Australian Stock Market Outlook
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892 responses so far ↓
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101 Anon // Jul 9, 2010 at 4:25 am
BDI is not tracking that well lately is it Ned.
Its correlation is pretty good with equities over a longer period of time -- but damn is it volatile! Not sure how the correlation will hold up over the next 6 months…so far its not tracking well on a short duration basis. My bet is the correlation will decouple, especially if there is a divergence between equities performance and the economy. But as always could be completely wrong.
Heres some stuff I found on deflation: Adds more confusion to our already confused thoughts:
“We think the downtrend in real yields will continue as baby boomers increasingly look to safe places for their savings. The samething happened in Japan in the 1990s. Demographically, the United States is 10 to 15 years behind Japan and the same dynamic is playing out.
The path of least resistance for the United States is to go down the deflation path, preferably some mild version where debtors can actually service their debts. Hyperinflation is not a choice. There is no country that has ever inflated its way out of a debt problem with a financial economy as large as the United States’--the 1970s not to the contrary, because the economy wasn’t nearly as financialized then.
What was arguably better about the Japanese tragectory was that it created no consumer credit bubbles. American consumers are going to have to retrench the spending that makes up two-thirds of the economy. If these consumer credit bubbles unwind in the United States, deflation is likely to be much stronger than it has been in Japan.”
This was predicted in 2006 btw.
By Hedgefund manager Peter Thiel, former founder and ceo of Paypal and owner of Clarium Capital.
Atm i’m starting to lean towards intermediate deflation…and then eventual inflation…although excessive inflation could be years away especially as governments begin to try and cut back stimulus.
Then again we could all be wrong and just have normal levels of inflation for the next several years. In forecasting you are generally wrong more than you are right and I’ve been wrong many times.
*All posts by this poster is not financial advice or a reccomendation to do something.
102 Anon // Jul 9, 2010 at 4:40 am
BP continues to rise…lucky I bght those calls in case I was wrong…because I was!
*All posts by this poster is not financial advce or a reccomendation to do something. Always seek financial advice before making financial decisions.
103 Anon // Jul 9, 2010 at 4:44 am
You are right Vince…we will try and stay on topic re: stocks.
104 Anon // Jul 9, 2010 at 5:03 am
Markets continue to rally…not sure why Walmart is not moving much given the good retail data and improving market conditions. Only concern I have is some management changes, which is usually a prelude to a downgrade. But its hard to fault a company that has increased eps for decades…so I wont make that bet (for now anyways). Also it appears Buffet has previously bght below 50$ from interpretation of his publicly released 13f filings. In addition Buffet has publicly disclosed he topped up his Tesco holdings recently, which gives bigger weight to the possibility he topped up his Walmart stock (both retailers) -- which would inturn give a boost to the stock price if released. Although purely guessing and could be wrong.
Additionally the longer stocks move sideways generally the bigger the rise when it breaks out. And this is been going sideways for 10 years!
105 Anon // Jul 9, 2010 at 5:10 am
EUR/USD has broken 1.27…looking for 1.35.
Numerous people trying to short it which makes this more bullish as this happens alot on a breakout as people doubt the rise!
*All posts by this poster is not financial advce or a reccomendation to do something. Always seek financial advice before making financial decisions.
106 Anon // Jul 9, 2010 at 5:23 am
US consumers continue to unwind debt:
“The $9.1 billion decrease followed a revised $14.9 billion slump in April that was initially estimated as a $1 billion increase, the Federal Reserve reported today in Washington. Economists projected a $2.3 billion drop in the May measure of credit card debt and non-revolving loans, according to a Bloomberg News survey of 34 economists.
Borrowing that’s increased twice since the end of 2008 shows consumer spending, which accounts for about 70 percent of the economy, will be restrained as Americans pay down debt. Banks also continue to restrict lending following the collapse of the housing market, Fed officials said after their policy meeting last month.
“Consumers are loathe to take out additional credit as the tight labor market is making it hard to get a job or maybe even keep one,” Chris Rupkey, chief financial economist at Bank of Tokyo-Mitsubishi UFJ Ltd. in New York, said before the report.”"
Walmart should benefit in a less frugal environment, having lowest prices. Looks like the consumers that Walmart picked up in the recession may not be willing to go back to bigger spending habbits than most analysts projected earlier in the year. Nice big catalyst?
Looks like Peter Thiels predictions, back in 2006, are slowly comming to fruition!
*All posts by this poster is not financial advce or a reccomendation to do something. Always seek financial advice before making financial decisions.
107 Anon // Jul 9, 2010 at 5:56 am
Dumping AUD/USD longs here. Might go higher but prefer to taketh what the market giveth
Its above fair value now and that is what it is.
Suspect AUD/USD might be in a very slow/drawn out downward moving trading range for awhile…the big moves have occured this year imho -- might not see any decent action till mid to late 2011?
Buying GBP/AUD 20% of position as not sure where this is going to bottom out…especially if it moves down and equities move up. Looks like pound may make a big move up sometime this year as the government becomes less nutty.
*All posts by this poster is not financial advce or a reccomendation to do something. Always seek financial advice before making financial decisions.
108 Anon // Jul 9, 2010 at 8:15 am
Looks like this rally may have legs -- crowd is excessively bearish:
“Bullish sentiment fell 3.7 percentage points to 20.9% in the latest AAII Sentiment Survey. The proportion of individual investors who expect stocks to rise over the next six months is at its lowest level since March 5, 2009. The historical average is 39%.
Neutral sentiment, expectations that stocks will stay essentially flat over the next six months, fell 11.3 percentage points to 22.0%. This is the first decline in neutral sentiment in six weeks. The historical average is 31%.
Bearish sentiment, expectations that stocks will fall over the next six months, surged 15.1 percentage points to 57.1%. This is the 15th highest level reading for bearish sentiment since the survey started in 1987. The historical average is 30%.”
http://blogs.forbes.com/investor/2010/07/08/bearish-sentiment-surges/
This indicator tends to only work best at extremes…looks pretty extreme to me !
*All posts by this poster is not financial advce or a reccomendation to do something
109 Ned S // Jul 9, 2010 at 7:47 pm
I can only assume you are using ‘we’ in the royal pronoun sense when you say “You are right Vince…we will try and stay on topic re: stocks” Anon me ole bean?
‘Cause my thoughts run way more along the lines of: “Tough titties!!!”
110 Anon // Jul 10, 2010 at 12:37 am
“-- Buffett disagrees with The New York Times economist Paul Krugman that the nation is in the early stages of another depression. Buffett says he has “enormous confidence” in the country’s economic future. He says the stimulus is working and the economy will improve in the next 2-3 years.”
Its interesting to also note Buffets father told him to wait around the time he first started to invest.
His father thought the USD was history and he was buying gold and preparing for the end of the world…back in the 1950s….I looked back and noticed people were doing this in 1974-5 and early 80s and 1987-88 and early 1990s. Its almost a contrarian signal to go long?
Also Jim Rogers said America was history and he would short it back in 1995…aswell he said in 1987-8 that a depression might occur. I think he did the same back in late 2008 or early 2009 from memory?
Looks like the doomists are a signal a recovery is underway and returns will be at least reasonable from these levels !
*All posts by this poster is not financial advce or a reccomendation to do something
111 Anon // Jul 10, 2010 at 12:42 am
Although not sure I could handle the known risks if we were above 5,000, unless material things had changed.
*All posts by this poster is not financial advice or a reccomendation to do something.
112 Anon // Jul 10, 2010 at 2:44 am
“Also it appears Buffet has previously bght below 50$ from interpretation of his publicly released 13f filings.”
Actually thats not 50$ its 52.56 (average price from highs and lows that quarter). Not a great guess but its all we’ve got to go by. Dont get exact entry prices unfortunately !
*All posts by this poster is not financial advce or a reccomendation to do something
113 Anon // Jul 11, 2010 at 2:02 am
Been trying to work out where we might go from here…
Looks like we might be ok till about September and then another significant drawdown possibly, altho the lows now should comfortably hold….so higher low pullback or at best sideways during sept/oct? Statistically unlikely to go lower than we’ve just been, given the extent of the correction thus far.
