mentality of markets!


___________________

More woes for Wall Street
Major gauges set to open sharply lower after China selloff and surprising uptick in key inflation gauge.
March 1 2007: 9:14 AM EST


NEW YORK (CNNMoney.com) -- Turbulence in overseas markets and a bigger-than-expected inflationary reading put U.S. stocks on a course for a sharply lower open Thursday, despite reports of some deals that could provide some support.

At 9 a.m. ET, Nasdaq and S&P futures were down sharply after being solidly higher in the early trading.


Stock futures moved lower after a government report revealed that consumers' income and spending rose more than expected in January, while a closely watched inflation measure showed an unexpected increase.

The core PCE deflator, a closely watched inflation measure favored by Federal Reserve policy makers, came in at an annual increase of 2.3 percent, compared to the 2.2 percent rise in December.

It is generally assumed that the central bank policymakers are comfortable when that measure is up between 1 to 2 percent.

Jobless claims also climbed unexpectedly last week, hitting 338,000, its highest level over a year.

Asian markets retreated again Thursday, with the Chinese markets that triggered this week's bear run resuming their decline. European markets, which also had been higher in early trading, were mostly lower as well.

In related news, Japan's top financial diplomat said he expected Japanese interest rates to rise further and urged investors to recognize the risk in high-leverage carry trades

Treasury prices rose as stock futures fell, taking the yield on the 10-year note to 4.52 percent from 4.57 percent late Wednesday. The dollar was stronger against the euro but sharply lower against the yen.

Economic reports due out later Thursday include a survey of manufacturing executives by the Institute of Supply Management at 10 a.m. ET, which will be one of the first looks at economic conditions in February.

The ISM index is forecast to edge up to 50, the tipping point between growth and contraction in the sector, after a 49.3 reading in January.

Also at 10 a.m. will be a reading on construction spending.

"There's going to be plenty for us to consider between now and 10 a.m.," said Art Hogan, chief market analyst at Jefferies & Co.. Hogan said stocks could also get a lift from a number of deal reports.

Software provider Oracle (Charts) could be on the verge of another acquisition as the New York Times reports that it is near an agreement to buy Hyperion Solutions (Charts) for about $3 billion. Shares of Oracle fell about 2 percent in heavy Frankfurt trading.

In an after-hours filing Wednesday, financier Carl Icahn and his investments firms announced plans to acquire between $120 million and $500 million of Motorola (Charts) stock, sending shares of the cell phone maker up 3.4 percent in Frankfurt.

DVD rental retailer Blockbuster (Charts) is in advance talks to acquire Movielink LLC, an online movie-downloading company owned by the major Hollywood studios, according to a report in the Wall Street Journal.

The deal is likely to be worth less than $50 million, but could give a lift to the service, which is facing increased competition from firms like Apple's (Charts) iTunes and Blockbuster competitor Netflix (Charts) as well as general retailers such as Wal-Mart Stores (Charts).

Throughout the day major automakers are set to report their February sales. General Motors (Charts) and Ford Motor (Charts) have already warned that their sales totals are expected to be less than forecas

[bull....]

bit of carnage on the open in us lets hope it takes charge and recovers

[Flying Goat]

In my opinion it is a more a result of the seed of doubt being planted in peoples minds regarding business valuations at the moment. Many valuations are excessive due to merger/takeoer speculation. Look at the media industry for example, historically companies like fairfax never traded on the multiples they are trading today. Many good companies that I own previous traded on 10 to 12 terms earnings, now it is accepted that they find support at 18 to 20 times earnings. In my opinion it is just that seed of doubt.... this correction is showing us that there is nervousness underneath the surface of the bull markets,,,

FG

[Halebop]

I think there is still too much money floating around to hold the market down for long. But a correction is needed to allow the market some breathing room. Personally I'd love to see a full blown crash but the best I expect is a testing of the bottom range of the primary uptrend - maybe 5,400 by April or May. One thing is likely no matter the eventual timing, unwinding a bull run tends to be quicker than cranking it up in the first place.

[soulman]

I am with edison here. Shanghai stock market went up 130% last and the govt is craking down on curruption....fair enough. Plenty of corruption in China anyway, we all know that because the chinese govt owned most of the blue chip stocks.

