Archive through June 29, 2008

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ody

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Post Number: 2557
Registered: 10-2006

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Friday, June 27, 2008 - 01:20 am:

FALLS WORSENING

At this stage falls are getting really BIG, both in Europe and the US, with something like at least -2% common, and graphs pointing downwards. The main culprit, once again, is the banking world of the US, which is judged to be in "far worse" condition than had been assumed. It is difficult to see how our own banks, even e.g. fairly straightforward propositions like WBC, will be able to withstand this kind of downward pressure. Australia is now looking like virtually the only market to be positive on Thursday, with others firmly declining.

paddy

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Post Number: 208
Registered: 03-2008

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Votes: 0


Friday, June 27, 2008 - 01:22 am:

Rudy : That candlestick indicated a substantial move and downwards as you first stated. So far 200+ points to downside - 11524 is not far away .

Ody - that was no "rally" - just let's SELL some stock to the "fishes" by the "sharks".

Next week should see start of counter-trend rally but that too will die on the vine.

Still a long ways to go and lots more "horrors" to come from "pandora's box" . Stock up for the "nuclear stock winter".

Fibs don't lie.

Paddy

ody

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Post Number: 2558
Registered: 10-2006

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Friday, June 27, 2008 - 01:42 am:

Paddy: actually, I like your description of that seeming "rally". We obviously agree that it will not be sustained - no way will this country continue to "fly" on its own.

ody

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Post Number: 2559
Registered: 10-2006

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Friday, June 27, 2008 - 02:14 am:

COMMODITIES UP, BANKS DOWN

Just one factor should mitigate matters a bit for the Aussie market on Friday: commodities - oil, various metals, etc. (just the sort of thing we sell) - are actually doing well at this moment, which ought to arrest the slide of BHP and RIO. If that slide were to continue in any bad way, then that would prove that even in OZ sentiment is REALLY bearish. For well may it be said God save the Queen, but tomorrow nothing will spare the financials, even in our own country. All we can hope for is that they will not be seen as negatively as elsewhere - but the idea of a strong upsurge, particularly as continuing, will almost certainly evaporate. THAT is the area - in addition to oil - where worries are most consistent, elsewhere. And its being Friday will not help.

paddy

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Post Number: 210
Registered: 03-2008

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Votes: 0


Friday, June 27, 2008 - 02:26 am:

Ody : China's proposed action should have a negative effect on BHP and thus your Market. It is down 1.9% on NYSE.

China's steel mills may boycott BHP's ore; dismiss price rise

http://www.domainb.com/industry/Steel/20080626_bhp_billiton.html

Still a long ways to go.

Paddy

ody

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Post Number: 2560
Registered: 10-2006

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Friday, June 27, 2008 - 03:30 am:

PADDY: You are clearly right on BHP in the US, and it has fallen even more since. The markets are certainly being savage. Interesting to consider their way of thinking: there is no reason why BHP should get any more for its ore than RIO, but BHP was setting itself up as though it would (being condescending about RIO), and it looks as though it is mistaken, so the market punishes it. One of the troubles about the BHP CEO (Kloppers) which we've often referred to on this site is that he immeasurably arrogant (to the point of megalomanic), and hugely overconfident. I think that is a reason why the stock is never getting as far ahead of RIO as he claims it intrinsically deserves, and in fact his highhanded stance works against him, as he does not live up to the expectations that he creates. This is probably an instance of that - though probably the fact is that at the moment very few stocks can escape being drubbed anyway, and it may well true that good commodity prices which have surfaced tonight will therefore only - and at best - affect some of our smaller resources stocks positively: by which I don't mean that they won't go down!

We are certainly seeing a number of striking low points being reached, and as you say, that will probably continuing. Many commentators continue to think we'll not go below March lows, but I continue to think we very well may, and at the least are likely to touch that level. However, my guess remains that the XJO will in days to come quite likely reach about 4750. At that point I think it could well muster some support. It may not get there in a straight line, either. But the predominant mood is STRONGLY bearish, worldwide, and Australia may be an island and also have a fairly strong economy, but this kind of battering will hurt us, too - inevitably.

To bed!! This is actually my bedtime (not yours it seems), so I am off. Just could not sleep for totally different reasons. The market does not surprise me, and thus does not worry me.

paddy

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Post Number: 212
Registered: 03-2008

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Friday, June 27, 2008 - 05:02 am:

Ody : Dow broke below 11524. Actually Low, so far, was 11498.

Oil topped $140

Crude futures reach fresh record above $140 on Globex

http://www.marketwatch.com/news/story/crude-oil-futures-top-140-barrel/story.asp x?guid=%7B73B58469%2D0BF8%2D4212%2DA5DA%2DC832D5696932%7D&siteid=bnbh

paddy

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Post Number: 213
Registered: 03-2008

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Friday, June 27, 2008 - 05:50 am:

And another item from "pandora's box".

http://www.marketwatch.com/news/story/bank-america-sees-7500-job/story.aspx?guid =%7BE95E3A22%2D00F5%2D4AB3%2D97A5%2D0349DFF1C803%7D&dist=TQP_Mod_mktwN

Bank of America sees 7,500 job cuts after Countrywide close - MarketWatch

Dow now below 11500 .

