Archive through March 20, 2008

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captain_chaza

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Post Number: 3098
Registered: 02-2003

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Wednesday, March 19, 2008 - 01:50 pm:

My apologies!!!

"WRONG THREAD"

Salute and Good Luck

BTW
How's it going interpreting the virtues of the poems of Virgil? LOL!!!

PS: 'twas an honest mistake!

"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

deanrosario

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Post Number: 1385
Registered: 11-2002

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Wednesday, March 19, 2008 - 02:01 pm:

As we enter the home stretch today I'm not sure what we can interpret from today's action on the XJO.

As the 60 minute chart shows, apart from the opening hour's exuberance as we caught up with overseas markets, there's been no real direction on the XJO.

There's been a bit of intraday resistance around 5270ish in the recent past (see chart), so if this fails to hold in the last hour I reckon we'll head back to today's support level, which was 5230ish, however, 5250 may be a more attractive "round number"!

Then it will be a nervous night for those with open positions as the US does its thing.

PS: Index futures expire at noon tomorrow so expect huge pre-open orders and a fair bit of volatility during the opening 1/2 hour.

(Message edited by deanrosario on March 19, 2008)

"Never commit yourself to anything you can't walk away from in 30 seconds." Neil McCauley (played by Robert de Niro) in 'Heat'.

"Hope is a dangerous thing. Hope can drive a man insane." Ellis Boyd "Red" Redding, played by Morgan Freeman, in 'The Shawshank Redemption'.

ody

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Registered: 10-2006

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Wednesday, March 19, 2008 - 02:22 pm:

COMMODITIES

Resillent,

An interesting graph, for spot prices. Personally I don't buy anything other than equities (e.g. not bars of gold etc.), and the following graph for metals and mining on the ASX during the last year gives me very mixed feelings about this sector of the market, although from a fundamental point of view I would think it is a more solid and sound proposition than e.g. financials.

http://www.tradingroom.com.au/apps/mkt/indexChart.ac?idx=XMM

ody

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Wednesday, March 19, 2008 - 02:38 pm:

FINANCIALS

The market has today attracted a number of enthusiastic buyers of e.g. banks, who are either interested in a short rally (fair enough, for as long as it lasts), or feel that somehow something important and positive has happened because the Fed has once again cut rates, while the results of two American banks, though bad enough, were not as bad as those of Bear Sterns. In short, if one trades anything in this sector at the moment, it would be sentiment, nothing substantial, and that sentiment can change around literally by the day, in the case of banks, because that is where the truly bad news tends to be concentrated. It's not a sector I'll be buying into until we have some solid evidence of intrinsic improvement, rather than declining earnings, exposure to bad debt, the likelihood of a recession and the possibility of a depression, etc. For the short-term speculator, however, who thinks that a change in sentiment has occurred which has some real mileage in it, this sector would of course look attractive from a contrarian viewpoint. There is no denying that these stocks have been battered, although jumps like we have seen today will probably not be sustained for long!

ody

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Wednesday, March 19, 2008 - 02:55 pm:

WALL STREET FUTURES ...

are down, though not by much as yet. It wouldn't surprise me if the outsized lift we saw overnight brings out sellers who tonight will want to take advantage of those who are optimistic about US equities. Most people of good sense are not, and would not want to hold them for any length of time (as distinct from short-term trading). We had another big rise only just recently which was snuffed out before you could spend much time looking at it. And, of course, if American optimism, such as it is, is not sustained, certainly our own market will be sold down again as well.

We still are solidly in a bear market: it can be exploited by short-term traders, although at considerable risk, but is best avoided by medium or even longer-term investors who will still have plenty of chances to buy good stocks at low prices, but on a more solid foundation than we have at present. Remember, it is the money OVER THE YEARS which you make and hang on to which will establish and preserve your wealth over the longer term.

coyotte

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Registered: 12-2002

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Wednesday, March 19, 2008 - 03:20 pm:

quote : As the 60 minute chart shows, apart from the opening hour's exuberance as we caught up with overseas markets, there's been no real direction on the XJO. un-quote

looks awfully like a Bear Flag ?

The "Sea of Uncertainty" is defeated by the nimble vessel "Probability", not the unwieldy vessel "Prediction".

hilarius

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Registered: 04-2004

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Wednesday, March 19, 2008 - 09:01 pm:

I agree with Ody's last post

Disappointment seems to set in after each burst of hope

Still no-one has answered my repeated question ... who profited from the sale of the dud financial instruments?

Someone did ... remember they actually got cash for what they sold on to others who are now writing off large portions of what they bought

Who is holding the buried treasure?

