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Trade Trends with Bollonger Bands and Twiggs Money Flow

Archive through June 03, 2010

Chart Forum » Hilarius' Hall Of Fame » Our Daily Bread » Archive through June 03, 2010

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colin_twiggs
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Username: colin_twiggs

Post Number: 615
Registered: 06-2009

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Tuesday, June 01, 2010 - 02:03 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)



Ody & Rudy,

I would prefer the voting system to be used only when feedback is requested. Unfortunately the system does not cater for this.

A "3" vote is pretty meaningless -- which is why I used it as an example.

I believe that, at least in Peter's case, the 1 star was intended to register disagreement rather than disrespect and am pleased to see that that was how Peter interpreted it.


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market_mad
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Username: market_mad

Post Number: 358
Registered: 09-2009

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Tuesday, June 01, 2010 - 02:47 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)



Hi Rudy,

I'm with you in the expectation of a rally, but I am targeting around 4550-4600 to be the top - not quite as bullish as you, and then for the impending down leg to gather momentum from there.

Cheers

MM







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rdumas
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Username: rdumas

Post Number: 3492
Registered: 11-2006

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Tuesday, June 01, 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)



Hi MM,

I have always said that there was one final leg (multi-wave) before we would experience a huge fall in the XJO and that would represent the higher level wave C. Prechter appears to believe that it would be a wave 3. At this stage it doesn't really matter which it is because they would both large and painful for investors.

At this stage I have analysed a medium term scenario which completes towards the latter part of June. I will be studying the pattern that is in play at the time this scenario completes. The reason why I will do this is because it may turn out that the scenario that I have outlined may only be a lower order pattern and it is important to be sure of this before deciding that wave C is commencing.

Having some idea of the state of Andrew's cycles analysis in terms of where the 4, 2 and 1 year cycles are would suggest that the end of June would be far too early for any major move down of any huge proportions so I'm not convinced of the Prechter scenario playing out at this point in time.


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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Username: rdumas

Post Number: 3493
Registered: 11-2006

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Tuesday, June 01, 2010 - 03:13 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 MM,

I forgot to add that on the basis of my posted scenario, I put some money into STW at the low point earlier today. I would have pulled out had the XJO dropped below the critical level mentioned on the chart below for obvious reasons.




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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Username: ody

Post Number: 5077
Registered: 10-2006

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Tuesday, June 01, 2010 - 03:16 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)



Colin, - voting system

I fear that in practice it will actually be impossible to distinguish between "disagreement" and "disrespect". How is one going to know what the voter intended? I thought the voter was highly disrespectful towards Peter. For one thing, when the vote was recorded your present terminology did not yet apply. So the voter was supposedly recording the intellectual level of the post. But those who do feel contempt for whatever someone else says will still use the one-star rating, because there is no other way they can express their view. And what is the use of knowing that someone disagrees, anyway, supposing "disagreement" is actually being expressed? When the matter was put to the vote, the question of "disagreement" was not voted on, either... I am sure your intentions are in the right direction, but I doubt that the change in wording will also result in a change in behaviour.


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market_mad
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Username: market_mad

Post Number: 359
Registered: 09-2009

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Tuesday, June 01, 2010 - 03:33 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)



Hi Rudy,

Yes, that was indeed a critical level and I too took on some long CFD contracts over the ASX200 index around that bottom with stops placed at 4375.

If the market trades up above 4510 it could be an ABC retracement and I feel it could turn very bullish and blow my upside target out of the water and that 5000 could be the target once again as overlapping structures are VERY bullish, have to wait and see how it plays out.

What is concerning me though is that volumes on the up days have been way lower than the down days which is not at all bullish. So it may have been a 1 down, 2 up and 3 down to come...very bearish...

Tough call at the moment as we appear to me to be in no mans land!

Cheers
MM


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rdumas
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Post Number: 3494
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Tuesday, June 01, 2010 - 03:55 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)



Hi MM,

At this stage the thought of an impulse wave down has already been invalidated because the rally went into what would have been the price range of wave 1 down. For it to continue to be an impulse down it would have to mean that the current move up is a 3(i) wave. So until the pattern shows us any differently we should be seeing the move down as corrective rather than impulsive and that the corrective wave is more than likely a Flat pattern because it's first wave had 3 legs.

