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Archive through May 21, 2010

Chart Forum » Hilarius' Hall Of Fame » Our Daily Bread » Archive through May 21, 2010

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pinkhat
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Wednesday, May 19, 2010 - 10:12 pm:Edit Post Delete Post Print Post    View Post/Check IP (Moderator/Admin only) Ban Poster IP (Moderator/Admin only) Move Post (Moderator/Admin Only)



Hi Guys,

Sold my EFT Gold this morning. I work full time so miss all the market action during the day. Very happy with the profit.

cheers,


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ody
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Thursday, May 20, 2010 - 03:22 am:Edit Post Delete Post Print Post    View Post/Check IP (Moderator/Admin only) Ban Poster IP (Moderator/Admin only) Move Post (Moderator/Admin Only)



Share markets in meltdown?

It does rather seem as though share markets are finding little reason for doing anything other, now, than selling. The intensity of the downward trend varies a bit depending on the country. Today Europe copped it very heavily, no doubt because of Germany's ban on naked short selling. It is not just short selling per se that has people worried - although a change in the conventional pattern by itself has a distorting and unnerving effect - but especially the reasons perceived to be BEHIND the ban: as the world of finance was particularly targeted, the thinking is that the authorities (Merkel etc) must feel that the dangers of a collapse in the German financial system are very real.

Otherwise the usual culprits of recent times continue to create worries - the Greek crisis and all its implications with the huge bailout causing real fright and aversion to risk, especially resources and financials, and fear of inflation and possibly a very hard landing in China, with the resources tax also creating disturbance, notably here, of course, in a big way. With the prices of commodities, the uncertainty of the tax, the shelving of projects or re-location of them to safer countries, and a sinking Australian dollar there is presently little to appeal to investors here, and large sums are going abroad for investments there or seeking safety in the US dollar.

Alas, there is little relief in sight, in all likelihood. For the time being the market is far more likely to continue its sell-off rather than to rally, and any rally AT THIS STAGE would probably be minute and short-lived. Many would use it as a reason for selling. However, at the moment the futures for our market on Thursday (today) aren't looking too bad (only mildly negative).

At the time of writing Wall Street was not as fiercely down as Europe.

The following is a piece from the Australian on yesterday's (Wednesday's) market here in Australia:
-----------------------
Shares dive again on ASX as Australian dollar plummets

* Scott Murdoch
* From: The Australian
* May 20, 2010 12:00AM

ALMOST $65 billion has been wiped off the Australian sharemarket this week as international investors flee Australia on fears the government's proposed mining tax will slash profits and concerns over the worsening Eurozone sovereign debt crisis.

The Australian market tumbled to a nine-month low yesterday while the Australian dollar suffered in the global flight to buy the US greenback.

The currency dropped by almost US2c on Tuesday night -- closing at US85.88c, down from US87.66c -- as investors dropped the euro on fears the sovereign debt crisis would not be contained to Greece.

The euro fell to a four-year low against the US dollar as a fresh bout of risk-aversion swept the markets.

The S&P/ASX200 closed down 83.6 points to 4387.1 while the All Ordinaries lost 85.7 points to 4414.3.

The losses wiped almost $24bn off the value of the Australian market after the $42bn panic selling spree on Monday.

The market is now down 8.7 per cent in May.

The ASX200 yesterday closed at its low for the day, which analysts said was a 'short-term bearish' signal.

Major bourses in Britain, France and Germany were down by up to 2 per cent last night.

The early futures trading indicated Wall Street would open at least 55 points down.

Most of the Australian selling came from the mining sector as investors reacted to the government's contentious Resource Super-Profits Tax (RSPT).

Morgan Stanley Smith Barney's wealth management vice-president Justin O'Brien said international institutions were concerned the proposed tax would increase the risk of investing in Australia.

"This is offshore selling," Mr O'Brien said.

"If the Australian dollar was improving you would say it's more of a domestic issue for the market, but this is an international issue. The money is leaving Australia.

"Offshore funds are looking at Australia and saying the sovereign risks here have increased."

The sour mood worsened when Fortescue Metals said it would temporarily shelve the $US9 billion ($10.4bn) Solomon hub and the $US6bn Western hub projects.

UBS equity sales executive director Craig Webb said the market would continue to be impacted by the negativity surrounding the mining tax and the Eurozone crisis.

"It's the tax coupled with Greece and there are concerns around Chinese economic growth. Obviously that could have an impact on commodities demand," he said.

Deutsche Bank's head of Sydney research sales Glenn Morgan said investors were growing increasingly cautious, as mining companies warned about the effects of the RSPT.

"The selling has been widespread but we are seeing the impact of the tax becoming clearer every day," he said.

"We are seeing the potential that it could have on future earnings," he said.

Macquarie Private Wealth adviser Helen Spencer said the market was awaiting a "circuit breaker" to end the selling streak, but there was no potential saviour in sight.

"A recovery is going to be a piecemeal process.

"At what point confidence returns to the market is the question," she said.

"Europe is a problem that is not going to be solved overnight.

"It's going to have to be worked through and I think finding a catalyst is going to be a work in progress."







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rdumas
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Thursday, May 20, 2010 - 08:10 am:Edit Post Delete Post Print Post    View Post/Check IP (Moderator/Admin only) Ban Poster IP (Moderator/Admin only) Move Post (Moderator/Admin Only)



There's no doubt about it, things are looking extremely negative at the moment, but you know what they say about "it's always darkest........."





Having said that, I have always said that any bounce would be over very quickly and would precede another significant drop which would possibly complete in early to mid June. Hence Ody and I continue to hold similar views in that regard.


I've given you my view based on what I know now. In another 5 minutes that view might change because of additional information. It's the best I can do - Rudy

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market_mad
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Thursday, May 20, 2010 - 09:00 am:Edit Post Delete Post Print Post    View Post/Check IP (Moderator/Admin only) Ban Poster IP (Moderator/Admin only) Move Post (Moderator/Admin Only)



Hi all,

I heard the guys on CNBC this morning after the US market close and one commentator said there is now more open interest in the S&P500 falling 50% than at any time during the 2007/08 crisis pre or post Lehmans.

Now that doesn't mean it will fall that heavily or that punters who have taken this position necessarily think it will fall that heavily because they will still make money if the market falls from here and volatility increases.

The AUD has just been getting smashed and you would have to expect a rally of 100 points or so on our market coming sooner rather than later but it is hard to see what will lift our market today.

However, in saying that, it looks to me like markets are primed for a 3rd of a 3rd wave down fall which could take the Dow to around the 8500 level and the ASX200 to the 4000 level?

Currencies are the main play at the moment with the Euro bouncing hard of its session lows last night.

European markets were smashed last night so they will probably rally a bit in the open tonight which might give our market a chance to rally a bit but the AUD does concern me as foreign investors are fleeing in droves.

As you said Rudy... its always darkest.. but it might just be the middle of the night!!

Cheers
MM

(Message edited by market_mad on May 20, 2010)


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rdumas
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Thursday, May 20, 2010 - 11:13 am:Edit Post Delete Post Print Post    View Post/Check IP (Moderator/Admin only) Ban Poster IP (Moderator/Admin only) Move Post (Moderator/Admin Only)



Hi MM,

I find that quite often those investing in the XJO attempt to anticipate what will happen in the US market on the following day which is why I always look at both markets. I am not sure whether it is the Aussie fund managers doing it or it is the influence of the overseas investors who play both markets. What ever the reason, I think it is good to look at the US market.

The previous "line in the sand" level appeared to me to be a logical interim bounce level. Another level that often comes into play is the longer term 200 day EMA. As you can see in the chart below it can act as both support and resistance in terms of close pricing. I have shown a bar chart to show how much the intraday price action can sometimes poke through that level.




