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ASX All Ordinaries candlestick charts and trends.

April 13th, 2010 · Greg Atkinson · 111 Comments

Yesterday the ASX All Ordinaries finally closed above 5000 and many stock market investors will now be wondering if this is the start of another period of rising stock prices, or simply the prelude to another downwards correction. Well the answer to both questions  in my opinion, is yes.

Last year when the stock market bears and doom crowd were predicting a global depression, I consistently held the position that what we were seeing was simply a nasty stock market correction and the bursting of a major economic bubble.

Like many investors, I did not enjoy seeing some of my holdings wiped out or my stocks portfolio take a major valuation hit, but I did not equate a severe market correction with the end of capitalism, or the need to carry around a bag of gold to do my shopping, because paper money was going to be worthless.

I know some people will claim I am just saying all this because the worst of the global financial crisis is now behind us, but actually I have been mocking the doom crowd for a long time.

Just in case you have forgotten what I was saying during the dark days of early 2009, you can refresh your memory by reading: World stock markets rally: is the bear back in its cage?

So if am optimistic about the outlook for the stock market and the global economy why do I think the recent market rally means a correction is on the way? Well simply because that is normally what happens. In my opinion, if you expect stock market corrections to come along then they become less of a shock when they finally do arrive.

To try and get a feel for how the market is moving and where it might head next,  let’s look at some candlestick charts for the ASX All Ordinaries Index starting with one covering the last 6 months.

ASX All Ordinaries  Candlestick Chart over 6 months

all-ords-6-month-tech-chart

I am using the above technical chart not to try and spot any short term trading trends, but rather to get a feel for how strong the rally has been.

The chart above shows that the All Ords rallied quiet strongly after the correction in January, but it also gives me the impression that the rally is running out of steam.

Therefore I have been waiting for a little weekly pull-back or correction for a week or so. It hasn’t happened yet, but I reckon  it will and that will be a good sign, because that is the way a well functioning stock market operates.

Let’s now have a look at what the All Ords has been doing for the last 2 years or during the worst of the global economic crisis.

ASX All Ordinaries  Candlestick Chart over 2 years

all-ords-2-year-tech-chart

The red bars on the chart indicates a week when the All Ords closed lower, the blue bars indicate a week in which it closed higher.

From around June 2008 until March 2009 the bad weeks were a lot more numerous than the good weeks. But now for over a year, it is pretty obvious that the weekly rises outnumber the weeks where the All Ords has closed lower.

The Simple Moving Average (SMA) shown on the above chart illustrates how the overall trend since the market bottomed out in March 2009 has been up, however over the last few months the upwards trend has flattened out quite a bit.

Finally if we look at the All Ords candlestick chart over the last 3 years we can see how it has moved from the bull market high in 2007, down to the bear market low in 2009 and is now slowly heading back up again.

ASX All Ordinaries  Candlestick Chart over 3 years

all-ords-3-year-tech-chart

Again I am not trying to use this chart to spot any short term trading trends, but rather to try and get a big picture view of what has happened, and what might happen over the next few months.

Quite clearly the All Ords is still a long way below the highs of 2007 and so although we have seen it rise quite sharply over the last year, it looks to me as the bounce off the market low is over and that for the market to push higher, investors will want to see tangible signs that the global economy is recovering.

In short that means the All Ords is unlikely to rally strongly from here until we start seeing some good company earning reports across a range of sectors, not just mining and banking.

I do expect the stock market to move higher over the rest of this year but at this stage I expect the gain to be modest, simply because of rising interest rates, higher commodities prices and doubts over the strength Chinese economy. But I will touch upon those issues in more detail in a few days!


111 responses so far ↓

  • 1 Vince L // Apr 19, 2010 at 6:31 pm

    Looks like the little correction you mentioned might be taking hold now. Could be a bad week for the markets.

  • 2 Greg Atkinson // Apr 22, 2010 at 8:51 am

    Vince the markets are hard to read at the best of times and seem ever harder to work out since the GFC hit. Although there appears to be a fair amount of good economic news around, the Australian stock market is still struggling to stay above 5000 and is still below the level seen just before the collapse of Lehman Brothers.

    At this point the ASX All Ords looks like it will make another run towards 5000 but will it be near that level in a few weeks or back down again?

  • 3 Anon // Apr 22, 2010 at 1:03 pm

    Hmm…guessing market direction is basically a useless exercise, yet we all still do it – lol. It brings out the gambler in all of us.
    The standard deviation from the 200dma (DJIA/SPX) is not representative of an immediate significant corrective phase, and one would assume, from previous tops, a slower type rollover is likely.
    Apparently retail investors are entering the market at these levels…altho using that as a bearish indicator is alittle problematic at best (e.g. retail investors were entering @ 4,000 on the XAO which was apparently bearish). Notwithstanding, most sentiment indicators look feverishly optimistic at the moment.
    As Ned mentioned the other day, its surprising more people have not grasped onto the fact that stimulus is going to be wound back soon. This is big negative catalyst…and i’d be surprised if the markets could hold these levels under such circumstances…even if gdp growth can be sustained, markets would still need to discount the possibility of weakness. Its a lose/lose scenario.
    The VIX looks tremendously mispriced and oversold. Volatility is a constant and the lack of volatility over the last ~12 months is abnormal. At the very least volatility will increase.

    Not financial advice, see a financial advisor for such decisions etc.

  • 4 Anon // Apr 22, 2010 at 2:42 pm

    “Citi: Now Comes The Roller Coaster”

    http://www.businessinsider.com/citi-the-next-three-years-will-be-a-roller-coaster-market-2010-4

    “Will the VXX Ever Outperform?”

    http://www.investingwithoptions.com/2010/04/19/will-the-vxx-ever-outperform/

    “The Yield Curve and Its Distortions”

    http://www.minyanville.com/businessmarkets/articles/yield-curve-10-year-treasury-china/4/19/2010/id/27810?utm_source=twitterfeed&utm_medium=twitter

    Not financial advice, see a financial advisor for such decisions etc.

  • 5 Anon // Apr 22, 2010 at 5:07 pm

    “Overcoming Stubbornness”

    http://traderfeed.blogspot.com/2009/09/overcoming-stubbornness-as-trader.html

    “Hollywood Exchange [Futures] Approved”- LOL whats next?

    http://dealbook.blogs.nytimes.com/2010/04/21/back-to-the-futures-hollywood-exchange-approved/

    “I’d Rather Be Wrong” Oaktree Capital

    http://www.oaktreecapital.com/Memos/Id%20Rather%20Be%20Wrong%20-%20031710.pdf

    Not financial advice (nor any of my posts), see a financial advisor for such decisions etc.

  • 6 Greg Atkinson // Apr 22, 2010 at 8:15 pm

    Anon, thanks for the links. As you can probably guess I am fairly cautious these days about the outlook for stocks mainly because I feel the rally so far has been fuelled by relief and government spending.

    As I wrote a while back I believe the relief rally is over, so now the only way I see stocks heading higher will be on the back of good earning reports.