What's relevant here is that our market went up 23 odd percent last year, not 130%. China market is actually like our 87 crash, so maybe more to go but if Australian shares suffer because of that, then I will open up my wallet to pick up a few.

[tommy]

quote:Originally posted by Halebop

Personally I'd love to see a full blown crash but the best


Hahaha, join the club... a lot of microcaps are in the red today on ASX, but still not buying yet, I would love to see more of this happen to pick up at rock bottom prices!

And Asia can't stop the bleeding, Nikkei in particlar seems to be going on a downward spiral lately:

http://finance.yahoo.com/intlindices?e=asia

[edison]

quote:Originally posted by soulman

I am with edison here. Shanghai stock market went up 130% last and the govt is craking down on curruption....fair enough. Plenty of corruption in China anyway, we all know that because the chinese govt owned most of the blue chip stocks.

What's relevant here is that our market went up 23 odd percent last year, not 130%. China market is actually like our 87 crash, so maybe more to go but if Australian shares suffer because of that, then I will open up my wallet to pick up a few.




Soulman,

Unfortunately I agree with you that China is full of corruption. All the money is there on the surface but it has no real foundation. You would be scared if you see the actual level of writeoffs of bad debts due to corruption ....... In terms of crackdown they will crackdown the one who just follows orders. ie the little people.

[Flying Goat]

Hmmm... groundhog day over in the UK, FTSE starts the day with a weak attempt at a rally then loses confidence after the first hour.... and starts to gather downward momentum, interesting times!

FG:)

[SEC]

quote:Originally posted by Halebop

the best I expect is a testing of the bottom range of the primary uptrend - maybe 5,400 by April or May.


Well you guessed a AORD 4800 bottom in the 2006 corection so pretty much bang on. I had my money on AXJO 4900 - pretty close.

So how low will the ASX200 go this time? I was wondering whether Wednesday's plunge was a one-off or a start of a bigger correction. After Friday's action on Wall St it looks like the latter. My prediction is back to 5500 - old support/resistance line, a good 10% shakeout (typical correction size - we're almost half way there already), and still within the primary bullish trend since 2003.

The SEC wallet has been closed for a few weeks now and will remain closed until further notice.

SEC

[Flying Goat]

Phaedrus,

Any chance of posting us a chart analysis of the implications of last weeks events..????!

Thanks
FG:)

[tommy]

Would be very interesting to see how world markets open on Monday... could it be a black one?! Greenspan better keep his mouth shut when his comments carry more weight than the current Fed chairman!!



U.S. Stocks Have Worst Weekly Drop in 4 Years Amid Global Rout

By Michael Patterson


March 3 (Bloomberg) -- U.S. stocks had their biggest weekly decline since January 2003, erasing all of the year's gains, amid a global selloff spurred by concern that share prices have climbed too high during a four-year rally.

Citigroup Inc. and Bank of America Corp., the biggest U.S. financial-services companies, led the retreat after a drop in consumer confidence and rising mortgage defaults spurred concern that profit growth will be wiped out by a recession.

This week's decline ended a streak of eight monthly gains in U.S. stocks that had pushed the Standard & Poor's 500 Index to a six-year high and the Dow Jones Industrial Average to a record. The rout erased about $837 billion in market value.

``The market is focusing on the bad news,'' said Alan Gayle, who helps oversee $70 billion as senior investment strategist at Trusco Capital Management in Richmond, Virginia. ``We've seen a complete reversal on the gains we've enjoyed. It has more than reset the clock.''

The S&P 500 dropped for a second week, falling 4.4 percent to 1387.17, with all 10 of its main industry groups declining. Only 19 of its members rose for the week. The index is down 2.2 percent for the year.

The Dow average lost 4.2 percent to 12,114.10. The Nasdaq Composite Index fell 5.9 percent to 2368.

The Morgan Stanley Capital International AC World Index, which covers developed and emerging markets around the world, dropped 4.7 percent. That's the sharpest decline since September 2002, a month before the last bear market ended. This week's decline trimmed the index's advance since October 2002 to 111 percent.