I’m seeing some possible future breakout setups forming on things I use to hedge downside risk. So clearly another shakeout comming in a few months if the patterns play out. These things are still in their early stages though.
After September/Oct, looks like we should go towards recent highs; if not create slightly new highs by end of Dec 2010.
Then perhaps a continuation into Jan/Feburary. Given we’ve crashed/corrected in January last 2 years in a row I’d suspect the bullmarket to keep powering higher into early 2011. Perhaps a topout @ 5,500 or so in Feb 2011? Possibly a correction in May and then a much slower several month lower low tanking process. So >20% falls over perhaps 6 months….the craziness and sharpness of the crashes weve experienced last few years makes it more likely any bearmarket or crash will be alot slower in 2011. Anyways, just ideas based on gut feel and could change as things change.
*All posts by this poster is not financial advce or a reccomendation to do something
114 Anon // Jul 11, 2010 at 3:27 am
When I mentioned the craziness and sharpess of the crashes last few years, I was talking specifically about the multiple crashes in 2008 and 2009 and the correction in 2010. Just unreal speed at which these things occured. Historically theres alot of falls that may fall like early 2008, 2009 and 2010 but at a much slower pace.
*All posts by this poster is not financial advce or a reccomendation to do something
115 Anon // Jul 11, 2010 at 1:57 pm
Forgot to mention am long aussie banks.
Looking cheap and the credit issues are still awhile off. Lower house prices take awhile to filter down into loan losses….so the bears will have to wait!
*All posts by this poster is not financial advce or a reccomendation to do something
116 Ned S // Jul 11, 2010 at 8:29 pm
They are sitting on a pretty respectable whack of deposits Anon:
“Total deposits in all Australian banks now top $1.26 trillion.”
http://www.theaustralian.com.au/business/cash-is-king-for-investors-around-the-world/story-e6frg8zx-1225889998927
117 Anon // Jul 12, 2010 at 7:04 am
Geez Ned…huge amount of deposits. Lets pray alot of these deposits arn’t locked in at those crazy interest rates of a few months ago, or they’ll be losing money!
Last time I saw the headlines “Cash is King” was in early 09 just before equities rallied significantly. Albeit stocks may not recover as quickly this time; but as the aritcle says theres alot of people on the sidelines which has generally been a good time to invest in equities.
*All posts by this poster is not financial advce or a reccomendation to do something
118 Anon // Jul 13, 2010 at 2:19 am
Adding to Euro/USD…will look to double my already sizeable position as it continues to correct in this intermediate uptrend.
As George Soros says..when something is going your way and there is a high probability of it continuing “you can never be big enough.”
*All posts by this poster is not financial advce or a reccomendation to do something
119 Anon // Jul 13, 2010 at 2:32 am
Walmart now is 100% of my portfolio if I exercised my long dated calls. Each dollar it moves is moving my portfolio ~3% (to max 10% downside as my puts kick in). Not going to muck around here…going for the jugular!
Been making too many bloody errors on position sizing i.e. ensuring when you make a kill you are all in. Separates poor performance from good imo -- altho most freeze when they need to add, and add when they should be cutting )been guilty of this many times!)
*All posts by this poster is not financial advce or a reccomendation to do something
120 Anon // Jul 13, 2010 at 2:42 am
Getting 15:1 reward to risk across the whole portfolio. Thats just nuts ?
Now watch the market plummet lol.
Even though we might have a slight pullback/consolidation here, the market is just way undervalued imo.
Pessimists be damned
*All posts by this poster is not financial advce or a reccomendation to do something
121 Anon // Jul 13, 2010 at 4:36 am
Howard Ward, GAMCO growth fund:
http://www.pbs.org/nbr/site/onair/transcripts/market_monitor_howard_ward_stock_picks_100709/
*All posts by this poster is not financial advce or a reccomendation to do something. Can change my mind quickly on any decision I make, given markets always change. Have positions in instruments discussed unless otherwise indicated.
122 Anon // Jul 13, 2010 at 4:41 am
Had alittle flutter on some ITM long dated calls for Alumina (AWC) a few weeks back and forgot I had them…lets see how the Alcoa earnings are? The street seems to be pessimistic which is generally a good sign? AA stock is not moving either which is a good sign perhaps? Or could be another shocker.
*All posts by this poster is not financial advce or a reccomendation to do something. Can change my mind quickly on any decision I make, given markets always change. Have positions in instruments discussed unless otherwise indicated.
123 Anon // Jul 13, 2010 at 6:15 am
Record short levels on + low expectations for earnings season = markets to move higher over the never several weeks. Albeit I have no idea if we will fall for the next few days..could happen.
*All posts by this poster is not financial advce or a reccomendation to do something. Can change my mind quickly on any decision I make, given markets always change. Have positions in instruments discussed unless otherwise indicated.
124 Anon // Jul 14, 2010 at 2:26 am
Markets are overbought…but this can easily become more overbought for several months. Usually big breakouts are in and stay in overbought territory and then you have all these retail investors trying to fade the rise. I wonder how many people got burnt trying to short the EURO?
I trippled my EURO position overnight, on the pullback, so that my virtual fx positions are more than my entire portfolio. My stomach was not handling this size very well but I have to listen to my intuition and not pass up outliers!!
Will look to dump EURO positions before the Sept/Oct possible correction.
Looking to add to BP calls position on abit more of a pullback.
*All posts by this poster is not financial advce or a reccomendation to do something. Can change my mind quickly on any decision I make, given markets always change. Have positions in instruments discussed unless otherwise indicated.
125 Anon // Jul 14, 2010 at 5:36 am
Bank of America on Friday…should beat given how low analyst expectations are and loan provisioning is at GFC type levels with no GFC. Another kicker for the market?
Looking for a top around 4.700-4,800 then a pullback to maybe 4,400-4,500. Then retest back up to 4,700-4,800, followed by a drop in Sept/Oct of either consolidation between 4,500 and 4,700 or a correction back to 4,300-4,350 followed by a rally till Feb 2010 to 5,500.
Looks bloody volatile, but lows should hold comfortably; so hold onto your seatbelts!
Will just ride out the noise until September..no point trying to time those moves in between!
*All posts by this poster is not financial advce or a reccomendation to do something. Can change my mind quickly on any decision I make, given markets always change. Have positions in instruments discussed unless otherwise indicated.
126 Greg Atkinson // Jul 15, 2010 at 1:57 pm
I am a touch surprised that the ASX All Ords/ASX 200 are still fairly weak. We are being told that “all is well” and yet the market can’t even get through 4500. Something just doesn’t add up.
127 Ned S // Jul 15, 2010 at 3:57 pm
Have read two ballpark guesses that the world is only about halfway through its deleveraging process Greg.
Give it another three years and we might know where we are at?
128 Anon // Jul 15, 2010 at 5:06 pm
Anyone see Nufarm today? Geez talk about timebomb
Feel sorry for the people who got caught up in this disaster.
I guess the warning signs were on the first downgrade; always more cockroaches in the kitchen.
http://money.ninemsn.com.au/article.aspx?id=7930029
*All posts by this poster is not financial advce or a reccomendation to do something. Can change my mind quickly on any decision I make, given markets always change. Have positions in instruments discussed unless otherwise indicated.
129 Ned S // Jul 15, 2010 at 5:32 pm
One of the risks of selling brand name products to a market that doesn’t place a huge premium on the brand name I guess. It’s not like using Roundup as opposed to a generic glyphosphate would give the average farmer as big a thrill as wearing an Armani handbag as opposed to a Bags Are Us one might give his missus maybe?
130 Anon // Jul 15, 2010 at 6:11 pm
Yep thats a good analogy Ned
131 Ned S // Jul 15, 2010 at 6:24 pm
Remember one of the other principals I picked out of some general reading once that I suspected could be of use at some time re investing Anon? :- It went along the lines that in WWII the Soviet tanks were crap -- But what did they care when they were going to be scrap iron within 3 engagements. Whereas the poor old Germans just couldn’t produce enough of their high precision masterpieces of the manufacturer’s art to keep up.
