Archive through September 01, 2007
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     holycow
Member
Username: holycow
Post Number: 3091
Registered: 08-2004
Rating: N/A
Votes: 0
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| | Friday, August 31, 2007 - 12:47 pm: | 
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Colin,
Petty is the word. If you have to use the cane, please give H 10 of your best... I think I deserve only 1, ONE ONLY! 
Cheers.
HC
"... he ain't no chart addict, but a TA junkie"
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easymoney
Member
Username: easymoney
Post Number: 43
Registered: 03-2005Rating: N/A
Votes: 0
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| | Friday, August 31, 2007 - 12:52 pm: |
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In response to an earlier question about whether the ASX can rally independently of the SPX or DJIA...
I found it interesting to note the relationship between a few indexes and their daily EMA200. The ASX200 is now about 2.5% above. The SPX500 is almost exactly even. The DJIA is about 2% above. The FTSE100 is about 2% below.
The figures suggest that the ASX is incapable of rallying independently of the US markets, but that the last decade or so indicates that it does rally slightly further in the medium term.
Relating back to fundamentals, as long as the minerals boom runs the ASX will continue to do better than the US markets.
In the next decade it seems likely that the US will become less influential as China and India grow, but the nexus between markets will be with us forever. Only a market that is dominated by local issues can act independently of other markets.
Not wishing to inflame any other issues, but as I've already trodden in the mess, neither greed nor fear is good per se. They simply drive markets in the short term and anybody playing the markets should be aware of the effects of both. There is also a significant difference between the effect of emotions on group psychology and any personal code of conduct. In the medium term, group psychology can take the market into places it doesn't want to be, like now. In the longer term only fundamentals are important.
Two of them say they're Jesus.
One of them must be wrong.
Industrial Disease
Dire Straits
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easymoney
Member
Username: easymoney
Post Number: 44
Registered: 03-2005Rating: N/A
Votes: 0
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| | Friday, August 31, 2007 - 01:29 pm: |
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Resilient1, far be it from me to classify myself as an intelligent bull, but I think your interpretation is somewhat on the negative side over a timeframe of say 5-10 years. It's an increasingly popular viewpoint however, as medium term fear grows to rival medium term greed.
As an example, on the housing affordability and debt issue, the severe dip in affordability is the combined result of the boom in prices and the containment of income growth. As ownership falls out of reach this is creating a boom in rental property and the capital growth in the owner occupier market is disappearing (or possibly reversing).
It is of course those who converting cash to property or property to cash that will be affected. Those who live in their home will always be able to buy the place next door for the same price as they can sell their own.
Over time this will play itself out. We will have a wages explosion and high inflation. Rents will become relatively less affordable and ownership will become relatively more affordable.
The minerals boom will survive over a 5-10 year timeframe and probably longer until the price of energy blows out beyond all recognition. This is perhaps a 20 year time frame.
I'd summarise my position as being neutral to positive over the next 5-10 years compared to developments in the decade after which will dwarf any set of numbers that can be produced today.
Two of them say they're Jesus.
One of them must be wrong.
Industrial Disease
Dire Straits
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holycow
Member
Username: holycow
Post Number: 3092
Registered: 08-2004
Rating: N/A
Votes: 0
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| | Friday, August 31, 2007 - 02:28 pm: |
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AORD vs SPX
EM,
It's interesting to note your comment. When I asked that question, my focus was on sentiment, ie, if the US markets were to be going down, ASX in my view would have problem moving counter-trend (US's trend, that is).
After reading your comment, I went back to check on AORD and SPX - from 1995-2000, SPX was doing better, probably due to tech bubble and easy money. Since 2001, it has decelerated much faster than AORD, also probably due to tech bubble being "pricked". From 2003 onward, AORD was doing much better than SPX as its acceleration was definitely way above that of SPX.
The last bit,... the little hook where both indices are showing, I think is the point worth considering... my view of the market:
1) the rally in ASX has more to do with liquidity inflow than just economic factors - liquidity drives the bull market (esp due to the effect of quant fund operating in ASX). Economy provides the support for its continuation.
2) note the correction from 2001 onward, SPX corrects much more and much faster than AORD, implying liquidity exiting much faster over there whilst AORD was cruising until near 2002, it began to correct - I take that to be due to the prolonged negative sentiment in the US rubbing off ASX.
3) the latest hooking down in both indices - I read that to be both are being affected by the "credit crunch" and both are suffering from liquidity problem. Esp with SPX, it is potentially forming a double top, and based on the current negative sentiment, I am concluding the index will not be able to break higher and remove the threat of that double top. (I may be jumping to early conclusion here though)
And if SPX were to get whacked bigtime, my take is AROD will go down with it, probably subjected to: a) extreme negative sentiment from the US, b) similar liquidity problem.