Worldwide Drop

The worldwide tumble was sparked on Feb. 27 by the Chinese government's approval of a special task force to clamp down on illegal share offerings and investments with borrowed money.

Chinese stocks slumped the most in a decade the day after the announcement, while Europe's Dow Jones Stoxx 600 Index dropped 3 percent and emerging markets sank. Russian shares slid from an all-time high; Brazil's Bovespa Index lost 6.6 percent.

The Dow average's 3.3 percent drop on Feb. 27 was the worst since March 2003 and snapped the index's longest streak in more than a century without a one-day drop of at least 2 percent, according to data compiled by Birinyi Associates Inc. and Bloomberg News.

The Chicago Board Options Exchange SPX Volatility Index, an indicator that measures the rate of expected stock-market swings, surged the most ever. The one-day, 64 percent jump in the so-called VIX showed investors anticipated more risk in owning stocks.

``It's been a roller-coaster,'' said Fritz Meyer, senior investment officer at AIM Investments, which manages $150 billion in Houston.

Greenspan

Citigroup dropped 7.1 percent to $49.97 for its biggest weekly decline since December 2002. Bank of America fell 5.4 percent to $50.01.

Former Federal Reserve Chairman Alan Greenspan said on Feb. 26 that he couldn't rule out a recession this year, the Associated Press reported. St. Louis Fed Bank President William Poole said yesterday that there ``could be'' a recession, though one isn't likely.

The Commerce Department said gross domestic product last quarter rose at a 2.2 percent annual rate, compared with a 3.5 rate reported on Jan. 31. Economists in a Bloomberg News survey expected 2.3 percent.

Other data this week added to evidence that growth in the world's biggest economy is slowing. New home sales plunged and a gauge of manufacturing contracted, while orders for durable goods slid the most since October.

Home Depot

Home Depot Inc., the biggest home-improvement retailer, dropped 4.8 percent to $39.01 after the new home-sales data doused speculation that the worst of the slowdown is over. The sto

[winner69]

quote:Originally posted by tommy



The Chicago Board Options Exchange SPX Volatility Index, an indicator that measures the rate of expected stock-market swings, surged the most ever. The one-day, 64 percent jump in the so-called VIX showed investors anticipated more risk in owning stocks.



Even though up 64% as the article says the VIX is still very low at &lt;20

Interesting the VIX turned up on Jan 25th and there appparentlly was a fair bit of selling momentum after that date ..... maybe that was a signal for what happened last week

What's the VIX saying ..... a month or so when the VIX was about 10 people expected the S&P to move uo or down by 2.9% over the next 30 days (on one standard deviation) .... now it is saying it will be up or down 5.4% .... ie 68% chance of being between 1312 and 1462

[pago]

hi ananda ,what do you make of last weeks correction?.i can not see any fundamental change to the china economy.the problem is the usa economy.the dow has taken a significant correction,overdue imho.although the shanghai index may have been the trigger and its a bubble, the dow is the still the major indicator.obviously what happens to the usa economy may impact on the china economy.if mineral resource prices fall lookout asx.looking ahead i see more volitilty caused mainly by the usa economy while they stuff about trying to decide if usa is possible recession(ala greenspan) OR going ok but slowing down(ala bernie}THE JURYS OUT.imo for now we are looking at a 10% correction some of which has already happened and more volitility.how are the charts looking for the the dow and asx,cheers ago.

[winner69]

This guy does a pretty good summary of the china situation .... written last week

http://www.ampcapital.com.au/K2DOCS/site_corporate/A22E0361-FE5F-4D57-85BC-C2DFB1A58368/OINo4.pdf?DIRECT

[Mick100]

Thanks winner

I'll post that link on the commodities thread as well
,

[ananda77]

pago:

...have posted all there was to post in regards to the correction earlier

...as you say, fundamentals have not changed -the US remains weak and if the economy goes into recession (officially that is) it will send shock waves through the world economy

...in the very short term, markets have been falling hard and fast and an up-ward rally is likely; I expect the Dow to test at least 12560'ish and the Aussie Markets at least 5815'ish (possibly 5850) -but:

...in no way will I buy the market -instead will add to short positions on interim highs -basically think the US is stuffed-

Kind Regards

[Flying Goat]

Nikkei sinking like a stone on open, think Shanghai opens in 20 minutes, if they have a bad day the correction may continue rather strong on every world index today... be prepared!

http://finance.yahoo.com/intlindices?e=asia

FG

[winner69]

Tried those beta charts on yahoo

a little ball rolls along the hills and valleys

click pn the 'time range' button and do some dragging back and forward ..... highlights trading ranges if nothing else

any other tricks ?