132 Greg Atkinson // Jul 15, 2010 at 10:32 pm
Ned for Oz I think 2011 might be a little tough simply because I think commodities prices and demand have hit a cyclical peak. But heck I have been worrying about that since last 2009 so maybe I should just keep a low profile
133 Ned S // Jul 15, 2010 at 11:25 pm
Bearish calls that turn out to be ‘right’ are usually made too early from what I’ve seen of it Greg. With the blokes who can see the genuine reasons feeling they are so obvious that everyone else must be able to see them too and will presumably react I guess?
About all I’m ‘seeing’ is inflation in the basics in Oz. Food, energy, insurance, government charges. Whilst stock prices have done what they’ve done. And that house prices may well have corrected if it hadn’t been for emergency interest rates and the FHOG.
A tricky one would be to get inflation in consumables and deflation in asset prices. And perhaps it isn’t out of the question -- A weak AUD coupled with/caused by poor demand for our exports could do it I guess.
134 Anon // Jul 16, 2010 at 1:06 am
“Bearish calls that turn out to be ‘right’ are usually made too early from what I’ve seen of it Greg”
Thats so true Ned….i listen to alot of bears but am generally different in duration and sometimes extremity.
Soros agrees with us re: 2011 bear market and a few other hedgefund managers are targeting 2011. Maybe around the back half of 2011?
The BDI just looks the sickest i’ve ever seen it in along time. Greg has reason to be concerned. If it doesn’t hold here, it might restest the 2009 lows! Lets hope it finds support here and then bounces (my gut feeling is we should bounce).
*All posts by this poster is not financial advce or a reccomendation to do something. Can change my mind quickly on any decision I make, given markets always change. Have positions in instruments discussed unless otherwise indicated.
135 Ned S // Jul 16, 2010 at 1:26 am
Seeing I failed miserably on letting you stock market types know that the KHR had some tax implications for the Oz miners (I assumed it was commonly known), I’ll see if I can do better on this one:
Lots (all?) of Bush’s tax cuts are set to expire after 2010 apparently. With a couple of possible interest to stock market people being the CGT and Dividends Tax I’d imagine. While I haven’t confirmed it, I have seen it mentioned that they both reset on 1 Jan 2011 (unless Obama’s lot figure that would not be desirable between now and then I guess):
“Higher tax rates on savers and investors. The capital gains tax will rise from 15 percent
this year to 20 percent in 2011. The dividends tax will rise from 15 percent this year to 39.6
percent in 2011. These rates will rise another 3.8 percent in 2013.”
http://illinoisreview.typepad.com/illinoisreview/2010/07/first-wave-of-obama-tax-hikes-to-hit-january-2011.html
136 Anon // Jul 16, 2010 at 1:45 am
Geez thats a catalyst right there. Thanks Ned, i’ve noted it down.
I’ve noticed markets sometimes go the wrong way with big events. But i’m starting to understand its the big boys pushing prices up for a few months, so they can dump and get out. Might see that in January/Feb if your tax calls are correct?
*All posts by this poster is not financial advce or a reccomendation to do something. Can change my mind quickly on any decision I make, given markets always change. Have positions in instruments discussed unless otherwise indicated.
137 Anon // Jul 16, 2010 at 1:59 am
Interesting stat and a reason why I’m bullish for Jan 2011 on the XAO.
Last 3 Januarys (2008,2009,2010) have had corrections occur. Since 1980 the XAO has not had 4 substantial January corrections ever. I’m going to backtest it further out aswell, but suspect the samething will occur. So i’m not betting on a down month in January as its statistically unlikely. Might aswell go to the casino !
*All posts by this poster is not financial advce or a reccomendation to do something. Can change my mind quickly on any decision I make, given markets always change. Have positions in instruments discussed unless otherwise indicated.
138 Anon // Jul 16, 2010 at 3:00 am
Also for the SPX that stat holds, re: statistically unlikely for 4 consecutive corrections in January. Going to test it back to the early 1900s though as only used a 30 year data set.
DJIA looks like its consolidating nicely before the next run, and the Asx may follow suit given the correlation?
*All posts by this poster is not financial advce or a reccomendation to do something. Can change my mind quickly on any decision I make, given markets always change. Have positions in instruments discussed unless otherwise indicated.
139 Anon // Jul 16, 2010 at 5:34 am
Goldman Raises Forecast for Euro
“The bank now sees the common currency rebounding to $1.35 in six months and $1.38 in 12 months”
http://online.wsj.com/article/SB10001424052748703722804575369293463896992.html?mod=googlenews_wsj
Euro has been a leading indicator for the XAO, for now anyways. So should be interesting to see what happens with the XAO next week and if this correlation persists.
My post on July 9th:
“EUR/USD has broken 1.27…looking for 1.35.”
*All posts by this poster is not financial advce or a reccomendation to do something. Can change my mind quickly on any decision I make, given markets always change. Have positions in instruments discussed unless otherwise indicated.
140 Anon // Jul 16, 2010 at 10:17 am
Re: EUR/USD, 1.35-1.40 is about in line with where the 200dma would be hence my guess on July 9. Saw awhile back that the EUR.USD has gotten near the 200dma on similar intermediate counter-trends following big crashes. Almost gave up on this pattern playing out again, but it looks like this correlation is holding (thank christ).
Retail Sales Sluggish:
http://scottgrannis.blogspot.com/2010/07/retail-sales-sluggish.html
Dr Copper says the patient is fine:
http://scottgrannis.blogspot.com/2010/07/dr-copper-says-patient-is-fine.html
*All posts by this poster is not financial advce or a reccomendation to do something. Can change my mind quickly on any decision I make, given markets always change. Have positions in instruments discussed unless otherwise indicated.
141 Ned S // Jul 16, 2010 at 4:16 pm
“But i’m starting to understand its the big boys pushing prices up for a few months, so they can dump and get out.” -- Pump and dump as they say.
The BDI -- Yep, a U-turn right about now would be a good sign.
The Americans voted in some new regs re Financials I see -- Guess we should know soon enough whether it changes anything via the market’s response. Although I find it a bit difficult to imagine they’d do anything that has teeth.
One concern is that while the Djia is only down 25% from its peak, the All Ords is down 35%. And the SSE is all a bit sad. That isn’t especially indicative of a recovery based in Asia to my way of thinking?
142 Anon // Jul 17, 2010 at 2:34 am
“The Americans voted in some new regs re Financials I see – Guess we should know soon enough whether it changes anything via the market’s response. Although I find it a bit difficult to imagine they’d do anything that has teeth.”
Yeah I had a quick look and given the price falls and still huge provisioning for bad loans its not going to make much difference. Also the prop trading desks of most banks, you would guess, must have made a killing with all this volatility; so profits should be boosted by that let alone the enivitable less provisioning. I think theres a wind bank of prop trading from banks re: not using their own money. But the timeline for that windback is years and shareholders still may make money from the spinoffs that would occur.
So you are correct, they won’t do anything with teeth !
“One concern is that while the Djia is only down 25% from its peak, the All Ords is down 35%. And the SSE is all a bit sad. That isn’t especially indicative of a recovery based in Asia to my way of thinking?”
Markets can be leading and lagging indicators…Leading at first…but then as panic selling sets in…going too far and over compensating for the known risks.
My feeling is Asia is slowing but the markets are over reacting and pricing in a complete collapse in the Asian growth story. There could be an additional discount for the extent of our housing bubble.
TBH i’m alittle concerned with our markets if the Aussie housing bubble implodes and the Asian story takes a breather at the sametime(long term we all know its great). But this could be a few years out, so I guess onwards and upwards for the moment at least! I try to separate my longterm bias from my investing and trading unless price action is confirming.
*All posts by this poster is not financial advce or a reccomendation to do something. Can change my mind quickly on any decision I make, given markets always change. Have positions in instruments discussed unless otherwise indicated.
143 Ned S // Jul 17, 2010 at 3:27 am
Another exciting close coming up Anon -- And on a bit of volume by the looks.
