Blood on the floor.

[Bilo]

Looks like a few panic sellers out there. Either that or margin calls. A few more bad days and time to maybe pick up some cheap stocks.

Margin calls may be some of it.

I suspect that there is a fair bit of short selling to cover long positions. As I see it these guys look after number one (at the expense of all and sundry) by shorting their long positions before / during dangerous times for the share, only releasing when profitable and the danger is past. Classic times are credit crunches, oil well drills, takeovers, capital raisings, excessive currency movements etc. Just another reason that that shorting using margin trading is unsociable and should be banned or very tightly controlled. It enables people to trade contrary to fundamentals.

The other nasty out there is index selling - those chappies are licensed to spread their dirt everywhere. Hence McDunk's view that every honest punter gets hurt - eventually.

It is hard to see an end to it without action like that planned in the USA to reduce shorting activity. Thankfully a disease not as widespread on the NZX as the ASX, but getting worse by the day....the "regulators" know zip...

[tricha]

Margin calls may be some of it.

I suspect that there is a fair bit of short selling to cover long positions. As I see it these guys look after number one (at the expense of all and sundry) by shorting their long positions before / during dangerous times for the share, only releasing when profitable and the danger is past. Classic times are credit crunches, oil well drills, takeovers, capital raisings, excessive currency movements etc. Just another reason that that shorting using margin trading is unsociable and should be banned or very tightly controlled. It enables people to trade contrary to fundamentals.

The other nasty out there is index selling - those chappies are licensed to spread their dirt everywhere. Hence McDunk's view that every honest punter gets hurt - eventually.

It is hard to see an end to it without action like that planned in the USA to reduce shorting activity. Thankfully a disease not as widespread on the NZX as the ASX, but getting worse by the day....the "regulators" know zip...

Close to exploding marginal lending calls today, wow, destruction, fund managers unloading bucket fulls of metals.

[Dr_Who]

Oil and commodity stocks getting slaughtered.

[winner69]

prempting the post olympic games factor

[STRAT]

prempting the post olympic games factorHi W69,
What are your thoughts on our market ( ASX & NZX ) post Olimpics?

[JBmurc]

Just when you think your shares are extremely oversold they then retest new lows weeks later very dishearting atm ...the million $$$$ Question...are we at or near lows in this bearmarket .........maybe when the ASX 200 trades at a P/E->5

[wazz1]

Lakey...you even have me worried. My company has me vested in their pension scheme and full medical insurance on retirement....at this rate I'll have to retire back in NZ.

Hello trendy,
I was hoping someone would be able to clarify a point re ;
"US Capital Controls" that have recently been passed through the House..

I heard a broadcast on www.financialsense.com recently and the commentators mentioned new US Capital Controls that frankly did sound alarming.
I cant quote them because it would breech of copyright but the information as I understand it was that...
US expatriates[citizens and residents>10yrs] were to be taxed on $ taken out of the country and by doing so all OS assets would be treated as liquidated and be taxed also..
The commentator said the info was buried in the recent Veterans Bill...

So I have searched and found the following link to a recent Vets Bill which I think covers what they were discussing..

http://thomas.loc.gov/cgi-bin/query/F?c110:3:./temp/~c110pL4doA:e45918:

Now please take note that I am a novice researcher and this may not be of any particular importance and I may have misunderstood the broadcast too.

I would be most interested in anyone elses interpretation of the Bill..

These capital controls maybe standard ??but if not I thought that you might be interested.The use of Capital controls does not bode well for US.imo

It was intimated on the broadcast that this maybe just the beginning of such measures..
However I must also advise you to make your own assessment of any info I have given or directed you to.

I find their weekly broadcast very educational ..

This might be of interest as you joked about retiring back in NZ..

[wazz1]

The link to the Bill has failed ''
so try typing in
www.govtrack.us/congress/bill.xpd?bill=h110-6081
then on the LHS ..click on PRIMARY SOURCE HR 6081 on THOMAS text for legislation.
Then Click on TEXT OF LEGISLATION in top LHS of page.
You should get
4 Versions of HR 6081 for 110th CONGRESS.
Click on one and go to the bottom of the page for
TITLE 111 Revenue Provisions and READ !!

It appears to be the way the Vets benefits will be funded..and may not refelect a
TAX blowout ...but still worth investigation IMO.

[winner69]

Hi W69,
What are your thoughts on our market ( ASX & NZX ) post Olimpics?


Re China in the short term the MacDunk theory might kick in but long term the 'urbanisation of China' will carry on

ASX / NZX .... probably down over the next few months which means don't worry about the index but be sector or stock specific

[ananda77]

...the present rally likely to come to a screeching halt like all 'sucker's rallies'...(in due time)

...some interesting reading supporting:

Mike Whitney Interviews Michael Hudson in

-SUPER IMPERIALISM-

Michael Hudson is a former Wall Street economist
specializing in the balance of payments and real estate at
the Chase Manhattan Bank (now JP Morgan Chase & Co.), Arthur
Anderson, and later at the Hudson Institute (no relation).
In 1990 he helped established the world’s first sovereign
debt fund for Scudder Stevens & Clark. Dr. Hudson was Dennis
Kucinich’s Chief Economic Advisor in the recent Democratic
primary presidential campaign, and has advised the U.S.,
Canadian, Mexican and Latvian governments, as well as the
United Nations Institute for Training and Research (UNITAR).
A Distinguished Research Professor at University of
Missouri, Kansas City (UMKC), he is the author of many
books, including Super Imperialism: The Economic Strategy of
American Empire (new ed., Pluto Press, 2002
http://www.informationclearinghouse.info/article20647.htm

...more business news:

Unemployment rate could hit two million by Christmas, Bank
of England warns
http://www.dailymail.co.uk/news/article-1050300/Unemployment-rate-hit-million...

New credit hurdle looms for banks
http://www.azcentral.com/business/news/articles/2008/08/27/20080827biz-credit...

Sean O'Grady: Credit crunch: 'It's just the end of the
beginning'
http://www.independent.co.uk/news/business/comment/sean-ogrady-credit-crunch-...

Experts doubt sustained U.S. economic growth
http://www.azcentral.com/business/articles/2008/08/29/20080829biz-economy0829...

Kind Regards

[Dr_Who]

Great article Ananda. :)

[tricha]

Ananda77 - "...the present rally likely to come to a screeching halt like all 'sucker's rallies'...(in due time)"

Wow, yes a screeching halt, more blood on the floor today, like ASX down 180 points, oh boy, going to be an interesting opening.:eek:

[ananda77]

...NDX100 closed at 1774.78, just above the 1756/1757 support;

>>too early to take a definite short position in the US markets -just yet- better to wait for the definite BREAK DOWN ...if it happens... (BE WARNED)

Kind Regards

[shasta]

...NDX100 closed at 1774.78, just above the 1756/1757 support;

>>too early to take a definite short position in the US markets -just yet- better to wait for the definite BREAK DOWN ...if it happens... (BE WARNED)

Kind Regards

The resource sector "smash down" sale continues :(

From today, closing prices & movement

MCR $1.27, (-11.5c)
CUO $0.26 (-5.5c)
SRL $3.91 (-42c)
OGC $0.47 (-7c)
IGO $2.60 (-21c)
OZL $1.27 (-8c)
PNA $0.625 (-3c)

It's getting ridiculous, producers are now on some of the cheapest forward P/E's i've seen in years...:confused:

We surely must be getting close to the bottom :confused:

[h2so4]

The resource sector "smash down" sale continues :(

From today, closing prices & movement

MCR $1.27, (-11.5c)
CUO $0.26 (-5.5c)
SRL $3.91 (-42c)
OGC $0.47 (-7c)
IGO $2.60 (-21c)
OZL $1.27 (-8c)
PNA $0.625 (-3c)

It's getting ridiculous, producers are now on some of the cheapest forward P/E's i've seen in years...:confused:

We surely must be getting close to the bottom :confused:

...thats no bull!! :D

[ananda77]

...think we've seen an intermediate bottom last night at least...was long on the Russ2000since Dow 11330, but exited a bit too early this morning, in anticipation of a bit of a pull back on the Dow tomorrow, before another leg up higher towards 11790...

Kind Regards

[bermuda]

...think we've seen an intermediate bottom last night at least...was long on the Russ2000since Dow 11330, but exited a bit too early this morning, in anticipation of a bit of a pull back on the Dow tomorrow, before another leg up higher towards 11790...

Kind Regards

Houston, we have a problem.

On our way to sub 10,000 Not that far away.

Just when I had some good stocks starting to hum. Life aint easy.

[Huang Chung]

Oil smashed, metals smashed, financials down.....

Welcome to a whole new world of pain.....:(

[The Big Ease]

businessspectator, there is an interview with the guy saying the commodity bubble has burst. the game is over.

i would doubt that very much, though continued price drops will likely occur. has a nuke been dropped on china? hmmm

[ananda77]

bermuda:

...think there is a GOOD chance, the markets are in the process of flooring out and will start rallying soon, maybe as early as this week -a good weekend ahead-

Kind Regards

[Footsie]

fear is at the extreme.... what does this usuallly mean?

[JBmurc]

Gold up 22points both gold & silver should have a strong run from here as the US fed makes even more USD to bail out bad dept all from thin air, hard currency to take centre stage late 08/09

JBmurc -buying more bullion

[Tok3n]

I don't understand Bank of America's Merill rescue e.g.

why not just let it plunged and then buy it at a massive discount vs. such a premium

Anyway, well done Singapore's Temasek for trying to bottom fish lol.

[Serpie]

I don't understand Bank of America's Merill rescue e.g.

why not just let it plunged and then buy it at a massive discount vs. such a premium

Anyway, well done Singapore's Temasek for trying to bottom fish lol.

There was a suggestion on CNBC that the US Government may have encouraged BofA to go into Merrill sooner rather than later in order to contain the situation.
What form this "encouragement" may have taken - I have no idea. Probably just a completely unsubstantiated rumour.

[MrDevine]

Read on Bloomberg that Gloom Boom Doom Marc Faber says on CNBC that this is GOOD let Lehman fail, chance for a rebound over the next month.

[shane_m]

Temasek should now start selling BOA :)

[lakedaemonian]

Gold up 22points both gold & silver should have a strong run from here as the US fed makes even more USD to bail out bad dept all from thin air, hard currency to take centre stage late 08/09

JBmurc -buying more bullion

I've been a big fam of PMs for a good few years now.

I was a buyer when gold recently fell below 800 and I'm REALLY liking silver at these levels.

But I have to admit I'm treading cautiously.

That was a pretty big deflationary/disinflationary whack. <---I'm guessing in my opinion

I'm thinking it's US centric on gold/silver prices going forward, unless we see a major crisis.

I'm feeling a bit confused on how underlying asset prices shriveling up(property & company valuations), combined with the inflationary effects of these bailouts will play out in the short-term.

Long term I'm bullish gold/silver and I think they'll pop within the next 12 months.

Maybe I'm just being greedy hoping for another gold dip possibly into the high 600's.

I'm a bit reluctant to continue dollar cost averaging UP on gold any further from here...silver a bit less so.

[bermuda]

bermuda:

...think there is a GOOD chance, the markets are in the process of flooring out and will start rallying soon, maybe as early as this week -a good weekend ahead-

Kind Regards

Hi Ananda77
Sooner or later things will come right but I am not holding my breath. We have hald a tumultuous time since the subprime exposed America's weakness last year.

Add on a rise in the oil price to $US147 which upset the world economies and led to a demand destruction that has seen oil plunge back towards $90. These are volatile times and America is finally finding out that the Fed and others are almost at the end of their glue in trying to paper over the cracks of an economy that was spurred on by Greenspan at the behest of Bush and Cheney.

They are now not only losing their houses but are starting to realise that their superannuation is going to come up short. Bush never learnt from the Enron debacle...they continued to prop up an ailing economy because that is what politicians do.

And the drop in oil price means enormous amounts of good work developing alternatives are now going to be shelved until the world once again uses up the oil supply cushion which has now blown out to about 4 million barrels per day versus 2 at the beginning of the year.

Twilight in the desert has been delayed.

But to comment on your post. We will have our day in the sun again. Trouble is it could be a long winter.
What a mess. The banks have still got a lot to learn about prudent lending. Dont they study financial history.?

[ananda77]

...the Dow July '08 low 10828 close still stands; so, it remains a wait and see situation... not too hopeful at this stage after the Nasdaq100 severed it's support...

Kind Regards

[Dr_Who]

The Dow should Rally overnight.