Cheers.
HC
"... he ain't no chart addict, but a TA junkie"
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easymoney
Member
Username: easymoney
Post Number: 45
Registered: 03-2005Rating: N/A
Votes: 0
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| | Friday, August 31, 2007 - 05:04 pm: |
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Thanks for being gentle with my inaccuracies HC!
I'll retreat to saying that post the Iraq invasion the ASX has outperformed the SPX, and that although coupled together there are extended periods when one does better (or less badly) than the other.
You may well be right about the double top, but the best time to assess any chart formation is when it is complete or nearly complete.
I wouldn't put any more store in the cause of the double hook than I did in the sudden upturn in 83 when the invasion of Iraq was announced. I believe both had more to do with herd mentality than anything fundamental. Same with the minicrash of 87.
Liquidity is definitely an issue, but in Australia a significant amount of money is in the form of superannuation funds and most of the super funds are compelled by their rules to be 100% in the market all the time. This is having a significant buffering effect. The constant pumping of a big proportion of 9% of all wages into the market must have a buoyant effect. They've got to buy something!
(Message edited by easymoney on August 31, 2007)
Two of them say they're Jesus.
One of them must be wrong.
Industrial Disease
Dire Straits
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holycow
Member
Username: holycow
Post Number: 3093
Registered: 08-2004
Rating: N/A
Votes: 0
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| | Friday, August 31, 2007 - 05:20 pm: |
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EM,
1) I agree with your view on double top. Now is too early to assume that.
2) On super fund "swimming" in the market, this one, I think I will temporarily put a "?" because I can't see much difference before and after the rule change.
3) Today's market action kind of tell me there don't seem to be a lack of liquidity though, not quite sure if it has anything to do with option expiring yesterday or not?
...regardless, next time if anyone hear me saying "the bull market can't rally much without the banks... blah blah blah", please remind me to buy some bank stocks right away!
Cheers.
HC
"... he ain't no chart addict, but a TA junkie"
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captain_chaza
Member
Username: captain_chaza
Post Number: 2661
Registered: 02-2003Rating: N/A
Votes: 0
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| | Friday, August 31, 2007 - 07:48 pm: |
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Ahoy Officers Holy Cow, Resllient #1 and Sea-Cadet #54
Would a 1%-2% Interest rate cut in America do the trick this time
Executed monthly at the rate of 0.25% /month if the rate of Inflation allows ?(refer Eco-Pol 101 )
It worked last time under the watch of Fleet Commander Greenspan
"Steady as she goes" he used to say
Yes! It seems I am the Lonely Bull ATM
But I prefer you call me The Bear Hunter
It's more sportsmanlike IMO and does not attempt to hide under the cover of a "Long Termer " for all its excuses for failures in the near term
Salute and Gods' speed for you all "Sooner or Later"
ie: Depending on your timeframe? LOL!
"While we stop and think, we often miss our opportunity." Publilius Syrus, 1st century B.C.
"I believe the future is only the past again, entered through another gate."
Sir Arthur Wing Pinero 1893
"There are two times in a man's life when he should not speculate: When he can't afford it, and when he can." Mark Twain, 1897
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hilarius
Member
Username: hilarius
Post Number: 2845
Registered: 04-2004
Rating: N/A
Votes: 0
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| | Friday, August 31, 2007 - 08:17 pm: |
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Good Evening
I am indebted to my good friend Rudy for pointing out that the XAO made an important high today
The question now is whether the next leg down will stop above or below the low of August 16
This will determine for me whether the market is in technical recovery or not, with a strong volume bounce off a new higher low being bullish
Of course even a technical recovery can be a bear trap, so I take on board the wisdom of HC's advice to proceed with caution
Hilarius
I come in peace to share my thoughts and to shine my candle light on possible long term opportunities
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easymoney
Member
Username: easymoney
Post Number: 46
Registered: 03-2005Rating: N/A
Votes: 0
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| | Friday, August 31, 2007 - 08:30 pm: |
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HC,
you are right to question the effect of super. It is as yet only an untested theory. We'll all know in 10 years time!
I think that if the effect of the super funds is showing on your very useful chart, it is probably twofold. First the reduction in jaggies since maybe 2003, and secondly in the slow motion correction we've just had.
The other thing to bear in mind is that because the super scheme has been running for a relatively short time (a decade or so) the proportion of super money in the market is growing relatively quickly (maybe 10% per annum) so the effect will only get bigger.