    Have earning reports been good? Some have been, but plenty of companies are cautious about the next 6 months and as the economic stimulus measures subside, conditions will get much tougher for many businesses.

    And then there is debt….this will have to be paid down at some point or at the very least, it will reduce the government’s ability to keep spending. Either way we can’t expect public sector spending to prop up the economy for much longer.

    But who knows? It is an election year and the health reform cash splash shows that the sky seems the limit when it comes to shoring up electoral support!

  • 7 Anon // Apr 22, 2010 at 8:34 pm

    “Have earning reports been good? Some have been”

    Apple’s were sensational! But Jobs is a prodigy…he could probably increase sales and profits in a depression! Whose buying an Ipad 😛
    I think most of the profits beats i’ve seen have been mostly from cost cutting…not to mention taking market share from the little guys. I’m not sure of many other good profit results…i haven’t been keeping up with the latest earnings reports, so can only really comment on what i’ve seen.
    I’m concerned the profit results comming out now are value traps. Need to see what the profits are like post sugar high to be sure they are “real” and sustainable.

    Not financial advice (nor any of my posts), see a financial advisor for such decisions etc.

  • 8 Anon // Apr 23, 2010 at 12:16 pm

    “Bringing Perspective to Current Stock Values”

    http://online.barrons.com/article/SB127076783122874253.html

    “Of the 25 bull markets in my study, 10 occurred within the context of what Ned Davis Research considers to be secular bear markets. At the one-year points of those 10, the P/E 10 on average stood at 14.6. The stock market’s current valuation is 46% higher than that.

    Some also have argued that the first half of the last century is not particularly relevant to today, and therefore I should focus on more recent decades. But that will get you only so far. The average P/E 10 at the one-year point of bull markets since the midpoint of the last century is 17.9, which — while higher than for prior bull markets — still means that the market’s current valuation is 19% higher.

    The bottom line? At least when looking at the modified P/E ratio known as P/E 10, stocks today are by no means cheap. On the contrary, depending on how you slice the data, stocks are either moderately or significantly overvalued.”

    Not financial advice (nor any of my posts), see a financial advisor for such decisions etc.

  • 9 Anon // Apr 28, 2010 at 6:27 am

    Post of mine a few days ago:

    “The VIX looks tremendously mispriced and oversold. Volatility is a constant and the lack of volatility over the last ~12 months is abnormal. At the very least volatility will increase.”

    VIX on the Rise!

    “VIX Surges 31% in Biggest Jump Since 2008 on Greece Downgrade ”

    http://www.bloomberg.com/apps/news?pid=20601087&sid=andLi1H64z0A&pos=4

    Not financial advice (nor any of my posts), see a financial advisor for such decisions etc.

  • 10 Greg Atkinson // Apr 28, 2010 at 10:33 am

    Anon, Vince..well I reckon the correction I have been talking about for a few weeks is now upon us. Once again the ASX All Ords/ASX 200 closed just above 5000 and then come right back down again.

    It seems the 4800-5200 range that I have been focused on for a year or more is pretty much on the money. (so to speak) I wonder how much longer the market can trade around that range?

    There is now a big disconnect between most economists, the RBA, the Government and the stock market. The “official” group (i.e. RBA etc) believe the Australian economy is booming whereas the market says otherwise.

    Personally I have more faith in what the stock market is telling me at the moment and reckon all the talk about a booming economy is premature.

    Anon..thanks for the information about the VIX..very interesting!

  • 11 Anon // Apr 28, 2010 at 2:31 pm

    I’ll sit on the fence Greg. Positioned in areas that tend to move just before a correction…some are showing signs of breaking out.
    Concerned there might be one more euphoric spike to take out the rest of the shorts and suck in more retail investors before the rolling downleg starts.

    Also concerned the correction will not be like most and suck in alot of people trying to buy the dips. Might be alot of lower highs, not sure. But all just speculation at the end of the day.

    “It seems the 4800-5200 range” — that could be what happens for awhile who knows?

    Sell in May and Go Away? Will it occur around mid may or early may? Or not at all?

    Not financial advice (nor any of my posts), see a financial advisor for such decisions etc.

  • 12 Anon // Apr 28, 2010 at 3:31 pm

    Looking just a tad bearish! lol:

    http://www.market-harmonics.com/images/tech/sentiment/putcall.gif

    Not financial advice (nor any of my posts), see a financial advisor for such decisions etc.

  • 13 Greg Atkinson // Apr 28, 2010 at 3:35 pm

    Anon I am also sitting on my hands. I felt reasonably confident buying when the market was down below 4000 but am not that confident these days.

    I am cautious about the outlook for China which means by default, I am concerned about the outlook for Australian stocks.

    Maybe the May selling has indeed begun early, U.S stocks after all have enjoyed a pretty good run over the last 12 months. But with so much stimulus money flying around it is really hard to work out “true” demand from “stimulated” demand.

  • 14 Anon // Apr 28, 2010 at 5:59 pm

    Well Europe is going off a cliff!
    Can it gain back later in the trading day?
    Dangerous to be long here imo (even if we have that final spike). Risk/reward has been terrible for sometime.

    Not financial advice (nor any of my posts), see a financial advisor for such decisions etc.

  • 15 Anon // Apr 29, 2010 at 9:36 am

    “Consumer Recovery Actually Is “Different This Time””

    Refer to following chart:
    http://www.consumerindexes.com/commentary_2010_contraction_watch_full.gif

    “As you can see from the above chart the current consumer “demand” contraction event is unique: if there is a “second dip” it may very well be unlike anything we have seen recently. Instead of a “call-911? type of event in 2008 or the “hiccup” witnessed in 2006, we may be seeing a “walking pneumonia” type of contraction that has legs.

    Over the most recent 7 quarters our economically “upstream” Daily Growth Index has led the “downstream” factory GDP numbers by about 17 weeks. If that pattern continues to hold, we are currently about halfway through the consumer transactions that will drive the third quarter’s production and GDP. If the blue line shown in the above chart continues drifting laterally over the next 40 days, the 3rd quarter 2010 GDP will look a lot like what we have previously projected for the 2nd quarter 2010 GDP, contracting at a mild but persistent rate.

    In summary, our data is telling us that US consumers are very reluctant to take on the kind of debt that they have traditionally assumed when pulling the economy out of previous recessions. Even a recent upturn in our retail index faded once the seasonal impact of the forward shifted Easter holiday had passed. Furthermore, even during the Easter retail up-tick the
    quality of the transactions was not very high. Big ticket items requiring longer term financial commitments were relatively scarce, and for that reason our Weighted Composite and Daily Growth Indexes did not materially respond.”

    http://www.tradersnarrative.com/consumer-recovery-actually-is-different-this-time-3998.html

    Not financial advice (nor any of my posts), see a financial advisor for such decisions etc.

  • 16 Anon // Apr 29, 2010 at 9:42 am

    Investors Intelligence Sentiment

    Bullish 53.3%
    Bearish 17.4%

    Not financial advice (nor any of my posts), see a financial advisor for such decisions etc.