If this is the case then we may take a month or so to complete the rally up which fits in more with the other methodologies that I use indicating that it would be a multi-week (and possibly month) rally.




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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sway
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Username: sway

Post Number: 605
Registered: 12-2005

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Tuesday, June 01, 2010 - 05:46 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)



My take on the voting system is that I'm almost never aware of it. This is because I get the posts emailed to me, rather than reading them on IC forum. It's only when I decide to post myself that I see what everyone is so aggrieved about.

Even so, when I do see stars, I take no notice anyway.

Cheers
Sway


This is not a recommendation or advice. As they say .... DYOR.

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p3t3
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Post Number: 8
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Tuesday, June 01, 2010 - 11:05 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)




rdumas wrote on Tuesday, June 01, 2010 - 09:51 am:

I know that when I do my tax for my SMSF, if I haven't settled my trade within the current financial year then it is still considered to an unrealised gain/loss in that financial year...


Hello Rudy

Sounds like an accounting "accruals Vs cash basis" issue. My understanding is that if you have a contract note (buy/sell confirmation) from a broker you're entitled to record the transaction as at the date on that note...I've certainly included transactions dated 29th June without grief from or adjustment by my SMSF auditor.

If you ring the Tax Office and talk to three different people you could well get three different answers : yes, no and maybe. A fourth might offer technical obfuscation. If it went to an Appeal the reviewers usually have some legal training and you'd probably get a more reliable judgement. All the large Funds lodge on accruals basis anyway, so at least some parts of the Tax Office know about it.

Pete


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bridog
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Username: bridog

Post Number: 125
Registered: 06-2009

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Wednesday, June 02, 2010 - 12:24 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, the following table sets out the changes to some commodities in Aussie $ terms at the end of May 2010 (current) and the two previous months. While I’ve done this at the end of the previous two months, I’ve not posted them, mainly because I didn’t get around to doing it until a week into the new month by which time the info was out of date.


AUD Current Prev Month Diff Diff % 2 Mths Diff Diff %
Gold $ 1,433 $ 1,266 $ 167 13.2% $ 1,225 $ 208 17.0%
Silver $ 21.69 $ 20.01 $ 1.68 8.4% $ 19.47 $ 2.22 11.4%
Aluminium $ 2,403 $ 2,347 $ 56 2.4% $ 2,489 $ (86) -3.5%
Copper $ 8,178 $ 7,899 $ 279 3.5% $ 8,478 $ (300) -3.5%
Nickel $ 25,446 $ 27,560 $ (2,114) -7.7% $ 27,083 $ (1,637) -6.0%
Zinc $ 2,238 $ 2,420 $ (182) -7.5% $ 2,559 $ (321) -12.5%

LME Stocks
Aluminium 4,561,400 4,535,450 25,950 0.6% 4,600,150 -38,750 -0.8%
Copper 476,725 499,300 -22,575 -4.5% 514,325 -37,600 -7.3%
Nickel 138,504 145,314 -6,810 -4.7% 156,426 -17,922 -11.5%
Zinc 619,000 552,525 66,475 12.0% 542,200 76,800 14.2%

All Ords 4,453 4,834 -381 -7.9% 4,893 -440 -9.0%
XMJ 11,563 12,293 -730 -5.9% 12,806 -1,243 -9.7%
BDI 4,078 3,354 724 21.6% 2,998 1,080 36.0%

Gold has finally moved up in terms of our currency with silver following on behind.

The AUD price for all commodities covered have suffered a decline over the past two months with zinc being the worst performer with a fall of 12.5% and nickel down 6%. The XMJ is down more than the average of the price declines, likely thanks to Messrs Rudd and Swan.

LME inventories are down for copper and particularly nickel, down 11.5% which is good to see. Nickel inventories are still high by historical standards and vulnerable to a sell off in prices. Zinc is the shocker with inventories rising 14.5% over the two months in sync with its declining price. If this trend continues it is most bearish for zinc miners such as Perilya (in particular) and Kagara.