144 Anon // Jul 17, 2010 at 3:39 am
Yeah the more volume the better, means panic selling is occuring
Albeit if that volume occured at a much higher level I would be concerned.
I’ve been adding to my EUR.USD position as the strength is phenominal. My stomach is dying from holding this size but position sizing is everything…and if you dont load up when its going your way your performance will be poor.
Looks like the XAO will follow suit on Monday and drop. Hopefully this correction will only hit the 10dma line (which the DJIA is about now) and bounce. If XAO/djia doesn’t hold here, then we might see a flash thru the 10dma and then a quick pullback. I’m seeing alot of price action that is indicative of accumulation occuring. And I know I have been buying
*All posts by this poster is not financial advce or a reccomendation to do something. Can change my mind quickly on any decision I make, given markets always change. Have positions in instruments discussed unless otherwise indicated.
145 Anon // Jul 17, 2010 at 3:54 am
I was thinking about why the BDI is so stuffed. Could it be that China has bght way more commodities than they need short term so now they are in pullback mode? Therefore China is still powering along but they are using their excessive stockpiles? Which would make BDI unreliable?
*All posts by this poster is not financial advce or a reccomendation to do something. Can change my mind quickly on any decision I make, given markets always change. Have positions in instruments discussed unless otherwise indicated.
146 Anon // Jul 17, 2010 at 4:01 am
My gut is telling me lots of companies have loaded up their raw material inventory so they are just running this off hence why BDI has fallen.
I’ve talked to a few companies who use raw materials and they say business is picking up (albeit its still along way off peaks). So something doesn’t look correct with the BDI.
*All posts by this poster is not financial advce or a reccomendation to do something. Can change my mind quickly on any decision I make, given markets always change. Have positions in instruments discussed unless otherwise indicated.
147 Ned S // Jul 17, 2010 at 4:54 am
Your thoughts on the BDI align with a report I read recently. Rio seems to be “cautiously optimistic”. But that is a mid term sort of thing.
I thought they might have managed a bit more volume.
148 Anon // Jul 17, 2010 at 5:04 am
Good to know Ned. You do alot more indepth research than me.
. Looks like support is around 10,000 or just below. But lets hope it bounces from here.
DJIA looks like its puking. Lets wait for all the doomsday predictionists to comeout right on cue again
*All posts by this poster is not financial advce or a reccomendation to do something. Can change my mind quickly on any decision I make, given markets always change. Have positions in instruments discussed unless otherwise indicated.
149 Anon // Jul 17, 2010 at 5:15 am
Re: your comment on XAO performance, i think you’ve got something there Ned. The DJIA is in a much more bullish formation than the XAO. Seeing 6 bullish candles in a row (on DJIA) which usually means a continuation of the rally after an overdue pullback from overbought market conditions…yet this is not shown on the XAO. Might be an indication of a performance differential for both…and I think Greg mentioned this aswell awhile back.
*All posts by this poster is not financial advce or a reccomendation to do something. Can change my mind quickly on any decision I make, given markets always change. Have positions in instruments discussed unless otherwise indicated.
150 Ned S // Jul 17, 2010 at 5:22 am
Yes, the bears will be able to tell everyone that the end of the world as we know it is coming again. Truth be told I think it just more a case that developing world standards of living are likely to go up while developed world ones go down a bit -- Although from the developed world’s perspective that pretty much does seem to equate to “the end of the world as WE know it!” …
151 Anon // Jul 17, 2010 at 5:28 am
I think my intraday calls are horrible… I said Citigroup is about to breakout and its broken down before it makes its way higher. Albeit I did the same thing when EUR.USD was 1.27 then it went to 1.25 before going to 1.30.
thankchrist I am not a day trader. I think I would go bankrupt.
Seems my calls are better for longer durations of a few months or more.
BP is another too early, albeit I was right a month later with a few more grey hairs
*All posts by this poster is not financial advce or a reccomendation to do something. Can change my mind quickly on any decision I make, given markets always change. Have positions in instruments discussed unless otherwise indicated.
152 Anon // Jul 17, 2010 at 5:35 am
“Truth be told I think it just more a case that developing world standards of living are likely to go up while developed world ones go down a bit ”
Jim Rogers agrees with you there.
Although Buffet seems to think developed countries standard of living will be much more improved than what we have now.
Abit hard to see how peoples standard of living can improve when they are all deleveraging!
Although Ken Fisher (phillip fishers son) seems to think consumer debt can continue to grow as it has for decades. And that the consumer debt bubble arguments are overblown.
*All posts by this poster is not financial advce or a reccomendation to do something. Can change my mind quickly on any decision I make, given markets always change. Have positions in instruments discussed unless otherwise indicated.
153 Anon // Jul 17, 2010 at 5:49 am
Something that I remember Jim Rogers mentioned awhile back is the inverse relationship between commodities and equities performance.
“Go back and you will fins that the last 100, 200, 500 years we have had periodic bull markets in commodities followed by periodic long bear markets in commodities. Likewise, we have had long bear markets in stocks followed by long bull markets in stocks. When you have a bull market in commodities you have a bear market in stocks.
*From Inside the House of Money
So if Jimmy is right equities would prefer lower commodity prices. So its not necessarily a bad thing for us that commodity prices have come off somewhat. If Jimmy is right and the commodity bullmarket has some puff left in it, then stock market timing is going to be crucial or you’ll end up with flat returns over a decade.
“I think my intraday calls are horrible”
Btw should read looking at my longer duration calls on an intraday basis. Never made any intraday calls thankgod.
154 Ned S // Jul 17, 2010 at 6:09 am
“comment on XAO performance” -- I’m not sure Anon -- It could just be the Americans choosing to keep their money close to home/in their own currency -- Ours is awfully volatile. And it may well have been like that since March 2009 all through the rally? I know it was early in the piece -- That is one of the reasons I’ve never really felt to trust the rally. Dunno -- But it’s worth keeping in mind regardless I think.
“consumer debt bubble arguments are overblown” -- That one would upset the hard money crowd -- I’ll have to follow up on it … Ta!
Standards of living -- I think we’re already seeing it in a lot of the developed nations -- The UK and the US both seem to have some pretty major issues going forward. And the PIIGS are obviously going to struggle. Doesn’t surprise me a whole lot if they are like us though -- I was fiddling with my tax last night and noticed that on my last assessment I got both an Entrepeneurs’ tax offset AND a Low Income tax offset -- Never really thought of myself as a charity case before? -- But apparently in Oz I qualify???
We just can’t give people the handouts we do and not expect to get hurt somewhere down the track is my thought.
155 Anon // Jul 17, 2010 at 6:41 am
http://finance.yahoo.com/tech-ticker/article/334648/Too-Much-Debt--Please.--We-Need-MORE-Debt-Says-Ken-Fisher?tickers=tlt,tbt,spy,dia,%5Egspc,udn,uup
Here ya go Ned, Fishers opion re: debt.
Btw I probably dont agree with this, but I guess its something we need to contemplate. He is a billionaire and has had contrarian views in the past (Like being bullish car markers in the 70s/80s when everyone thought the end of the world was upon us and we didn’t need cars because we were going into the stone age).
*All posts by this poster is not financial advce or a reccomendation to do something. Can change my mind quickly on any decision I make, given markets always change. Have positions in instruments discussed unless otherwise indicated.
156 Anon // Jul 17, 2010 at 6:47 am
The thing that bothers me regarding the debt issues…is these arguments were occuring in the 70s,80s,90s and 2000s. And each time people were preaching a world depression and the end of fiat money and consumer spending.
I’m just wondering if i’m going with the crowd instead of against it.
*All posts by this poster is not financial advce or a reccomendation to do something. Can change my mind quickly on any decision I make, given markets always change. Have positions in instruments discussed unless otherwise indicated.
157 Anon // Jul 17, 2010 at 7:00 am
In any event Rogers arguments regarding a bull market in commodities always leading to a bear market is stocks holds weight…a relationship that holds for such a long period has to be taken seriously. So we are in a intermediate bullmarket within a longterm bear market imo. Rogers mentioned commodity bull might end in 2015 or so, so markets will likely be rocky for awhile -- making market timing crucial. Albeit Fisher could be right 10-20-30 years from now re: our levels of under indebtness and our ability to increase our capacity to borrow.
