Archive through June 04, 2008

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deanrosario

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Post Number: 1418
Registered: 11-2002

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Friday, May 30, 2008 - 03:20 pm:

XJO's end to the month is getting ugly - the index has just breached the 5650 support level.

It really needs to bounce now or, in my opinion, we may see a selling frenzy in the last hour that takes us back to where we were at the start of the month - i.e. 5600ish.

Although, Mr Fibonacci may bring a halt to proceedings today around the 5630 level.

The bulls don't seem to be the slightest bit interested in buying at most support levels.

"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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Post Number: 2503
Registered: 10-2006

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Friday, May 30, 2008 - 03:47 pm:

Dean, - That bounce has meanwhile come, although we still have some time left. But it seems pretty clear. However, I don't cling to the belief that it is major support, as all in all the pattern has recently been down far more than up, and for perfectly understandable reasons (i.e. not arbitrary ones). It is difficult to say just when we'll go through this support level, but I do think it is more a matter of when than if. In general the mood of the market is "corrective" and has been for several days now - i.e., I think we are seeing a pattern.

Could, all in all, become a W shape:

1. Down in Nov/Dec.
2. Up (seemingly strongly) from March (where it ended up after an intermediate rally) - up on diminished fears about credit crunch.
3. Now down, in a correction of 10% or so (could be more) - mainly on oil/inflation/slow growth.
4. Not down all the way to March, though, or even if we did go that far, the pattern would probably still be corrective, with the market going up once it feels improvement has occurred in relation to BOTH the credit crunch AND oil/inflation. But we'd need a fairly clear catalyst to pull it up again. In the meantime the drivers are for the market to go down. And the oil/inflation situation needs to be under control for people to feel at all safe about buying.

kate

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Post Number: 885
Registered: 04-2005

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Friday, May 30, 2008 - 04:14 pm:

Dean
Resources are down, I have a feeling oil is going to tumble soon and gold is down. The USD up. None of that is good for our market. Financials might have some short term gain but looking at the makeup of the XJO its unlikely to make up for the resource losses.

Regards
Kate

Rudy, someone said recently the only things holding up the S&P500 are the oil stocks. I wonder how true that is?

ody

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Post Number: 2504
Registered: 10-2006

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Votes: 0


Friday, May 30, 2008 - 04:48 pm:

Kate: oil

I agree with your reading of the market, in that one by one the standby sectors tend to give way. In varying degrees, admittedly. Health hasn't been too bad, as neither has energy. But, as for the latter: as you will have noticed, resources in general (yes, even gold!) are now definitely down as people like you and I have been saying for some time would happen. Things don't go up for ever.

Oil has a huge advantage in being a very much needed commodity and one that can easily be manipulated. Nevertheless, history has repeatedly shown that its high price eventually does not last, BECAUSE IT IS IN PART (ONLY IN PART) INVARIABLY DUE TO SPECULATION. So even in a case of real "need", like now, funds are exposed to oil in a huge way, and the target in people's minds, psychologically, seems to be $150 or somewhat below (for MOST people, I mean). If that is so, then investors will try to push the price up to whatever is the implicitly agreed maximum, but once they come close they will all begin to fear that it will be sold down, and will therefore sell AHEAD of the target. If then there emerges anything like a sell-off, the fall could be quite significant. This is pretty much what has been happening to resources recently.

I do not imply that such sell-offs will necessarily last for long. On the contrary, I think that all in all oil will stay high, and be one of the things partly to wreck the world economy, together with high prices for other things that cannot be kept down. It's not parellel to gold, as it is an essential ingredient to keep the world going, quite literally.

Rudy will know better than I what to think of the overall strength of the market, i.e. what else than oil may hold it up, and to what extent.