The BDI is up a whopping 36% over the 3 months, and yes I know it has been a bit discredited, but I agree with Rudy it should not be totally discarded. Clearly coal and iron ore is being loaded onto ships to the max. The only cloud over BHP and RIO is Australian sovereign risk. It makes me feel sick to say that.


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ody
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Post Number: 5078
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Wednesday, June 02, 2010 - 12:25 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)



Robert Gottliebsen (from Business Spectator)

RSPT shockwaves spread

There is a real danger that at the next election the ALP will lose all its Western Australian seats and have no representation in the federal parliament, according to Roy Morgan Polling. The people in WA understand the impact of this tax on their standard of living.

The material now starting to emerge about the RSPT mining tax is that few Australians will escape its impact because all our lives have become interwoven with the mining industry even though we often don’t realise it. And while there have been enormous protests about the RSPT mining tax from the Minerals Council, few companies have specified how it will affect their operations, hoping the tax will change. When they tell the horrific truth, many boards could be the subject of class actions from angry shareholders who will complain that directors kept the facts secret fearing the impact on the share price.

One of the best analyses so far on the effect of the RSPT on Australia has been undertaken by Ivor Ries writing in our sister publication, the Eureka Report. Ries is head of research at EL&C Baillieu Stockbroking and I commend the article to all those who are likely to be affected by the tax.

Ries calculates that the free cash flow of older mines that have virtually fully depreciated their equipment will be taxed at a whopping 60 to 70 per cent. That applies to Rio Tinto and BHP iron ore mines. It’s a fact that clearly needs to be announced by all listed companies in this situation because, although the exact details are uncertain, the tax – as currently planned – could have a material effect on share prices.

The tax also applies to the black and brown coal mines that fuel domestic power generation around the land. In many cases – and particularly in Victoria – these mines are highly leveraged and the tax cuts in before interest charges. The higher costs will have to be passed on and Ries estimates that it will add $3-$4 per megawatt hour to the average industrial or commercial power user's power bill, lifting Australia’s manufacturing cost base by between $800 million and $1 billion.

Ordinary Australians will also get hit.

Then count the cost of the closure of major new investments. Ries' calculations apply to the Queensland LNG plants where each major project cancelled costs 2000 full-time jobs and about $2 billion in state and federal taxes lost. Queensland is going to be brutalised by the tax because most of the Gladstone LNG projects will be lost, which involves investment of close to $90 billion – of which the majority was funded by Canberra’s 'foreign devils' (overseas-owned mineral companies and bankers). The Bowen Basin coal expansion is also in deep trouble.

In South Australia, Olympic Dam expansion is history while OneSteel chairman Peter Smedley announced that the tax in its current form would – over time – put the Whyalla steelworks out of business.

We could go on. Imagine if the secret government briefing of an advertising agency had explained that the tax would decimate the $90 billion LNG expansion in Queensland, slash WA iron ore expansion, kill off Olympic dam expansion plus Whyalla and raise power costs around the country. That’s the real truth.

Unless this tax is dramatically changed (and I think it will be), Australia will become like New Zealand – a low growth country. There is a very good case that over the medium term the mining tax as it is presently constituted will reduce, not increase, taxation revenue.

The government is right – we do have a national emergency and so does the Prime Minister.


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breaker_1
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Post Number: 186
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Wednesday, June 02, 2010 - 01:42 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, when I place the cursor over vote nothing happens

PS I hope this does'nt out me as a negative voter


When one door closes another door opens; but we so often look so long and so regretfully upon the closed door, that we do not see the ones which open for us.

Alexander Graham Bell





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breaker_1
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Wednesday, June 02, 2010 - 01:45 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)



That post must have triggered something as it works now


When one door closes another door opens; but we so often look so long and so regretfully upon the closed door, that we do not see the ones which open for us.

Alexander Graham Bell





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bridog
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Post Number: 126
Registered: 06-2009

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Wednesday, June 02, 2010 - 01:53 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)



Breaker 1 - BND

Yes I know South Galilee is a long way from production, they have to build a mine and even a trainline first to Abbott Point, not them but Waratah Coal.

I caught MD Ray Shaw on a local ABC radio program complaining about the risk of the RSPT on their projects.