Global central banks and govts have moblised to curb the Lehman issue. Also Barclays still in talks to buy Lehmans other assets.

The Dow on the futures market is has already moved up on anticipation of a rally overnight.

[bermuda]

The Dow should Rally overnight.

Global central banks and govts have moblised to curb the Lehman issue. Also Barclays still in talks to buy Lehmans other assets.

The Dow on the futures market is has already moved up on anticipation of a rally overnight.

Hi Dr,
This thing is a lot worse than a lot of people realise. It is so volatile I wouldnt bother calling one day from the next. We are looking at serious issues here. Like losing your house and Superannuation. And all the time oil goes down delaying/removing the funds required to mobilise our planet. ( through alternative energies )

Dow will stabilize tonight or continue down but I would not bet on too many more lifts.

[The Big Ease]

fear is at the extreme.... what does this usuallly mean?

be scared? :p

[AMR]

That was short lived...S&P futures pointing down 20 points...

[ananda77]

Super Imperialism: The Economic Strategy of American Empire (new ed., Pluto Press, 2002

...again, we need to realize that what is happening in the financial markets is "BY DESIGN" and not some sort of natural occurence;

...the market direction leading up to the present crisis and now during the crisis is handled very well by institutional buying/selling spreads, otherwise markets would have melted down and gold/silver gone stellar;

...the financial crisis: GOOD - BAD depends entierly from what ankle you look at it;

Question (Mike Whitney):
---The housing market is freefalling, setting new records every day for foreclosures, inventory, and declining prices. The banking system is in even worse shape; undercapitalized and buried under a mountain of downgraded assets. There seems to be growing consensus that these problems are not just part of a normal economic downturn, but the direct result of the Fed's monetary policies. Are we seeing the collapse of the Central banking model as a way of regulating the markets? Do you think the present crisis will strengthen the existing system or make it easier for the American people to assert greater control over monetary policy?

Answer (Micheal Hudson):
---What do you mean “failure”? Your perspective is from the bottom looking up. But the financial model has been a great success from the vantage point of the top of the economic pyramid looking down? The economy has polarized to the point where the wealthiest 10% now own 85% of the nation’s wealth. Never before have the bottom 90% been so highly indebted, so dependent on the wealthy. From their point of view, their power has exceeded that of any time in which economic statistics have been kept.

You have to realize that what they’re trying to do is to roll back the Enlightenment, roll back the moral philosophy and social values of classical political economy and its culmination in Progressive Era legislation, as well as the New Deal institutions. They’re not trying to make the economy more equal, and they’re not trying to share power. Their greed is (as Aristotle noted) infinite. So what you find to be a violation of traditional values is a re-assertion of pre-industrial, feudal values. The economy is being set back on the road to debt peonage. The Road to Serfdom is not government sponsorship of economic progress and rising living standards; it’s the dismantling of government, the dissolution of regulatory agencies, to create a new feudal-type elite.

The former Soviet Union provides a model of what the neoliberals would like to create. Not only in Russia but also in the Baltic States and other former Soviet republics, they created local kleptocracies, Pinochet-style. In Russia, the kleptocrats founded an explicitly Pinochetista party, the Party of Right Forces (“Right” as in right-wing).

In order for the American people or any other people to assert greater control over monetary policy, they need to have a doctrine of just what a good monetary policy would be. Early in the 19th century the followers of St. Simon in France began to develop such a policy. By the end of that century, Central Europe implemented this policy, mobilizing the banking and financial system to promote industrialization, in consultation with the government (and catalyzed by military and naval spending, to be sure). But all this has disappeared from the history of economic thought, which no longer is even taught to economics students. The Chicago Boys have succeeded in censoring any alternative to their free-market rationalization of asset stripping and economic polarization.

My own model would be to make central banks part of the Treasury, not simply the board of directors of the rapacious commercial banking system. You mentioned Henry Liu’s writings earlier, and I think he has come to the same conclusion in his Asia Times articles.

read the full iterview here:
http://www.informationclearinghouse.info/article20647.htm

-STAY DEBT FREE-!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!! !!!!

Kind Regards

[bermuda]

That was short lived...S&P futures pointing down 20 points...
Well it looks as though the Dow will eek out a reasonable but volatile rise. It has been a truly fascinating 12 months. What lies ahead? AIG???? If they dont get a bridging loan or Fed help they are gone burger. Ouch and more ouch.

[Dr_Who]

Dow up 140. I cant see it staying up for too long. Dead cat bounce?

[duncan macgregor]

The worst has still to come the American economy is failing taking the markets world wide down to much lower levels. How many yanks are paying the mortgage with ever increasing credit card debt?. Live for today to hell with tomorrow it might never happen.
Dead cat bounces in a market in a steep downtrend thats what i expect. Wait until China revs up then starts manipulating the price of oil to sink that big aggressive bully once and for all. Oil will be $200 a barrel in 2009 which will turn the American dream into a nightmare. Macdunk

[dartMonkey]

So you will be buying oil producers McD, just not yet?

[lakedaemonian]

So you will be buying oil producers McD, just not yet?

Personally, I'm thinking the underlying commodity will perform better...according to Jim Rogers.

Depending on the oil producer of course.

I'm of the belief that big oil will be a fat juicy target for governments short on tax revenue, looking for someone to blame.....and everyone hates big oil except shareholders.

And that's without even covering the operational, managerial, financial, and political risks.

[STRAT]

Personally, I'm thinking the underlying commodity will perform better...according to Jim Rogers.

Depending on the oil producer of course.

I'm of the belief that big oil will be a fat juicy target for governments short on tax revenue, looking for someone to blame.....and everyone hates big oil except shareholders.

And that's without even covering the operational, managerial, financial, and political risks.Hi Lakedaemonian,
That would be a fair call but for the fact that Governments dont rule Big Oil. Its the other way around.

[bermuda]

Hi Lakedaemonian,
That would be a fair call but for the fact that Governments dont rule Big Oil. Its the other way around.


Unless you are dealing with Chavez, Putin, Saudi Arabia ( new entrant ) Iran, Iraq, and a host of others.

Bush tried to rule Iraq Oil. The 60,000 strong Iraqi oil workers' Union got in the way. Now they are diversifying and doing some big deals with China.

But back to the point. The West has little and diminishing control of oil,...a precious finite resource. Governments rule.

There are millions out there being fooled by the falling oil price.

A medium term respite...and a much needed opportunity to expand our alternative energy programs...but I fear a lot are being scrapped as we speak.

We know not what we do.

[ananda77]

...quite sure we will see quite a bounce tonight; it's either that after Central Banks worldwide inject stupendous amounts of cash, or the markets will be in a non-stop melt down...

Kind Regards

[shane_m]

This market market crash points to a total collapse of American capitalism.

[mark100]

I don't agree. This is simply a well needed purge that will enable a new cycle to eventually form.

[lakedaemonian]

I don't agree. This is simply a well needed purge that will enable a new cycle to eventually form.

Agreed.....but managing the purge must be approaching maximum on the scale of impossibility.

And if cycles start again by or including overcorrecting the long-term mean......that's rough....particularly in regards to real estate and its implications for the equity markets

[ananda77]

...quite sure we will see quite a bounce tonight; it's either that after Central Banks worldwide inject stupendous amounts of cash, or the markets will be in a non-stop melt down...

Kind Regards

On Friday morning, Senator Christopher Dodd, the head of the Senate Banking Committee, was interviewed on ABC's “Good Morning America.” Dodd revealed that just hours earlier at an emergency meeting convened by Secretary of the Treasury Henry Paulson and Federal Reserve chairman Ben Bernanke, lawmakers were told that

"WE'RE LITERALLY MAYBE DAYS AWAY FROM A COMPLETE MELTDOWN OF OUR FINANCIAL SYSTEM.”

Dodd added somberly, that in his three decades of serving in public office, he had "never heard language like this.”-

...a stupendous amount of cash has been injected to try to stop the "BIG FREEZE" in interbank lending, a run on the money markets and as a result, a non-stop melt down in equity markets.

But now what??????????

GRASPING AT STRAWS
By Mike Whitney
http://www.informationclearinghouse.info/article20828.htm

...and to help to understand the 'Brave New World' read also:

Financial Bailout: America's Own Kleptocracy
The largest transformation of America's Financial System since the Great Depression
by Michael Hudson
http://www.globalresearch.ca/index.php?context=viewArticle&code=HUD20080920&articleId=10279

Kind Regards

[Huang Chung]

Dow down 778

Are we even sure there is a floor under there?....all I can see is blood :eek:.

Would think the amount of margin calls would hit new records today.

[MrDevine]

I sold out of the ASX on Friday, couldn't handle the volatility. I have ridden this ugly bear for 12 months lost and made money to come out almost even, however on Friday I got the fear. And this morning it is justified. I will keep my powder dry THERE WILL BE good stocks to buy.

Mr D.

[kura]

Last night I convinced myself that the worst was over, (put in some buy orders) Have just been cancelling them all this morning.

[Tok3n]

The problem now is interest rates are coming down (in NZ).

Just had some of my term deposits rollover, nearly off 1%.

[JBmurc]

The problem now is interest rates are coming down (in NZ).

Just had some of my term deposits rollover, nearly off 1%.

going be pently more drops to come as well with NZ having one of the worse Debt> income ratio in the OECD---

[Huang Chung]

I sold out of the ASX on Friday, couldn't handle the volatility. I have ridden this ugly bear for 12 months lost and made money to come out almost even, however on Friday I got the fear. And this morning it is justified. I will keep my powder dry THERE WILL BE good stocks to buy.

Mr D.

Nice move Mr. D

It looks like Paulsen et al will now take a while to regroup, unless they put the same proposal up again for a re-vote (which would seem fairly pointless).

[Serpie]

Lots of fear out there. Anyone game enough to be buying today? Might be some money to be made if you can get in and out before the end of the day, but too scary to hold for another night on the DOW?

[shasta]

Lots of fear out there. Anyone game enough to be buying today? Might be some money to be made if you can get in and out before the end of the day, but too scary to hold for another night on the DOW?

Keep an eye on precious metals Serpie, in particular Gold & Silver, the disintegration of the US market may be the catalyst for the PM's to finally start to run again...

[Stranger_Danger]

I *may* buy a little today, but only a little. I reckon we have a couple more punishing days left so if I do anything, it'll be of a "bob each way" nature. I don't think we're done yet but unless we're truly in for the armageddon - and if you assume a sharemarket is forward looking - I don't think we're too far away.

I wouldn't touch financials with a bargepole, but, there *is* a point which debt free companies, holding cash, with decent prospects (albeit a year or two of reduced profits?) should be bought, and in many cases I reckon we're not far from that point.

[spruik]

Lots of fear out there. Anyone game enough to be buying today? Might be some money to be made if you can get in and out before the end of the day, but too scary to hold for another night on the DOW?

My personal view is to cautiously start buying, possibly best time around one hour after market opening. Big panics are also opportunities, and believe the US will put something together to calm the herds soon..

[JBmurc]

Great day to buy IMHO 1-2hrs after the open companies like SEV with nett assets of near $9 for sub $6 yeild %5-6 ,,,,ex divie in a couple weeks

[mark100]

Great day to buy IMHO 1-2hrs after the open companies like SEV with nett assets of near $9 for sub $6 yeild %5-6 ,,,,ex divie in a couple weeks

Except SEV management were stupid enough to spend their cash on listed securities which will be declining with the market.

They were smart enough to sell the media business for an inflated price but then were dumb enough to spend the cash on over-inflated shares!

[JBmurc]

Except SEV management were stupid enough to spend their cash on listed securities which will be declining with the market.

They were smart enough to sell the media business for an inflated price but then were dumb enough to spend the cash on over-inflated shares!

There not the only ones ......paying 2.60 for OGC has been a right kick in the guts esp. when golds over $1100oz AUD

[voltage]

what should be on the shopping list looking at top quality blue chip stocks

[soulman]

Lots of fear out there. Anyone game enough to be buying today? Might be some money to be made if you can get in and out before the end of the day, but too scary to hold for another night on the DOW?

If anyone bought early in the first hour should have made reasonable dough at around midday to 1pm. Holding overnight is a risk but you have to think maybe the DOW overreacted with a 7% fall. Another similar fall would not suprise me but I would think the Fed will do something to calm the market down a bit.

[Serpie]

I couldn't help myself. Bought a trading parcel of an old favourite. It's had rock solid support near to the current levels throughout all of the years events, and looks to bounce back each time.
The DOW futures are pointing to a better night tonight, so worth a punt. Bollingers say buy, so it's a good time to test that particular indicator (I know, I know - more than 1 indicator required to buy).