So confusing!!
*All posts by this poster is not financial advce or a reccomendation to do something. Can change my mind quickly on any decision I make, given markets always change. Have positions in instruments discussed unless otherwise indicated.
158 Anon // Jul 17, 2010 at 5:42 pm
Seems like consensus is the XAO will keep going sideways so you should trade them. And we’re getting alot of newbies wanting to trade for the first time.
Usually when this starts to happen buy and hold works better. Abit like when everyone wanted to short the AUD when they should of been going long.
Seeing lots of trade school offers ways to “profit from the volatility” -- not to mention adverts on television. Just more snake oil salesman that just waste our money!
I’m almost back to buy and hold right now, bar my currency positions. And then do that until the sheep start holding for the longterm again (no doubt at the top of the market).
1%-2% of the 5% winners out of 95% losers make most of the money trading. So I don’t like those odds unless I can fire a dart blind folded and hit anything (i.e. in May).
Kinda feel “the dart time” for buy and holders is comming, given the crazy valuations across the board. Lets hope we all prosper together and have the ability to be patient.
*All posts by this poster is not financial advce or a reccomendation to do something. Can change my mind quickly on any decision I make, given markets always change. Have positions in instruments discussed unless otherwise indicated.
159 Greg Atkinson // Jul 19, 2010 at 8:13 am
Well the BDI might have bottomed out for now at 1700 and it looks like it me be trying to rise again. But for a country like Australia that depends so much on commodities exports a weak BDI is not a good sign.
Remember there are a lot of ships being scrapped and laid up, so I would say that the impact the G20 economic stimulus measures are starting to fade and as a result we will see commodities prices drop back a touch.
But like I have said a few times, the All Ords/ASX 200 have already taken a major hit and are still way down from the highs of 2007, so I reckon that over the next few years they will gradually climb back up.
But when will we see the Australian stock market reach a new high? 2012 perhaps?
160 Anon // Jul 20, 2010 at 6:28 am
Yeah, BDI looks to be moving up, altho could slip alittle more before going North -- but clearly bottoming out.
2012 New high? Well anything could happen!
Historically it takes along time for people to recover emotionally and financially after major crashes like 2008-2009:
XAO
Year: 1987
Approx crash from top to bottom: >50%
Years before new highs reached (from previous highs): Arguably double top in ~93 so >9 years to make new highs.
—--
SPX
Year: 73-75
Approx crash from top to bottom: >48%
Years before new highs reached (from previous highs): ~>7 years
—--
SPX
Year: 73-75
Approx crash from top to bottom: >48%
Years before new highs reached (from previous highs): ~>7 years
—--
DJIA
Year: 1907-8
Approx crash from top to bottom: >48%
Years before new highs reached (from previous highs): ~8 years
—--
DJIA
Year: 1920-22
Approx crash from top to bottom: >45%
Years before new highs reached (from previous highs): ~5 years.
*Just approximations as it takes too long to do each calculation to the exact number…just trying to be slightly right as opposed to completely wrong.
The DJIA charts over 1997-2010 are looking eerily familiar to the charts from 1915-1925. If that correlation held out Greg could be right and new highs in 2012. Or it could take the usual 7-8 years which would make that 2014-2015.
I’m still betting on a 2011 crash (20-25%) but it appears 2012 onwards maybe different…lets see what happens and change as markets change.
The DJIA currently appears to be moving up on bad news (housing data)…so becoming cautiously optimisitc. Guess people on the sidelines dont like holding overvalued treasures with terrible yields.
*All posts by this poster is not financial advce or a reccomendation to do something. Can change my mind quickly on any decision I make, given markets always change. Have positions in instruments discussed unless otherwise indicated.
161 Anon // Jul 20, 2010 at 8:46 am
Well been fairly inactive last couple of months (and for big chunks of this year). Good to keep transaction costs down and not help my broker attain more record profits
Not much to do on a buy and hold portfolio, accept be patient and wait.
*All posts by this poster is not financial advce or a reccomendation to do something. Can change my mind quickly on any decision I make, given markets always change. Have positions in instruments discussed unless otherwise indicated.
162 Anon // Jul 23, 2010 at 8:39 am
Libor 1,3,6 and 12 months are falling;
BDI bottoming;
Investors intelligence bearish;
DR Copper is looking better;
Risk currencies are rallying;
Valuations are good, decent margin of safety over risk free rate;
Yield Curve shows probability for double-dip unlikely, as short term rates are lower than long term rates;
Richard Russell is bearish;
Corporations have record levels of cash;
“Corporate Sector is cashed up. For example, total liquid assets of the US non-farm, non-financial sector expressed as a percentage of net worth is at its highest level in 60 years at over 14%. This, in part, is because the recession reduced equity by about 22% but also because of the strong kick-back of profits and the historically low level of capex.” June Platinum quarterly.
Hedgefunds are still below normalized long levels and overly cautious in general;
US treasuries overvalued and overbought;
US interest rates unlikely to rise this year given weakening second half (see consumer metrics readings/indicator)
Ben Bernanke -- “We are ready and we will act if the economy does not continue to improve — if we don’t see the kind of improvements in the labor market that we are hoping for and expecting,”;
Pimco selling insurance for Black Swan events;
Weak hands from retailers who bght and held thru the correction, begining to think about selling strength.
So being bullish is clearly the right play atm imo. My technicals are flashing bearish signals, but technicals can be useless at times so wont bother using it here, given the copious amount of data inline with bullish future prospects (albeit volatile).
*All posts by this poster is not financial advice or a reccomendation to do something. Can change my mind quickly on any decision I make, given markets always change. Have positions in instruments discussed unless otherwise indicated.
163 Senator13 // Jul 23, 2010 at 9:44 am
Looks like a good day for the aussie market and markets around the world.
Some good earnings results coming out of the US today too.
164 Anon // Jul 26, 2010 at 10:53 am
I’m abit concerned with how the USD is acting. Given Britain and Europe are now bringing in plans to cut deficits etc it just leaves the United states which is still a basket case. Given US unlikely to raise rates this year + no immediate measures to reign in deficit spending = problematic for the USD.
USD could retest intermediate lows (double bottom) before marching higher, which is quite abit of downside risk.
*All posts by this poster is not financial advice or a reccomendation to do something. Can change my mind quickly on any decision I make, given markets always change. Have positions in instruments discussed unless otherwise indicated.
165 Anon // Jul 26, 2010 at 1:03 pm
Looks like XAO may topout around 4,700-4,800 on this rally over the next few weeks, so not much to go. Am starting to re-insure the portfolio as the rise continues. Then Sept-Oct correction back to perhaps 4,350 and 10,000 DJIA? Kinda inline with the 2 year presidential cycle, altho adjusted for statistically unlikey price targets/action.
Sector rotation aswell as stock selection within the sector is going to be key imo. Two tier market is occuring.
Bullish: Healthcare, Consumer Staples, Energy, Utilities, Telecommunications, Soft Commodities.
Neutral: Financials, Commodities, Capital Goods.
Bearish: Insurance, Cyclicals, Transportation, Technology.
*All posts by this poster is not financial advice or a reccomendation to do something. Can change my mind quickly on any decision I make, given markets always change. Have positions in instruments discussed unless otherwise indicated.
166 Anon // Jul 26, 2010 at 1:49 pm
Looked at some previous corrections in past history and i’m pretty sure (but u can never be 100%) that the next possible correction in Sept/Oct will be much shallower than the May one. Its statistically improbable to have two 15%+ corrections in such a short period of time. You generally get only one ~15% correction every 11-12 months. So I wont be dumping out of this rally, as any possible correction will be too shallow and temporary to time; thus will stay almost fully invested thru Oct with hedges. Likely to be a very viscous rise out of the Oct lows -- unlike the May/July situation. I don’t want to miss the bulk of the trend given markets only trend ~15% of the time. Statistically its shown trying to time markets makes you under perform and miss bulks of trends -- so i’ll buy and hold till Feb next year.