These are my thoughts on BND:

1. The founding directors hold 65% of the companies shares off market, they are not listed. In addition the top 20 shareholders other than directors hold another 25% and have not shown any intention to sell. There are only some 24 million tradable shares outside the top 20. There was recently a broker arranged overseas transaction for about 5 million shares (from memory) which was probably from a top 20 holder.

2. I doubt BND will actually ever conduct any mining themselves, particularly at South Galilee. I'd say their objective is to prove up a valuable resource for which someone will pay a lot more than 17c per tonne. Chinese buyer?

3. Bandanna's coal resources in total add up to more than that of MCC, NHC or WHC. (When I looked at it last in March).

Summing up, I have no inside knowledge of the workings of BND, only the public record, but it seems to me that they have a world class resource in South Galilee plus a number of other projects. No investor should expect an early killing, it will be a patience game. As far as risk is concerned my take is low to moderate at current pricing because the thermal coal resources are inherently undervalued at 17c per tonne, even with the RSPT threat.

My plan is to be contrarian not TA driven, accumulating some shares when prices drop until I have a satisfactory core holding above which I'll trade. Mind you I'm not going in so hard as to do much damage if for whatever reason it doesn't work.

To anyone reading this, I must stress I'm not making any recommendations, I have no qualifications for that. I'm simply giving my view which may be right or wrong or somewhere in the middle.


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breaker_1
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Wednesday, June 02, 2010 - 07:45 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)



No worries bridog,I was suggesting you might have your money tied up for a while


When one door closes another door opens; but we so often look so long and so regretfully upon the closed door, that we do not see the ones which open for us.

Alexander Graham Bell





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rdumas
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Wednesday, June 02, 2010 - 07:48 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 Pete,

Thanks for that explanation. It makes sense that if you have a contract note that the chances of the trade not being settled would be miniscule and should be accepted by the tax department as being already settled. I agree with your comment about the 3 different opinions because I've gone through that route before. Because of this experience the approach I take now is to keep my tax returns (in particular the SMSF) completely idiot proof so as to not attract any misunderstandings.


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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Wednesday, June 02, 2010 - 08:18 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)



Rudy, how far does e.g. the S&P500 have to go down for it to go up? I must say that the mental climate for and in share markets seems in general to have declined again, and quite a bit. But possibly they are readying themselves for your final move up (before they go down more sharply)? Or do you think they are in the process of losing confidence more lastingly? To me it's beginning to look more like the latter, and both the fundamentals and the news flow point in that direction - but I concede I have been surprised more than once by the markets' ability to bounce back a bit time and again. So I don't like repeatedly to make the same mistake.


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jaded
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Wednesday, June 02, 2010 - 08:22 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)



bridog,anyone
any link that shows the monthly average spot price for iron ore.Want to keep track of it for next price negotiations.
Seems the Chinese are not at all happy with BHP/RIO and Vale 'pulling' this and are trying to circumvent or at least minimise buying from these three.

Also that Gulf Oil spill would be impacting BHP big time but it's being hidden/forgotten in the tax panic.
Remember Ok Tedi?my memory is it halved the BHP price from $20 to $10[prices prior to a share split years ago]
regards.


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

Sir Zelman Cowen c 1970.

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ody
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Wednesday, June 02, 2010 - 08:47 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)



Some very bad results

Most markets were down overnight, with many factors mentioned as having a likely negative impact (I don't think I remember anything positive). Most tellingly for Australia, perhaps, prices on the LME (London Metal Exchange) were SAVAGED. In general, things on this front have behaved much worse, and look far worse, too, than most people seem to realise. Labor's determination to introduce a resources tax looks more ludicrous and irresponsible by the day. (Note: I am not saying that the latest moves down on world markets are caused by Rudd and Swan - but I AM saying that their judgement is appalling.)

And yet the Coalition is not performing well enough either, with the Greens - who certainly cannot govern the country, and with whom it would be hard for either major party to form a "coalition" - in the ascendancy. We thus face a very uncertain political future, together with what looks a weakening economic future, and these two developments are likely to continue to dampen people's spirits, with a very likely fall in investment confidence. Even the residential market is now beginning to get affected. Yet the economy is certainly not sensibly balanced yet.