Re your 'middle of the night' comment I believe that to be true. If we think that night is 'dark' and 'negative' and represents the current corrective move in the XJO, I believe that any bounce will only be short term because the morning doesn't come until early to mid June.


I've given you my view based on what I know now. In another 5 minutes that view might change because of additional information. It's the best I can do - Rudy

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rdumas
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Thursday, May 20, 2010 - 11:26 am:Edit Post Delete Post Print Post    View Post/Check IP (Moderator/Admin only) Ban Poster IP (Moderator/Admin only) Move Post (Moderator/Admin Only)



Short Term Fibonacci Targets

The short term targets for this leg of the current correction are 50% alternate wave projection of 4353.88 and the 61.8% AWP of 4283.34.





I've given you my view based on what I know now. In another 5 minutes that view might change because of additional information. It's the best I can do - Rudy

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rdumas
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Thursday, May 20, 2010 - 12:04 pm:Edit Post Delete Post Print Post    View Post/Check IP (Moderator/Admin only) Ban Poster IP (Moderator/Admin only) Move Post (Moderator/Admin Only)



Another possible positive sign

Following is a short term snap shot of the VIX which tends to move in the opposite direction to the S&P500. I have indicated that the VIX may possibly have formed a short term Zigzag pattern.

The importance of this pattern is that if it is a Zigzag then the likelihood of a wave equality scenario playing out would mean that the pattern is almost there and that the next move for the VIX is down. This would mean that the S&P500 would respond by going up!!!





I've given you my view based on what I know now. In another 5 minutes that view might change because of additional information. It's the best I can do - Rudy

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ody
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Thursday, May 20, 2010 - 12:10 pm:Edit Post Delete Post Print Post    View Post/Check IP (Moderator/Admin only) Ban Poster IP (Moderator/Admin only) Move Post (Moderator/Admin Only)



Robert Gottliebsen - without any addition from me, for his article speaks for itself. I can only wish that Dean Rosario will see it now that the damage is becoming clearer and clearer. And that Rudd and Swan showed some understanding of what they are doing; but that is no doubt too much to hope for.
-------------------
Robert Gottliebsen (Business Spectator, today)

The huge bear raid on Australia

Australian currency and share dealers are being hit by a wall of selling from European and Japanese investors as it becomes clear that the government’s horrendous mining tax mistake is affecting the sovereign risk of Australia.

Australia’s currency and shares would have been expected to decline in line with the drop in commodity prices, but we are seeing panic selling of considerable proportions.

At this point I must add that the Australian Treasurer Wayne Swan vigorously disagrees with my stance on the mining tax and last night personally took me to task – which is his right – and I describe that development in a separate article.

Unfortunately the situation facing Australia gets even worse than a bear raid on our currency and share markets. I have been talking with some of the most senior bankers in the country and they say that the European sovereign risk crisis is going to make it more expensive for banks to borrow the vast sums overseas that are required to service Australian home mortgages and business loans.

Perhaps unfairly, the irrationality of the mining tax has lumped Australia into the high sovereign risk basket in the eyes of those overseas institutions who lend to our banks. In particular, the Japanese banks who have been prepared to borrow yen at token rates and lend to Australian banks in Australian dollars, have taken a beating which they may take years to forgive.

At the beginning of this month the Australian dollar was trading around 92.65 US cents. It has fallen an incredible 9 per cent in just under three weeks. Losses in yen have been worse. Over the same period the much maligned euro has fallen just over 6 per cent against the American currency.

The Australian share market has fallen much more steeply than the US share market and our declines have been much more akin those experienced on European exchanges, confirming that were are seen as a crisis country.

The government clearly not only did not understand the effect of the tax on the mining industry but had no concept that when you take such an action at a time when the globe is extremely nervous, there is grave danger that it will trigger a bear raid on Australia shares and currency and endanger our bank borrowing. And that’s what has happened.

Bear raids can fade, especially when there is a degree of irrationality. We are not in the same position as the PIIGS. But once a bear raid gets under way it is multiplied by heavy shorting and panic selling and it can take shares and currency very low. In Australia’s case we are probably overdue for a swing back, but if that swing back does not hold and we start sliding again, then we will fall even further. Remember that unhedged overseas investors are not only being hammered by the fall shares, but the currency as well. Our share market is one of the worse performers in the world to unhedged overseas investors.

The cabinet needs urgently to drastically change the RSPT. Changing it will not repair the damage because confidence has been lost, but it will stop an all-out collapse. Superannuation savings in Australia have already been hit. Another big blow would be devastating.


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ody
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Thursday, May 20, 2010 - 12:53 pm:Edit Post Delete Post Print Post    View Post/Check IP (Moderator/Admin only) Ban Poster IP (Moderator/Admin only) Move Post (Moderator/Admin Only)



For the moment, what I see as operating within, and in relation to, Australian assets is mainly fear - and understandable fear at that.

For that reason, and because the factors causing the fear do not seem to be likely to disappear in a hurry, or sufficiently, even if some factor or other were removed, I think that - always allowing for some counter-move - the predominant likelihood is for both the share market and our currency to go down yet further.

Greg Peel reminds us in FnArena this morning: "As at yesterday's close the ASX 200 is down 12.3% from its closing price peak of 5001 made on April 15."

It is sobering to see how big a fall has already occurred within just over a month, and particularly in the very recent past.

And then there is our dollar currently that is almost 10% down from where it most typically was in April (from 93+ cents to 84+ cents). And not only has our currency fallen quite a bit more than the euro, about which we tend to be particularly condescending, but it has shown remarkably little resistance.

Interestingly ETF Gold has managed to be positive even today, though gold is not in an unambiguous position of strength. And one would need a heck of a lot of money in both gold and American dollars, as a non-shorting person in a declining share market, to provide a real antidote to the declining Aussie dollar. I think its decline will in essence continue further, but if one wants income as well, in a super fund, there are significant limits to how much one would want to put into non-yielding assets.

I don't blame all of this on Rudd and Swan: but they are certainly among the culprits, and they still do no show any sign of improved understanding. I cannot easily remember any other government which I have watched with any real care acting as irresponsibly and incompetently as this one does, except Whitlam's. The idea of a hefty mining tax at this of all times is a blunder of enormous magnitude which defies belief. That is why quite a few people believe it will not be introduced. The only evidence that I see in this regard is that of the government digging in.


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ken
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Thursday, May 20, 2010 - 01:07 pm:Edit Post Delete Post Print Post    View Post/Check IP (Moderator/Admin only) Ban Poster IP (Moderator/Admin only) Move Post (Moderator/Admin Only)



Ody,

From ABC News at 9am

Garnaut urges calm debate on mining tax

Professor Ross Garnaut, chairman of Lihir Gold, will outline his views on the tax in a lecture (AAP: Dave Hunt)

The man who helped develop the Federal Government's emissions trading scheme says cool heads should prevail in the debate over the proposed minerals super-profits tax.

Economist Ross Garnaut says the broad approach of the proposal is sound, but there will need to be a lot of analysis of the detail to make sure it is right.

He co-wrote a paper in 1975 credited with starting the global debate on resource rent taxes.

"This issue has to be settled by analysis and looking at actual effects," he told Radio National.

"We've got a lot of noise in the discussion at the moment. I must say the way the debate was started wasn't world's best practice.

"It would have been good to have more exposure along the way. But the initial response has been one of noise rather than analysis.

"I think it's important for Australia that we step back a bit and get back to analysis of actual effects. That's the way we'll actually work out whether investment is being affected in a way that's damaging to the economy."

Professor Garnaut is also the chairman of the listed mining company Lihir Gold, and will give a lecture in Melbourne tonight to outline his views on the tax.

"In the sense that it doesn't distort any of the investment production decisions or trade decisions - and that's the ideal of a tax - no tax gets there perfectly, but the closer you can get to it the lower the cost of the tax to the community," he said.