[Oiler]

I couldn't help myself. Bought a trading parcel of an old favourite. It's had rock solid support near to the current levels throughout all of the years events, and looks to bounce back each time.
The DOW futures are pointing to a better night tonight, so worth a punt. Bollingers say buy, so it's a good time to test that particular indicator (I know, I know - more than 1 indicator required to buy).

Serpie

Dont keep us in suspense............ what is your "old favorite"? ;)

Like you say Serpie, I also suspect the DOW to bounce tomorrow. The "contrarian" in me sees buying opportunities out of this down market.

Oiler

[Serpie]

Oiler my old amigo!

It was Deep Yellow (DYL). Shrewdy's interest in U producers has rekindled my love affair with DYL, which was my first stock, and was a 4 bagger for me. Unfortunately it also gave me false confidence in my own ability - something that has now been "adjusted".

DYL looks range bound between 20c - 25c, and that held today so I grabbed a few at the bottom end of that range.

And it's a stock that I'm happy to hold for 5 minutes or 5 years, but I'm trying to learn technicals so will try to follow sound principles in selecting an exit point.

Knowing you Oiler, I'd say you may have had your chequebook out today as well?

[ananda77]

...more, more, more,...

[soulman]

A few stock offering great returns today.....Buying at open and selling afterwards intra-day.

AMP, MQG, BEN, QBE, ANZ, IPLDA, HIL, IFL and at the specs end BOW, MCC, FLX, and many others.

[Huang Chung]

Lots of fear out there. Anyone game enough to be buying today? Might be some money to be made if you can get in and out before the end of the day, but too scary to hold for another night on the DOW?

Hi Serpie

I picked up an extra 2,000 New Hope Coal (NHC) this morning at $4.18. It finished at $4.30, so I guess I'm happy under the circumstances.

Unless I start shuffling the deck chairs on the Titanic (i.e. rearranging the portfolio), I think I've fired my last bullet for a while. (PS, please excuse the mixed metaphores).

[airedale]

I have just read the number of gainers and losers on the Stockness home page.
Somehow the figures seem awry. On a significant down day there are:
Unchanged....23,494.....93.4 %
Gainers...............366.....1.5 %
Losers................1297.....5.2 %

Yet all four of the main ASX indices are down more than 4 %. How can there be a drop of +4 % when most of the stocks are said to be unchanged

[Serpie]

Good stuff HC. NHC looks like it wants to be at $4.45, so good buying, and already in profit!

[shasta]

I have just read the number of gainers and losers on the Stockness home page.
Somehow the figures seem awry. On a significant down day there are:
Unchanged....23,494.....93.4 %
Gainers...............366.....1.5 %
Losers................1297.....5.2 %

Yet all four of the main ASX indices are down more than 4 %. How can there be a drop of +4 % when most of the stocks are said to be unchanged

The indices are down, due to the weighting of the companies that are down, ie RIO, BHP, WPL, STO etc

[Serpie]

I have just read the number of gainers and losers on the Stockness home page.
Somehow the figures seem awry. On a significant down day there are:
Unchanged....23,494.....93.4 %
Gainers...............366.....1.5 %
Losers................1297.....5.2 %

Yet all four of the main ASX indices are down more than 4 %. How can there be a drop of +4 % when most of the stocks are said to be unchanged


I think there's only about 2200 stocks on the ASX Airedale, so those numbers don't seem right?

[Huang Chung]

I have just read the number of gainers and losers on the Stockness home page.
Somehow the figures seem awry. On a significant down day there are:
Unchanged....23,494.....93.4 %
Gainers...............366.....1.5 %
Losers................1297.....5.2 %

Yet all four of the main ASX indices are down more than 4 %. How can there be a drop of +4 % when most of the stocks are said to be unchanged

Losers do seem to be a bit light, don't they.

Still, a huge part of that 4% drop in the ASX 200 and all ords would be attributable to just BHP, RIO WBC and NAB.

[Tok3n]

23,494 companies?

Did everyone that is a contractor, self-employed just listed themselves on the ASX? :)

The difference between the SPI futures and index was quite interesting.

SPI was down 7%!

[soulman]

FTSE turning positive but I would suspect they are influence by Wall Street futures.

I bought quite a few today and sold a few today as well.

HC, you can include SGB in that index as well. Big fall from WBC and SGB today.

[Huang Chung]

HC, you can include SGB in that index as well. Big fall from WBC and SGB today.

Yeah...tell me about it :(.

[soulman]

I picked up SGB today but with WBC huge drop, not quite sure I want it now. Nevertheless, when the merger gets closer in early Nov, along with the banks result, it might reach $31.50 again. The usual caveat is WBC share price going along at the $23 to $24 mark.

I sold BOQ at the close, which I reckon should be kept for the next few days. Their profit result should be out soon.

[Huang Chung]

The merger of SGB with WBC is a good thing I think Soulman.....the combination will be one hellava outfit. Only CBA will come close to matching it.

[Huang Chung]

Looking like it could be another nasty day.....market now seems to think that the bailout will go through, but looking past that event, all there is to be seen is a huge black hole.

Was it MacDunk who has for ages been predicting a really bad end to the year? Give the man a cigar......

[soulman]

The merger of SGB with WBC is a good thing I think Soulman.....the combination will be one hellava outfit. Only CBA will come close to matching it.

I sold SGB yesterday HC. Don't want to hold it as I don't see it over $32 in the short term. It should trade along the range of $29 and $32 until the result announcement of them and WBC, the flagged special dividend of over $1 and the merger vote.

The thing that suprise me today is SUN. A T/O talk surrounding SUN has surfaced again and maybe one of the big 4 and QBE might break SUN up. Ever since QBE failed takeover of IAG, both shares has rallied and held up quite well in this market turmoil.

[Huang Chung]

The thing that suprise me today is SUN. A T/O talk surrounding SUN has surfaced again and maybe one of the big 4 and QBE might break SUN up. Ever since QBE failed takeover of IAG, both shares has rallied and held up quite well in this market turmoil.

SUN is not one of my favourite banks.

Worth a read.....

http://www.theaustralian.news.com.au/story/0,25197,24427780-30538,00.html

[mark100]

I don't think its safe to go back in the water yet but I note in the past couple of weeks Buffet has been spendng a bit of his cash, albeit on very attractive terms that are not available to the ordinary investor.

And I remember the old saying that when the last of the bulls become bears the bottom is near. Well for the past year I have read endless bullish (or was that bullsh!t) articles by Charlie Atkin in the Eureka report. But over the past couple of weeks I sense fear in his articles and he's become bearish. Has the last bull turned into a bear?

[Huang Chung]

I don't think its safe to go back in the water yet but I note in the past couple of weeks Buffet has been spendng a bit of his cash, albeit on very attractive terms that are not available to the ordinary investor.

And I remember the old saying that when the last of the bulls become bears the bottom is near. Well for the past year I have read endless bullish (or was that bullsh!t) articles by Charlie Atkin in the Eureka report. But over the past couple of weeks I sense fear in his articles and he's become bearish. Has the last bull turned into a bear?

Mark, did you recieve the 2008 preview DVD that the Eureka Report put out at the start of the year? I loved the discussion with Aitken (Bull) and Gerard Minack (Bear).....I think we now know who was right :rolleyes:.

[soulman]

Anyone suprise by the US market fall? Gut feeling suggest the market has already factored in a bailout approval, but another feeling is that the fall of 350 points on the DOW was a sign of bailout failing again. Hence, the DOW should at least be a green last night.

The unemployment report wasn't great either and as pointed out before the bailout will not stop the economics of the world but I think it will at least end the uncertainty and we all can get back to work.

Mark, I see WB buying stocks such as GE and Goldman (on the discount side of course). Will be interested to see what else he is buying.

[AMR]

http://money.cnn.com/2008/10/03/news/economy/california_crisis/index.htm

Terminator wants $7bn loan to pay teacher's salaries.

[mark100]

Mark, did you recieve the 2008 preview DVD that the Eureka Report put out at the start of the year? I loved the discussion with Aitken (Bull) and Gerard Minack (Bear).....I think we now know who was right :rolleyes:.

No I didn't HC. I'm not a proper subscriber to Eureka, I just get some reports passed on to me. My gripe with Minack is that he is a permabear, he was calling the market down all through the bull run and now is having his day in the sun. Although I did enjoy hearing what he had to say on Inside Business this weekend, its available on the web if you missed it

[lakedaemonian]

http://money.cnn.com/2008/10/03/news/economy/california_crisis/index.htm

Terminator wants $7bn loan to pay teacher's salaries.

Wait until you see what happens to the teachers' pension fund CalPERS.....biggest in the US....quarter trillion....and up to their eyeballs in sour CDO investments.

There's a lot of rot in US pension funds that is but one layer of this onion like crisis.

[airedale]

I don,t know whether the bottom is nigh, but I can see a big move up on the asx in the last hour. It may be just an intra-day move, but interesting to see. May be the Dow will turn tonight.

[Serpie]

RBA cut interest rates by 1%

[macduffy]

I don,t know whether the bottom is nigh, but I can see a big move up on the asx in the last hour. It may be just an intra-day move, but interesting to see. May be the Dow will turn tonight.

More likely to be expectation of an RBA interest rate cut. If so, it won't impress the Dow!

;)

[Mick100]

I don,t know whether the bottom is nigh, but I can see a big move up on the asx in the last hour. It may be just an intra-day move, but interesting to see. May be the Dow will turn tonight.

DOW futures already up 120 pts airedale

[The Big Ease]

No I didn't HC. I'm not a proper subscriber to Eureka, I just get some reports passed on to me. My gripe with Minack is that he is a permabear, he was calling the market down all through the bull run and now is having his day in the sun. Although I did enjoy hearing what he had to say on Inside Business this weekend, its available on the web if you missed it

the difference is minack uses reasoned analysis whereas atken is usually full of sh!t. he has been wrong all the way through my last year's subscription with his gut feel analysis of what might happen. oh, but he got fmg fairly early on. he will live off that for a while yet :rolleyes:

[Huang Chung]

RBA cut interest rates by 1%

I bet we'll hear a bit about this on Squark Box tonight.

[Packersoldkidney]

Much more pain ahead, much more...

....found this graph of past and predicted mortgage resets - remember this is for the USA - who knows what carnage will be inflicted globally by the entire credit crisis in terms of mortgage resets, considering the low, low interests rates we've had globally in the last 7 years or so and the exotic debt instruments that have been building since then.

According to this (conservative) prediction, it will be 2012 at least before the mortgage reset situation stabilizes and hence around that time before the mortgage default situation moderates. Note the fact that the next wave of mortgage resets will be in so-called 'healthy' mortgages, not the 'risky' sub-prime mortgages that got the ball rolling in the first place.

http://bigpicture.typepad.com/comments/images/2007/10/22/various_resets_and_defaults.png

[winner69]

.... but everybody says all the problems are fixed

[Huang Chung]

An interesting article on the gridlock in international trade.


http://business.timesonline.co.uk/tol/business/industry_sectors/transport/article5141744.ece

[The Big Ease]

Hey POK.

have seen that chart before (about 8 months ago?)and i think its the best one to illustrate what was ahead back then and where we are right now. to me it shows we are past the peak of sub-prime resets and with the interest rates slashed all around the world and more to come, they should be more manageable for the mortgagees. However it will not be until first quarter of 09 that we see the results of the peak reset period that just past last month.

from now on its not so much a sub-prime issue as it is a confidence issue in the debt markets and of course now the economic consequences of the last 14 months of financial crises. the economic side of things is much better understood imo. my biggest concern is the rate of deleveraging that will take place in developed economies. the nyt had an excellent article saying after all the government capital injections and private capital raisings, the banking system is only jsut returned to the gearing levels before the financial crises took hold in late 07. these levels were already too high, so it means tighter credit and higher rates (relative to the cash rate) for a long time.

imo, this is what needs to be managed most once the debt markets begin to function again.

in short: subprime - worst is over
credit markets - still require confidence and will probably return once efin inst report 1st or 2nd quarter reports that are either clean of write downs or greatly reduced write downs.
economy - more govt spending on productive infrastructure, more fiscal and monetary policy stimulus.

when you think about it, unemployment might return to around 7%, but for most of last century that wouldve been a dream.

one last thing about that chart: you will always have a peak of loan resets 2-4 years out as most loans are taken at those fixed periods.