[Flying Goat]

Reckon the All Ords will be back to 5,400 by the end of the week ... hehe

Anyone else care to take a guess for market close at Friday 9th Mar 2007?

FG

[tommy]

quote:Originally posted by Flying Goat

Reckon the All Ords will be back to 5,400 by the end of the week ... hehe

Anyone else care to take a guess for market close at Friday 9th Mar 2007?

FG



Suppose 10% correction sounds about right, assuming this is a correction needed to maintain the uptrend[}:)]

Markets all over the world are wobbly today indeed...

Stocks: Expect more anxiety
Investors crawl back to work Monday after toughing out the worst week on Wall Street since 2003. And the choppiness may continue.

By Alexandra Twin, CNNMoney.com senior writer

March 4 2007: 8:59 AM EST

NEW YORK (CNNMoney.com) -- After surviving the worst week on Wall Street in nearly four years, investors return to face what could very well be another endurance test. Get ready.

With no meaningful earnings reports due and most of the relevant economic reports not expected until Friday, the week ahead is likely to bring more choppiness and few anchors.


Stocks slumped across the board last week, as a massive selloff in Chinese markets on Tuesday caused a domino effect across a variety of world markets, including the United States.

Tuesday's selloff sent the Dow down 416 points in its worst one-day decline since the day the markets reopened after the 9/11 attacks.

For the week, the Dow Jones industrial average (Charts) lost 4.2 percent, its worst one-week decline on a percentage basis since March 2003. And the rest of the stock market had just as rough a time. (Full story).

"The market basically had a mild heart attack," said James Awad, president at Awad Asset Management.
Survive the market drop

China got the ball rolling, but it wasn't just the international markets that spooked U.S. investors last week. It was also a surprisingly weak read on durable goods orders and a run-up in a key inflation indicator.

Comments from former Federal Reserve Chairman Alan Greenspan that the economy could be heading for a recession by the end of the year didn't help.

There was also a plunge in the dollar as global traders rushed to close out carry trades, or bets on riskier currencies financed by borrowing in the currencies of countries with low interest rates, like Japan.

Another factor: renewed worries about the fallout for subprime mortgages - home loans given to borrowers with bad credit histories.

Then add in the fact that stocks had basically been climbing for eight months straight, since bottoming last summer. Just prior to the selloff, the Dow Jones industrial average and the Russell 2000 had both hit all-time highs, while the Nasdaq composite (Charts) and the S&P 500 (Charts) had both hit more than 6-year highs.

"We were overdue for a pullback," said Fred Dickson, chief market strategist at D.A. Davidson & Co.

"Our feeling is that this will be a fairly short, somewhat volatile, violent correction that that will last a few weeks or a month," he said. "But is it the start of a bear market? No."

Dickson said that U.S. markets will eventually stabilize and recover, but that global markets probably need to recover first.


The sky is falling... maybe not

The so-called fundamentals of the economy didn't change last week, with many economists still looking for slow, but not too slow, growth and waning inflation.

The Fed is still expected to remain on the sidelines for now - Fed chair Ben Bernanke hinted as much when he spoke last week. The huge amount of deals activity, in both public companies and private equity, is not expected to slow.

What changed last week fairly abruptly, and is likely to continue to weigh on stocks for the time being, is the great appetite for risk, Awad said.

He said that the zest for risk - including emerging markets, currencies, housing - contributed to the huge run-up in equities over the last few years, but it also left stocks vulner

[soulman]

Wow, absolutely bleeding today. Our market fall as much as Wall Street in points but double the percentage. This will hurt. That's 45, 160, 23, 24 and today's 120 fall in 5 trading days.

[Dazza]

man this is bleeding really bad &gt;&lt;

ZFX
CMR
AGS
SMM
MCR


making me bleed

but im still in front, only paper profits gone :P