*All posts by this poster is not financial advice or a reccomendation to do something. Can change my mind quickly on any decision I make, given markets always change. Have positions in instruments discussed unless otherwise indicated.
167 Biker // Jul 26, 2010 at 5:10 pm
“Likely to be a very viscous rise out of the Oct lows – unlike the May/July situation.”
Yes, I’ve thought about oil shares myself… .
168 Anon // Jul 26, 2010 at 5:49 pm
Hey Biker. Yeah well the peak oil bubble has to re-start sometime. My technical readings are suggesting a possible double top in oil @ $140ish, but i’m really not sure how its going to get there; especially with a weakening 2nd half economy. That just leaves terrorist activities / war / or more likely, some supply side shock on a major well, related to long term depletion?
Also, have to be careful with stock selection…some equities are going down the gurgler and some are holding and tracking oil more consistently. My main oil exposure is in the US -- USO and WPL on the ASX, aswell as some indirect agricultural net/net plays and more riskier BP. And obviously this post isn’t financial advice.
Investing in oil is abit like buying gold, if you dont run for the exits when people start heading for the doors, you’ll be left with a soggy cigar butt in your mouth and a near worthless contract/script
Might be some short term weakness in oil, as this hurricane premium comes off?
*All posts by this poster is not financial advice or a reccomendation to do something. Can change my mind quickly on any decision I make, given markets always change. Have positions in instruments discussed unless otherwise indicated.
169 Anon // Jul 27, 2010 at 6:36 am
Good bullish leading indicator from mutual funds; retailers still doubting the rise which is bullish signal aswell:
“Mutual funds, pensions and endowments are spending more on stocks than at any time since the start of the bull market, just as individuals grow the most pessimistic in a year.”
http://www.bloomberg.com/news/2010-07-25/stock-buying-hits-bull-market-high-at-institutions-as-individuals-retreat.html
Mutual fund bullishness is usually only a contrarian indicator at market extremes, the crowd is usually right in the meat of the rally.
*All posts by this poster is not financial advice or a reccomendation to do something. Can change my mind quickly on any decision I make, given markets always change. Have positions in instruments discussed unless otherwise indicated.
170 Anon // Jul 27, 2010 at 7:50 am
T2 Partners quarterly
http://www.valueinvestingcongress.com/landing/n10/downloads/T2-Partners-AB-InBev-BP-Microsoft.pdf
Talks about market direction, whether we are in a bear or bull market, or both. Dont agree with their range bound thesis, at least for the next several months into next year. High probability to break out of the range and new highs, albeit we might slip back into the range (after Feb 2011?) on a longer duration.
Page 41 onwards shows why BP is undervalued and the media have completely overblown the potential damages. I partially fell for the media hype by selling my position at near breakeven, but quickly realised my mistake, bght calls, and then loaded common on the last pullback @ 35$. Wont be making the same mistake twice! If you are going to make a mistake, thats life; but you better recognize it quickly, even if you are unaware you better become aware, or life will force you to!
*All posts by this poster is not financial advice or a reccomendation to do something. Can change my mind quickly on any decision I make, given markets always change. Have positions in instruments discussed unless otherwise indicated.
171 Greg Atkinson // Jul 27, 2010 at 7:55 am
Anon…I think you could probably post some of these comments here? Global Economic Outlook
Anyway regarding the Australian stock market, we might be in for a nice Q3 rally back up to 5000?
172 Anon // Jul 27, 2010 at 8:27 am
Sure, i’ll move them now. You might need to delete a couple of posts.
I’ll move my currency chat over to that thread aswell given the pairs affect the global economy.
Q3 rally is possible into August early Sept?…but my technical models saying flat at best during Sept/Oct with strong bias for an 8-10% correction during that period. Might be a 4Q rally past 5,000? Either way its highly probable for a big rally sometime in the second half, given historical returns comming out of ~50% crashes; since the early 1900s.
*All posts by this poster is not financial advice or a reccomendation to do something. Can change my mind quickly on any decision I make, given markets always change. Have positions in instruments discussed unless otherwise indicated.
173 Plornt // Jul 27, 2010 at 1:57 pm
“The Investors Intelligence survey, a measure of investment newsletter editors from ChartCraft is basically unchanged once more. This week we have an absolutely equal amount both bearish and bullish (35.6%). For the previous 2 weeks, the bull bear ratio has been hovering around par and this week that continues once again. The last time the bull bear ratio was this low was in July 2009 and April 2009.
AAII
This week the American Association of Individual Investors’ weekly sentiment survey had a decline in optimism. The bulls decreased from 39% to 32% while those expecting higher prices increased from 38% to 45%.”
Switching usernames from “Anon” because there are too many different people using Anon, so it gets confusing.
*All posts by this poster is not financial advice or a reccomendation to do something. Can change my mind quickly on any decision I make, given markets always change. Have positions in instruments discussed unless otherwise indicated.
174 Biker Pete // Jul 27, 2010 at 10:30 pm
G’day Ned. Here’s the tax info DRA keeps blocking:
Senior Australians Tax Thresholds
The taxable income level above which Australians eligible for the Senior Australians tax offset (SATO) begin to pay tax will increase on 1st July 2009
Eligible single senior Australians will have no tax liability if their rebate income is:-
• < $29,867 for the 2009/10 income tax year
Eligible senior Australian couples will have no tax liability if their rebate income is:-
• < $25,680 in the 2009/11 income tax year
The amount of SATO will be determined by reference to a taxpayer's ‘rebate income'. The SATO entitlement reduces by 12.5 cents for every $1 of rebate income above the following relevant thresholds:-
• Single -- $2,230
• Couple (each) -- $1,602; and
• Couple (separated by reason of illness) -- $2,040
You may already have this info.
Still working on THE LIST. Once I have all the answers I'll post it all…
175 Plornt // Jul 29, 2010 at 10:15 am
Markets might go sideways to up here. Risk/reward not good from these levels given possible Sept/Oct weakness, so am not selling or buying (longer duration risk/reward still good) but have been increasing hedges substantially.
GBP.AUD looks really good, have backed the truck up and am scaling into EUR.NZD, altho I don’t think the latter has made a bottom yet, so as usual could be too early.
*All posts by this poster is not financial advice or a reccomendation to do something. Can change my mind quickly on any decision I make, given markets always change. Have positions in instruments discussed unless otherwise indicated.
176 Plornt // Jul 29, 2010 at 10:31 am
Anyone see the media reports re: BP oil dissipating and they cant find it! Microbial dissipation along the sea floor or something?
Could be a chargeback for BP now that the oil is dissipating. 30 billion is starting to look overstated for liabilities, might be less than 10 billion total, over 10 years? What a rediculous over reaction this was! They probably don’t need to keep selling assets and have enough cash.
*All posts by this poster is not financial advice or a reccomendation to do something. Can change my mind quickly on any decision I make, given markets always change. Have positions in instruments discussed unless otherwise indicated.
177 Plornt // Jul 29, 2010 at 7:50 pm
We have to be careful here gents. Theres alot of false bottoms occurring across various instruments.
This market is looking dangerous in terms of relative price performance for stocks in the same sector, aswell as ST rallies sucking in intermediate duration trend investors.
Very difficult market. Must always know your VAR, tail risk, risk collars. Capital preservation at all costs.
*All posts by this poster is not financial advice or a reccomendation to do something. Can change my mind quickly on any decision I make, given markets always change. Have positions in instruments discussed unless otherwise indicated.
178 Plornt // Jul 30, 2010 at 10:11 pm
http://www.consumerindexes.com/commentary_2010_dailygrowthindexvsgdp.png
The consumer metrics chart is getting worse! And to top it off the US GDP figure was below expectations that were already expecting softness.
Going to be a rocky sideways ride through Sept/Oct I suspect.
Shorting the AUD/USD again and unloaded EUR/USD longs.
*All posts by this poster is not financial advice or a reccomendation to do something. Can change my mind quickly on any decision I make, given markets always change. Have positions in instruments discussed unless otherwise indicated.