Much more pain ahead, much more...

....found this graph of past and predicted mortgage resets - remember this is for the USA - who knows what carnage will be inflicted globally by the entire credit crisis in terms of mortgage resets, considering the low, low interests rates we've had globally in the last 7 years or so and the exotic debt instruments that have been building since then.

According to this (conservative) prediction, it will be 2012 at least before the mortgage reset situation stabilizes and hence around that time before the mortgage default situation moderates. Note the fact that the next wave of mortgage resets will be in so-called 'healthy' mortgages, not the 'risky' sub-prime mortgages that got the ball rolling in the first place.

http://bigpicture.typepad.com/comments/images/2007/10/22/various_resets_and_defaults.png

[ananda77]

Market Bounce and Sucker's Rally...

Kind Regards

[STRAT]

Market Bounce and Sucker's Rally...

Kind RegardsHaha,

How about this ? Subprime made easy :D

http://www.authorstream.com/Presentation/kerrysmithers-94004-sub-prime-101-expl-business-finance-ppt-powerpoint/

[ananda77]

I read somewhere that the bulk of mortgage defaults at the moment are people who are voluntarily walking away from the house, due to negative equity. Its cheaper to buy somewhere else or rent, then continue paying off a mortgage on a house that has dropped in value by 50%. Particularly if its a second home or investment property.

What needs to happen is for a stabilisation in house prices - which I believe is beginning to happen. As well as the excess housing inventory to be mopped up, which is also happening. Plus homeowners can now refinance on reasonable terms as the mortgage market in the US is stabilising due to govt intervention in Freddie and Fanny

...walking away just sounds like the best strategy available...

20 Reasons Why the U.S. Consumer is Capitulating, thus Triggering the Worst U.S. Recession in Decades
Nouriel Roubini | Nov 14, 200

Today’s news about October retail sales (-2.8% relative to the previous month and now down in real terms for five months in a row) confirm what this forum has been arguing for a while, i.e. that the U.S. has entered its most severe consumer-led recession in decades. At this rate of free fall in consumption real GDP growth could be a whopping 5% negative or even worse in Q4 of 2008. And this is not a temporary phenomenon as almost all of the fundamentals driving consumption are heading south on a persistent and structural basis. Consider the many severe negative factors affecting consumption. One can count at least 20 separate or complementary causes that will sharply reduce consumption in the next several years:

· The US consumer is shopped-out having spent for the last few years well above its means.

· The US consumer is saving-less as the already low household savings rate at the beginning of this decade went to zero/negative by 2006 and has now to raise to more sustainable levels.

· The US consumer is debt burdened with the debt to disposable income having increased from 70% in the early 1990s to 100% in 2000 and to 140% in 2008.

· Not only debt ratios are high and rising but debt servicing ratios are also high and rising having gone from 11% in 2000 to almost 15% now as the interest rate on mortgages and consumer debt is resetting at higher levels.

· The value of housing wealth is now sharply falling by over $6 trillion as home price depreciation will soon be 30% and reach a cumulative fall of over 40% by 2010. Recent estimates of this wealth effect suggest that the effect may be closer to 12-14% rather than the historical 5-7%. And with home prices falling over 30% about 40% of all households with a mortgage (or 21 million out of 50 who have a mortgage) will be under water (negative equity in their homes) with a huge incentive to walk away from their homes.

· Mortgage equity withdrawal (MEW) is collapsing from $700 billion annualized in 2005 to less than $20 in Q2 of this year. Thus, with falling housing wealth and collapsing MEH US households cannot use their homes anymore as ATM machines borrowing against them.

· The value of the equity wealth of US households has fallen by almost 50%, another ugly wealth effect on consumption.

· The credit crunch is becoming more severe as the recent Q2 flow of funds data and the Fed Loan Officers’ Survey suggests: it is spreading from sub-prime to near prime to prime mortgages and home equity loans; and from mortgages to credit cards, auto loans and student loans. Both the price and the quantity of credit are sharply tightening.

· Consumer confidence is down to levels not seen since the 1973-75 and 1980-82 recessions.

· Real wage growth and real income growth has been stagnant in the last few years as income and wealth inequality has been rising. And now with GDP and real incomes falling real consumption will fall sharply.

· The Fed is reaching the zero-bound on interest rates as the economy gets close to deflation given the slack in goods, labor and commodity markets. Deflation means that consumers will postpone consumption as future prices are lower than current prices, as real rates are positive and rising and as debt deflation increases the real value of the households nominal debts

· Employment has been falling for 10 months in a row and the rate of job losses is now accelerating. In the last recession in 2001 that was short and shallow (8 months from March to November 2001 with a cumulative fall in GDP of only 0.4%) job losses continued all the way until August 2003 with a job loss recovery and a total cumulative loss of jobs of over 5 million from the peak. In this cycle job losses have been so far “only” slightly over 1 million while labor market conditions are severely worsening based on all forward looking indicators such as initial and continuing claims for unemployment benefits. Massive job losses and concerns about job losses will further dampen current and expected income and further contract consumption.

· Tax rebates of over $100 billion failed to stimulate real consumption earlier in 2008. Only 25% of the tax rebate was spent as US consumers are worried about jobs and need to use funds to pay their credit card and mortgage. The tax rebate was supposed to boost consumption all the way through September 2008: in reality real retail sales and real personal spending rose only in April and May while starting in June and all the way in July, August, September, October and now into the holiday season real retail spending and real personal spending are down month after month. Thus, another general tax rebate would be as ineffective as the first one in boosting consumption.

· The 1990-91 and 2001 recessions were not global; this time around the IMF is forecasting a global recession for 2009.

· The recent rise in inflation – that is only now slowing down – reduced real incomes even further for lower income households who spend more than the average households on gas, transportation, energy and food. The recent sharp fall in gasoline and energy prices will increase real incomes by a modest amount (about $150 billion) but the losses of real disposable income and thus falling consumption from other sources (wealth, income, debt servicing ratios) are much larger and more significant.

· The trade weighted fall in the value of the U.S. dollar since 2002 has worsened the terms of trade of the US and reduced further real disposable income and the purchasing power of US consumers over foreign goods.

· With consumption being over 71% of GDP a sharp and persistent contraction of consumption all the way through at least Q4 of 2009 implies a more severe recession than otherwise. Consumption did not fall even a single quarter in the 2001 recession and one has to go back to 1990-91 to see a single quarter of negative consumption growth. But the worsening balance sheet of US consumers in 1990-91 (debt ratios, debt servicing ratios, employment contraction, wealth effects of housing and stock markets) was much less severe than the current downturn.

· Monetary easing will not stimulate durable consumption and demand for residential housing as demand for such capital goods becomes interest rate insensitive when there is a glut of capital goods; monetary policy becomes like pushing on a string. In the previous recession the Fed cut the Fed Funds rate from 6.5% to 1% and long rates fell by 200bps. In spite of that capex spending of the corporate sector fell by 4% of GDP between 2000 and 2004 as there was a glut of tech capital goods and it took years to work out such a glut. Today there is a glut of housing, consumer durables and autos/motor vehicles; so it will take years to work out this glut and monetary policy is becoming ineffective to resolve that glut.

· While policy rates are sharply falling the nominal and real rates faced by households are rising rather than falling: rising mortgage rates (and event near lack of any mortgage financing at even higher rates for sub-prime and jumbo loans), rising rates on credit cards, auto loans and student loans together with less availability of credit are severely dampening the ability of households to borrow and spend.

· To bring back the household savings rate to the level of a decade ago (about 6% of GDP) consumption will have to fall – relative to current GDP levels – by almost a trillion dollar. If all of this adjustment were to occur in 12 months GDP would contract directly by 7% and indirectly (including the further collapse of residential and corporate capex spending in a severe recession) by 10%, an exemplification of the Keynesian “paradox of thrift”. If such an adjustment were to occur over 24 months rather than 12 months you would still have negative GDP growth of 5% for two years in a row with a cumulative fall in GDP from its peak of 10% (note that in the worst US recession since WWII such cumulative fall in GDP was only 3.7% in 1957-58). One can thus only hope that this adjustment of consumption and savings rates occurs only slowly over time – four years rather than two. Even in that scenario the cumulative fall of GDP could be of the order of 4-5%, i.e. the worst US recession since WWII. Note that the cumulative fall in GDP in the 2001 recession was only 0.4% and in the 1990-9 recession was only 1.3%. So, the current recession may end up being three times as long and at least three times as deep (in terms of output contraction) than the last two and worse than any other post WWII recession.

...and this is one option the G20 could use to solve the crisis:

Larry Edelson: The G-20's secret debt solution
http://www.moneyandmarkets.com/the-g-20s-secret-debt-solution-27996

Kind Regards

[Zephyrus]

I read somewhere that the bulk of mortgage defaults at the moment are people who are voluntarily walking away from the house, due to negative equity. Its cheaper to buy somewhere else or rent, then continue paying off a mortgage on a house that has dropped in value by 50%. Particularly if its a second home or investment property.

What needs to happen is for a stabilisation in house prices - which I believe is beginning to happen. As well as the excess housing inventory to be mopped up, which is also happening. Plus homeowners can now refinance on reasonable terms as the mortgage market in the US is stabilising due to govt intervention in Freddie and Fanny

Surely if you walk away from a home you will do so via applying for bankruptcy & will not be able to purchase another home??

Also, someone I know is/was about to invest in some of these forclosures at 40 cents in the dollar. I presume he meant the value of the loans. Anyway, he had a group of investors in the UK working with him but the loan they were supposed to get has subsequently been reduced. I believe it was originally approved & the value was 1,000,000 (not sure of currency but would assume US$). This would've been enough to purchase 13 dwellings but has now been reduced to enable them to only purchase 2 dwellings. I'm not sure how much equity the group have, if any. They were to do up the dwellings & rent them out, then presumably sell them when the housing market rises (my presumption).

[ananda77]

...the 'apathy stage' could still be a bit out, but selling at this stage????
Equity Strategy
Volatility Remains Unabated
https://www.citigroupgeo.com/pdf/SNA27188.pdf

Is Now the Time to Buy Stocks?
Here is what the historical evidence suggests.
By JOHN H. COCHRANE
http://online.wsj.com/article/SB122645226692719401.html

Kind Regards

[Dr_Who]

I want to buy, but i am too scared. Sitting on the sideline and watching the destruction. It sums up alot of long term investors view.

[flyingmariner]

Not true.........................I can tell you the mortgage documents say you are liable and you will pay. People may hand back the keys and it does happen but banks are not going to waste money chasing down someone to try and get more money (after all if they had the money they would have continued paying their mortgage in spite of being underwater or owing more than the house is worth) Bankruptcy is the only way to get out from under and the option of walking away is there but the credit record will hound anyone who does that until they wish they never had. Ask anyone who has experienced ID theft.

[trackers]

Been on the sidelines for two months, took some hits but avoided a lot of the carnage. Been buying yesterday and today and am now fully invested.

Time will see if I've finally been able to pick a bottom :)

[tricha]

Oh boy, I couldnt help myself either. I bought today too. Weirdly enough, the stocks I bought have been going up for the last 2 days - so sniffing the slightest possibility of a change in trend, I jumped back in.

I tell you, this dollar cost averaging down theory better bloody well work!!!!


This could b a smashing day today on the ASX, we could hit the next level of margain lending defaults.

Index data delayed 30 min.http://www.kitco.com/images/down.gif DJIA7,596.09-254.32http://www.kitco.com/images/down.gif NASDAQ1,477.68-56.68http://www.kitco.com/images/down.gif NIKKEI7,645.51-104.66http://www.kitco.com/images/down.gif RUSSELL431.83-16.53http://www.kitco.com/images/down.gif NYSE4,974.76-232.00

[winner69]

ASX200 been in a sustained downtrend for some time now

Since May last year been no real sign of any reversal (on a weekly basis anyway) of the downtrend.

The optimisitics would be saying the ASX200 consolidating around the 3500 mark before heading north. Prob said that when it was around 4000 as well

If you say what might happen today does happen only continuation of a past trend .... and i dont think anybody knows when its going to end ... even in Australia ... where cash in corporates is really stretched

[Dr_Who]

The Chinese are picking up the carcasses.

They brought in the paramedics to revive the dying.

[OutToLunch]

Ooo. I don't like the sound of this. :(

http://www.telegraph.co.uk/finance/comment/ambroseevans_pritchard/4623525/Failure-to-save-East-Europe-will-lead-to-worldwide-meltdown.html
Failure to save East Europe will lead to worldwide meltdown

The unfolding debt drama in Russia, Ukraine, and the EU states of Eastern Europe has reached acute danger point.