I think we are likely to be in for some disappointing times, even if we don't experience a truly big collapse in our share market (though it could be a big fall even if it isn't Prechter-size). Currently I cannot see a rise, as the psychology for that seems lacking - but maybe, if prices go low enough, the bulls will indeed have one last go. Not all bullishness has gone yet. But it must surely be diminishing.

Now we have increased tensions in the Middle East to contend with as well.

Gold is still looking good, though I'd like to hear Rudy explain how he sees both the share markets and gold.


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market_mad
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Wednesday, June 02, 2010 - 08:48 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 Ody,

Personally, I'm expecting a decent sized rally as long as this 4380 holds today, so I believe that is a key area today to look out for.

Futures are indicating a fall below this but I will be looking for the price at the COB today.

IMO it's probably a good value punt to buy stocks for a rally that could see the index push up 5% odd.

Cheers
MM


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ken
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Wednesday, June 02, 2010 - 09:04 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)



Hello Rudy,

On IGMarkets this morning the XJO equivalent Australia 200 Cash is currently at 4359. It could easily move up before the open but if the ASX200 opens at this level will it invalidate any of your scenarios?

Regards,

Ken


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market_mad
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Wednesday, June 02, 2010 - 09:26 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)



News just out which could bhoy the resource sector today;

A captain of Australia's mining industry voiced confidence on Wednesday that miners and the government could resolve their fierce dispute over Canberra's plans to slap the industry with a 40 percent profits tax. Ian Smith, chief executive of Newcrest Mining Ltd <ncm.ax>, Australia's biggest gold miner, made the comment at a conference in Canberra. Smith is also chairman of the mining industry's main lobby group, the Minerals Council of Australia.

Cheers
MM


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market_mad
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Wednesday, June 02, 2010 - 09:33 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)



Then again another headline just out; Australia's resources minister has said that headline rate of mine tax of 40% is not negotiable!

Government certainly playing hard ball

Cheers
MM


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bridog
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Wednesday, June 02, 2010 - 09:38 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)



Over the last couple of days most of the stocks I watch have drifted down but on ever diminishing volumes which could be said to be somewhat bullish.

But with all the negative news I'm not sure I have enough faith in my convictions to go into the market.

Eugenio, is that being a girlie-boy or what?

I'll look at gold/ gold stocks when the market opens, but think the price will have already jumped.

Cheers


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cat_lady
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Wednesday, June 02, 2010 - 10:04 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)



Jaded

the oil spill is impacting BP big time in the US (-15% last night) which is partly the reason for the big fall last night on wall street. however, not sure why this would impact on BHP? is there a connection?

cheers
cat lady


Without my morning coffee I might as well be a dog

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jaded
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Wednesday, June 02, 2010 - 10:22 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)



why cat lady,BHP owns the oil spill.It's up for the Multi/Hundreds of Million$$$ compensation,clean up etc.
It's also impacting on development approval in All Offshore Sites and Alaska.
I'm surprised that a Share Market Devotee such as you,cat lady was unaware of this.
or is this a trick question?

Certainly the Company Announce that it's the Contractor's Fault and Insurance will protect profits isn't washing now the Everglades are in Jeopardy.

regards


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

Sir Zelman Cowen c 1970.

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ody
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Wednesday, June 02, 2010 - 10:37 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)



From Business Spectator

Note: the article does not say that the price of gold - the metal - is at risk. Rather, it interestingly focuses on the RSPT's likely impact on gold mines (virtually inevitable), and discusses sovereign risk in Australia. The view that Australia is at serious risk is NOT, as Laborites often think, confined to the mining industry and the opposition in Australia: if anything people abroad look at what is happening here with greater concern, and usually just do not understand what possesses this government.

Of course, the government is not singlehandedly destroying the prospects for our mining sector, which would be experiencing difficulties anyway in this deepening crisis, but Rudd c.s. is actively contributing to the malaise.
-----------------------------------------------------

RSPT places gold sector at risk: report

The federal government's proposed 40 per cent resource super profits tax (RSPT) could place the local gold and minerals sector at risk, potentially destroying the value of some mines while making others unviable, The Australian Financial Review reports.

According to the newspaper, a KPMG report shows the RSPT would curb investment in new projects and have an especially detrimental impact for commodities including gold, copper and nickel.