"That's one of the reasons for taxing mineral rent."
End ABC

I am personally wondering whether the CEO's of mining companies in PR mode, who have spouted off about project cancellation without providing details of their analysis of the effects of the tax, will be accused by ASIC of misleading the market.

Ken


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ody
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Thursday, May 20, 2010 - 01:41 pm:Edit Post Delete Post Print Post    View Post/Check IP (Moderator/Admin only) Ban Poster IP (Moderator/Admin only) Move Post (Moderator/Admin Only)



Ken: I think that as usual Garnaut is spouting leftist and vague waffle. The accusation about lack of analysis is completely wrong. I have by now seen so much of it, and not just from the mining industry, that it is almost coming out of my ears.

On a different but related note, whatever the merits of the tax could turn out to be (I haven't so far seen any), we also have to consider the huge damage that it is doing to the country in the meantime. About that, at any rate, there can be no dispute - it is, on all the evidence, huge. Just to quote one snippet to show how some falls are indeed connected directly, in their intensity, to the mining tax, see this recent statement by broker Patersons:

"The S&P/ASX 200 is now down 13.3% from the high it reached on April 15. Since the federal government announced the RSPT, it has fallen 9.7% and the Aussie dollar has lost 7.7%. One broker has made the point that Australia's has been the worst performing market in US dollar terms over the past month, falling 18%."

It is often argued that the index was already falling before the tax, and this is true, as would be the claim that the dollar had already lost some ground. But the fact remains that both the share market and the currency started accelerating their plunge immediately after the announcement.

To my mind, Garnaut should in effect be seen simply as a government ally, as is Ken Henry. Both of them politicise everything and have no understanding of economics. Yes, I know: officially Henry is "qualified" - but, alas, he lacks any sense of reality in the way he applies his thinking. He reminds me of the Nobel prize winners that thought that volatility would disappear, years ago, because the market knew everything there was to know, so it could not do anything surprising: a new age was upon us. Some - even very highly qualified - economists show less grasp of what actually happens than many who lack their bizarrely academic, convoluted sense of logic. (I have myself been an academic since 1966, and know only too well that for real nonsense academics are often absolute champions.)

Rudd's ETS ideas were largely Garnaut-derived and utterly lacking in practicality and good economic sense, and the same is true of what the government has taken from Henry. These totally impractical theoreticians are a danger of the first order to good management of the country. Had Rudd's ETS ideas been implemented they would have been a disaster, economically, and even before having been implemented the Henry Resources Tax already IS a disaster in its effects. Should it get up - which heaven forbid - and at a time like this, the country will very quickly see its economy deteriorate further (it is already deteriorating in that, for example, a great deal of money is finding its way abroad, and people have lost a lot of their wealth).

One can only have hope that the good sense of "ordinary Australians" and "working families" is not what Rudd takes it to be, and there is some evidence that the government is not gaining much support for its tax - not nearly as much as it had hoped, in its naivety. If this tax were to be introduced, then one must hope that the Coalition will get in and rescind it. Not that I have a high opinion of that lot, but at least they are economically less incompetent, and they certainly would rescind the tax.

The claim that the policy has hardly been analysed shows either Garnaut's ignorance or a desire to obfuscate what people have in fact been saying. It also ignores that many have already been voting with their feet. But then, they are only business people and investors, and what would they know of the real world, compared with Garnaut, Henry, Rudd, and Swan??

(Message edited by Ody on May 20, 2010)


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ken
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Thursday, May 20, 2010 - 02:23 pm:Edit Post Delete Post Print Post    View Post/Check IP (Moderator/Admin only) Ban Poster IP (Moderator/Admin only) Move Post (Moderator/Admin Only)



Ody,

I take your point about academics, but bear in mind that Garnault is chairman of one of the affected companies ( admittedly less affected due to PNG mine) and a respected economist.

All the CEO's are spouting off about their current real or imagined difficulties and these are mostly caused by the uncertainties due to the legislation not being passed yet.

I don't see any of them including the payments from the government for exploration costs or when they make a loss - these CEO's are in PR not factual mode, you must admit. Forrest goes to meet the government without the figures - I think those figures get in the way of a good story.

Meanwhile prices are down and if you can pick the bottom there is money to be made.

I'm not saying whether the tax is good or bad - but as Stephen Mayne said on ABC radio last night, (approximately) "Governments all over the world have balance sheet problems and have to raise new taxes or cut spending. If you were going to raise nine billion in new taxes, what would it be?"


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rdumas
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Thursday, May 20, 2010 - 02:59 pm:Edit Post Delete Post Print Post    View Post/Check IP (Moderator/Admin only) Ban Poster IP (Moderator/Admin only) Move Post (Moderator/Admin Only)



Hi Ken,

It would not be as crucial to raise additional money if they stopped wasting so much of it. Their ability to spend money in wasteful ways is breathtaking!!!

Thanks to a whole lot of different circumstances both through a combination of some good management and a lot of good luck, our country has managed to stay out of the proverbial. I had no major objection to some sort of stimulus spending during the early part of the GFC but it was neither targeted well nor managed well. They appear to be completely devoid of project management capabilities. They basically behaved like kids who had never had money before going into a lolly shop with their father's monthly wages.


I've given you my view based on what I know now. In another 5 minutes that view might change because of additional information. It's the best I can do - Rudy

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baysider
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Thursday, May 20, 2010 - 04:06 pm:Edit Post Delete Post Print Post    View Post/Check IP (Moderator/Admin only) Ban Poster IP (Moderator/Admin only) Move Post (Moderator/Admin Only)



Wow - there's blood on the floor, this is a massive market exit. I daren't go round to Eugenio's, I'm not sure what I'll find!

I may be mad but I just bought MAH at 51c it was 85c 21 days ago and BHP at $36.70. There is support for the XJO and XAO at 4300 which is not far away at all and a short term bounce must be in order you'd think? I won't be holding too long though that's for sure.


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eblode
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Thursday, May 20, 2010 - 04:38 pm:Edit Post Delete Post Print Post    View Post/Check IP (Moderator/Admin only) Ban Poster IP (Moderator/Admin only) Move Post (Moderator/Admin Only)



Hi Baysider,
Drop around and you'll find me in great spirits. I will always remember what my mother told me when the DOW plunged southward and shares were dropping like stones. I thought I would find her distressed and in a foul mood. Instead she appeared only defiant and very optimistic. "this market" she said " is just getting rid of the fools who had no idea of the market and shouldn't have been trading in the first place. They don't know the value of a company, have no idea of what the company even produces, and then panic when the price drops. As soon as we clean them out the fund managers will come in to pick up the bargains and within a few months these shares will double". She was tough but oh so right.
As Rudy said, June will be the pick up. Meanwhile I'm making a pig of myself picking up jewels of shares at really bargain prices. Comes July we'll be laughing. So anytime you're in the neighborhood Baysider drop in, I'm treating.

Eugenio


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ody
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Thursday, May 20, 2010 - 05:22 pm:Edit Post Delete Post Print Post    View Post/Check IP (Moderator/Admin only) Ban Poster IP (Moderator/Admin only) Move Post (Moderator/Admin Only)



Eugenio,/Baysider

The comment that your mother made, Eugenio, would - if the fall was bad to begin with - be right as a prophecy only in very few cases. In a proper sell-off, prices often go so low that it takes literally years for them to regain their former highs. Surely you are aware that at the end of 2007 the market was at a much higher point than in has been since??

I think there IS often sense in picking up the pieces when the market has seemingly more or less bottomed, which I estimated, wrongly, to have happened at the end of 2008, beginning my major move back in then. The shares that I bought before March 2009 of course usually went down, but the risk at the end of 2008 was no longer particularly great, so I kept my cool. However, that is because of the general price level that then prevailed. At this moment, there certainly still is plenty of room for shares to be sold off further, and I think that on the whole those who wait to buy back in later will do better.