By Ambrose Evans-Pritchard
Last Updated: 2:05AM GMT 15 Feb 2009
Comments 152 (http://www.telegraph.co.uk/finance/comment/ambroseevans_pritchard/4623525/Failure-to-save-East-Europe-will-lead-to-worldwide-meltdown.html#comments) | Comment on this article (http://www.telegraph.co.uk/finance/comment/ambroseevans_pritchard/4623525/Failure-to-save-East-Europe-will-lead-to-worldwide-meltdown.html#postComment)


If mishandled by the world policy establishment, this debacle is big enough to shatter the fragile banking systems of Western Europe and set off round two of our financial Götterdämmerung.
Austria's finance minister Josef Pröll made frantic efforts last week to put together a €150bn rescue for the ex-Soviet bloc. Well he might. His banks have lent €230bn to the region, equal to 70pc of Austria's GDP.
"A failure rate of 10pc would lead to the collapse of the Austrian financial sector," reported Der Standard in Vienna. Unfortunately, that is about to happen.
The European Bank for Reconstruction and Development (EBRD) says bad debts will top 10pc and may reach 20pc. The Vienna press said Bank Austria and its Italian owner Unicredit face a "monetary Stalingrad" in the East.
Mr Pröll tried to drum up support for his rescue package from EU finance ministers in Brussels last week. The idea was scotched by Germany's Peer Steinbrück. Not our problem, he said. We'll see about that.
Stephen Jen, currency chief at Morgan Stanley, said Eastern Europe has borrowed $1.7 trillion abroad, much on short-term maturities. It must repay – or roll over – $400bn this year, equal to a third of the region's GDP. Good luck. The credit window has slammed shut.
Not even Russia can easily cover the $500bn dollar debts of its oligarchs while oil remains near $33 a barrel. The budget is based on Urals crude at $95. Russia has bled 36pc of its foreign reserves since August defending the rouble.
"This is the largest run on a currency in history," said Mr Jen.
In Poland, 60pc of mortgages are in Swiss francs. The zloty has just halved against the franc. Hungary, the Balkans, the Baltics, and Ukraine are all suffering variants of this story. As an act of collective folly – by lenders and borrowers – it matches America's sub-prime debacle. There is a crucial difference, however. European banks are on the hook for both. US banks are not.
Almost all East bloc debts are owed to West Europe, especially Austrian, Swedish, Greek, Italian, and Belgian banks. En plus, Europeans account for an astonishing 74pc of the entire $4.9 trillion portfolio of loans to emerging markets.
They are five times more exposed to this latest bust than American or Japanese banks, and they are 50pc more leveraged (IMF data).
Spain is up to its neck in Latin America, which has belatedly joined the slump (Mexico's car output fell 51pc in January, and Brazil lost 650,000 jobs in one month). Britain and Switzerland are up to their necks in Asia.
Whether it takes months, or just weeks, the world is going to discover that Europe's financial system is sunk, and that there is no EU Federal Reserve yet ready to act as a lender of last resort or to flood the markets with emergency stimulus.
Under a "Taylor Rule" analysis, the European Central Bank already needs to cut rates to zero and then purchase bonds and Pfandbriefe on a huge scale. It is constrained by geopolitics – a German-Dutch veto – and the Maastricht Treaty.
But I digress. It is East Europe that is blowing up right now. Erik Berglof, EBRD's chief economist, told me the region may need €400bn in help to cover loans and prop up the credit system.
Europe's governments are making matters worse. Some are pressuring their banks to pull back, undercutting subsidiaries in East Europe. Athens has ordered Greek banks to pull out of the Balkans.
The sums needed are beyond the limits of the IMF, which has already bailed out Hungary, Ukraine, Latvia, Belarus, Iceland, and Pakistan – and Turkey next – and is fast exhausting its own $200bn (€155bn) reserve. We are nearing the point where the IMF may have to print money for the world, using arcane powers to issue Special Drawing Rights.
Its $16bn rescue of Ukraine has unravelled. The country – facing a 12pc contraction in GDP after the collapse of steel prices – is hurtling towards default, leaving Unicredit, Raffeisen and ING in the lurch. Pakistan wants another $7.6bn. Latvia's central bank governor has declared his economy "clinically dead" after it shrank 10.5pc in the fourth quarter. Protesters have smashed the treasury and stormed parliament.
"This is much worse than the East Asia crisis in the 1990s," said Lars Christensen, at Danske Bank.
"There are accidents waiting to happen across the region, but the EU institutions don't have any framework for dealing with this. The day they decide not to save one of these one countries will be the trigger for a massive crisis with contagion spreading into the EU."
Europe is already in deeper trouble than the ECB or EU leaders ever expected. Germany contracted at an annual rate of 8.4pc in the fourth quarter.
If Deutsche Bank is correct, the economy will have shrunk by nearly 9pc before the end of this year. This is the sort of level that stokes popular revolt.
The implications are obvious. Berlin is not going to rescue Ireland, Spain, Greece and Portugal as the collapse of their credit bubbles leads to rising defaults, or rescue Italy by accepting plans for EU "union bonds" should the debt markets take fright at the rocketing trajectory of Italy's public debt (hitting 112pc of GDP next year, just revised up from 101pc – big change), or rescue Austria from its Habsburg adventurism.
So we watch and wait as the lethal brush fires move closer.
If one spark jumps across the eurozone line, we will have global systemic crisis within days. Are the firemen ready?

[Dr_Who]

Dont worry you may just get what you wish for.

[JBmurc]

think I'll be taking some more profits of the floor next week large correction coming

[Skol]

We don't agree on gold but agree on this one, been coming for a while, could be some bargains over the next few weeks.

[winner69]

Prob be a boomer of a day on the ASX tomorrow .....

..... which means we'll get the ASX200 to 5,000

A month or so later than precited but why worry about that in the big picture of things

Even ELD might go up to 33 .... yippe

[Phaedrus]

JBmurc and Skol, the Australian market has never had a large correction that was not accompanied or preceded by a significant drop in the SP500 Index.

A quick glance at the Market Strength Indicator shows us that the SP500 could not be any stronger right now. (The AllOrds is similarly at maximum "market strength".)

http://i602.photobucket.com/albums/tt102/PhaedrusPB/SP50045.gif

[Ketel One]

think I'll be taking some more profits of the floor next week large correction coming

The analogous resistance on the S&P500 & DOW charts have both been broken. History suggests the XAO follows the direction of these indices pretty closely...
http://iforce.co.nz/i/lbdnqd4m.png

[Ketel One]

Oh dear I was too slow; Phaedrus beat me to it!

[JBmurc]

I'd rather take some profits next week with the market looking bullish will it close above 5000 on tue I think not but will be very close.
Not going hurt having some cash on the sidelines got a large tax bill to pay soon ...


plus wouldn't mind increasing my silver holding

[drillfix]

I'd rather take some profits next week with the market looking bullish will it close above 5000 on tue I think not but will be very close.
Not going hurt having some cash on the sidelines got a large tax bill to pay soon ...

plus wouldn't mind increasing my silver holding

JB you gonna dump your NAV holdings along with CFE after all the posts you have done? :P


ps:

Forgot to mention, its a little bit early or pre-emptive for the Blood on the Floor thread is it not?? I would have thought 5150 XAO at least before something like this sets in.

Self made prophecy is what will eventually occur, of course it will become fully obvious once the Yanks finish playing Hot Potato.

[STRAT]

Geez the bears are out early.At least wait till some snow starts to thaw fellas.

[macduffy]

Here's another bear having a quid each way!

http://www.smh.com.au/business/stocks-may-be-heading-for-10-reversal-20100405-rn5l.html

I'll be watching for Phaedrus' charts as a better indicator.

[Dr_Who]

Interesting, thanks everyone.

What do you guys use to hedge your portfolio? Short position in S&P to hedge portfolio?

[Hoop]

Here's another bear having a quid each way!

http://www.smh.com.au/business/stocks-may-be-heading-for-10-reversal-20100405-rn5l.html

I'll be watching for Phaedrus' charts as a better indicator.

Hmmmm...Looks like Lucy may have been reading ST forums...I see some familiar stuff.

5000 looking good

[Skol]

Thanksd for the info Phaedrus but I've taken some money out as the market gets higher. Still got lots in there but getting ready to pick up some bargains.

[JBmurc]

JB you gonna dump your NAV holdings along with CFE after all the posts you have done? :P


ps:

Forgot to mention, its a little bit early or pre-emptive for the Blood on the Floor thread is it not?? I would have thought 5150 XAO at least before something like this sets in.

Self made prophecy is what will eventually occur, of course it will become fully obvious once the Yanks finish playing Hot Potato.

Na wouldn't be selling those two or PEN have far to much growth yet to come it's more so towards my STX, ROC holdings -Nat Gas looking weak in the mid term-ROC because I've got a truckload an I like taking 10k+ for a week trading profit

[drillfix]

Well folks, with regards to Bear/Bull calculations,

Here is my interpretation of it, I keep an EYE on these things and you can see where EYE think if any turnaround is coming, will potentially come.

Just call it the heads up zone :P

http://i43.tinypic.com/2r78xsx.png

Cheers~!

ps: for my liking look for other indicator divergences whilst around or over 5100 oblique resistance shown in the chart.
In the meantime, we seem to be tracking below the lower Oblique Resistance line which should easily take us to 5,012

[Hoop]

Well folks, with regards to Bear/Bull calculations,

Here is my interpretation of it, I keep an EYE on these things and you can see where EYE think if any turnaround is coming, will potentially come.

Just call it the heads up zone :P

http://i43.tinypic.com/2r78xsx.png

Cheers~!

ps: for my liking look for other indicator divergences whilst around or over 5100 oblique resistance shown in the chart.
In the meantime, we seem to be tracking below the lower Oblique Resistance line which should easily take us to 5,012

5200...Yeah basically agree Drillfix. There is a lot of minor (precrash) resistance points between 5000 and 5200 as well and the All Ords could get hung up on any one of these.

To add another dimension to this topic..... A Break above the 5200 area is very bullish up to about July-ish 2010 then not so bullish after that date....maybe:mellow:......it all depends on if the uptrend line side of the possible*** reverse ascending triangle is reached again and respected.

***The chart below shows a Reverse Ascending right angle triangle (broadening) in the making... it needs another set of points before I would confirm it as a real formation.
This formation is bearish but reasonably unreliable (66%) (Bulkowski (http://thepatternsite.com/rabfa.html)) so in other words if this formation is confirmed there would be a 66% chance that the index would fall below 4500 within this 2010 year.

Now the tricky part ..... the big question... Do you add a false breakout (bull trap) as a confirmation point in a possible formation?....If you ignore the false break (bull trap) then no broadening triangle exists (red circled unconfirmed). What you have now is a recent breakout(4900) of the continuation rectangular pattern which is very bullish especially if you confirm it against the recent breakout on the S&P500.

If this is the case then 5550ish area 4500 + (4900-3850) is the Target area for the next cyclic Bull market correction.

Note:- if the broadening triangle scenario exists its still possible to reach that correction due point if it did so that correction would look like a cycle reversal...however its all conjecture at this point.
----------------------------------------------------------------------------------------------------------------------------------------------------
Edit:...For the near term all is looking rosy for the All Ords to crack that 5000 mark.

Also of interest will be the false break(bull trap) peak of 4980...if the index does not stutter at this 4980 point then it would be a good reason to ignore that peak in future trendline/formation marking in the future.



http://i458.photobucket.com/albums/qq306/Hoop_1/Allord01042010.png

[drillfix]

Hi Hoop, I subscribe to your potential view also.

I think the term (bulltrap) that you used also refers to what is known and shown as previously in your chart called "Falling Off the Roof"
(break past resistance and then a sharp decline to follow).

Here is what concerns me take from John Murphey's indicator perspective.

http://i44.tinypic.com/ruwdo6.png

The chart shows Bonds and the USD behaving as one would expect but the CRB and Stocks (S&P500) and moving in positive formation.

Potential alarm bell there of things that "could come".

[Ketel One]

Hi Hoop, I subscribe to your potential view also.

I think the term (bulltrap) that you used also refers to what is known and shown as previously in your chart called "Falling Off the Roof"
(break past resistance and then a sharp decline to follow).

Here is what concerns me take from John Murphey's indicator perspective.

http://i44.tinypic.com/ruwdo6.png

The chart shows Bonds and the USD behaving as one would expect but the CRB and Stocks (S&P500) and moving in positive formation.