PS: I don't have much faith in the financials or ANYTHING to do with our own, domestic economy. All in all, our gains will continue to come from resources, hard and soft, that other countries need. Plus a few areas of skill which we can supply, as in the case of CSL and Leighton. Here at home ... costs are very high and will go higher if the A$ doesn't stay at lofty highs. Interest rates are high. The economy is shrinking, and will do so further as people refuse to spend as much as they did previously. Residential homes are at risk of a downturn. So you get an internal flow-on effect. Little real growth, but higher prices in essential areas like food. Not good at all - exports will be of the essence.

(Message edited by ody on May 30, 2008)

rdumas

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Post Number: 1431
Registered: 11-2006

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Friday, May 30, 2008 - 04:58 pm:

Hi Kate,

I'm not sure why someone would come to that conclusion. I'm assuming that oil in the S&P500 comes under the Energy Sector which as you can see only represents 14% of the S&P500 weighting.

Regarding the resources, the materials index today fell heavily through a very strong support level shown by the orange line on the chart below. That is a pretty serious event and doesn't bode well for our overall market because its been the resources sector that has been the back bone of our market since the bear market commenced.

How far will it fall ??? That is the burning question. Currently we are sitting 4.7% above the 30 week EMA which is a likely bounce point.

Should it break through that support and head down to the bottom of the bull channel then we would be falling around 14.4%. That would create a situation which would have us re-visiting the March 2008 lows and Eugenio's bet with me would be in real jeopardy.

My current investment strategy has be buying my second tranche of shares after a further drop of around 10%.

ody

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Post Number: 2505
Registered: 10-2006

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Votes: 0


Friday, May 30, 2008 - 10:44 pm:

US NOT LOOKING TO BAD AHEAD OF TRADING

Oil is definitely less expensive and falling a bit right now, and a number of other US news items were not depressing either, so, with European markets in full swing, it looks as though Wall Street will be up. I can't wait to see what it will get to, but am not going to stay up for the purpose!

paddy

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Post Number: 108
Registered: 03-2008

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Friday, May 30, 2008 - 11:12 pm:

INDU today : My estimate is somewhere around 12790 - 12820 .

Regards,

Paddy

ody

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Post Number: 2506
Registered: 10-2006

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Friday, May 30, 2008 - 11:24 pm:

OIL MOVING UP AGAIN ...

You just shouldn't open your mouth these days, as the moment you say something an event will contradict you. Now oil is UP again:

BANGKOK, Thailand (AP) -- Oil prices climbed towards $128 a barrel Friday ending a decline of more than $4 in the previous session helped by a huge unexpected drop in U.S. crude oil stocks.

A "huge unexpected drop in U.S. crude oil stocks" is not a good thing, for the price of oil.

ody

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Post Number: 2507
Registered: 10-2006

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Saturday, May 31, 2008 - 06:44 am:

US IMPRESSIONS (FROM CNN)

Nasdaq up, but
-----------------------------------------------------------
... the broader market struggled amid rising oil and gas prices and a mix of economic news that did little to temper fears about a slowdown.

The Dow Jones industrial average (INDU) lost a few points, according to early tallies. The broader Standard & Poor's 500 (SPX) index gained 0.2% and the Nasdaq composite (COMP) gained 0.6%.

Stocks sank last week as oil prices hit an all-time high around $135 a barrel and investors backed off ahead of a long Memorial Day weekend. But this week, stocks have been on the rise as the dollar has firmed up and oil prices have backed off a bit.

A Thursday report showed first-quarter GDP growth was better than initially reported, while Friday's economic news was mixed. Reports showed an uptick in personal income, in-line inflation, weaker consumer sentiment and continued weakness in manufacturing.

"The reports this morning basically confirm a continued sluggish economy," said Tom Hepner, financial adviser at Ruggie Wealth Management.

Stocks rallied from mid-March through mid-May as investors breathed a sigh of relief that the worst of the credit crisis appears to have passed. Since then, stocks have slumped on the rise in oil prices and bounced back this week.

That rangebound trading is not likely to change anytime soon, Hepner said, as investors move through the often tricky third quarter.