It is also not yet at all clear, really, how long this will go on for. By the end of 2008 we had had such a big fall that the end looked in sight - though it still wasn't. At the moment it does not seem to me likely to be particularly close, so any purchase made now would at the least run the risk of temporary loss, and possibly worse.

I suggest you remember the story you told us here about that legendary investor, Bernard Baruch, who warned your parents against staying in the share market because he foresaw the crash that was coming. He turned out to be right, and as you admitted, your parents were wrong and lost a lot of money. One of Baruch's famous statements remains "I made my money by selling too soon". An exceptionally interesting observation, in my view, especially because for most people it seems to be impossible to imitate that attitude, and they often do lose money by staying in the market for too long, or buying into it while it is falling thinking, as Baysider does, that a rally will be near.

That may be so, but often, when the sell-off is of this fierce a nature, the rally does not come soon or is too insignificant to trade. So, Baysider, I would wait, myself. Almost certainly you will pick up stocks far more cheaply if you do than if you buy them now, and many purchases at this point would probably be comparatively high risk. We are no longer in that months long up-and-down phase where you traded with great skill and successfully by exploiting the dips. The current configuration of the market is quite different.

There is no GUARANTEE of a significant rally in June or any time soon after, though it may well occur. And meanwhile the market is certainly far more in a falling mode than a rising one, so that losses may not be easy to regain in such a rally even if we get it. I could easily see the market go down to 4000, at the current rate, or lower.


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gdd3
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Thursday, May 20, 2010 - 05:35 pm:Edit Post Delete Post Print Post    View Post/Check IP (Moderator/Admin only) Ban Poster IP (Moderator/Admin only) Move Post (Moderator/Admin Only)



Baysider...

May be not so "mad"! I can see some T/A reasons why you are picking these areas as shown in my weekly charts below but even if a bounce from here occurs, at this stage, if would favour minimal upside.

BHP...
$36.55 provides both horizontal(thick white line) and trend channel base(thick yellow)support. Momentum indicators, eg Williams%R14, are at oversold extremes and you would expect some reprieve(upside) to ease the pressure. However, as the Williams has broken its long-term uptrend support(nearly 4 weeks ago), you would expect that any rally would be limited to say 8% or up to the $39.00-39.50 area but this maybe enough for you to warrant risk/reward. Another -ve is that BHP has a confirmed 'Double Top' in place and has still to reach its objective M/M($33.64).




MAH...
Very similar in that its +ves are:- it closed right on uptrend channel base and horizontal support(50.5) = 0.618% retracement(May09 low - April 10 high) = reciprocal of retracement from the Sept 08 high - May09 low(0.382%)and momentum indicators are also at extremes. However, again the Williams%R14 has broken uptrend support so you would expect any rally from here would be stiffled(initially).



Just my take on your chosen 'buys'.

Good tradin'
Dolphin


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rdumas
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Thursday, May 20, 2010 - 05:35 pm:Edit Post Delete Post Print Post    View Post/Check IP (Moderator/Admin only) Ban Poster IP (Moderator/Admin only) Move Post (Moderator/Admin Only)



Hi Eugenio,

I have to echo Ody's comments. As you know using Elliott Wave one has to have a number of scenarios in view (both bullish and bearish) and allot probabilities to each scenario as more of the pattern is revealed.

My previous preferred scenario did have a rally that would make new highs after a bottom of the current correction was reached in June this year. The nature of the price action in the last two days however does start to reduce the odds of that scenario taking place as I indicated in my previous post. The significant bounce would still occur in early to mid June as I have always suggested but the nature of that bounce and how high it goes is being modified each day the price action reveals more of the pattern. Be very cautious my friend because if the bearish case comes to the fore then the best bounce will not get higher than 4427.3.


I've given you my view based on what I know now. In another 5 minutes that view might change because of additional information. It's the best I can do - Rudy

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peterloh
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Thursday, May 20, 2010 - 05:36 pm:Edit Post Delete Post Print Post    View Post/Check IP (Moderator/Admin only) Ban Poster IP (Moderator/Admin only) Move Post (Moderator/Admin Only)



Eugenio,

I fully agreed with what your mum said. This is another opportunity that comes along once in a blue moon.Fortune favours the brave.Be patient and the rewards will come.

Baysider, I would rather pay for a low price and wait a little longer then to go chasing at a higher price for a higher return. You can never go wrong with buying something cheap, as long as you have done your own research.

Cheers,

Peter


-------------------------------------------------
Disclaimer: Please note that comments made in this column is mainly for the interpretation of charts in technical analysis. It is not made in my professional capacity and should not be taken as advice.In my professional capacity I am only allowed to give advice on certain managed funds authorised by my license dealer.Any share discuss is for general interest and should not be relied on to make an investment decision.It is likely that I may own the shares that we discussed as a trade or as an investment. Please consult your stock broker or financial adviser in regard to your personal situation.

The views expressed here contain information derived from public available sources that has not been independently verified.No representation or warranty is made as to the accuracy, completeness or reliability of the information.Any forward looking information in this representation has been prepared on the basis of a number of assumptions which may prove to be incorrect.It should not be relied upon as a recommendation or forecast by the writer.

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ody
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Thursday, May 20, 2010 - 05:39 pm:Edit Post Delete Post Print Post    View Post/Check IP (Moderator/Admin only) Ban Poster IP (Moderator/Admin only) Move Post (Moderator/Admin Only)



Rudy/Ken,

You are right to point out, Rudy, that the members of this government behaved like kids in a lolly shop at the time they started stimulating the economy. They spent far too much, and did it badly. One reason was that that foolish Ken Henry told them to go in "early and hard". As a result we are among the most over-stimulated countries in the world, with a distorted, skewed and "overblown" economy.

This spending placed the Rudd government in a state of enormous indebtedness. And note the psychological similarity in their attitude this time, and also what I would call their "symmetrical incompetence". Just as they completely overrated the supposed vulnerability of the share market and our economy then (you will remember how I particularly railed against the SIZE of the stimulus package), they now stupidly believe that an economy which in part has performed strongly - but artificially - as a result of their ludicrous spending, can stand easily a huge TAX (NOT stimulus) at exactly a time when the going for Australia will in fact be much harder. But then, they have no idea, really, of the vulnerability of the economy as it is at present. Only a few weeks ago even the RBA thought that Greece etc would not affect us (as it in fact already has done in major fashion), and China is viewed as a machine that will endlessly spit out money while it is in fact suffering from huge inflation, with empty cities, a government stepping on the brakes, etc.

Just as the government's stimulus was too big then, so would their resources tax be now. If that had been 5-10% the country might have reasonably absorbed it - but 40% is exorbitant. Though Garnaut does not seem to know it, e.g. Moody's has calculated how big the impact is likely to be, as I have posted here; and it is very substantial indeed. (But then, no doubt Moody's consorts with those capitalist miners.)


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eblode
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Thursday, May 20, 2010 - 05:40 pm:Edit Post Delete Post Print Post    View Post/Check IP (Moderator/Admin only) Ban Poster IP (Moderator/Admin only) Move Post (Moderator/Admin Only)



Rudy,

If we don't get a real bounce in June I'm buying a Trampoline.

Eugenio


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ody
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Thursday, May 20, 2010 - 06:03 pm:Edit Post Delete Post Print Post    View Post/Check IP (Moderator/Admin only) Ban Poster IP (Moderator/Admin only) Move Post (Moderator/Admin Only)



Ken - exploration costs

Ken, you observe: "I don't see any of them including the payments from the government for exploration costs or when they make a loss - these CEO's are in PR not factual mode, you must admit."