Potential alarm bell there of things that "could come".

According to the blurb on that chart it says there are three key relationships between those four markets. CRB (Commodities, I assume) and Stocks having a positive relationship isn't one of those mentioned.

Why is it a potential alarm bell?

[drillfix]

Hi Ketel,

Sorry I perhaps should have added to the info. In Murphey's book (Intermarket Technical Analysis) he also mentions that, Bonds and Stocks are historically linked together.

In brief a bearish forecast for Bonds is also a bearish forecast for stocks and vice versa with bullish. Bonds can or should also act as a lead indicator.

Take a look at some of the 187 -1989 charts referencing this matter and surprisingly they can tell a story but uncertain is the actual Lead Time of the subject.

Hope this helps.

[JBmurc]

So going from the T/A pros posting right now is the time to tick up large in shares ? T/A showing a bullish market going forward in the short term (next 2-3 months) you guys feeling bullish buying right now or just not selling.




I'm bearish US bonds--US debts are still growing---rates must go up or US will not be able to roll their debt on to creditors

Just watched these great U-tube clips-http://www.youtube.com/watch?v=lMIFEZdWFkk&feature=related

[Phaedrus]

So going from the T/A postings, right now is the time to tick up large in shares? No. The time to buy up large was back in February when the plot was light green and the Index was below 1100.


T/A showing a bullish market going forward in the short term (next 2-3 months)It's certainly bullish at the moment, but no-one knows how long this will continue for.


You guys feeling bullish buying right now or just not selling.I'm bullish when the plot is green and bearish when it is red.
The time to buy is when the plot is light green.
The time to sell is when the plot is red.
Currently the plot is dark green - a time to hold.
No buying. No selling.

[winner69]

Even ELD might go up to 133 .... yippe

Maybe just maybe 133 today ... good eh Dr

[Dr_Who]

Maybe just maybe 133 today ... good eh Dr

All good things take time? :) lol

[drillfix]

No. The time to buy up large was back in February when the plot was light green and the Index was below 1100.

It's certainly bullish at the moment, but no-one knows how long this will continue for.

I'm bullish when the plot is green and bearish when it is red.
The time to buy is when the plot is light green.
The time to sell is when the plot is red.
Currently the plot is dark green - a time to hold.
No buying. No selling.

Good post phaedrus, you cannot put it any more simple than that. (unless those who wish to do a few day trades here and there :P)


but no-one knows how long this will continue for.

So true, and the closer we get to May-July, the more it becomes a game of Hot Potato.

I would really be interested in the seeing a correlation between the colours on your chart and any divergence amongst the S&P, CRB, Dollar and Bond charted index.

Of course, looks like we need to wait a bit for that one first.

[STRAT]

, but no-one knows how long this will continue for.
.Hi Yall,
Seems to me that a lot of folk here agree with this post by Phaedrus and/or approve of the post at least, yet we have 2 pages of predictions. Surely one cant have a foot in both camps. If one agrees then predicting the future or even discussing it is pointless. Right?

My understanding is that TA is reactionary by nature so can someone enlighten me as to how the crystal ball stuff works?

[drillfix]

Strat, which part would you like clarification on?

No crystal balls here, pure speculation with what is the now, with view to what will be now "later" (potentially).

[Phaedrus]

Drillfix, people will have trouble interpreting Murphy's chart correctly because the magenta additions you appended to it contain multiple errors.

http://i602.photobucket.com/albums/tt102/PhaedrusPB/PerfChart.gif

(1) You have highlighted the crucial relationship here as being Stocks vs Commodities. This is not one of the three key relationships which bind these four markets together. According to Murphy they are :-

An INVERSE relationship between commodities and bonds.
A POSITIVE relationship between bonds and stocks
An INVERSE relationship between the US Dollar and commodities

(2) You note that these two markets (Stocks and Commodities) have "positive movement direction" (both are rising) but go on to say that they "should be opposite". They shouldn't. Stocks and commodities normally move in tandem and you should NOT see this as a "potential signal of concern."

(3) The "normal" arrow you mark is in fact the abnormal here. It points to bonds. These usually have a POSITIVE relationship with stocks but here they are falling while stocks are rising. This is a bearish divergence, but you can see from the chart that there have been plenty of these over the course of this strong uptrend. None came to anything of any consequence.

[drillfix]

Phaedrus, in the chart drawn up by Stockcharts.com, the relationship is correct as you know, though perhaps my commentary probably leaves a lot to be desired.

Where I have drawn Normal, it is showing the inverse movement between the CRB and the dollar and Bonds. (A and C on your point list) which to me, is normal.

I can see a small divergence there between Bonds heading south and stocks heading north. (small as it may be) And that was my point in writing, a signal of concern.
Perhaps I should have wrote, should these maintain a signal of divergence then it will be a BIG concern, especially if the stocks overall continue to climb higher.

So, P, I honestly do not believe I that what I have posted contains "Multiple" errors at all.

So with the part I write as Normal, this is reflective of what CRB is doing. Its all open to ones own interpretation. Mine is that it could be right, and that the Stocks could be wrong with its direction. See what I mean?

add:, Im not speaking only of commodities as such, I am talking about The Constant Dollar Commodity Research Bureau (CRB) index.

Further to this, check it out:
http://www.slanker.com/report/id26.htm

[winner69]

Whats the RH scale .... %age change from July or something

[drillfix]

http://i602.photobucket.com/albums/tt102/PhaedrusPB/PerfChart.gif


Phaedrus, dont know why you have uploaded the chart from TinyPic onto PhotoBucket?

I feel like I have been busted by the Technical Analysis Police something. LOL

Also, I dont understand how you can say there is a bearish divergence whilst also stating that I am wrong on all accounts here.


This is a bearish divergence, but you can see from the chart that there have been plenty of these over the course of this strong uptrend. None came to anything of any consequence.


Sure, Absolutely, there have been plenty of other signals, I agree, But not at or coming up to the 5K+ XAO level, which is what the context of what I was referring to.

Which is, when (should) the XAO breaks past 5,000+ Then this will be what is very different to the Previous so called normal Divergence and there has not been PLENTY of them over or at above the 5,000 mark so we really need to take that in to consideration.

Not trying to scare monger anybody or anything, Im just trying to use "anything" that I see potentially that can give a heads up to any potential turn, that's all.

[Hoop]

Hi Yall,
Seems to me that a lot of folk here agree with this post by Phaedrus and/or approve of the post at least, yet we have 2 pages of predictions. Surely one cant have a foot in both camps. If one agrees then predicting the future or even discussing it is pointless. Right?

My understanding is that TA is reactionary by nature so can someone enlighten me as to how the crystal ball stuff works?

Sorry Strat ..no crystal ball stuff .... but this is the next best thing

It's all to do with chance happenings... and percentages of it happening again next time in a similar situation..this type of forecasting (predictions) is a lot better than a flip of a coin (50%). E.g High tight flags nearly 100% predictable..spooky:cool:

Learning to identify certain types of chart pattern (without the aid of a computer program) is tricky... misdiagnosis is common...missed noticing a pattern altogether even more common .....

Bulkowski has done a lot of statistical work in this area. All Chartists should at least have or have access to his book The Encyclopedia of Chart Patterns as a reference....also his Encyclopedia of Candlestick Charts...those who haven't .... check out his website (http://thepatternsite.com/index.html)

[drillfix]

The Encyclopedia of Chart Patterns as a reference....also his Encyclopedia of Candlestick Charts...

Would that the 1st or 2nd Edition you are referring to Hoop :P

[STRAT]

Thanks Fellas and thanks for the link Hoop. I will do some reading.

[Dr_Who]

I am keeping a close eye on those Aussie rates increase. Interest rate will get to a level where it will have an impact on the Aust economy.

[Phaedrus]

A lot of folk here agree with Phaedrus' ((reactive MSI based)) post yet we have 2 pages of predictions. Surely one cant have a foot in both camps? My understanding is that TA is reactionary by nature so can someone enlighten me as to how the crystal ball stuff works?

TA is not exclusively reactionary, Strat. Lagging indicators such as moving averages are of course totally reactionary and always fire after the event, but leading indicators such as OBV and oscillator divergences etc can fire ahead of price movement, triggering Sell signals while the shareprice is still rising, for example. You could call that "crystal ball stuff" in that it is "predicting the future" with some (preferably known) degree of accuracy. It is quite common to utilise both leading and lagging indicators (I do) so one really can have a "foot in both camps". All sorts of compromise "intermediate" positions are possible, for example some people are happy to act on leading signals while others prefer to wait and see if price action is moving as "predicted" before buying/selling. Others might wait until their lagging indicators confirm their leading indicator signals.

[winner69]

I am keeping a close eye on those Aussie rates increase. Interest rate will get to a level where it will have an impact on the Aust economy.

... and I be keeping a close eye on what these bond vigilantes around the world are up to ... they could make what happens to rates interesting

[Phaedrus]

Phaedrus, why have you uploaded the chart from TinyPic onto PhotoBucket?So I could post it here alongside my comments thus making it easier for people to understand the issues I am raising.


I feel like I have been busted by the TA Police!!!Sorry about that! I guess my criticism does come across as a bit heavy, but we can't have you confusing people can we!


I dont understand how you can say there is a bearish divergence whilst also stating that I am wrong on all accounts here..There IS a bearish divergence - but you didn't identify it. The arrow you have pointing to the divergence is labelled "normal"!

http://i602.photobucket.com/albums/tt102/PhaedrusPB/SPBOND-1.gif


Sure, there have been plenty of other signals.......... Right - and how good were they? I have marked the most obvious ones on the chart above. (We are looking for where the magenta Bond rate falls while the red SP500 is rising.) Such divergences "ought" to be followed by a significant FALL in the SP500. How many were? None. How much confidence, then, can you have that the current divergence will be followed by a significant fall in the SP500?


.......... but not at or coming up to the 5K+ XAO (ALL Ords) level... Then this will be what is very different to the Previous Divergences.... so we really need to take that into consideration.No we don't, and neither should we. Thisr chart features the SP500. It neither knows nor cares what level the AllOrds is at. In any case, 5000 is a completely arbitrary figure with no religious, financial or any other meaning. Nothing special happened at 2000, 3000, 4000, 5000 or 6000 last time - why should this time be any different?


Im just trying to use "anything" that I see potentially that can give a heads up to any potential turn, that's all.Fair enough, but let's not get desperate here. Rather than using just "anything", it would be better to restrict yourself to signals with some reasonable degree of proven reliability.

[Hoop]

Would that the 1st or 2nd Edition you are referring to Hoop :P

Neither Drillfix:)

Figures came from his website thepatternsite.com (http://thepatternsite.com/index.html)

See here (http://thepatternsite.com/htf.html) for the stats on flag high and tight section as I can't seem to copy and paste them to this post...basically he is now saying it has a break even failure rate of 0%* and 90% chance of meeting its target price.

Referring back to the first edition (1999).

Flags. high and tight on page 227
Failure rate 32%
Failure rate if waited for breakout 17%
Average rise 63% with most likely rise between 20 & 30%......44% have gains over 50%.


I have no idea what the second Edition says.....I haven't got that edition

Yeah..Yeah ..I know ..the second Edition (2005) is far superior to the first edition..

At a cost of $170 ..I've sort of never got around to buying the later edition....its in my 5 year plan though;)

Maybe someone with the later edition could post the updated figures as a comparison.

Investment Hint: ;) Those people dabbling in miners should pay special attention to this flag formation topic being mentioned.

[drillfix]

Neither Drillfix:)

Figures came from his website thepatternsite.com (http://thepatternsite.com/index.html)


Hi Hoop, yep a great site indeed, excellent reference material there and recommended for those to add to their TA/reference favourites folder should they not have one.
Cheers~!

[STRAT]

TA is not exclusively reactionary, Strat. Lagging indicators such as moving averages are of course totally reactionary and always fire after the event, but leading indicators such as OBV and oscillator divergences etc can fire ahead of price movement, triggering Sell signals while the shareprice is still rising, for example. You could call that "crystal ball stuff" in that it is "predicting the future" with some (preferably known) degree of accuracy. It is quite common to utilise both leading and lagging indicators (I do) so one really can have a "foot in both camps". All sorts of compromise "intermediate" positions are possible, for example some people are happy to act on leading signals while others prefer to wait and see if price action is moving as "predicted" before buying/selling. Others might wait until their lagging indicators confirm their leading indicator signals. Hi Phaedrus. No argument here regarding that. I guess using the words "crystal ball" was a bad move. It certainly invoked a few reactions. I didnt mean anything by it fellas other than to get the reaction I got from Hoop. Thanks Hoop.