"The lack of certainty in the debt markets means (miners) will not be able to price in meaningful reduction in the cost of debt, and access to debt will be challenging," the report said, according to the newspaper.

The findings of the KPMG study came as part of intensifying opposition from the resources sector to the rent tax, with the mining industry releasing economic modelling to show the scale of the impact of the proposed levy.

The KPMG report added weight to miners' concerns that companies will find it more difficult to raise project funding under the government's 40 per cent guarantee, and will face a range of finance arrangements far more complex than Treasury has forecast, the newspaper said.

Xstrata backs sovereign debt claims

Meanwhile, Xstrata chief executive Mick Davis has echoed calls from Rio chief executive Tom Albanese that the proposed RSPT is the biggest sovereign issue concerning miners, according to The Australian newspaper.

Last week, Mr Albanese said Rio was reviewing all of its investments in Australia due to the proposed tax, and describing Australia as its biggest sovereign risk concern.

Mr Davis sent a letter to the UK's Financial Times newspaper in response to an editorial claiming Mr Albanese's comments were 'absurd'.

"Sovereign risk concerns about Australia may once have seemed absurd. Sadly they are foremost on every mining company's board agenda," Mr Davis said, according to The Australian.


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cat_lady
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Wednesday, June 02, 2010 - 10:57 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 jaded

BHP has a no commerical interest in the macondo field. macondo is owned 65% BP, 25% Anarcando & 10% Mitsui. BHP will probably experience some short term difficulties with the spill, mainly because of the clamp down by US authorities on wanting every gulf of mexico operator to triple check all rigs. this new "environmental awareness" of the US is going to make it harder for all operators to work the gulf of mexico. they are also slightly impacted by the fact that in the nearby field of atlantis in which it JV's with BP (BHP has a 44% non operating ownership) several of the rigs have been diverted to assist with the horizon disaster which reduces slightly on the BHP's forecast oil production.

cheers
cat lady


Without my morning coffee I might as well be a dog

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rdumas
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Hi Ody/Ken,

I've got a very busy 'non market' schedule today and hence will miss out on most of today's price action.

My original comments made some time ago was that any down move at this part of the cycle would be limited and my position on that has not changed one iota. For the XJO I originally said that a move down to the 4072.95 level (50% retrace of March 2009 rall) was a possibility but even that I think is unlikely.

Ken, at this stage the impulse wave scenario is still in play as you can see from the chart below.




In the event that the wave iv went into the price range of wave i then it would mean that we had a 3 wave move up and we would have to look a triangle pattern before a final kick up to the levels I suggested yesterday. All this would do is keep both bulls and bears guessing until the last move.

The market just loves hurting as many participants as possible which is why I don't pay any attention to the daily changes in news articles and keep my eyes clearly focussed on the patterns playing out.

At this stage we are still in a complex move upwards. The volatility will keep everyone guessing however the pattern is pretty clear to me at present.


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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jaded
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Wednesday, June 02, 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)



must be drinking too much,cat lady.I really thought it was BHP not BP.
memo to self-don't just have a little one til after 4pm.


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

Sir Zelman Cowen c 1970.

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ody
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Rudy, - I think your analysis is actually pretty convincing, viewed technically. You are right to suggest that daily volatility, in either direction, should not be taken as much of a guide. I am sore, though, at losing out, with half of my former investment, on the rise in EFT GOLD! But at least the half I have kept is doing well. Still, the market is indeed not decisively going down, as you point out. And even the futures in the US, being in the green, may help our market to stand up today. However, the overall situation controlling the destiny of shares is very clearly getting worse, and although the bulls may try to counteract this by creating rallies or buying on what they see as low prices, they are not likely to win out, in my view. I.e., it can only be a matter of time for any rally to be knocked over the head again.

What we are seeing is pure speculation, I believe, which can very quickly change course, even though I can see why a number of people want to pull as much as they can out of this market before it turns down further. But with so much going wrong, optimism will not for long carry the day.