  • 17 Greg Atkinson // Apr 29, 2010 at 10:35 am

    Well the rally on the Australian stock market has indeed now run out of steam and the correction I have been talking about is now a work in progress. The ASX All Ords & ASX 200 are both down near 4800 and I still reckon the banks and mining stocks could see further falls, which means basically they will drag the whole market down.

    I will say it again, the Australian economy is not booming, it is simply unbalanced and has “lucked” it through the GFC so far. Another quarter or two of economic contraction in Australia is a very real possibility. (even if the RBA don’t think so)

  • 18 Anon // Apr 30, 2010 at 3:09 am

    Heres that last euphoric spike on the DJIA was worried about. Will it last?

    Not financial advice (nor any of my posts), see a financial advisor for such decisions etc.

  • 19 Greg Atkinson // Apr 30, 2010 at 9:33 am

    Anon, the volatility does seem to be creeping back into the market. No matter how good company earnings appear to be, most investors know that there are still some major economic issues to sort out. All the debt out there is going to come back and cause some problems some day.

  • 20 Anon // May 1, 2010 at 5:02 am

    “Anon, the volatility does seem to be creeping back into the market.”

    Just alittle bit!! Yesterdays gains out the window and we finished at the lows. The dredded month of May is now upon us, mid or early may — not sure when the brunt of the correction will hit. But we can expect severe counter trend rallies on the way.

    Not financial advice (nor any of my posts), see a financial advisor for such decisions etc.

  • 21 Greg Atkinson // May 3, 2010 at 9:23 am

    Well the stock market correction is well underway and the first trading day in May is not being kind to the Australian stock market.

    I think you are right about some pretty severe counter rallies Anon. If the mess in Greece gets sorted and Spain avoids a meltdown then we could see the markets rally strongly but…there is still the issue of debt to deal with!

  • 22 Anon // May 3, 2010 at 9:29 am

    Very choppy markets. Wont be a pretty sight when mean reversion occurs.

    Not financial advice (nor any of my posts), see a financial advisor for such decisions etc.

  • 23 Anon // May 3, 2010 at 9:40 am

    BHP getting hammered. I’m surprised its not falling further. Closes below 39 support will have disappeared and its swan dive time!

    Not financial advice (nor any of my posts), see a financial advisor for such decisions etc.

  • 24 Greg Atkinson // May 5, 2010 at 9:46 am

    The big miners are getting hit from all sides..Rudd/Swan, EU Debt and the possible slowdown in China. Ouch.

    The correction is now getting a little more nasty than I expected, but I reckon we will get back into the 4800-5200 range once again. This sell off will probably be overdone. I doubt if the new mining tax as it stands now will ever see the light of day, so I reckon BHP & RIO will end up being oversold.

  • 25 Anon // May 5, 2010 at 10:00 am

    “The correction is now getting a little more nasty than I expected, but I reckon we will get back into the 4800-5200 range once again.”

    It does look if its abit overdone (at least temporarily). My targets for the DJIA end of year are 10,920 based on historical data and lots of possible scenarios (and subject to alteration). So the risk/reward is hopeless still.

    Lets see if the 210dma holds (~4,650) on the XAO. If not look out below!

    Not financial advice (nor any of my posts), see a financial advisor for such decisions etc.

  • 26 Anon // May 5, 2010 at 2:43 pm

    ‘I doubt if the new mining tax as it stands now will ever see the light of day, so I reckon BHP & RIO will end up being oversold.”

    Big recovery in BHPs shareprice today.
    Not sure if this is jut a temporary bottom though. If the tax gets scrapped or diluted then obviously it would be catalytic towards an upwards move. Still wouldn’t touch it with a ten foot pole tho.

    I still think its overvalued just based on basic fundamental valuation methods. Theres not enough discount for any potential Chinese weakness and associated correction for commodity prices.
    eps 6/10 est 263.8c
    eps 6/11 est 386.7c
    The 6/11 estimates look very unrealstic…it seems the market is pricing in significant growth for FY ending 6-2011.
    So the market is expecting ~50% growth haha. Goodluck with that!
    And these are pre-henry review estimates!

    Not financial advice (nor any of my posts), see a financial advisor for such decisions etc.

  • 27 Anon // May 6, 2010 at 9:31 am

    “Lets see if the 210dma holds (~4,650) on the XAO. If not look out below!”

    210dma broken – at least intraday. Needs to close below and then we’ll either have a whipsaw – followed by a suckers relief rally; or a parabolic type panic drop.
    Sentiment readings are still far too bullish, not a good sign. Looking for capitulation and panic selling from retail investors, but cant see this yet.

    Not financial advice (nor any of my posts), see a financial advisor for such decisions etc.

  • 28 Anon // May 6, 2010 at 10:50 am

    The SPX is only just starting its downtrend, while the XAO is already in the meat of it…this isn’t good…because when the states keeps falling (to catch up) it will put more downward pressure on the XAO. We could see 15% falls in the states and then 20% falls in Australia. I’m looking at value entries at ~4,000 on XAO and ~9,000-9,200 DJIA at the moment (but obviously this can and will change very quickly if something changes). So atm, we have along way to go in this correction. Going to be hard to resist buying into these fierce and expected counter-trend rallies.
    However this is just speculation and this might take several months to play out, or even may not occur at all – keep nimble.

    Not financial advice (nor any of my posts), see a financial advisor for such decisions etc.

  • 29 Greg Atkinson // May 6, 2010 at 11:28 am

    Anon I have ceased trying to guess where stocks will go in Australia at the moment while the ming tax debacle is ongoing. I am not sure why anyone would launch an assault on about the only export sector we have in Australia that is doing okay..at the moment.

    Anyway I have been cautious on the Australian stock market since late last year and that turns out to have been a good move.

    The big problem now is that the Rudd Government fears it might actually lose the next election, which means they will probably do nothing to cool the housing market and heaven forbid, actually take measures to support it further!

  • 30 Anon // May 6, 2010 at 11:38 am

    “Anyway I have been cautious on the Australian stock market since late last year and that turns out to have been a good move.”

    Yes, Greg that was a good call, hopefully you have abit of gun powder ready to go when the time is right to pounce.
    Did you manage to get some shorts in before it hit?
    Pound is about to move if you are looking to hedge out.

    Not financial advice (nor any of my posts), see a financial advisor for such decisions etc.

  • 31 Greg Atkinson // May 6, 2010 at 12:41 pm

    Anon I am not a shorting sort of guy since I am simply not good at enough at market timing to do that. So I just re-balance and move things around as circumstances change.

    I did try and do short term trading a few years ago but failed miserably at it, so I took the hint and have stayed away from trying to be a trader ever since.

  • 32 Anon // May 7, 2010 at 10:52 am

    Latest Jim Rogers comments (via bloomberg)

    ““The market’s overdue for a sell-off,” Rogers, Singapore- based chairman of Rogers Holdings, said in a Bloomberg Television interview. “Being down 3 or 4 percent is a big, big number but that’s hardly panic, not yet.”

    U.S. stocks plunged yesterday by the most in a year in a selloff that briefly erased more than $1 trillion in market value on concern Europe’s debt crisis will halt the global recovery. The Dow Jones Industrial Average earlier fell almost 1,000 points, a 9.2 percent plunge in its biggest intraday percentage loss since 1987, before paring the drop to close 3.2 percent lower.