Phaedrus. Leading indicators I have found very useful and fairly reliable short term but what are your thoughts on these medium and long term? I would be prepared to say ( shoot me down if necessary ) not so useful. Its clear to me that predicting the market is no easy task. The "bottom or bear rally" thread was testimony to that. I started that thread to invoke discussion on this very subject.

As always Im still looking for that elusive Crystal Ball. One with a 3 to 12month forecasting range would be ideal for my purposes.:drool:

If anyone has one for sale they can PM me

[Hoop]

........As always Im still looking for that elusive Crystal Ball. One with a 3 to 12month forecasting range would be ideal for my purposes.:drool:

If anyone has one for sale they can PM me

Hmmm... sorry Strat..I don't seem to have that range model in stock.


How about the long term range crystal ball.
You get it here at http://www.jimkopas.com/archives/289 (note :written 2 months ago)

Enjoy:):))

[Phaedrus]

Strat, predicting the market is more than "no easy task" - it is essentially impossible. Regardless of the methods used, the further into the future you are trying to predict, the lower the accuracy. Sooner or later it becomes a complete and utter waste of time. I see the important issue as being one of positioning rather than predicting. The aim of any system is surely be well positioned right now. Say you are holding a stock that is in a good uptrend. You are happy to be in, you are pleased that it is steadily rising - you are well positioned. Why worry about futilely trying to predict where it will be in a week, a month, a year, ten years? Your guesses are worthless, pointless and meaningless.

The situation is not unlike ocean sailing. So long as you are heading in roughly the right direction and making good progress, you are happy. That is all you want and all you need. Why bother trying to predict exactly when you will make landfall or where you will be in a weeks time? Who knows what the future may bring? You don't know, can't know and right now, don't care. It is of course important that you trim your ship to suit the prevailing weather, progressively reducing sail as the going gets heavier. In the event of major storms, it is best to have no sail up at all. Fortunately such storms do not appear out of nowhere and generally give plenty of warning such as a falling barometer, gathering clouds, etc. Only the unobservant, the foolhardy, the overconfident, the inexperienced and the ignorant are caught unprepared.

With stocks, you can jump ship any time you become dissatisfied with your rate of progress!

[STRAT]

Strat, predicting the market is more than "no easy task" - it is essentially impossible. Regardless of the methods used, the further into the future you are trying to predict, the lower the accuracy. Sooner or later it becomes a complete and utter waste of time. I see the important issue as being one of positioning rather than predicting. The aim of any system is surely be well positioned right now. Say you are holding a stock that is in a good uptrend. You are happy to be in, you are pleased that it is steadily rising - you are well positioned. Why worry about futilely trying to predict where it will be in a week, a month, a year, ten years? Your guesses are worthless, pointless and meaningless.

The situation is not unlike ocean sailing. So long as you are heading in roughly the right direction and making good progress, you are happy. That is all you want and all you need. Why bother trying to predict exactly when you will make landfall or where you will be in a weeks time? Who knows what the future may bring? You don't know, can't know and right now, don't care. It is of course important that you trim your ship to suit the prevailing weather, progressively reducing sail as the going gets heavier. In the event of major storms, it is best to have no sail up at all. Fortunately such storms do not appear out of nowhere and generally give plenty of warning such as a falling barometer, gathering clouds, etc. Only the unobservant, the foolhardy, the overconfident, the inexperienced and the ignorant are caught unprepared.

With stocks, you can jump ship any time you become dissatisfied with your rate of progress!Excellent Phaedrus. We are in complete agreement. Something I always find reassuring though I will be doing a bit of reading on the subject in any case ( thanks Hoop )

Thanks Phaedrus.

This month at least for me the seas have been calm. The sun has been shining and a nice strong tail wind has kept my sails full.

[drillfix]

Well folks,

Looks like the XAO weekly candle is making out with the 50% Fib line, so we are not quite across the line yet.

Check this out,

http://i40.tinypic.com/25isljn.png

If we choose to draw the fib on the actual body of the candles from the high to the low then the weekly candle just nudges through. (the body)

Anyway, food for thought and just a brief observation.

ps: on a daily we had cracked through upwards, but now, downwards we are actually "sitting on the line" (the body).

Check this out too: XAO daily >>> http://i42.tinypic.com/50rtdt.png

[winner69]

Drill - just as Phaedrus has is special chart of the ASX I have 1 of my own

A weekly one of the ASX200 (prefer this as a market indicator rather than the ASXORD even though not much different) .... with Fib lines on it

And as yoy say sometimes a bit spooky

ON the way up from March last years low the 23,6% retracement was 3996 and this resistance for while but the 38.2% mark at 4522 was both resistance and then support (almost where the last downward step ended up before turning. The 50% mark is 4922 -- about where the uptrend ended in both October and Feb

At the moment the ASX200 is just over this point .... will it hang in there for the end of this week .... if so the 4922 might become support ....as the ASX200 heads up to 5372 which is the next mark

The ASX200 has essentially range traded between the 38.2% and 50% Fib levels since Sept last year (over 6 months)

Intersting subject .... how nature explains how many things go on in the business world and share prices

[Dr_Who]

Anyone know what PE the Aussie and US market is trading at? Where can I obtain the markets PE?

We must be experiencing all that freshly printed money flowing into the market. Cheap monopoly money.

[winner69]

Dr ... depends on you want to listen to and what basis is used but the general consensus is that market PEs are about the long term average .... maybe slightly above average ... which means the markets might be slightly overvalued ... but not excessive

Summary ... valuations not a worry ... go for it

[drillfix]

Nature at its finest W,

Hey should a ease up occur, for reference we could also try putting a FIB in between the existing 50% and 38.2% and see how that experiment works out.

FIB in FIB >>> http://i44.tinypic.com/2iqfptt.png

But then, why dont we just use normal support and resistance lines hey ...lol

Though why did the Irishman draw 2 sets of Fibs? To be sure to be sure :P

Personally, I think we are getting set for a breather, maybe not, but then may so, or at least back down to 4858 for a bounce, or there abouts.


ps: would like to see your chart there Winner.

[Skol]

Last time the market took a breather I bought some TLS, did OK, seems to be a fairly defensive play. Just bought some again yesterday, 9.3% DY, not bad, chart looks OK.

[drillfix]

Hey Winner,

For even more recreation, I have drawn the upper Fib in Fib, with the lower Fib in Fib amongst the Overall FIB from the 2007 High to 09 Low.

Trying not to trade today until I have my other account set up which should be on Mon, so hyst filling in some time :P

Morning 09/04/2010 XAO Daily Fib in Fib >>> http://i44.tinypic.com/14muqlx.png

Enjoy :P

[winner69]

well done drillie

jeez going to be a frustrating day for today eh .... no trading and all those prices going up

Better go and have some V or something to get the heart beating faster

[drillfix]

Its all good Winner, no need for me to continually think I need to have bought the Low for every stock.

The purpose of this new trading account will be primarily for trading only. This also gives me the ability to have 50% cash circulating and my other account I will keep to do long buy and hold trades, which wont create thousands and thousands in brokerage. Im over that now and feel/believe I am moving in the right direction.

Interesting times a head.

[Dr_Who]

Hate to have a short position in this market. The bull is running strong. Even Greece cant stop this bull.

WOW :)

[winner69]

Hate to have a short position in this market. The bull is running strong. Even Greece cant stop this bull.

WOW :)

Amazing eh ..Greece (and other EU) stuffed, America in desperate state, NZ survives becasue the world thinks we are part of Australia ..... markets are totally overvalued .... long term expected returns on equities on most measures virtually zilch
.... and still the bull roars

Never mind just follow the herds until the elevator stops eh ... why worry .... as in the Dire Straights song ... 'there's always sunshine after rain, theres's always a crash after a boom, thats the way it has always been so why worry'

[JBmurc]

the bull in general equities will IMHO come to yet another GFC type fall later this year OCT my pick--

But in the mean time make hay while the sun shines-

[Dr_Who]

So true. The party dont last forever, especially when it is fueled by monopoly money freshly printed out of the press. Just dont forget to hope off and limit your hangover before the music stops.

Good trading and good luck everyone.

[Huang Chung]

Originally posted by NZ_Andy on HC...doesn't here vist here occasionally?

Particular reference to the NZ economy.

http://goldmeasures.com/2010/04/economies-like-animalsin-pit.html

[drillfix]

Looks like today will be the hit of 5,000

Wonder where it will close, above or below, IMO, above.

[ratkin]

ASX200 been in a sustained downtrend for some time now

Since May last year been no real sign of any reversal (on a weekly basis anyway) of the downtrend.

The optimisitics would be saying the ASX200 consolidating around the 3500 mark before heading north. Prob said that when it was around 4000 as well

If you say what might happen today does happen only continuation of a past trend .... and i dont think anybody knows when its going to end ... even in Australia ... where cash in corporates is really stretched


What a difference a year makes :)

[Dr_Who]

I ve got a feeling the market wants to consolidate from here. Maybe it is just the curry I had for lunch.

[sharer]

Well there went the 5,000 :-(

It was a nice little ray of sunshine while it lasted ...

Now, looking out for opportunities to re-enter, but all those good quality majors on my wish list are still pushing ahead & getting more expensive.
My estate lawyer's riposte to that is: "Buy BHP, it's always good value, don't even ask the price ..."
So much for TA. Stand on Fundamental assertions. I'm not sure which fundament is involved.
It is a bit worrying, i'm often sick, & after i die these characters are going to take over running my Estate; looks like they're going to sell everything regardless & invest the lot in BHP! :eek2:

[drillfix]

KW, if what you say is true for you and your finding it difficult to find stocks, how about trading index's or something, you know some of those are seasonal and have a more probabilistic outcome than some of these stocks.

Just a thought anyway~!

[gazprom1]

Hey DF,

Just been hooked up on the computer in Koh Samui after 10 days. You been making any money??? NGE is moving on up...beautiful!!!!! Not enjoying my ride in CVX at the moment. Will send you a PM in the next day or so!!!

Gazprom

[drillfix]

Will send you a PM in the next day or so!!!

Gazprom

Hi Gaz, great to see ya again mate and no worries about the stocks, up and down like yoyo's but the bills bet paid, have a fantastic time in Koh Samui.

Cheers~!

[JBmurc]

Hey DF,

Just been hooked up on the computer in Koh Samui after 10 days. You been making any money??? NGE is moving on up...beautiful!!!!! Not enjoying my ride in CVX at the moment. Will send you a PM in the next day or so!!!

Gazprom

Your not the only one not happy with CVX of late did ring CVX PR today asking Q's I will get the Answers E-mailed to me the MD is currently over in the UK?

[Dr_Who]

WOW, this market keeps on BOOMING! We ve all forgotten there was even a crisis less than one year back.

[lewinsky]

KW,

I agree with you. I have purchased TSO and sold for a nice profit and have also purchased some AJA because of the yield. I am not putting the house on them, but the yield is tempting and trading at a susbstantial discount to NTA.

Regards


LEW.

[trackers]

WOW, this market keeps on BOOMING! We ve all forgotten there was even a crisis less than one year back.

yep...Really really strong, and the US at least is on the back of some really good earnings from its top companies...

I've got my positions all set, this time around, though I won't be standing when the music stops - I was a bit concerned this morning when the guys on CNBC started going on about Jo Public starting to enter the market lol....

Now just need to research indicators that show that the DOW bull rally is running out of momentum.....

[Hoop]

WOW, this market keeps on BOOMING! We ve all forgotten there was even a crisis less than one year back.

Dunno about the cyclic bear market and crisis being forgotten..There are many out there who remember it so well they find it hard to accept that this cyclic bull market may still have some legs left in it and have now decided to sit it out on the sidelines awaiting for that crisis opportunity to return.

TA wise...the AllOrds has broken above its old high before its second correction thus final confirmation that the second correction is history and the primary advance trend has recommenced albeit at a much steeper trend rate than many investors expected...

The All Ord is now primary advancing towards its next TA Target point at 5500 ...(5000 + (5000 - 4500) )

Those figures are rounded for convenience... 5000 is nearer to 4980 or perhaps the Oct 2009 intra-day high of 4900 may count and there was an intra-day low lower than 4500.

A bull trap would stop this primary advance but as we have already had one of those around the New Year, the chances of a second one occurring within 3-4 months of each other should be considered as low.