BHP down 2%

paddy

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Post Number: 214
Registered: 03-2008

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Votes: 0


Friday, June 27, 2008 - 06:07 am:

Dow closes @ 11455.86 .

WTIC on Globex up $5.09 at $140.08 - High was $140.86.

BHP @ $81.14 - downside probably tempered by high oil price.

rdumas

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Post Number: 1499
Registered: 11-2006

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Friday, June 27, 2008 - 08:35 am:

MARKET WRAP

The late bearish move of the S&P500 mentioned in my previous market wrap continued last night our time as the S&P500 sank like a stone 2.94% to close at 1283.15. This move caused it to slice through the 1298 blue support line like butter. Next stop the March low of 1273 a mere 10 points below our current position.

Our market yesterday had a rally through the bank stocks but as suggested in my last market wrap there was no reason to believe that the down draft in the market was over yet. The XJO made a failed attempt to breach the descending trend line (shown in red) and the orange support (now resistance) level at 5329. Today we should see a continuance of the move down towards the March low. It would not surprise me at all to see our market break down through the 5186 (blue line) support and close below this support.

The XXJ (Financials excl LPTs Sector) continued its bounce but failed to breach the descending trend line (shown in red). This descending trend line remains a very strong overhead resistance to the financials.

I suspect that we will see the loss of all of yesterday's gains in the banks today.

The XMJ (Materials Sector) held its ground yesterday but I doubt that it will do so for a second day running. I suspect that it will go down to the lower boundary of the short term bull market channel (yellow boundaries). I only hope that this boundary holds as a move down to complete the neckline of the Head and Shoulders pattern at the orange line would not be a good sign.

rdumas

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Post Number: 1500
Registered: 11-2006

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Friday, June 27, 2008 - 08:51 am:

Our Banks

In spite of our banks continuing to be 'tarred with the same brush' as the US and UK banks I continue to believe that there are huge differences between our banks and the others.

Following is an article from the Business Spectator website on APRA's view of our banks.

===============================================================

Big Four safe from crunch: APRA

By a staff reporter

The Australian banking system is in a prime position to ride-out the global economic downturn, Australia's financial services regulator says.

In a speech delivered at an industry conference in Sydney, Australian Prudential Regulation Authority (APRA) manager Wayne Byers said the system could sustain losses of $24 billion without breaching the 8 per cent minimal capital requirement.

"We consider Australian bank capital to be quite sound, but remain vigilant for any emerging signs of weakness," Mr Byers told the conference.

The 8 per cent minimum capital requirement comprises 4 per cent Tier 1 and 4 per cent of less reliable Tier 2 capital set aside by the major banks to guard against unexpected losses.

Mr Byers said local lenders have traditionally maintained a Tier 1 benchmark of 6.5 per cent, in which case only $9 billion in losses could be sustained. Some global lenders have posted sub-prime-related losses approaching this amount, suggesting Australian banks would have to remain cautious.

The outlook paints a generally rosy picture for the outlook for Australia's 22 locally-incorporated banks, with most set to withstand unexpected loan losses.
Mr Byers reported that Australia's banks had amassed total regulatory capital of $149 billion, $106 billion of which was prime Tier 1 capital.

==============================================================

pse

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Post Number: 214
Registered: 10-2007

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Friday, June 27, 2008 - 10:07 am:

huge volumes executed on the banks and top miners prior to XJO open this morning,
is there an expiry today? or are the instos sending signals?

peter

"TRADE WHAT IS, NOT WHAT MIGHT BE"

ohkoolnutz

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Post Number: 761
Registered: 10-2005

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Votes: 0


Friday, June 27, 2008 - 11:43 am:

I am still amazed that people repeat past mistaken judgements. If you go back on this thread to June/July/August 2007 you will read the same comments of how the Australian banks are immune to the credit problems in the US.

The financial are a spiderweb. If one link goes down it will remain intact but if you take enough of them down the whole web fails to exist. We have a global problem and it will be resolved globally and not bypass Australia.

---
ohk

Lies, Damn Lies and Technical Analysis

rdumas

Member

Post Number: 1501
Registered: 11-2006

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Votes: 0


Friday, June 27, 2008 - 12:05 pm:

Hi OHK,

There is no doubt that they are affected by the effects of the problems originating from the banks in the US. What APRA is saying is that the likelihood of our big four banks going bust (as many banks in the US will) is quite low at this stage.

With CBA being 35.7% below its high last year I was willing today to buy some at $39.99, Sure, it will probably fall further but I don't think that it will go bust and at these prices it could fall another 10~11% and still be covered by the dividends.