    While a bankruptcy for Greece will be a “good thing” for the country and the euro, it may result in “great instability” for markets as investors worry about contagion in other economies including the U.K. and the U.S., Rogers said. Investors should “be very careful and cut back” on their holdings if they have any “doubt,” he said.”

    Not advice, just gambling and speculation. Always see a financial advisor for decisions etc.

  • 33 Greg Atkinson // May 7, 2010 at 11:23 am

    Well Anon as you know I have been talking about a correction for a while so this rout is not entirely unexpected for me. Of course in Australia our stock market is getting an extra bashing thanks to Rudd’s tax grab, but I reckon when the dust settles the bargain hunters will move back in.

    I am actually in the mood to top up my holdings in some of my favorite stocks if they fall far enough. Call me silly, but I think the market might now be getting into the oversold area.

    But everyone should remember I purchased shares in Babcock & Brown because I thought they were oversold, so it is probably best to ignore much of what I say 🙂

  • 34 Anon // May 7, 2010 at 11:37 am

    “I am actually in the mood to top up my holdings in some of my favorite stocks if they fall far enough. Call me silly, but I think the market might now be getting into the oversold area.”

    Well ~4485 looks like its holding for now Greg. You can be oversold for a very long time and become more oversold though.
    I did a value scan on the Aussie market but I cant find anything thats screaming cheap imo. Perhaps I am too stingy lol.
    Lets not get too excited yet…May is not over and seasonally June is bad aswell. Happy to reverse if I am wrong tho, but i’ll wait for more price confirmation and give up some upside.

    Previous post:
    “XAO broken support ~4485, at least intraday.
    Will see whether this support can hold at close. If not, next major support closer to ~4,000. Not good”

    Not advice, just gambling and speculation. Always see a financial advisor for decisions etc.

  • 35 Anon // May 7, 2010 at 12:02 pm

    “But everyone should remember I purchased shares in Babcock & Brown because I thought they were oversold, so it is probably best to ignore much of what I say :)”

    A good trick to avoid these dogs is to screen out any company that continually increases debt since listing – up to 10 years. Takes out alot lots of addicted to debt dogs that are eventual time bombs.

    Not financial advice (nor any of my posts), see a financial advisor for such decisions etc.

  • 36 Ned S // May 7, 2010 at 4:55 pm

    Well, what does one say? The Europeans are adding to the uncertainty by changing their rules now too. Greek bonds as collateral – Certainly Mr Papandreou – We wouldn’t want to see your people not have enough money to buy benzene – They are obviously in urgent need of it to burn your banks and your policemen.

    Your average mug couldn’t hope to have any idea of what may or may not be backed by bad debt these days. So “value” investing is out. And with volatility being what it is, I’m not at all sure those stop loss things would keep a bloke as safe as I like being.

    Polite people are still talking about Greek debt; And denying that Portugal could possibly have a problem. But it sounds more like Spain is getting factored in to me? And the real stirrers are still pointing fingers at some of the very high forms of life.

    Now for some levity (courtesy of Satyajit Das): Two investors are walking in the woods. Suddenly they see a bear and one investor starts to run: “You can’t outrun a bear,” the second one shouts. “I can outrun you!” yells the other.

  • 37 Anon // May 7, 2010 at 7:09 pm

    lol Ned! good to have abit of humour.

    Here something to get ya laughin:

    http://www.youtube.com/watch?v=ppEJ8r7bQ2o

    Concentrate from about 58 seconds in. He is giving a webinar just before the market tanks ~1,000 points (DJIA).

  • 38 Greg Atkinson // May 7, 2010 at 7:51 pm

    Liked the joke and the youtube clip 🙂 Anyway this rout will bottom out at some point and is not causing me to panic…yet. I expected a correction a while back and it finally came along with a bang. As I have said many times, corrections are normal but I have to admit this one is a cracker!

    Greek debt, oil spills, a U.K election and a new mining tax in Oz are all doing their bit to shake things up.

    But I expect the world will keep rotating and that the markets will creep up again over the next few months.

    Amazing how investor sentiment changes so quickly. A few weeks many people were talking about how well the global economy was bouncing back, but they seem to be rethinking that view at the moment.

    I suspect that concerns over debt levels will be an issue for a while yet.

    By the way, my pal the Baltic Dry Index is on the rise again after taking a major dip before this correction, so maybe a stock market rally is on the cards?

    Remember my saying for 2010: keep your eye on the BDI 🙂

  • 39 Ned S // May 7, 2010 at 8:00 pm

    Can’t view it unfortunately Anon – But it gave me a good laugh anyway. I can well imagine the response given that it took me back to the time I was diligently refreshing “live” gold prices when they reacted to what I imagine was that 700 point drop in the dow. I had no idea what the hell was happening – But I had every suspicion it was neither usual nor good! 🙂

    The G7 is gunna have a chat and make it all better I see. Maybe, although that Satyajit Das bloke I mentioned reckons this has got another year or two to run with still about $700b in nasties for banks to get off their books:

    http://articles.moneycentral.msn.com/Investing/SuperModels/CreditCrisisOverNotLikely.aspx

  • 40 Anon // May 7, 2010 at 8:13 pm

    The pound is just all over the place. I’m going to completely hedge and neutralize the position it if breaks support. Hung Parliament confirmed and looks abit messy. But risk/reward still looks good to me…perhaps one last big shakeout and then a big multi-month advance?
    Been patient with the sterling, but I must admit my patience is beginning to be tested.

    Not advice, just gambling and speculation. Always see a financial advisor for decisions etc.

  • 41 BP // May 7, 2010 at 8:22 pm

    JFC! Glad I’m in property… . If you fellas need that kind of excitement in your lives, sign up for online poker!!~

    Not advice, just LMAO…

  • 42 Anon // May 7, 2010 at 8:41 pm

    K price action looks bullish…I submitt defeat, had a good run with ALOT of luck. Took off 80% of my shorts.

    Not advice, just gambling and speculation. Always see a financial advisor for decisions etc.

  • 43 Ned S // May 7, 2010 at 8:51 pm

    Das writes lots of great stuff: “In the U.S.A., financial services’ share of total corporate profits increased from 10% in the early 1980s to 40% in 2007.” (Figured it was high but have not seen a figure put on it before.)

    http://www.roubini.com/financemarkets-monitor/258172/interview_with_satyajit_das_on_derivatives_and_the_financial_crisis

    It would be a big ask to expect the Yanks to voluntarily do anything that would affect the profitability of their banks. Although I am reading that a lot of other parties are telling them they have no desire to purchase their financial products again thanks.

  • 44 Ned S // May 7, 2010 at 9:19 pm

    “BP” – There’s a reasonable number of wealthy Europeans starting to feel the same way apparently:

    http://www.wealth-bulletin.com/rich-life/property/content/4058718635/

    Das is scathing on these derivative things – Without actually saying anything nasty about them at all – He just explains who uses them and why:

    http://www.roubini.com/globalmacro-monitor/258484/the_greek_job

    It’s a hell of worry. I’m not surprised the G7 is going to have to a chat and see if they can make it all go away. Noone wants anyone looking at their books in any meaningful way at all I fully expect?