For those on the sidelines chances are it could be an agonising wait waiting for P chart to turn red again.

[Phaedrus]

Now just need to research indicators that show that the DOW bull rally is running out of momentum.....There are plenty of indicators that could be used for that purpose, Trackers. Here is just one of them. It is a composite of multiple conventional indicators such as moving averages, stochastics, DMI etc. There is not so much as a hint of the DOW losing momentum at this point. You can see by the MSI plot that the pedal is still right to the metal.

http://i602.photobucket.com/albums/tt102/PhaedrusPB/DOW415.gif


For those on the sidelines chances are it could be an agonising wait waiting for P's chart to turn red again.I would hope that those so cautious as to be on the sidelines would be prudent enough to wait for the chart to turn light-green before buying up large!

[Hoop]

yep...Really really strong, and the US at least is on the back of some really good earnings from its top companies...

I've got my positions all set, this time around, though I won't be standing when the music stops - I was a bit concerned this morning when the guys on CNBC started going on about Jo Public starting to enter the market lol....

Now just need to research indicators that show that the DOW bull rally is running out of momentum.....

Trackers...Also heard on CNBC this morning that there were a number of factors causing this rapid swing up...yes FA investors coming in with better profit announcements..Joe blogs plucking up courage to re-enter...but apparently the permabears had to cover their shorts, sounds like there were a large number of them too

Tried to figure out why there was a large amount o shorts around...apart from the 11000 DOW and 1200 S&P500 being psychological numbers there is a large Resistance/Support zone around this area dating back as far back as 1998... perhaps this was part of the reason.

Ironic really to think that the Bulls may have the bears to thank for that +1% rise today....eh

Edit: Phaedrus Quote..."I would hope that those so cautious as to be on the sidelines would be prudent enough to wait for the chart to turn light-green before buying up large"....Good in theory P, but I suspect many get seduced by the dark side and buy up that "cheap bargain"..eh

[trackers]

Hi Phaedrus, good to see an update - Cheers. Still learning about TA, will have a read of stochastic oscillators and DMI (never heard of it) on investopedia..

Hoop, missed that bit - Indeed, didn't think that some of the recent move would be short covering but it does make sense. Like you say, seems like people's reasons for thinking this rally would (past tense) be short lived is psychological - Maybe a bit of overcautiousness off the back of a few uncertain years...

Anyway, its all good - And I found the DOW thread recently here, so thats been keeping me entertained. Look forward to a bright day for my commodity stocks

[JBmurc]

"While the crash only took place six months ago, I am convinced we have now passed through the worst - and with continued unity of effort we shall rapidly recover. There has been no significant bank or industrial failure. That danger, too, is safely behind us." - Herbert Hoover, President of the United States, May 1, 1930

[trackers]

Things looking better, DOw up 2% and indicators turning..



Bulls on Brink as S&P 500 Makes Third Pass at 200-Day Average


June 15 (Bloomberg) -- The rally in the Standard & Poor’s 500 Index above its average level in the last 200 days is captivating Wall Street for the third time in two weeks.

The benchmark gauge for American equities gained as much as 2 percent to 1,111.76 as of 2:55 p.m. in New York, exceeding by 3 points the level considered significant by investors who base trading decisions on chart patterns. The S&P 500 increased to near the 200-day mean on June 3 and May 27 before losing as much as 5 percent in the next two days.

Technical levels are affecting trading in the absence of earnings and economic news and take on more influence as traders fixate on them, said Peter Sorrentino, who helps oversee $13.3 billion at Huntington Asset Advisors in Cincinnati. The S&P 500’s failure to hold above 1,105, its intraday high the day before May’s employment report spurred a 3.4 percent plunge, was cited in the index’s drop yesterday as it erased a 1.3 percent early rally.

“No one disregards technical analysis now,” said Sorrentino. “If they do so, they do so at their own peril. Technical analysis has become increasingly important because of so much money chasing around. The momentum of money has become more important than the fundamentals beneath it.”

Recovery From Plunge

The S&P 500 tumbled as much as 14 percent from a 19-month high on April 23 through June 7 as concern grew that Europe’s debt crisis will derail the economic recovery and BP Plc’s leaking well in the Gulf of Mexico triggered the worst oil spill in U.S. history.

Equities rallied today as an 11th straight month of growth in the Federal Reserve Bank of New York’s manufacturing gauge added to evidence the economic rebound is weathering the European debt crisis. The S&P 500 has rebounded 5.7 percent since June 7 as concern over European budget deficits eased and investors speculated growth in China and the U.S. will bolster the global recovery.

“The bulls are slowly starting to wrestle back control,” Christopher Verrone and Nicholas Bohnsack, technical analysts at Strategas Research Partners in New York, wrote in a note to clients today.

More than 50 percent of New York Stock Exchange-listed shares have risen above their 200-day moving averages, Verrone and Bohnsack said. The Dow Jones Transportation Index, Nasdaq Composite Index and Philadelphia Semiconductor Index are among other benchmark gauges that have topped their 200-day moving averages in recent days.

‘It Means Something’

The S&P 500 closed below the 200-day average on May 20 for the first time since July 2009 and remained under the trend line for 16 straight sessions before today.

“To the extent of people looking at this, it means something,” said Michael Shaoul, chairman of Marketfield Asset Management, who oversees $770 million and whose flagship fund beat 97 percent of peers over the last year. “It doesn’t tell you that this correction is over, but I think people would look at it as a plus and it would set up the test of the next resistance, which most people would say is at the 50-day moving average.”

The S&P 500’s 50-day moving average is 1,143, about 3 percent above today’s level, according to Bloomberg data.

http://www.bloomberg.com/apps/news?pid=20601087&sid=a.gospkcpBR0&pos=3

[winner69]

You young guys should read this thread

**** happens on a regularly basis ..... and panic sets in on a regular basis ....... but the world carries on

But then maybe, just maybe, this time is different

[blackcap]

But then maybe, just maybe, this time is different

And because of that bit Winner... we get the panic and we get strange herd mentality and we get some (in hindsight) super funny prices were available etc. It also applies to a bubble. But I must be honest and say I got caught up in the hype back in 2000 myself. Also in 1998 with the Asian crisis. You live to learn and consequently took a hit in 2008 but was not afraid to buy when everyone was selling so am still alive to tell a tale.

[NZSilver]

Some days you look at the market and you feel pretty good, other days you look and feel a bit sick... But you must control your natural instinct, emotions and herd mentality - today is bad day to sell shares, and it is actually a good day to buy shares - so don't follow mr.market as he cements losses and panics. Winner is right - the world still goes on, businesses still make money, their clients still come through the doors so to speak.

[blackcap]

Agree with you totally NZSilver.... but it can be hard at times to distance yourself from all the noise. And its hard not to let yourself be taken in isn't it. Yes agreed, today is a good day to buy shares but then the greed kicks in and I may just wait a day or two longer to see if prices will fall that bit further :)

[POSSUM THE CAT]

Getting closer to my cheeky bids for Mighty River Power shares every day.

[ELYOB]

Good thread here . I have been buying bigtime ! I was cashed up for 1 year , put up the closed sign !!! I see greed as I feel all the ducks are lining up for me to make progress in the next 3-4 months. Only trade oilers mainly . I haven't seen good buying like this for ages , and quality ...

Also, I built my experience in bad times , had complete wipeout 1987! using bank money . Handled 2007-8 wipeout quite well and regained all 2009-10 mainly because I use my own hard saved rather than anyone elses. Been into trading since 1981 , and I am sure many have been over the bumps like me .

pls don't ask about purchases .... I don't tell !

[voltage]

ok what are you buying

[ELYOB]

Yes , I knew what the DOW was doing and also the credit problem in China . I considered based on my experience , they were no worry to me . So , I have bought extensively right up to end of tax squeeze!

I have been waiting past year for the markets to right themselves with the big bubble in gold and PMS. The USA is showing signs of good recovery . China is adjusting itself for its own good .

I deal in oilers mostly. This is going to have its turn imho! I wont go into that further ...

Stocks I have attacked HZN CUE NEN AZZ TAP JPR SPS TNP and the ROC [have smaller positions in another 8 sri being my only non oiler] ROC HZN CUE are big! So there ...

[JBmurc]

Yes this TAX LOSS selling + China woes..pressurizing some already well oversold resource stocks to insanely low levels many now trading well below cash backing and have nil value for assets.....If only I had some spare cash I'd be like a kid in a candy store...

[Skol]

Yes this TAX LOSS selling + China woes..pressurizing some already well oversold resource stocks to insanely low levels many now trading well below cash backing and have nil value for assets.....If only I had some spare cash I'd be like a kid in a candy store...

Well if you're so confident just mortgage the house, you can't go wrong.

Right?

[blackcap]

There are some companies on the market right now that you can buy for less than the net cash they hold in the bank. Its been a long time since opportunities like this present themselves. Its a crazy market all right. You just need to be able to pick the companies that dont burn through cash. But there are plenty of them around too.

[Skol]

There are some companies on the market right now that you can buy for less than the net cash they hold in the bank. Its been a long time since opportunities like this present themselves. Its a crazy market all right. You just need to be able to pick the companies that dont burn through cash. But there are plenty of them around too.

Well you know what to do, pile in.

[blackcap]

Well you know what to do, pile in.

I am :) Well not piling in but nibbling as opportunities present themselves. Not so keen on those resource stocks that chew through cash and keep going back to the market for more working capital.

[JBmurc]

Well if you're so confident just mortgage the house, you can't go wrong.

Right?

LOL hows your hats fitting of late Skol bet your sweliing head will be hard to fit of late.... with the Gold/resource shares getting hammered...soak it up while it last's ....many of the record lows we see now we be just that record in the pages of history

Ticking up more than I already have no thanks don't want to stress and work more than 120 days a year ...but if the likes of OXX does boom on good discovery news I will be selling down a few to spread round some of the massively oversold resource shares that have solid incomes and cash backing....

[elZorro]

Well you know what to do, pile in.

Maybe not most gold stocks at the moment. Would consumer stocks be any better though? Not according to the biggest investors.

http://www.moneynews.com/MKTNews/billionaires-dump-economist-stock/2012/08/29/id/450265?PROMO_CODE=12670-1

[ELYOB]

Gold is having a bad night again .... there is a sign in this .... somewhere ! Oil doing nice atm . Market forces moving to a reformed equilibrium point which has been months overdue . Thing(s) just look like setting up for nice times ahead ...... may start slowly!

PS: Do not hold gold ,silver , plat etc.,. never will....

[JBmurc]

Another 500-600+ crash tonight on the DOW .... pretty much everything in the RED ... but yields on T-notes ..

[troyvdh]

JB...its not really a surprise eh.

[JBmurc]

JB...its not really a surprise eh.

yes my wife likes to remind me how i was talking up MAJOR correction after MARCH during FEB this year ... amount of times I come up with a great Trading plan to push it aside in GREED muti companies running certainly put my blinkers on ... one day I'll learn

[troyvdh]

Yup...believe me no one is perfect..cheers.
I often say to my kids...historically a compounding return a year of 7 %...is ok.

[JBmurc]

Yup...believe me no one is perfect..cheers.
I often say to my kids...historically a compounding return a year of 7 %...is ok.

Yeah true ... in the meantime after losing the plot today and taking profits asap....I regained some sense and put $$248k into Major miner NCM.. I see GOLD Copper and SP500 futures up 1.1% so far ...so here's hoping NCM will catch a bid rest of the week

[Sous87]

I find I’m in a position currently where I’m waiting for just one of my 8 or so stocks to have a run so I can take some returns and redistribute among one of the others, as most of them have had decent pullbacks to what I would say are good entry points.

Oh well, sit tight.

[JBmurc]

Yes I can't believe GOLD is not much higher with US CPI up 8.3% only up around 1% ... Markets crushed again overnight and futures looking for more pain >>> I'm Glad I took a BIG chunk from the specs but really Should have followed plan-A and went into BBUS >>

Only positive overnight for me is Oil up strongly 5%+... AUD spot oil back over $150bbl .... start of the year was around $100bbl ... so all these undervalued O&G plays like CUE/MAY/TEG have seen their underlining product worth 50% more ... yet most SP following the FEAR of the market>>

[nztx]

I'm fairly close to free-carry overall out of derisking on recent past peaks, so not so worried about a few slides
here and there .

Now hanging out watching for glowing discounted buys with brilliant potentials out there and they are likely
to present themselves if markets continue to be hammered to lower levels :)