For every buyer who is writing off large amounts there is a seller who avoided that necessity and who received top dollar for what they sold

Finally there seems to be consensus that the baddies ought not to be bailed out ... while the goodies need support

Interesting that many argued for a free market system with zero morality ... now the lack of morality has produced its inevitable result ... fear and panic

Suddenly morality is looking a whole lot better

Perhaps we need a register of morally run star stocks whose directors see the importance of long term benefit to shareholders over short term self aggrandisement

I still believe there are those who have kept their heads in the midst of all the immorality and greed

We should honour them ... and in due course their companies, their employees, their shareholders, their suppliers and the entire economy will prosper as those with decent moral standards and related financial performance gain greater recognition

With Best Wishes

Hilarius

I come in peace to share my thoughts and to shine my candle light on possible long term opportunities

coyotte

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Wednesday, March 19, 2008 - 09:12 pm:

probably wrong hilarius, but i still maintain that nobody got the trillions of $$$$s , because it is yet to be created/earned/payed-back/printed --- reading in one of the posts that they where leveraged at 1:20, so the 19 is yet to be created.

The "Sea of Uncertainty" is defeated by the nimble vessel "Probability", not the unwieldy vessel "Prediction".

ody

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Wednesday, March 19, 2008 - 10:16 pm:

NEED WE SEE YET MORE EVIDENCE OF A NATION GONE CRAZY?

The following is real material I found on CNN just now:
-----------------------------------------------------------
MORGAN STANLEY IMPRESSES WITH EARNINGS

Wall Street firm reports 33% decline in profit, but results stay ahead of forecasts. Shares climb in pre-market trade.
-----------------------------------------------------------

This has become the new way of looking at things in the US today. The NORM has become Bear Sterns - i.e. virtually complete failure, and this we try to deny to ourselves, as Americans, or we extend a helping hand, or shove it under the carpet. A CAUSE FOR JOY is found when forecasters think that a stock's profit will have declined by, say, 50%, and it has in fact gone down by a smaller amount. NEVER MIND IT IS A LOSS: THE RESULT IS BETTER THAN WE EXPECTED, SO HAPPY DAYS ARE HERE AGAIN.

This country in recent years has, I believe, gone crazier and crazier. It would probably be unwise (however attractive) to blame George W. Bush for everything. Alas, he is probably as much a symptom of a sick country as the cause of its sickness - a disease that found a ready welcome in a body already sick.

But the fun goes on. First a big climb of about 4%, slavishly echoed by e.g. Australian followers (how embarrassing ...). Then, a bit more time, and the Europeans are now providing the lead in taking their markets down again. Futures for Wall Street are also in the red, but ... not that much, for, after all, Morgan Stanley has awarded us with joy, so that stock is 3% UP in pre-trading.

rdumas

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Thursday, March 20, 2008 - 07:35 am:

Would all bungy jump contestants please take their places

Based on the Australian ADRs on the NYSX over night the commodities are going to get a hit in the eye today and bring down the rest of the market as well. Extract below:

For Australian ADRs listed on the NYSE, BHP Billiton dropped $4.72 (6.87%) to $63.99, Rio Tinto Plc shed $34.78 (8.08%) to $395.50, News Corporation lost 2 cents (0.11%) to $18.69, ResMed dipped 71 cents (1.68%) to $41.52, Telecom Corporation of NZ declined 47 cents (2.98%) to $15.29 and Westpac slid 76 cents (0.7%) to $107.49.

deanrosario

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Thursday, March 20, 2008 - 08:24 am:

Yes Rudy XJO futures are indicating the XJO will drop around 100 points at the open and, since 2008 March XJO futures expire today, there could be a bit of volatility as futures traders roll over their holdings from the March 2008 to the June 2008 instruments.

Based on the 60 minute chart, I see the intraday resistance and support at 5220ish and 5170ish respectively, but if the 5170 support breaks within the opening 30 minutes, I'd expect a test of 5150.

Of course, with Aussie markets closing at 2:30 p.m., traders will have 90 minutes less than usual to decide what they want to do pre-Easter holiday.

Also worth considering is the fact that, subsequent to the ASX close today, the US will have two trading sessions prior to the opening of the Aussie market post-Easter.

ody

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Thursday, March 20, 2008 - 08:57 am:

Rudy and Dean: as you say

New York (almost) predictably gave up most of its big gains within a day, and our own shares were certainly not spared. I must say I am particularly reassured that resources stocks have been battered of late, as I felt they had gone up too much in relation to the rest of the market and might continue to be seen as a "safe haven" (for speculation). But it looks as though I need not have worried: they too are now clearly in the grip of "de-leveraging" - the ruling pattern and trendy term of the day.

And de-leveraging is what we SHOULD see: all the people who have been investing irresponsibly and who have thus artificially pumped up the prices of shares should be duly punished with losses - though that is not how it will work: some of them will be but others won't and many innocent people will be punished instead. But, with day to day changes of magnitude, matters are now also getting harder for very short-term traders, and the total pattern seems towards the "big purge" that I have been looking forward to for months. Until most of the irresponsible money has been shaken out of the market and a significant number of people who shouldn't be there are removed from it it won't be a remotely reliable place to be.