  • 45 Anon // May 7, 2010 at 9:35 pm

    “JFC! Glad I’m in property… . If you fellas need that kind of excitement in your lives, sign up for online poker!!”

    lol Biker. Well this is gambling – i dont deny that ;).

    Not advice, just gambling and speculation. Always see a financial advisor for decisions etc.

  • 46 Ned S // May 7, 2010 at 9:49 pm

    Yes, I told a chap by the name of “Biker Pete” I was going to stay out for a while, but figured this lot was just TOO juicy to ignore. If Das is right, it could be the best case scenario is to hope the djia will still be somewhere about 10,000 in a year or two’s time? – After recovering regularly for a few months at a time and then having another coronary as each successive domino falls?

    It was 10,000 ten years ago. Wonder if it’ll still be 10,000 in 10 years time? 🙂 No wonder the masters of the universe are keen to get some inflation happening!

  • 47 Anon // May 7, 2010 at 10:13 pm

    Well rest time. Been abnormally hectic. Thankfully its only like that during significant corrections.

    “Yes, I told a chap by the name of “Biker Pete” I was going to stay out for a while, but figured this lot was just TOO juicy to ignore. If Das is right, it could be the best case scenario is to hope the djia will still be somewhere about 10,000 in a year or two’s time? – After recovering regularly for a few months at a time and then having another coronary as each successive domino falls?”

    Thats my opinion aswell Ned. Makes sense too given historical returns for shares since the 80s were way above average!
    My targets for the DJIA is 10,920 end of year. Then I suspect all this government debt is going to implode on itself, and act as a catalyst for a couple of successive down years. Might sitout those couple of bad years if it comes to fruition.
    I’m focusing on the late 1930’s…1937 onwards for an idea (guess) of what might happen.

    Not advice, just gambling and speculation. Always see a financial advisor for decisions etc.

  • 48 Anon // May 7, 2010 at 10:17 pm

    “I’m focusing on the late 1930’s…1937 onwards for an idea (guess) of what might happen.”

    SPX historical returns:

    1942 21.74%
    1941 -9.09
    1940 -8.91
    1939 2.98
    1938 17.50
    1937 -32.11

    Not advice, just gambling and speculation. Always see a financial advisor for decisions etc.

  • 49 Ned S // May 7, 2010 at 10:32 pm

    I recall the words of that chap Nadeem Walayat I mentioned a while ago who reckons he’s a trader and a good one – And on being asked what he was invested in, said stocks made up about 30% of his assets (or was it 20% ?) – But either way commented to the effect that he is a somewhat senior chap and that stocks are risky! 🙂

  • 50 Anon // May 7, 2010 at 11:16 pm

    Yep stocks are hugely risky, especially if you cant manage risk properly.
    Are you seeing the DJIA right now, down again! Lucky I didn’t unwind everything! Was hoping to get a decent bounce for a few weeks to reshort.

    Definitely not buying until the dust settles.

    Not advice, just gambling and speculation. Always see a financial advisor for decisions etc.

  • 51 Anon // May 7, 2010 at 11:33 pm

    i’m pissed, I should not have unwound 80% of my shorts. Let the media feed me that bs that there was a bounce comming when I knew otherwise. Ah well I will trust my intuition next time.

    Not advice, just gambling and speculation. Always see a financial advisor for decisions etc.

  • 52 Ned S // May 7, 2010 at 11:38 pm

    Was a bit negative then a bit positive so I stopped looking. Could be they reckon Greece is going under/a bad credit risk regardless of how much money anyone ponies up for them to swallow? I’ve seen a few headlines that indicate that while Greece being “saved” (at least for now) might be the best thing for the EU, it may not be the best thing for the Greeks? But I still come back to the point that without transparency, how can anyone really be expected to invest. As oppposed to having a bit of a flutter! 🙂

    And all the government fiddles to date seem to have continued to be moves away from transparency. It seems to be a real catch 22 in a lot of ways.

  • 53 Ned S // May 7, 2010 at 11:46 pm

    Das doesn’t even seem to think there is much hope of getting transparency in derivatives – Not enough people understand them and the private sector will always pay more money to attract those who do than the regulatory bodies that set out to police them. Plus with 40% of America’s corporate profit coming from financials, just how serious can they really be expected to get regarding regulating them anyway. Mark to Market hasn’t exactly been welcomed back with open arms by anyone I’ve heard of?

    The ftse 250’s getting butchered – Down about 4.5%
    And the djia is down close to 2%
    Don’t think I want to look at how the poor old Oz peso is making out! 🙂

  • 54 Anon // May 7, 2010 at 11:56 pm

    “Could be they reckon Greece is going under/a bad credit risk regardless of how much money anyone ponies up for them to swallow?”

    Maybe, something is going on. Then it could just be fear feeding on itself causing prices to fall further causing more to capitulate and panic.

    “But I still come back to the point that without transparency, how can anyone really be expected to invest. As oppposed to having a bit of a flutter!”

    Its possible to invest, just have gigantic margins of safety before buying anything.
    With interest rates so high I cant find much with enough safety margin. Cash is King! (except in Australian dollars lol)

    Not advice, just gambling and speculation. Always see a financial advisor for decisions etc.

  • 55 Ned S // May 8, 2010 at 12:02 am

    “Cash is King! (except in Australian dollars lol)” – UNKIND!!! But true … Good night! 🙂

  • 56 Anon // May 8, 2010 at 12:06 am

    Unwinding more shorts only 10% left now.

    Night Ned.

    Not advice, just gambling and speculation. Always see a financial advisor for decisions etc.

  • 57 Greg Atkinson // May 8, 2010 at 8:12 am

    Ah Mark to Market..reminds me of the Enron mess! Anyway there is just too much happening at the moment to make any sense of it. The main thing is to avoid reading the trash churned out by most of the Australian financial media since they just leap from issue to issue. One minute they are talking about a mining boom, now they are trying to grab readers by scaring people with horror EU debt stories.

    We just need to relax, take a deep breath and hope the dust settles next week.

  • 58 Anon // May 18, 2010 at 8:38 am

    Buffet Dumping Kraft now.
    Obvious patterns over last several months for Buffet. Lots of selling…some buying into Defensive areas (e.g. Sanofi — albeit his timing was just awful into that buy) and issuing alot of stock and diluting his shareholdings.
    Looks like Mr Buffet feels the market is going to fall (or at least under perform)- albeit he will come up with lots of other reasons in the media.

    http://www.bloomberg.com/apps/news?pid=20601087&sid=a9gbG.S2SCRo&pos=4

    None of my posts constitute financial advice – so do not act on it in that manner. Its just chit chat. Always see a financial advisor for decision making / advice / info.

  • 59 Firebug // May 19, 2010 at 9:19 am

    Hi Anon, ASX has dipped below the support line as you mentioned.