To begin with the CEO's, yes, they are pushing their own case, of course, but that does not mean that they are wrong. Both the government and the CEO's are pushing a case, and the cases are diametrically opposed. They cannot both be right. It so happens that to my mind the CEO's are right, independently of what one thinks of their motives. I believe they are right in general economic terms and about the harm being done to the country. That is not to say that I feel that there is no case for people like THEM to make less money - but that is a different matter, for which we don't need a resources tax. Indeed, usually even the chiefs of lousy companies still often get paid a lot of money. So that, I think, is not the issue, but a separate matter. One could tax THEM more heavily - though again the trouble would be that THEY would not want to be CEO's in Australia.

As for the exploration tax: the trouble with that is that this will for the most part only benefit small companies, in principle, which do a lot of exploring. That also means, since such ventures often fail, that the taxpayer will lose the money in question. I can't say that I see this as money well-spent.

For the bigger companies, which have less exploring to do and must in many cases chiefly make their money from development, implementation, transport, selling, etc., the exploration tax is of little value compared with the resources tax which will hit them with great force, and thus also anyone in Australia whose welfare depends at all significantly on the welfare of BHP, RIO, etc.

Since the big resources companies earn the bulk of Australia's export income, that means that harm done to the big miners means ultimately a reduced standard of living for the country as a whole, and most people in it. This is where this measure is to my mind likely to be quite counter-productive. Most "ordinary Australians" have done very well out of the boom we have had. With the boom looking wobbly now, the country is not going to benefit if the country's main money-spinner (the resources industry) gets saddled with a huge handicap. Crudely put, BHP's loss will be a loss for "ordinary Australians". Not just in superannuation (where BHP is almost always an important component), but also in economic flow-through. As money is being withdrawn from Australia, and our dollar is declining, we are all getting poorer already.


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rdumas
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Thursday, May 20, 2010 - 06:42 pm:Edit Post Delete Post Print Post    View Post/Check IP (Moderator/Admin only) Ban Poster IP (Moderator/Admin only) Move Post (Moderator/Admin Only)



Hi Folks,

Well, our market had the buoyancy of a brick.

Today we closed at the magic figure of 4316.5. That was within a gnat's dingwhisker of the 150% Fibonacci extension target of 4315.



In terms of a bullish scenario the pattern is now right on the extreme of an expanded flat scenario but I would think that the probability of this scenario is pretty low.

At present is really looking like either a wave 3 of a large impulse wave down (extremely bearish) or a wave C of a corrective wave down (medium bearish scenario).

It will be extremely interesting to see what the US does tonight.


I've given you my view based on what I know now. In another 5 minutes that view might change because of additional information. It's the best I can do - Rudy

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market_mad
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Thursday, May 20, 2010 - 07:00 pm:Edit Post Delete Post Print Post    View Post/Check IP (Moderator/Admin only) Ban Poster IP (Moderator/Admin only) Move Post (Moderator/Admin Only)



Peterloh - never go wrong with buying something cheap? Remember price is what you pay,value is what you get.. Why buy something today if you can buy it cheaper next week?

Be careful boys 4000 is a coming and if that fails we'll see 3600

Cheers
MM


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ken
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Thursday, May 20, 2010 - 07:05 pm:Edit Post Delete Post Print Post    View Post/Check IP (Moderator/Admin only) Ban Poster IP (Moderator/Admin only) Move Post (Moderator/Admin Only)



Ody,

My concern is that market disclosure is lacking. If BHP and RIO recast their last year's results with the tax in place, then the market would be informed and prices would be up again most probably. At the moment the market is panicking because they have no information. All we have is the PR campaign. Obviously the CEO's have a personal interest in this in relation to making their bonuses, but in mis-informing the market they leave themselves open to ASIC's interest.

Ken


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rdumas
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Thursday, May 20, 2010 - 07:12 pm:Edit Post Delete Post Print Post    View Post/Check IP (Moderator/Admin only) Ban Poster IP (Moderator/Admin only) Move Post (Moderator/Admin Only)



Spot on MM.

The XJO has fallen 14.1% so far. I'm sure that anyone getting into the market in 2008 when it was 14.1% down would not have expected a further drop of +40%


I've given you my view based on what I know now. In another 5 minutes that view might change because of additional information. It's the best I can do - Rudy

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ody
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Thursday, May 20, 2010 - 07:33 pm:Edit Post Delete Post Print Post    View Post/Check IP (Moderator/Admin only) Ban Poster IP (Moderator/Admin only) Move Post (Moderator/Admin Only)



Ken, - Yes, I see your point, and I think it is a good one. I certainly do not see CEO's as saints ... But it would also be difficult, I think to project ALL possible factors and scenarios back into last year's result, as we don't know the full effects of the tax until that has been introduced and been in operation for some considerable time. That is one of the problems with it. But it may well be that the CEO's could indeed try some more modelling!


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ken
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Thursday, May 20, 2010 - 08:46 pm:Edit Post Delete Post Print Post    View Post/Check IP (Moderator/Admin only) Ban Poster IP (Moderator/Admin only) Move Post (Moderator/Admin Only)



Ody,

Alan Kohler identified to my satisfaction why our dollar and market are going down so fast - the Australian market in US dollars is now down 24% from the April 15 peak. I would be getting out too if I hadn't.

Ken


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baysider
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Thursday, May 20, 2010 - 08:47 pm:Edit Post Delete Post Print Post    View Post/Check IP (Moderator/Admin only) Ban Poster IP (Moderator/Admin only) Move Post (Moderator/Admin Only)



Thanks for your comments dolphin
Like you I saw strong support for BHP in the $36.50 area. For sure there's some risk but it would be incredible if it plunged through that zone. I can set a stop just below $36 so the risk is only 2% or so on the downside.

MAH has dropped like a stone and other than KRudd and co. and can't see a reason for it. Again 50c is almost the last stand resistance so you'd expect the bargain hunters to have a look (like me!). It could see 55-60c tomorrow and that would see me out.

Interesting times.


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ody
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Thursday, May 20, 2010 - 10:36 pm:Edit Post Delete Post Print Post    View Post/Check IP (Moderator/Admin only) Ban Poster IP (Moderator/Admin only) Move Post (Moderator/Admin Only)



Ken - Falling market and falling dollar

Ken, - I too saw Kohler, and to me what he said held no surprise, except that I am not sure that he is actually right about the 24% given what Patersons quoted earlier today (which was bad enough) - but of course both the dollar and the market have gone down further again. Presumably Kohler did work out the total figure as correct and up to date.

You surely are not suggesting that I have not myself also stressed the importance of this market fall and the falling dollar, as well as the fact that a lot of money has been shifted overseas, which then in turn makes the market and the dollar go lower again. This is obvious. That is typically what happens in a bear market: people rush for the exit, and then others follow them as prices go down further and further.

But I am not clear what you are actually implying. A market does not simply fall of its own accord, but as a result of confidence getting lost. I have all along conceded that already before the government's announcement both the market and the dollar had declined. However, it is simply and factually undeniable that the loss (of both) started accelerating greatly after the announcement. There is no way that you can ignore that, and argue that these losses have occurred in a void. There were already other factors worrying the market and investors, and that remains the case. But the resources tax nevertheless has made the whole matter demonstrably worse; and then, of course, fear also begets further fear, so that - more or less - we are actually in free fall.

For Garnaut and others then to continue to argue in favour of a resources tax - at THIS moment! - shows that he lives in total unawareness of what is actually happening in the real world. I would be prepared to go into a bet with you that prices would at least improve if Rudd suddenly withdrew the tax altogether. I do not imply - and never have done, of course - that the tax is the only matter driving prices (for the market and the currency) down.