-------------------------------------------------------

Oil doesns't show any real signs of coming down and all in all, according to the LATEST round of news items,the US economy appears to be weakening still, with nothing powerful to help it upwards. When that is so, you have sideways trading at best, but - in the absence of a "catalyst" - more likely a continuation of the downward trend of which we have had signs. Any profit downgrade will be punished, anything like an expected report will not be rewarded, and only unexpectedly HIGH results might get a guernsey.

All in all it remains better, probably, to prepare for a further decline in the market rather than the possible slight rise that looked possible before Wall Street opened. A convincing RALLY, at least, looks unlikely. I think the markets in essence still want to correct, and that the green we saw in Europe does not really establish a countertrend: such a move would need to last, and it looks too weak for that.

rdumas

Member

Post Number: 1432
Registered: 11-2006

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Votes: 0


Sunday, June 01, 2008 - 08:54 am:

MARKET WRAP

S&P500

The action of the S&P500 on Friday night did not give a clear direction because it formed an 'inside day' candle' which none the less was still giving a topping type indication for this index. I am therefore assuming a down ward bias from the US market.

Our Market

To see where our market may go in the short term I would look at the two main sectors in our market, namely the materials and financials (ex. LPTs). These two sectors do tend to drive our market and are almost equally weighted (materials ~28%, financials ~26%).

Materials Sector

The materials sector has clearly broken down through a key support last week and is heading to the nearest support level indicated on the chart below by the blue line which is approximately 3% below the current level.

Financial Sector (excl LPTs)

This sector is currently consolidating just below the recent support level (orange line) and will more than likely head down towards the next support level indicated by the blue line which is around 5.2% below the current position.

Averaging out the two downward moves (3+5.2)/2 = 4.1%. Our current level on the XJO is 5654.7 therefore a drop of 4.1% would give us a level of 5423. This happens to coincide with the next support level on the XJO of 5427 indicated by the blue line on the chart below.

I would suggest that this is a reasonable target for the XJO in the short term.
.

deanrosario

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Post Number: 1419
Registered: 11-2002

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Votes: 0


Monday, June 02, 2008 - 11:37 am:

Retail Sales Figures for April 2008 (released 1130 a.m)

Reg: abs.gov.au

SEASONALLY ADJUSTED ESTIMATES

- turnover for the Australian Retail and Hospitality/Services series decreased by 0.2% in April 2008.

- This follows a revised increase of 0.2% in March 2008 and a decrease of -0.1% in February 2008.

Industries that had a decrease in the seasonally adjusted estimate were:
- Food retailing (-1.1%)
- Recreational good retailing (-1.2%)
- Other retailing (-0.7%)

Industries that had an increase in the seasonally adjusted estimate were:
- Department stores (+1.9%)
- Clothing and soft good retailing (+2.9%)
- Household good retailing (+0.4%)

end abs data

Dean's analysis:

- Not sure what to make of the data
- it seems we are spending less on food but more on some discretionary items!

Again it must be noted that the figures refer to dollars spent, so it could just be the unit cost of items is going up (and we know that is the case) but we are buying less volume.

RBA Cash Rate decided tomorrow.

kate

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Post Number: 888
Registered: 04-2005

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Votes: 0


Monday, June 02, 2008 - 11:45 am:

Hi Rudy

Tried looking for something to support the comment about the oil stocks over the weekend to no avail then this morning there was a comment in AIR.
When you open the link read paragraph 4&5.

http://www.aireview.com.au/index.php?act=view&catid=8&id=8708

Take out the oil stocks and what have you got? Vertigo?!!

Regards
Kate

PS On the other hand Copper hasn't tanked.

kate

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Post Number: 889
Registered: 04-2005

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Votes: 0


Monday, June 02, 2008 - 11:53 am:

Dean, there was something on the radio this morning saying that the pattern of consumption in supermarkets is changing with more "plain labelled brands" being sold.

Regards
Kate

Another possibility is that more people are buying in discount retailers like Aldi.

deanrosario

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Post Number: 1420
Registered: 11-2002

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