    What is your view now the direction of the market from here please?

  • 60 Anon // May 19, 2010 at 9:23 am

    ALL ORDS 4458.1 down arrow -41.9

    Still above Firebug.

    None of my posts constitute financial advice – so do not act on it in that manner. Its just chit chat. Always see a financial advisor for decision making / advice / info.

  • 61 Firebug // May 19, 2010 at 10:02 am

    Thanks, we may well get to 4,000 before the close of the week!

  • 62 Anon // May 19, 2010 at 10:05 am

    ALL ORDS 4426.5 down arrow -73.5

    ouch its broken intraday! Needs to hold until close tho.

    None of my posts constitute financial advice – so do not act on it in that manner. Its just chit chat. Always see a financial advisor for decision making / advice / info.

  • 63 Greg Atkinson // May 19, 2010 at 10:33 am

    Well I said a correction was coming, but I have to admit I did not think it would push the market below 4500. We have a lot of things working against stocks now:

    – The new mining tax. Outside Australia the tax is getting the big thumbs down except in other resource rich nations where they hope to see the mining companies head their way.

    – The mess in Europe. Nasty, but probably not as nasty as it seems right now.

    – Rumours of a China economic bubble. A slowdown in China would be nasty for the Australian economy and I suspect a slowdown is on the cards. But talk of a “bust” in China is growing and that would send the Austrlaian economy hurtling into a recession in my opinion.

    I was going to post some charts, but the market is moving too much!

  • 64 Firebug // May 19, 2010 at 11:11 am

    Hopefully the RBA will cut the interest rate later this year if / when there is a slow down in the economy.

  • 65 Greg Atkinson // May 19, 2010 at 11:14 am

    Firebug I reckon the RBA raised rates too high too fast already, but what can they do if inflation keeps rising? It all looks pretty messy to me.

  • 66 Anon // May 19, 2010 at 11:42 am

    ALL ORDS 4419.9 down arrow -80.1

    Wheres a link to jaws music.

    Next support ~4278 (altho i dont think this will hold)

    I’m going to keep nimble here. Market is just too volatile.

    None of my posts constitute financial advice – so do not act on it in that manner. Its just chit chat. Always see a financial advisor for decision making / advice / info.

  • 67 Ned S // May 19, 2010 at 11:50 am

    “RBA … what can they do if inflation keeps rising? – A liitle bit of inflation is “good” – And a little bit more will be “more good” I suspect?

  • 68 Anon // May 19, 2010 at 12:54 pm

    Re-shorting Euro/USD with tight stops…this has breached longterm support all over the place.
    Will go long if breaches ~1.235

    None of my posts constitute financial advice – so do not act on it in that manner. Its just chit chat. Always see a financial advisor for decision making / advice / info.

  • 69 BP // May 19, 2010 at 1:39 pm

    Figure a bloke should buy back in at 3200?*
    – Or wait for the 40% property crash instead, Ned?! 😉

    Recent ANZ actions may indicate a fall / stall in interest rates, increased interest in property and an emerging bank battle for property market share.

    Hellzapoppin’

  • 70 Anon // May 19, 2010 at 2:35 pm

    Looks like ~4430 might hold…altho we wont know till close.
    If it does, we should bounce here…but again the market is not cheap..perhaps fairly priced at best?
    I rkn we are still in a rolling downleg, with severe counter-trend rallies to be expected.

    None of my posts constitute financial advice – so do not act on it in that manner. Its just chit chat. Always see a financial advisor for decision making / advice / info.

  • 71 Anon // May 19, 2010 at 3:17 pm

    “Looks like ~4430 might hold…altho we wont know till close.”

    Well that was wrong…we’ve closed below ~4430.
    Not looking too healthy! Possibly more big falls to come unfortunately.

    None of my posts constitute financial advice – so do not act on it in that manner. Its just chit chat. Always see a financial advisor for decision making / advice / info.

  • 72 Anon // May 19, 2010 at 3:55 pm

    Not saying there is any connection here, but this is starting to look eerily familiar.

    Sept 19th 2008
    “Short-selling bans help fuel bank stocks rally”
    http://www.reuters.com/article/idUSLJ31150320080919

    The markets proceeded to crash, after a short rally.

    ——————

    “German regulator issues naked short-selling ban”
    http://www.nytimes.com/2010/05/19/business/19views.html

    None of my posts constitute financial advice – so do not act on it in that manner. Its just chit chat. Always see a financial advisor for decision making / advice / info.

  • 73 Firebug // May 19, 2010 at 4:11 pm

    Hi Greg,

    Will there be any political ramification if the below happens between now and the federal election

    – The stock market goes into a correction to say around 4,000 then sideway moves

    – Aussie real estate market starts to drift down a touch

  • 74 Greg Atkinson // May 19, 2010 at 5:54 pm

    Firebug the first thing that is likely to happen over the next few months is that Swan’s budget forecasts are going to start falling apart if commodities prices keep falling.

    After that maybe people will start thinking about where Australia is going to borrow the money from keep funding Government spending and also keep fueling the housing market?

    I would then suspect many people will start to worry how much debt the Government is racking up and question how well the economy has been managed…or then again maybe not? Perhaps the Government will hand out cheques again to keep everyone happy?!?

  • 75 Anon // May 19, 2010 at 5:55 pm

    What an absolute mis-managed mess!

  • 76 Ned S // May 19, 2010 at 6:04 pm

    Ftse isn’t inspiring confidence is it.

    If Oz stocks even shows signs of thinking about getting to 3200 again Biker, I suspect a good number of older Aussies will be looking for a less volatile asset class to put their “wealth”.

  • 77 Anon // May 19, 2010 at 6:18 pm

    Ftse down…pound rising…more tax receipts and reduced uk government stimulus (well planned) is bullish Sterling!

    “If Oz stocks even shows signs of thinking about getting to 3200 again Biker, I suspect a good number of older Aussies will be looking for a less volatile asset class to put their “wealth”.”

    I’m starting to see retail investors think that way (even tho we are not at 3,200)…thats good signs…means we are closer to a bottom. Still there isn’t absolute panic and capitulation yet.

    None of my posts constitute financial advice – so do not act on it in that manner. Its just chit chat. Always see a financial advisor for decision making / advice / info.

  • 78 Ned S // May 19, 2010 at 6:49 pm

    As a mug, I think I’d be feeling very sad at about 3,800 if that helps Anon? 😉

  • 79 Anon // May 19, 2010 at 6:54 pm

    “As a mug, I think I’d be feeling very sad at about 3,800 if that helps Anon? ;)”

    😉
    Well I dont think we’d go down past that…theres a helluva lot of support in the high 3,000’s.
    The BDI is rising but I suspect the direct correlation is broken. Something does not look right there.

    Probability of US Recession using Treasury Spread:

    http://www.investmentpostcards.com/wp-content/uploads/2010/05/US-recession.jpg

    None of my posts constitute financial advice – so do not act on it in that manner. Its just chit chat. Always see a financial advisor for decision making / advice / info.