And I don't think, by the way, that you would find many people other than me that have so consistently pointed at the importance of the falling dollar - both in terms of the causes of that happening, and the damage that the event is causing. Obviously, if you can see a currency going down and have little reason for believing that it will soon go up, you quit your investment in that country, all other things being equal. As it happens they were not equal, and a number of factors is working together to press down both the currency and the share market, while the two are connected as well, in this disastrous development.

To think, by the way, as some do, that this provides an appeal for foreign investors at this stage would appear to be misguided, as there are simply no attractive factors supporting either the market or the currency right now. For that one would have to have some sort of catalyst, of which there is no evidence, while there are plenty of triggers to send investors away from Australian shares and the Australian dollar.

This situation is highly dangerous, and although people like Rudd may not understand it and think that the resources tax is not playing a part in all this, the truth is that people are voting with their feet, and began to do so far more intensively after that tax was announced.

Indeed, if we look for other factors than the resources tax which might explain why Australia is such a PARTICULARLY bad investment for foreigners and indeed Australians at present, what would we find? Surely that is a factor that sets us apart from any other country.


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ken
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Thursday, May 20, 2010 - 11:10 pm:Edit Post Delete Post Print Post    View Post/Check IP (Moderator/Admin only) Ban Poster IP (Moderator/Admin only) Move Post (Moderator/Admin Only)



Ody,

I have known for ages that the yanks are going into our market because of the amplified gain they make with the currency and the market performance.

I have also known that when the market went against them it would go very fast because of that leverage.

We have also had predictions from Rudy and others via Elliot Wave that the market was likely to turn down sometime around now for a serious fall.

We also know from Prechter's work that market movements as described in Elliot wave terms are caused by social mood, hence his new area of study, Socionomics.

So all of this is no surprise to me and would have happened anyway, it was just needing a trigger for the negative mood, and the Greece situation and the tax beat any other reason to the draw. Had the tax not happened the market would have fallen anyway, for some other reason.


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market_mad
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Thursday, May 20, 2010 - 11:54 pm:Edit Post Delete Post Print Post    View Post/Check IP (Moderator/Admin only) Ban Poster IP (Moderator/Admin only) Move Post (Moderator/Admin Only)



Hi Ken,

That area of Socionomics is pretty interesting stuff. I agree that the market was just looking for a "reason" - the Greece thing has been around for months and before that Dubai yet markets weren't spooked!

Cheers
MM


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eblode
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Thursday, May 20, 2010 - 11:58 pm:Edit Post Delete Post Print Post    View Post/Check IP (Moderator/Admin only) Ban Poster IP (Moderator/Admin only) Move Post (Moderator/Admin Only)



Ody/ Rudy,
It really is a measure of your professional judgement to warn us to beware of greater falls to come. How often traders like ourselves fall into the trap of thinking a share is cheap just because it has a melt down of maybe 8 or 10% and think we're getting a bargain. Just today my Stop hit SEK at 7.27, a few minutes later it leaped to 7.50 and I howled like a baby, only to see it close today at 7.10. Maybe tomorrow it may drop even lower and who knows, end up at $5.00 Happens all the time in this atmosphere of panic selling. So it's refreshing that you both cool our senses to what real bargains might be forthcoming. I decided to wait patiently until this market has run it's course and I see very positive signs of a real recovery. Fortunately the USA is getting stronger, the Euro situation will be solved, and the mad tax on minerals will definitely be either dropped or drastically reduced. Until such time I'll stay out of the market.

Eugenio


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ody
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Friday, May 21, 2010 - 12:02 am:Edit Post Delete Post Print Post    View Post/Check IP (Moderator/Admin only) Ban Poster IP (Moderator/Admin only) Move Post (Moderator/Admin Only)



Ken,

What none of this accounts for is

(1) the rapid fall that occurred after the Tax announcement - a factor specific to Australia, though I don't discount its impact on other countries;

(2) that our market has performed far more negatively than e.g. the Canadian one, which is a proper one to compare as Canada is also a resources country.

In fact, the performance of our market has been particularly abysmal. Sure, we too reacted to the Greek factor, as did all markets - though probably Australia less so than Europe and the USA. And, again, any other international factors that affected markets globally cannot be disregarded in our own case. But even if one takes all other factors into account, the fact remains that our market did behave in extraordinary fashion particularly after that tax announcement, and that most of its fall (and the fall in the dollar) has occurred since.

As I said before, if the tax were withdrawn, I'd be willing to enter into a bet with you that that would positively affect our market. The very uncertainty of it, even, widely affects people and is a continued subject of financial discussion, especially in Australia, but also overseas.

So while I don't disagree that the market would have fallen anyway - and I have argued the reasons for that for some months - I do not agree that the particular fall that we have seen would have been the same without the tax.

The American withdrawal that you mention was undoubtedly influenced at least in part by the notion that the tax posed a threat to investment in Australia. Indeed, that is how Americans and others tend to see it: a bizarre, self-destructive proposal.

Incidentally, you must surely be aware that Prechter's claims about socionomics are highly contentious, and that many would argue that although internalised factors no doubt play a role, people nevertheless also are influenced by events around them, and in the world generally. Investors do, I would concur, often react to these in surprising ways, but when it comes to a situation as clearly worrying as the current one we can do without a vague notion of "social mood": yes, market psychology is operating strongly, but we don't need to look very far for the causes, on which in general more and more people agree. I doubt, for example, that many would argue that the Greek debacle has not had a strong impact on investment decisions. I imagine that even Eugenio, who at one stage pooh-poohed it, now takes it seriously. If not I think he would be exceptional!


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ody
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Friday, May 21, 2010 - 12:20 am:Edit Post Delete Post Print Post    View Post/Check IP (Moderator/Admin only) Ban Poster IP (Moderator/Admin only) Move Post (Moderator/Admin Only)



MM: "the Greece thing"

What you don't take into account is that, although this to many who didn't understand it at first seemed a minor matter, it has of late grown so big that people can no longer overlook its seriousness. So, again, I would insist that the notion that somehow markets have been acting in the sort of "self-contained" fashion which Prechter speculates about is simply wrong. In the world at large it is probably the sheer SIZE of this problem which has come to strike people more and more, just as in the case of the subprime disaster, which at first many people also greatly underrated. So, no: people did not "look" for a reason: there were clearly was one, and in both Europe and the USA is has scared the pants off people. For long people went on again and again to act as though they could continue to make a quick buck, but of late they have come to think differently. And it is not at all difficult to see what factors have been involved in creating the new outlook. In essence it has been a matter, as always, of a reality based in debt catching up with those who felt it would not do so or could be ignored.

Debt underlies Greece and the malaise in Europe, as well as America. And debt underlies Rudd's tax grab: he has been spending money like a drunken sailor, and somehow needs to try and remove that problem, so "let's tax the rich". What he did not grasp was that people would see the economic disadvantages as serious to the economy as a whole. That is one major reason why he is on the nose, in addition to his lack of credibility after withdrawing the ETS. And it is one reason why this country is fast losing money.


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ody
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Friday, May 21, 2010 - 12:34 am:Edit Post Delete Post Print Post    View Post/Check IP (Moderator/Admin only) Ban Poster IP (Moderator/Admin only) Move Post (Moderator/Admin Only)



Colin on the A$

The statement below strikes me as addressing some of the key issues rather than circling around them as socionomics might urge us to do:
------------------------------------------
The Aussie dollar broke through support at $0.86, signaling a primary down-trend. Australia survived the recession, despite the mediocre performance of its present government, but the big question is: will it survive the recovery? China's massive fiscal stimulus boosted commodity exports, but authorities are now struggling to curb the excesses of an over-heated economy, while European austerity measures are now du jour. Both are likely to impact on the commodity market and force further belt-tightening down under.