179 Plornt // Jul 31, 2010 at 6:03 pm
Still long haven’t sold but hedged with cost neutral risk collar strategies and defensive currencies. Haven’t put on any futures hedges yet as we still may go alittle higher.
Thinking about 4,700-4,800 on the XAO and 10,700-10,800 on the DJIA and then i’ll probably begin to hedge the whole portfolio out to protect against the possibility of another fall to 10,000 or so in Sept/Oct. If we break these levels then we could go higher.
The bottoming process we just experienced gives a high probability for a lower high (temporarily) followed by a near retest of lows under 10,000ish. I’ve been trying to refine my exits as my entries are good but exits shocking. So far was good on Euro, lets hope it works on this index read.
I’m entertaining the thought of lower lows on the next correction, but still can’t see that happening yet -- it would be very rare statistically. But the economy is slowing much more than I anticipated in my modeling.
Not going to be complacent here, takes you a small amount of time to lose it and years to replace it. Cut risk when markets rise meaningfully and increase risk when markets are at statistical lows.
*All posts by this poster is not financial advice or a reccomendation to do something. Can change my mind quickly on any decision I make, given markets always change. Have positions in instruments discussed unless otherwise indicated.
180 Plornt // Aug 2, 2010 at 9:43 am
If the pound moves inverse to the XAO, this is abit of a concern for markets post August as seeing big breakout setups on the GBP.
The correlation could break or weaken so keep that in mind.
I saw similar setups in April about 4 weeks before the markets rolled over. But given recency bias, I doubt we will have the same sort of correction as was in May; that was brutal.
So the GBP is starting to look like the next big move in the currency market more and more.
Volatility on these pairs are high so drawdowns will be inevitable and scaling in will be key.
Am going long both GBP/AUD and GBP/NZD with very loose stops to allow for the volatility…could move down 700 pips and still be on a breakout move, no point giving temporary drawdowns to the volatility gods.
Targets for GBP/AUD are 1.90 and GBP/NZD 2.45 and is high probability.
Looking for perhaps late August move on the pound.
*All posts by this poster is not financial advice or a reccomendation to do something. Can change my mind quickly on any decision I make, given markets always change. Have positions in instruments discussed unless otherwise indicated.
181 Plornt // Aug 2, 2010 at 2:42 pm
Low volumes on the XAO, pretty bullish sign as you come out of market bottoms.
Looks like there is alot of stuck shorts who are putting off covering as they think its a sure bet monthly mean reversion will occur at some point.
Can’t see any reason to sell here, even though I am fighting off the urge to sell everyday. Stay the trend until price confirms.
Probably a bullish sign I feel like selling as I usually sell too early?
Cut some of my AUD/USD shorts as its moving against me.
*All posts by this poster is not financial advice or a reccomendation to do something. Can change my mind quickly on any decision I make, given markets always change. Have positions in instruments discussed unless otherwise indicated.
182 Plornt // Aug 3, 2010 at 10:07 am
Wow what a rally overnight, looks like shorters were covering en mass.
The DJIA is near my target range…there is alot more risk than reward from these levels. The faster you bounce like this, the more likely its a bull trap. I think more sideways action here to frustrate shorters, for a few weeks/months then a drop down. But important to note alot of value stocks will breakout at the top of a range, so timing from individual stocks can be quite different to timing the index. I’m still not selling as I see value in what I hold that is yet to be realised regardless of the index, derisking index and tail risk with risk collars.
But clearly its very risky to be buying from these levels given Sept/Oct headwinds and slowing GDP. Markets have gone from discounting the GDP slowing to now not discounting it at all.
USD Index has gone down for over 8 weeks straight, so a bounce would be expected soon. Its at critical support.
I’m still not fully hedged but if we keep going like this I will be.
*All posts by this poster is not financial advice or a reccomendation to do something. Can change my mind quickly on any decision I make, given markets always change. Have positions in instruments discussed unless otherwise indicated.
183 Plornt // Aug 3, 2010 at 10:34 am
ES futures prices for further dated contracts are now pricing in a fall in the index. This is similar to what I was seeing in the VIX when it was at record lows…i.e. VIX contracts for future dates were alot higher than the current price.
Feeling very uncomfortable at these levels.
*All posts by this poster is not financial advice or a reccomendation to do something. Can change my mind quickly on any decision I make, given markets always change. Have positions in instruments discussed unless otherwise indicated.
184 Plornt // Aug 3, 2010 at 11:38 am
Thought this was interesting in regards to investment performance relative to indexes:
How you invest in flat or declining markets determines your ability to outperform over the longterm -
“However, I have pointed out that any superior
record which we might accomplish should not be
expected to be evidenced by a relatively
constant advantage in performance compared to the
Average. Rather it is likely the if such an
advantage is achieved, it will be through
better-than-average performance in stable or
declining markets and average, or perhaps even
poorer-than-average performance in Rising Markets”
Warren Buffet. 1960.
*All posts by this poster is not financial advice or a reccomendation to do something. Can change my mind quickly on any decision I make, given markets always change. Have positions in instruments discussed unless otherwise indicated.
185 Plornt // Aug 4, 2010 at 2:06 pm
Looks like XAO is settling at these levels, might go up or down -- not sure. But can’t imagine a big move in either direction right atm.
Markets were anticipating US stimulus and now Bernanke has said he will wait. So this USD capitulation and subsequent inverse move on equities is starting to look exhausted. People have GFC stimulus recency bias atm and that has caused unrealistic speculation towards equities; in anticipation of something that hasn’t happened and has been confirmed that will not happen soon.
Big move on Pfizer (PFE) last night. Results were finally better than expectations after having just ok results from Citigroup and Sanofi Aventis. Just shows you stock picking is key not just sector selection. When enough people hate a technique it begins to work again and produce outsized returns, until its in vogue again and then the method loses its edge.
My conservative valuation on Pfizer is 24$, currently at ~16$. Optimistic instrinsic value is 33$ -- but doubt we’d get that high. I have been adding on the way up and pressing the position (if exercised my calls it would be 130% of my entire portfolio).
Will hold till at least 24$ and not a cent less. Wont use charts on this run as if I followed them i’d be whipsawed or headfaked 20 times on the way to 24$ -- waste of concentration.
Looking at going long the USD.JPY but not 100% sure its bottomed.
*All posts by this poster is not financial advice or a reccomendation to do something. Can change my mind quickly on any decision I make, given markets always change. Have positions in instruments discussed unless otherwise indicated.
186 Plornt // Aug 4, 2010 at 3:07 pm
“Jim Rogers predicts a new recession in 2012″
http://www.telegraph.co.uk/finance/economics/7913302/Jim-Rogers-predicts-a-new-recession-in-2012.html
Albeit Jim tends to be bearish at markets bottoms in the past, his longerterm macro calls have been relatively accurate.
All posts by this poster is not financial advice or a reccomendation to do something. Can change my mind quickly on any decision I make, given markets always change. Have positions in instruments discussed unless otherwise indicated.
187 Plornt // Aug 5, 2010 at 2:28 pm
Not much happening today. XAO up abit following Wallstreets lead.
Looking to sizeably increase BP position as the more I look at it the more i’m convinced the government has over done it re: the compensation fund and given the oil is now dissipating (which is no surprise given the size of body of water affected) liabilities may not even be 5 billion from here.
People are going to have a tough time claiming outside of direct obvious damage given how quick things have been almost plugged and now oil dissipating. For example people claiming losses on their house prices is going to be very hard to prove, given the real estate market.
Looks like everyone concerned have over-reacted due to the speed of the media cycle these days and the government have done the same.
I think there probably shouldn’t even be very much of a discount given how much BP earns and the fact money has already been put aside, which I think is about double what they need in 10 years time! Looking at 60$ targets.
All posts by this poster is not financial advice or a reccomendation to do something. Can change my mind quickly on any decision I make, given markets always change. Have positions in instruments discussed unless otherwise indicated.