  • 80 Ned S // May 19, 2010 at 7:07 pm

    Watch the SSE maybe?

    http://finance.yahoo.com/echarts?s=000001.SS+Interactive#chart1:symbol=000001.ss;range=5y;indicator=volume;charttype=line;crosshair=on;ohlcvalues=0;logscale=off;source=undefined

  • 81 Anon // May 19, 2010 at 7:15 pm

    VIX looks like its heading higher – not good for stock market direction –

    http://stockcharts.com/h-sc/ui?s=vix

    None of my posts constitute financial advice – so do not act on it in that manner. Its just chit chat. Always see a financial advisor for decision making / advice / info.

  • 82 Anon // May 19, 2010 at 7:34 pm

    United States CPI figures out in a couple:

    Prior Consensus Consensus Range
    CPI – M/M change 0.1 % 0.0 % -0.1 % to 0.2 %
    CPI less food & energy 0.0 % 0.1 % 0.0 % to 0.1 %

    None of my posts constitute financial advice – so do not act on it in that manner. Its just chit chat. Always see a financial advisor for decision making / advice / info.

  • 83 Anon // May 19, 2010 at 8:00 pm

    Closed shorts … just have pound longs which i’ve held for yonks.

    None of my posts constitute financial advice – so do not act on it in that manner. Its just chit chat. Always see a financial advisor for decision making / advice / info.

  • 84 Firebug // May 19, 2010 at 8:49 pm

    It’d be an interesting election, I think Rudd will hold it as late as possible

  • 85 Anon // May 19, 2010 at 9:31 pm

    Going Long EUR/USD here. Tight stops

    None of my posts constitute financial advice – so do not act on it in that manner. Its just chit chat. Always see a financial advisor for decision making / advice / info.

  • 86 Anon // May 19, 2010 at 9:45 pm

    I can sense a big Euro short covering rally comming!
    The price action looks like its about to spring.

    None of my posts constitute financial advice – so do not act on it in that manner. Its just chit chat. Always see a financial advisor for decision making / advice / info.

  • 87 Anon // May 19, 2010 at 10:01 pm

    Euro rally needs to break 1.2329 with conviction – for a continuation of the recent breakout.

    ““There simply isn’t any kind of price pressure of any consequence in the economy,” said David Resler, chief economist at Nomura Securities International Inc. in New York, who accurately forecast the decline in prices. “This puts the Fed firmly in place for the foreseeable future.” ”

    http://www.bloomberg.com/apps/news?pid=20601087&sid=aDjc6C46siT0&pos=1

    Bearish USD – Bullish EUR

    None of my posts constitute financial advice – so do not act on it in that manner. Its just chit chat. Always see a financial advisor for decision making / advice / info.

  • 88 Anon // May 19, 2010 at 11:07 pm

    “Euro rally needs to break 1.2329 with conviction – for a continuation of the recent breakout.”

    Broken resistance, i’ve added to Euro longs

    Lots of big players trying to whipsaw people out of positions.

    None of my posts constitute financial advice – so do not act on it in that manner. Its just chit chat. Always see a financial advisor for decision making / advice / info.

  • 89 Anon // May 19, 2010 at 11:34 pm

    Financials are moving…looks like the market has made a short term bottom here.

    None of my posts constitute financial advice – so do not act on it in that manner. Its just chit chat. Always see a financial advisor for decision making / advice / info.

  • 90 Anon // May 20, 2010 at 12:23 am

    Closed EUR/USD will look to re-enter later

    None of my posts constitute financial advice – so do not act on it in that manner. Its just chit chat. Always see a financial advisor for decision making / advice / info.

  • 91 Greg Atkinson // May 20, 2010 at 6:47 am

    My routine now is to look at what happened in Europe & the U.S overnight and if it looks ugly, I try not to watch the Australian stock market during the day 🙂

    I must say Rudd and Swan have the worst market timing skills on the planet. What a time to be talking about raising taxes on miners and suggesting more money needs to got into Super. Doh!

  • 92 Anon // May 20, 2010 at 7:33 am

    “My routine now is to look at what happened in Europe & the U.S overnight and if it looks ugly, I try not to watch the Australian stock market during the day”

    lol good plan, no point going thru the pain twice!

    “I must say Rudd and Swan have the worst market timing skills on the planet. What a time to be talking about raising taxes on miners and suggesting more money needs to got into Super. Doh!”

    Well at least Wayne Swans wife is arguably a good market timer re: her selldown of mining shares 😉

    None of my posts constitute financial advice – so do not act on it in that manner. Its just chit chat. Always see a financial advisor for decision making / advice / info.

  • 93 Anon // May 21, 2010 at 12:15 am

    Bought Citigroup.

    Buy when blood is on the streets…and i’m seeing blood!
    Newbies are trying to short the AUD and short stocks.
    Still could be more downside so i’m only 10% long.

    None of my posts constitute financial advice – so do not act on it in that manner. Its just chit chat. Always see a financial advisor for decision making / advice / info.

  • 94 Anon // May 21, 2010 at 12:36 am

    Shorting the USD and buying Euros for a long term play. Support was VERY STRONG at late 08 levels. USD to continue lose monetary policy with low interest rates (fueling carry trade) and little current inflationary pressures.

    None of my posts constitute financial advice – so do not act on it in that manner. Its just chit chat. Always see a financial advisor for decision making / advice / info.

  • 95 Anon // May 21, 2010 at 8:18 am

    Have hedged AUD exposure…its just utter panic…I am going to seriously load up when the dust settles.

    None of my posts constitute financial advice – so do not act on it in that manner. Its just chit chat. Always see a financial advisor for decision making / advice / info.

  • 96 Anon // May 21, 2010 at 8:54 am

    AUD bottoming unwinding hedges.

    None of my posts constitute financial advice – so do not act on it in that manner. Its just chit chat. Always see a financial advisor for decision making / advice / info.

  • 97 Anon // May 21, 2010 at 9:05 am

    Gonna wait till XAO is down 180+ before loading.

    None of my posts constitute financial advice – so do not act on it in that manner. Its just chit chat. Always see a financial advisor for decision making / advice / info.

  • 98 Anon // May 21, 2010 at 9:16 am

    I’m seeing lots of funds moving into the market here. Hedgies were loading on the djia last night aswell.
    When the snap back occurs it will be fast and viscous.

    None of my posts constitute financial advice – so do not act on it in that manner. Its just chit chat. Always see a financial advisor for decision making / advice / info.

  • 99 Ned S // May 21, 2010 at 10:21 am

    There’s lots of issues of course. But certainly one big one is the possibly of another credit crisis. In that regard, wouldn’t the RBA be correct to keep it’s rate higher than others to attract overseas funds? Plus stabilise the AUD.

  • 100 Anon // May 21, 2010 at 10:22 am

    “AUD bottoming unwinding hedges.”

    Ahh that explains it…i was seeing some huge buying occuring at support…on the news wires it says the RBA might have been defending the AUD.

    None of my posts constitute financial advice – so do not act on it in that manner. Its just chit chat. Always see a financial advisor for decision making / advice / info.