Twiggs Momentum falling to a new 2010 low confirms the down-trend. Initial target for the decline is $0.78*. Recovery above $0.86 is unlikely, but would warn of a bear trap.


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ody
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Friday, May 21, 2010 - 12:38 am:Edit Post Delete Post Print Post    View Post/Check IP (Moderator/Admin only) Ban Poster IP (Moderator/Admin only) Move Post (Moderator/Admin Only)



Europe has been performing badly, and so far figures on Wall Street look even worse.

I can only repeat what I have said before by way of warning: this is NOT a market to go long in. It is too early for that.


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market_mad
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Friday, May 21, 2010 - 06:27 am:Edit Post Delete Post Print Post    View Post/Check IP (Moderator/Admin only) Ban Poster IP (Moderator/Admin only) Move Post (Moderator/Admin Only)



Eugene,

Bit of a change in sentiment from you from 4.30pm to 11pm yesterday. In your first post after market you said you had been "making a pig" of yourself "picking up jewels of shares at bargain prices", then you say at 11.30pm that you said "until such time I'll stay out of the market"

Can't have it both ways mate....

How's our Aussie dollar bet going? Looks like the 5500 bet has a fair bit of work to do as well before the end of the year.

You'd better pray that 4000 holds because if not, we're down to 3600 and that 5500 will take a lot of work.

You want my address now to send the bottle of Scotch to?

Let me know

Cheers
MM


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baysider
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Friday, May 21, 2010 - 07:18 am:Edit Post Delete Post Print Post    View Post/Check IP (Moderator/Admin only) Ban Poster IP (Moderator/Admin only) Move Post (Moderator/Admin Only)



Ouch! that knife hurt. All bets are off, clean the decks and look for short positions.
Ody you are 100% totally vindicated in the position you've held all year. I had expected a bounce of sorts but not to be, such is life and we move on. I should also add Rudy and MM to the 'bear' clan who have warned us who look for bargains, well done guys. Exceptional work.


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ody
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Friday, May 21, 2010 - 08:11 am:Edit Post Delete Post Print Post    View Post/Check IP (Moderator/Admin only) Ban Poster IP (Moderator/Admin only) Move Post (Moderator/Admin Only)



Baysider, thanks.

Yes, I do feel vindicated, in that I have never doubted that the rally which started in March 2009 was a bullish rally within a bear market, and would inevitably - because no effective steps had been taken to solve the global financial crisis - come to an end and be followed by a period of further financial unwinding (partly caused, even, by the very steps that had been taken to supposedly improve matters). It was a rally that one could trade, but those who thought that we would automatically move into another bull market were, and are, in my view quite wrong.

For myself, I was happy to trade the rally, but got out after having made a very handsome profit. As it turned out - and as again is not new to me - I would have been able to make more if I had stayed put a bit longer. I always underrate the "animal instincts" that lead markets to move into territory where complacency and confidence are such as to overlook completely the economic reality which they should be aware of. I just have to live with this ... But at least I am totally set up to face the current situation and have been for some time. The only thing I deeply regret is that I did not open an account in American dollars - otherwise I am prepared for a continuation of the rout, as I was at the end of 2007. What we are seeing at the moment has uncomfortable parallels with what happened then, but I really would not like to predict quite how far down we shall be taken.

At present, however, I am sure that if you stand aside you will be doing the right thing. The international economic situation confronting us is deeply serious, and the rot that had been disguised by stimulus measures, bailouts, etc. has come to plague us.

I have just read in its entirety the lecture by Garnaut, and find myself greatly disturbed by the ease with which he separates what he sees as the "public" interest from the "private" interest. This is socialist thinking I grew up with in the 50s, and idealistically but unwisely supported by my parents. The whole implied distinction between "capitalists" on the one hand and "ordinary Australians" on the other is naive and mistaken, not least at a time when we have well and truly moved beyond that, and when "ordinary Australians" are inevitably harmed if the "capitalists" are prevented from making money for the benefit of all of us. While I had expected him to be out of touch, I had not expected him to be so stuck in an entirely outdated and discredited way of thinking.

Sorry - I had overlooked your intention to make money through shorting. I find that also not particularly attractive, but I do think it is a far more sensible approach than going long.

(Message edited by Ody on May 21, 2010)


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rdumas
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Friday, May 21, 2010 - 09:35 am:Edit Post Delete Post Print Post    View Post/Check IP (Moderator/Admin only) Ban Poster IP (Moderator/Admin only) Move Post (Moderator/Admin Only)



Target Levels for XJO

The way that the S&P500 index is slicing through strong support levels like a hot knife through butter you just know that we are seeing characteristics of a 3rd wave in action. For that reason I am labeling the current XJO wave in the chart below as a possible 3rd wave as well.



It is still entirely possible that we are undergoing an ABC correction and we are presently in a wave C. If that were the case then we would likely terminate the current move down at somewhere near the 50% Fib retracement level indicated on the chart.

If however we are forming an impulse wave down (waves labeled 1, 2, 3, 4 & 5) and we are only in wave 3 then we have a far more serious situation in progress. The reason is that the impulse wave down would only be part of a much larger pattern to the down side. That would then clearly take out the March 2009 low of 3120.8


I've given you my view based on what I know now. In another 5 minutes that view might change because of additional information. It's the best I can do - Rudy

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smithy
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Friday, May 21, 2010 - 10:13 am:Edit Post Delete Post Print Post    View Post/Check IP (Moderator/Admin only) Ban Poster IP (Moderator/Admin only) Move Post (Moderator/Admin Only)



Ody, you mention you feel vindicated by getting the bear market right, to who. I just don't understand the statement.
I say well done, you traded to your plan, you got out when you felt the time was right, that to me is vindication, to yourself.
Did you get out to early and miss the last leg up, doesn't matter your not in now and that's what was important to you at the time?
I think people need to understand it's not calling the market right that makes you a winner, it's trading your plan to the conditions that present currently. It's just we all use different ways to achieve this, Ody, fundamentals, rdumas elliot wave, myself an ATR break. I didn't know which way the market was going 4 weeks ago, about 3 weeks my system filter said no more longs, tighten your stops. All my trades got stopped out and I am no longer in the market.
Whenever any trader respects their trading plan whether mechanical or discretionary, they got it right.
At this moment, I would say someone is mad to go long because my filter is off, but someone else could be trading long saying this is a great time to buy. My question, who is right? Answer: Both....


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eblode
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Friday, May 21, 2010 - 10:16 am:Edit Post Delete Post Print Post    View Post/Check IP (Moderator/Admin only) Ban Poster IP (Moderator/Admin only) Move Post (Moderator/Admin Only)



MM,
Nothing feels better than sticking the boot in when a man is down, ey MM?

Eugenio


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market_mad
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Friday, May 21, 2010 - 10:50 am:Edit Post Delete Post Print Post    View Post/Check IP (Moderator/Admin only) Ban Poster IP (Moderator/Admin only) Move Post (Moderator/Admin Only)



Sorry Eugenio but if you don't laugh you'll cry...

You are right though in a sense becuase this sell off will produce excellent opportunities going forward.

That right shoulder is looking pretty strained at this moment in time.... I remember well how you were taking the mickey out of me for even suggesting that and that we were heading back to new highs...


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peterloh
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Friday, May 21, 2010 - 11:18 am:Edit Post Delete Post Print Post    View Post/Check IP (Moderator/Admin only) Ban Poster IP (Moderator/Admin only) Move Post (Moderator/Admin Only)



Ody and Rudy,

Good call, it took some time, but the magnitude went further than what I guarded against.I cannot distant myself from this risk completely but can only hope to buy some more when things settle down at a lower price. I also agree with Ody's analysis of the current situation and the harmful actions of the current government and comments by the bureaucrats which is doing no favours for the people in general. It is a fact of life that our money is invested in a cross range of assets, whether it is through superannuation funds or any other investment vehicles.If businesses find that there is no incentives or the rewards do not justify the risks, they will not be in it anymore.They will move on.We only made up of about 2% of the international allocation and that could be dumped easily whether it is currency or equities.Australia today is a sovereign risk in the eyes of international investors.