188 Biker // Aug 5, 2010 at 8:27 pm
Yeah, yeah. Considering Mr Rogers Neighborhood* I’d take it with a grain of the proverbial, Anon.
The problem is that we only hear about it later when these guys are actually _right_ in their predictions. They make _sure_ we know they said it!
So we owe Rory Robertson a debt of thanks, for concreting Steve Keen’s ludicrous predictions firmly into the foundations of Australian financial history.
* http://www.google.com.au/search?client=safari&rls=en&q=Mr+Rogers+Neighborhood&ie=UTF-8&oe=UTF-8&redir_esc=&ei=2J5aTI6JL4HEvQOZmuGBAg
189 Plornt // Aug 6, 2010 at 10:41 am
Well Rogers has a good track record Biker. He said China was going to boom 20 years before you even knew about their growth. And Japan was going to implode in the mid 80s just before the 20 year bear market.
I think he compounded at about 30% p.a. during the 70s while the market went sideways.
He was calling for a commodities supercycle in the early to mid 90s.
He does like Australia longterm, but says our politicians are almost as bad as Americas and we need to bring in our spending and deficits, or our future will be much less certain.
I think someone who has such a great macro and investment record for over 40 years is someone I should listen to now and then
Although, I won’t listen to him all the time -- especially when investment periods are less than 12 months -- where logic and thorough analysis has less effect on prices.
Atm the trend on the XAO is up. We are all trying to pick a top which i’ve found is a futile exercise, although I do nail quite a few turns with the shorts. So I will wait for price action to confirm the trend has exhausted, which objectively atm looks a fair way off.
All posts by this poster is not financial advice or a reccomendation to do something. Can change my mind quickly on any decision I make, given markets always change. Have positions in instruments discussed unless otherwise indicated.
190 Plornt // Aug 6, 2010 at 9:35 pm
Terrible jobs number, still got all my hedges on. Am thinking of increasing some of my USD long. Figure was supposed to be 60k+ and 50k lost would have helped the markets.
‘Breaking News: Economy sheds 131,000 jobs in July; stock futures turn negative”
http://www.reuters.com/article/idUSTRE65M2WK20100806
All posts by this poster is not financial advice or a reccomendation to do something. Can change my mind quickly on any decision I make, given markets always change. Have positions in instruments discussed unless otherwise indicated.
191 Plornt // Aug 10, 2010 at 1:07 pm
XAO Rally is starting to look exhausted. But you never know when these rallies end, and they can go on for much longer than you anticipate.
I am now hedged in a way that my portfolio should rise in both directions (aslong as there is not extreme index upside). Its rising today even though the XAO is falling and rose yesterday when the DJIA rose.
Pretty large position on USD/JPY atm which looks poised to make a ST move to 88-89, albeit may retest the recent lows.
Still cutting back my short AUD/USD position (been cutting it back for the last week) as I think this is starting to become a crowded trade. May change my mind as prices change of course. Still have a decent size on though, incase I am wrong.
Never let a loss get too big, because you are too stubborn to admit an error and begin to rationalize it.
All posts by this poster is not financial advice or a reccomendation to do something. Can change my mind quickly on any decision I make, given markets always change. Have positions in instruments discussed unless otherwise indicated.
Be sure to seek and take personal professional advice from someone familiar with your circumstances and needs.
192 Plornt // Aug 10, 2010 at 4:07 pm
Summer Rally Historical Performance May/Jun low to Q3 high on DJIA is on average 9%. Looks like any upside from here is high risk for the next few
months anyways (if averages hold out)
Although Statistically August tends to be stronger in the middle than at the begining or end. So perhaps one last “blow off” type bull trap rally before we
rollover for about 8-10%.
All posts by this poster is not financial advice or a reccomendation to do something. Can change my mind quickly on any decision I make, given markets always change. Have positions in instruments discussed unless otherwise indicated.
Be sure to seek and take personal professional advice from someone familiar with your circumstances and needs.
193 Plornt // Aug 12, 2010 at 9:53 am
Been relaxing but did make a couple of changes.
Unwound my hedges as I think we are close to a bottom here. Been buying CL aswell as GC.
Major support around 10,200 DJIA and 4,370 for the XAO.
I am contemplating shorting heavily on the next rally say around 4,800 and 10,800 in Sept/Oct. I wont be unwinding shorts on that line early. Infact i’m pretty sure (although never certain) it will be either flat at best or 8-10% down. Alot of retail investors will look at the past price action and assume another shallow pullback and then get hit from recency bias.
All posts by this poster is not financial advice or a reccomendation to do something. Can change my mind quickly on any decision I make, given markets always change. Have positions in instruments discussed unless otherwise indicated.
Be sure to seek and take personal professional advice from someone familiar with your circumstances and needs.
194 Plornt // Aug 13, 2010 at 2:05 pm
Not sure what the XAO is doing atm.
Bght a decent long ES line at the SPX lows ~1072ish. I think thats the bottom, if not its very close to it…so risk/reward looks good. Will look to hold them for the next few weeks into early/mid Septh.
Loaded up on GC yesterday, which I mentioned in the previous post. Its exploded now. May be slight pullback who knows but there is a big breakout comming, so will probably use puts to manage my risk instead of hard stops -- want to participate to get the meat of the rally.
My CL -- oil contracts are underwater, bght 78$ now 76.5 Looks like oil has bottomed from my interpretation of the charts…so looking for 86$ on the next run.
Never think you are better or know more than the market or people on the otherside of the trade — you will be slaughtered and carved up!
All posts by this poster is not financial advice or a reccomendation to do something. Can change my mind quickly on any decision I make, given markets always change. Have positions in instruments discussed unless otherwise indicated.
Be sure to seek and take personal professional advice from someone familiar with your circumstances and needs.
195 Plornt // Aug 16, 2010 at 1:06 pm
XAO looks to be bottoming out.
Cutting risk from companies I hold that haven’t released results yet (extra puts, cut position size). It seems to be almost gambling betting on a company prior to releasing results -- you don’t know what can happen. Although of the companies I hold only one (so far) has failed to beat or meet expectations out of 15 -- with still some yet to report.
Am heavily overweight ES longs waiting for the inevitable short squeeze.
Last 5 years late August has been typically strong for the DJIA/SPX.
Am now long EUR.USD for a ST play.
All posts by this poster is not financial advice or a reccomendation to do something. Can change my mind quickly on any decision I make, given markets always change. Have positions in instruments discussed unless otherwise indicated.
Be sure to seek and take personal professional advice from someone familiar with your circumstances and needs.
196 Vince L // Oct 14, 2010 at 5:45 pm
Plort you were about right, the market bottomed out in mid-late August. We now seems to be on a run up to 5000?
197 Greg Atkinson // Oct 15, 2010 at 8:53 am
The 5000 mark appears to be a lot tougher to break through than I thought. I guess the mining tax, carbon tax and election outcome have probably knocked 200 points off the market though so in a perfect world, we would be probably sitting near the 5000 level now.
I suspect that if the All Ords/ASX 200 hit 5000 a lot of people will push the sell button just to lock in some profits so I wonder if there is much chance of ending the year much above 5000.
198 Ned S // Oct 16, 2010 at 12:03 am
A naughty thought that just flicked through my mind is that a genuine improvement in the US economy just could cause lots of ‘things as we currently know and love them’ to unwind pretty sharply in the absence of ongoing hopes of stimulus and QE.
199 Greg Atkinson // Jan 6, 2011 at 7:33 am
Well I have stuck my neck out again and taken a punt at predicting where the market will end in 2011: Australian stock market outlook for 2011
It’s already looking like this year will be full of market surprises!
200 Greg Atkinson // Jan 15, 2011 at 11:58 am
Here is an extract from the latest stock market outlook from Wilson Asset Management (ASX:WAM)
“Heading into the new calendar year we remain cautious despite the rally in equities since July 2010. We remain concerned about a bubble forming in the mining sector, especially among smaller resource stocks, with many leaping by more than 100 per
cent in just six months. The emergence of inflation in China could result in authorities being forced to slow growth and, as a result, reduce demand for Australian commodities.”
Interesting…
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