I have serious doubts about the supposed desirability of the banks at this juncture, for I think that the almost daily bad news (sometimes wrongly seen as "good" when not as bad as expected!) will continue, and that you may strike it lucky with an upward movement, but will just as readily get knocked over the head. The banks at this point are not a comparable proposition to resources on 22 January. The fall we saw then was a classic big bear fall, which usually provides the first strong bear rally, as duly happened. Resources had inherent strength and were clobbered, so it was unsurprising to see them go up for a while. That stint - particularly as matters in general have turned out to be FAR worse than they looked even on 22 January - appears to have ended, for the time being. Banks have, in contrast to resources, been mired in difficulties on an ongoing basis, and cannot just jump out of those. As well, we have far more rapid zig-zagging in the market now, so to speculate in the bank area will be a pretty hazardous game. Even short-termers won't find the going nearly as easy as it was in post-22 January resources.

And for anyone other than short-termers it remains a matter of standing aside while the crash continues: don't be tempted to jump back in too early. Sure, by waiting longer you may miss an opportunity, but you are also likely to buy more safely. There is still plenty of rot. Do NOT listen to people like Ian Huntley who argue that "the companies haven't changed": they may well try to continue to do their usual thing and be good at it, but their CIRCUMSTANCES have changed, and it always amazes me when people think you can isolate the prices for companies from the environment in which they must make their money. That environment is, for most, MUCH worse than before, so there is every reason to think that if you buy a company now it HAS changed. For the most part that means that its prospects are less good. That, in turn, then means that people will continue to avoid buying, and will often still sell: until it looks as though most of the rot in markets and economies has been removed, and we can start build on whatever strength remains, with the debris well and truly visible, as it should be. So far too much of it is not. The artificial actions of Americans still continue to obfuscate far too much of the reality we must confront.

Dean: I think all the factors you mention as special for the market today are real and important, and should impact. On the other hand, as the day is short, many may not even get round to acting!

ody

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Thursday, March 20, 2008 - 09:09 am:

Another good overview (I feel) from FnArena's Greg Peel, hitting the main points right on the head. He might have added: most banks "re-crucified". And let us thank the Lord for the "de-leveraging" that he is describing. Matters will not be OK until most of these absurdly overgeared people are gone. We are in classic bear territory now - though the figures are different, many of the inevitable developments are duly occurring, in the style of the 1987-92 period.
----------------------------------------------------------
The Overnight Report: Dow Fails, Commodities Crucified
FN Arena News - March 20 2008

By Greg Peel

The Dow closed down 293 points on its lows or 2.4%, while the S&P gave back 2.4% and the Nasdaq 2.6%.

It's heartbreaking stuff, but it may yet prove to be all part of a protracted bottoming process.

Just when Wall Street believed it was safe to go back into the financial sector water news came out that Merrill Lynch may have to write-down a further US$3bn which it had not anticipated. This is due to an insurance firm questioning its obligations to pay Merrills on coverage of US$3bn of credit default swaps. Merrill Lynch intends to sue the insurance firm to recover the money, but another seed of doubt has been sown in Wall Street's financial sector.

The news overshadowed a first quarter result from Morgan Stanley which mirrored the results of Goldman Sachs and Lehman Bros yesterday. Morgan lost 42% compared to the same quarter last year, but it did beat the Street on earnings estimates. Its shares rallied initially on the news, until Merrills-related selling saw them pull back to only a slight gain.

It was not the case elsewhere in the sector. After euphoric gains yesterday, Merrills lost 8%, Goldmans 5%, Lehman 9% and Bear Stearns 11%, for what the latter is worth. The commercial/investment banks held up better, with Citigroup only losing 1.5% and JP Morgan 0.5%.

But while the financial sector turnaround was disappointing, the sector that really copped a beating today was materials.

The word on the Street is that in light of the Bear Stearns collapse, the implications thereof for all investment banks, and the lifeline provided by the Fed rescue package, investment banks are telling their hedge fund clients that the days of extreme leverage are over. At the very least, positions running in the realms of 10x leverage will need to be pulled back to more like 5x. To achieve this, hedge funds are thus forced to reduce some of their high leverage investments.

And what has been the popular target of hedge fund investment lately? Commodities. Last night saw a major rout across the commodity spectrum, from gold to oil to metals and grains.

Gold fell US$37.90, or close to 4%, to US$943.50/oz. Silver fell US$1.28, or 6.5%, to US$18.37/oz. Platinum, which traded close to US$2300/oz this month, has now fallen to US$1907/oz.

Oil fell US$4.94, or 4.5%, to US$104.48/bbl. Oil was not helped by the weekly figures that showed demand