MM,

I am only making a general comment that if we buy something cheap by our own valuation in the longer term we stand to benefit. This is to be taken in context with Eugenio's remark about his mother experience and her comments to Eugenio.( I find Eugenio funny at times and toying around but this man is full of wisdom.)It does not mean that I agree that MAH is the right share to buy at this point of time.

Cheers

Peter


-------------------------------------------------
Disclaimer: Please note that comments made in this column is mainly for the interpretation of charts in technical analysis. It is not made in my professional capacity and should not be taken as advice.In my professional capacity I am only allowed to give advice on certain managed funds authorised by my license dealer.Any share discuss is for general interest and should not be relied on to make an investment decision.It is likely that I may own the shares that we discussed as a trade or as an investment. Please consult your stock broker or financial adviser in regard to your personal situation.

The views expressed here contain information derived from public available sources that has not been independently verified.No representation or warranty is made as to the accuracy, completeness or reliability of the information.Any forward looking information in this representation has been prepared on the basis of a number of assumptions which may prove to be incorrect.It should not be relied upon as a recommendation or forecast by the writer.

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ody
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Friday, May 21, 2010 - 01:36 pm:Edit Post Delete Post Print Post    View Post/Check IP (Moderator/Admin only) Ban Poster IP (Moderator/Admin only) Move Post (Moderator/Admin Only)



smithy: vindication

My statement that I did feel vindicated was a direct response to the following statement by Baysider, to whom I expressed thanks just before:

"Ody you are 100% totally vindicated in the position you've held all year."

What Baysider is plainly referring to is my reading of the market, which was considerably less optimistic than that of many posters on this thread, and that of the vast majority of members of the financial industry and the commentariat. Of course, my view was not unique, and I am not claiming it to be. On this thread, Rudy and MM, for example have for quite some time also pointed at the likely dangers ahead.

What we are talking about here is nothing other than whether some people make a better assessment as to where a market is heading than others - not something else. A minority of us here were right in our thinking that there would be a significant correction and that the bear market rally (which it has turned out to be) should not be seen as the beginning of a new bull market.

To some of us distinctions of this kind are important. To others they may not be. But, obviously, if people using different methods nevertheless do get good results that means that what happens in the market at a particular time supports their strategy, while those who misjudge what they are doing lose money. So there is no question of my suggesting that my way of investing is "the" way - it is one of several that people might use to get good results.

What is undeniable, though, is that not everyone gets equally good results. The market will reward those who know what they are doing (whatever the method they use), and will punish those who don't. It does make a difference how one proceeds.

By "punishment" I would mean "having financial loss imposed upon one when that was not sought or intended".

I add that peterloh is right to say just what he does say about Rudy and me, i.e. that we made a good call, though it took some time for the market to do what we said it would.


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baysider
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Friday, May 21, 2010 - 02:07 pm:Edit Post Delete Post Print Post    View Post/Check IP (Moderator/Admin only) Ban Poster IP (Moderator/Admin only) Move Post (Moderator/Admin Only)



Hi Rudy

The market has rebounded a bit from the lows of the day, whilst still being a negative day. If there is a bounce from here what you expect to act as resistance? There is some previous support, maybe now resistance at the current level of 4260 on the XJO, it will be interesting to see if that caps the rise today.


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bridog
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Rudy, like Baysider I'm finding some green shoots amongst the sea of red.

Could dawn be about to break? or is it just moonlight over the red sea?

Cheers,


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ody
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Friday, May 21, 2010 - 02:55 pm:Edit Post Delete Post Print Post    View Post/Check IP (Moderator/Admin only) Ban Poster IP (Moderator/Admin only) Move Post (Moderator/Admin Only)



A good time to buy Aussie stocks/the market?

I think the reason why the market is up a bit is the same, ultimately, as for the A$. There is some bargain hunting, it appears, but (a) in small volumes, and (b) unlikely to be of any length and to lead to any significant gains:
------------------------------------------------------
Australian dlr up as a minority bargain hunts
Friday May 21, 2010, 1:13 pm

SYDNEY/WELLINGTON, May 21 (Reuters) - The Australian dollar jumped over 2 percent on Friday, with hedge funds and Asian central banks cited as buyers after its fast slide this week rendered it attractive for those in for the long haul. * Australia dollar AUD=D4 up at $0.8233, a good way from a low of $0.8075 seen early Friday. Japanese margin traders also seen buying the Aussie, helping to spike as much as 3 percent to a high of 74.54 yen AUDJPY, from early Friday's 71.83.

* But Reuters matching data showed trading volumes behind Aussie's bounce on Friday were far thinner than volumes seen during the sell-off earlier this week.

* That suggested the market remained extremely cautious and investors who reckoned the Aussie is a bargain at these levels were a minority.

* There was talk in the market that the Reserve Bank of Australia (RBA) may be intervening in the market to support the Aussie. When asked, the RBA said it does not comment on market moves.

* The RBA has said in the past it intervenes when the market is disorderly, which is characterised by high volatility, sharply widening bid-ask spreads, or erratic movements. It has said it does not target specific Aussie levels.

* The last time the RBA said it was intervening in the market was at the height of the financial crisis in October 2008.

* Friday's bounce aside, Aussie is still on track for its worse week since October 2008 against the U.S. dollar and yen as hedge funds and mutual funds sharply reduce their bullish Aussie bets to protect their performances from the dropping currency.

* Kiwi NZD=D4 shielded from Aussie volatility for now, holding steady around $0.6665 level, after bouncing from an overnight low of $0.6619, lowest since August 12 last year. Support for kiwi seen around $0.6600 and resistance at $0.6700.

* Both currencies, proxy to risky trades, fall victim to risk aversion as equities and commodities fall on worries over the fallout of the euro zone credit crisis.

* Kiwi around one-month low at 0.5306 euro NZDEUR=R, after hitting a one-month low of 0.53 euro.

* The fortunes of the kiwi and Aussie are seen as closely linked. Aussie has been the main beneficiary of risk trades, and if investors sell it the kiwi may well be dragged lower.

* However, kiwi outperforms the Aussie and the cross rate AUDNZD=R sees the kiwi touch a seven month high of A$1.227 before trimming its gains.

* Interest rate swap market NZDIRS active, with two-year swap yield falling 21 basis points and 10-year yield down 11 basis points, leading to a steepening of the yield curve.

* Pricing of the first NZ rate rise on June 10 falls to 52 percent from around 70 percent CSRBNZ=CSAU in the morning on volatile financial markets and euro zone credit crisis.

* Data shows NZ's monthly migration gains down to a 16-month low in April. No market impact. [ID:nWEL004052] Consumer confidence and credit data also due Friday.

* NZ bonds 0#NZBMK= lower, with yields around 2 basis points higher. Aussie three-year bond futures YTTc1 also up 0.08 points at 95.24 and 10-year contract YTCc1 0.045 points higher at 94.64. (Reporting by Koh Gui Qing in SYDNEY and Mantik Kusjanto in WELLINGTON; Editing by Ed Davies)







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jaded
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Friday, May 21, 2010 - 03:06 pm:Edit Post Delete Post Print Post    View Post/Check IP (Moderator/Admin only) Ban Poster IP (Moderator/Admin only) Move Post (Moderator/Admin Only)



Cockatoo,bridog.
With MCC falling over COK is d'GO!!

with GRR arising in contention.


" Hear what you Say...
But see what you Do!"

Sir Zelman Cowen c 1970.

 
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