  • 101 Anon // May 21, 2010 at 10:24 am

    Yep Ned, they wont drop rates…and fund managers can only short a currency for so long with a negative carry cost! No to mention our country has one of the lowest government debt to gdp ratios in the world.
    Could be huge short covering rally now with the RBA argubaly comming in on market and buying.

    None of my posts constitute financial advice – so do not act on it in that manner. Its just chit chat. Always see a financial advisor for decision making / advice / info.

  • 102 Greg Atkinson // May 21, 2010 at 10:54 am

    Well at times like this having assets in Japan does not look that silly after all. The Yen has jumped 15% higher against the AUD during this mess.

    As for Oz, the problem with the debt is that a) it is mostly owed offshore and b) Australia is sliding further into debt and our balance of trade is not helping.

    On top of that, households in Oz carry a lot of debt.

    But I guess the miners won’t mind seeing a weaker Australian dollar..good news for exporters.

  • 103 Anon // May 21, 2010 at 11:09 am

    Well i’m done…set my longterm stuff up…stopped at ~40% invested. We might go lower but that would just be the last capitulation…no point trying to guess that! Risk 5%, Reward 20%…no brainer imo! (provided you dont buy dogs and overvalued pieces of crap of course)

    Greg have you loaded up or are you still sitting on your hands?

    None of my posts constitute financial advice – so do not act on it in that manner. Its just chit chat. Always see a financial advisor for decision making / advice / info.

  • 104 Ned S // May 21, 2010 at 11:18 am

    Debt just doesn’t seem to concern Henry and co Greg (for better or worse) – As their line seems to be that we need it to keep developing. (Can’t really argue with that given our low rate of saving – Albeit that an issue a chap a bit smarter than Swanny might have given a bit of thought!)

    But irrespective, their big concern would still be not being able to attract credit I guess?

  • 105 Ned S // May 21, 2010 at 11:34 am

    My concern would be that the markets could still be in for a pretty torrid month yet – Until the G20 maybe? – When the big UK and US banks might really be able to say they’ve figured out what Merkel is up to and just how it may or may not affect their longer term profitability.

    Just a thought from an interested observer.

  • 106 Greg Atkinson // May 21, 2010 at 11:40 am

    Anon I have just been adding a little to stocks I like with the view that I won’t see a return for 2-3 years out, except for dividends.

    I am not in the mood for taking large bites out of the market yet.

  • 107 Anon // May 21, 2010 at 6:17 pm

    Most people think this is silly, but I think for the moment its clear there an above average correlation here (~70%). You would have done well following this over the last 2 years. Be silly not to use it as indicator (for the moment at least).
    Correlation may disappear later – who knows.

    http://www.mrci.com/special/ddji39.php

    None of my posts constitute financial advice – so do not act on it in that manner. Its just chit chat. Always see a financial advisor for decision making / advice / info.

  • 108 Anon // May 22, 2010 at 11:42 am

    Thought this was a great passage by Roger on Market Timing:

    “Cliché 2: Its ‘Time in the market’ not ‘Timing the market’ that leads to success.

    Another cliché that comes to mind is the idea that time in the market is the key to success rather than timing. At the outset, let me state that I don’t believe that timing the market or share prices works. Nor do I believe that time in the market works always, and if it sometimes does, the time can be so long that the returns are meaningless. Take for example the investor who purchased shares in Macquarie Bank at $90 some years ago; they are still waiting for a positive return. Or what about the investor who bought shares in Great Southern Plantation when the company listed? No chance of a positive return at all. If you purchased shares in Qantas or Telstra ten years ago, you would now have an investment with less value than you what commenced with.

    Time in the market is no good if you buy poorly performing businesses or pay prices that are far above the intrinsic value of a company. For the seventeen years bound by 1964 and 1981 the Dow Jones rose just 1/10th of one percent. Time, it seems, was not the friend of the merely patient investor. I can show you equally long periods of low returns on the Australian market too.

    The point however is that time is only the friend of the investor who buys wonderful businesses at large discounts to intrinsic value. Otherwise, time is an enemy that steals returns just as surely as it steals a great day.

    Don’t use time then as a band-aid to heal your investing mistakes. Stick to A1 businesses bought at discounts to intrinsic value and time will be your friend. So what are the businesses that time has befriended the most? What businesses have been increasing in intrinsic value the most over the last three, five or ten years?”

    http://blog.rogermontgomery.com/who-has-time-favoured-the-most/

    None of my posts constitute financial advice – so do not act on it in that manner. Its just chit chat. Always see a financial advisor for decision making / advice / info.

  • 109 Anon // May 22, 2010 at 12:37 pm

    Some contrarian buying signals:

    Sell Anything
    http://pragcap.com/richard-russell-sell-anything

    Fear of a Double Dip could cause one
    http://www.nytimes.com/2010/05/16/business/16view.html

    2010’s coming stock market crash: 1987 all over again
    http://money.cnn.com/2010/05/17/magazines/fortune/2010.crash.1987.again.fortune/index.htm

    None of my posts constitute financial advice – so do not act on it in that manner. Its just chit chat. Always see a financial advisor for decision making / advice / info.

  • 110 Anon // May 22, 2010 at 12:45 pm

    Bullish signs for financials:

    ““We are DONE FOR THE FORESEEABLE FUTURE INVESTING IN LARGE, COMPLICATED FINANCIAL INSTITUTIONS. By “investing”, I mean taking long positions with the view of holding for 9-24 months based on some view of normalized earnings and a forecast of what will happen over the next several years.

    As the war on speculators, banks (indeed entire financial system) rages on, one big US hedge fund has had enough.

    Writing to investors, the fund says it’s now too risky to invest in large financial institutions for anything other than the short-term.”

    http://ftalphaville.ft.com/blog/2010/05/20/237401/we-are-done-with-financials/

    I am overweight financials. Big rally comming for the banks over the next 12 months. Historically financials tend to outperform after a major credit crisis in the proceeding decade. Its enevitable that loan losses/provisioning will/continue to fall…there is no need for credit growth in order to fuel bank earnings…less provisioning will do that.

    None of my posts constitute financial advice – so do not act on it in that manner. Its just chit chat. Always see a financial advisor for decision making / advice / info.

  • 111 Anon // May 22, 2010 at 3:16 pm

    “This opens the chance to buy selected stocks which have been trashed in the stampede, and with the overall market trading on a prospective price-earnings ratio of 11.4 times against the long-term average of 14 times, the equity market is cheap.”

    http://www.theaustralian.com.au/business/opinion/market-correction-will-be-a-buying-opportunity/story-e6frg9if-1225869811232

    Earnings now below historical average…market is not expensive here. Unfortunately we cant expect to get credit crisis 08 prices all the time. If you wait for those under priced extremes, you will be waiting a very long time! I’ve seen value managers underperform (from their investor letters) for 10+ years waiting for prices to fall back to ultra-bargain levels.

    11.4 – ~8.77%
    cash rate – 4.50%

    ~94% Margin of Safety over the cash rate…Benjamin Graham would be happy 😉

    None of my posts constitute financial advice – so do not act on it in that manner. Its just chit chat. Always see a financial advisor for decision making / advice / info.

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