I can't back it up but I just have a feeling that we will see choppy seas turn into major swells. This is largely based on one the reasoning in the Rich Dad Prophecy book. If he's right we're in for a HUGE rise followed by a MASSIVE crash. Everybody will see it coming and nobody will be able to prevent it.
As for the banks, they are almost perfect money making machines. The only better ones are income tax and the GST!
Captain, I have no idea what an interest rate cut would do to the fundamentals and I respectfully submit that those making the decisions also have little idea. Everybody is driving down the road with the eyes firmly fixed on the rear view mirror!
You may be a lonely bull, but you are not alone. The ASX200 will reach 20,000 (but not this year).
Two of them say they're Jesus.
One of them must be wrong.
Industrial Disease
Dire Straits
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captain_chaza
Member
Username: captain_chaza
Post Number: 2663
Registered: 02-2003Rating: N/A
Votes: 0
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| | Friday, August 31, 2007 - 10:52 pm: |
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Do you Silly Bears give up now??
Sorry! This Captain takes no prisoners!!!
Salute and better luck in your next life in the near term
PS Officer Easy You said
"Two of them say they're Jesus.
One of them must be wrong."
From my limited experience with these sort of fundamentalists /fanatics I would bet they are both "LIARS"
(Message edited by captain_chaza on August 31, 2007)
"While we stop and think, we often miss our opportunity." Publilius Syrus, 1st century B.C.
"I believe the future is only the past again, entered through another gate."
Sir Arthur Wing Pinero 1893
"There are two times in a man's life when he should not speculate: When he can't afford it, and when he can." Mark Twain, 1897
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lafee
Member
Username: lafee
Post Number: 656
Registered: 04-2003
Rating: N/A
Votes: 0
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| | Saturday, September 01, 2007 - 12:09 am: |
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Captain,
Your not the only bull.
Are you ready to chase some US specs with me?
Cheers Lafee
Don't ask an academic if what he does is relevant
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ingot54
Member
Username: ingot54
Post Number: 1917
Registered: 05-2004
Rating: N/A
Votes: 0
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| | Saturday, September 01, 2007 - 12:56 am: |
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Good evening Captain
I'm with you - anyone can see that the Bears have it wrong ... again.
The chart below clearly shows a bounce, and an uptrend.
I'm in!
Keep Smiling - Don't look back
Trading style: Chartist Artist _ Breakouts and Shakeouts.
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hilarius
Member
Username: hilarius
Post Number: 2846
Registered: 04-2004
Rating: 
Votes: 1
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| | Saturday, September 01, 2007 - 07:47 am: |
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Laissez Faire Economics
The words mean literally "let things happen"
It can even mean "let anything happen"
This is exactly why it was discredited as an economic system after it was put forward some centuries ago
The incidence of slavery and child labour put paid to any idea that uncontrolled market forces would produce the greatest good
The statute books of the world are now filled with legislation designed to limit the adverse impact of market forces. We no longer have laissez faire economics.
That was made crystal clear when the USA introduced monopoly breaking laws in the pre WW2 period and the ACCC continues that noble tradition.
My reference to American alarm at dangerous food imports (and I could mention also the scandal about the use of lead paint in childrens toys) was legitimate and needed no abrasive response
Laissez faire as a system is dead and will thankfully never be revived
I am a lifelong opponent of the idea that market forces can be allowed to operate in a moral vacuum, and references to laissez faire will always engender my heartfelt opposition. Laissez faire is not a magical cure for systemic problems, and indeed can often be a cause of them
It can be argued that the present turmoil in some financial sectors is a direct result of inappropriate reliance on laissez faire
All that said I agree that bailing out the abusers of the financial system with rate cuts is by no means the most appropriate response to the difficulties
Elsewhere I have referred to rate cuts as like pouring petrol on the flames of financial irresponsibility
That said there is a point where confidence becomes so damaged that the innocent are being hurt along with the guilty
The USA Federal Reserve is being absolutely responsible in saying that it will use its powers to prevent a wholesale collapse in confidence
Bull and Bear Markets
Yesterday the XAO made an important higher high. It remains to be seen whether that will be cancelled out be a new low below the August low. If there is a higher low the potential for a resumption of the bull market will be in place. I am open to either possibility but see no weight of evidence in favour of the bear case. There is considerable weight of evidence for a continuation of favourable world economic conditions. I provide the BHP chart as evidence that this particular engine of economic activity is alive and well.
An end to confidence is not impossible but the case for it has not yet been made. I agree that if confidence was shattered the effects would be large. I see no point in predicting doom before clearer evidence is available.
With Best Wishes
Hilarius
I come in peace to share my thoughts and to shine my candle light on possible long term opportunities
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