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cat_lady
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Wednesday, June 02, 2010 - 11:27 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)



no worries jaded
recent headlines wouldn't have helped much either. bloomberg ran an article last week linking BHP to the oilspill and calls for its operations in the gulf to be shut down. Took several close readings before I worked out they were referring to its JV with BP at a nearby oilfield and not the horizon platform.
cheers (or not )
cat lady


Without my morning coffee I might as well be a dog

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ody
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Wednesday, June 02, 2010 - 11:47 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)



More on the market's short-term direction

I do agree with Rudy that one must, to judge the immediate prospects, look at what the market (XJO) is actually doing in its overall pattern (for the shorter term, anyway), and not be misled, by daily volatility or by what one can see will be the eventual impact of fundamentals, into believing in something which is not occurring.

The combination of a number of bad days on the one hand and shocking fundamental news on the other could easily lead one to feel that the market is stagnant or going down, but that is just not true. On 21 May we had a low of 4175, and currently the market has reached, after an initial fall this day, 4402 (it is probably higher again when you see this). For a number of days, now, the OVERALL trend has been up, savage though some falls have been in individual stocks or even the market as a whole.

So I think Rudy is right to stick to his reading, certainly at this stage. How much further the rally from 21 May will go or how long it will go on for is the difficult thing to guess. I am not going to try, for although obviously markets are no longer as bullish as they were in April, there has been a recovery, however volatile, and that could well continue for longer than would to me seem logical. That is, from a fundamental perspective I see the market as going the wrong way and overpricing shares, but technically I must say I agree with Rudy that the pattern is, overall, UP, for the XJO. Perhaps those who are pushing our market up are Labor supporters! No - more likely just punters, or people in the financial industry.


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ody
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Wednesday, June 02, 2010 - 12:01 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)



jaded (and others): comments please!
------------------------------------------------

Deutsche lifts guidance for BHP, Rio on rising demand for thermal coal

* Michael Bennet
* From: The Australian
* June 02, 2010 10:36AM

Coal mining activity

Growing hunger for thermal coal in India and China has brightened prospects for miners. Source: Bloomberg

DEUTSCHE Bank has upgraded its earnings guidance for a swag of coal miners, including BHP Billiton and Rio Tinto, due to a possible rise in the thermal coal price over the next decade similar to iron ore&#146;s recent lift.

The German bank’s thermal coal team expects thermal coal prices to rise 26 per cent in the next two years to $US120 a tonne in the full-year 2012, on the back of a rise in net imports to China and India.

“The seaborne thermal coal market is experiencing a transformation which may be as significant as that which occurred for the iron ore market over the past decade,” analysts said.

“Then, China grew from a marginal consumer of seaborne iron ore to a giant, representing nearly 50 per cent of the entire market.

“In a similar way, we believe that China and India together could transform the demand landscape for thermal coal over the next decade; displacing the current, Western importers and evolving to dominate the industry.”

Analyst Brendan Fitzpatrick this morning upgraded Whitehaven Coal to a “buy” from “hold” & Macarthur Coal to a “hold” from “sell”.

Whitehaven and Centennial Coal are the bank’s preferred exposure, with the revised prices lifting valuations for the two by up to10 per cent, and Centennial’s earnings per share by up to 65 per cent in full-year 2012.

Analyst Paul Young also upgraded earnings for BHP and Rio, but said the increase of up to 5.5 per cent in 2012-13 was the most modest of the miners due to the size of their thermal coal businesses relative to their other divisions.

“We believe the competition for capital with other divisions means BHP’s energy coal growth pipeline is more limited than Xstrata and Anglo,” he said.

“After selling most of its domestic sales focused US assets, Rio’s coal division has increased its leverage to the higher-priced seaborne market. Xstrata, however, is the world’s largest thermal coal exporter and offers the most leverage to thermal coal pricing.”

Deutsche reiterated its “buy” rating on both Rio and BHP and upgraded its price targets 1 per cent to 4 per cent, to $48 for BHP and $96.50 for Rio.


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jaded
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well,Ody one just has to wait for signs and indications,these days.

Thermal Coal is chiefly for Power Generation.Power mostly for Industry as opposed to Households.So Demand for Thermal Coal is constricted by the needs of Industry.For example large areas of India have no Grid and those on the Grid have 'patchy' Supply.
Read once that the Indian Power Commissioner was really proud that they could supply electricity for 92% of the day.However the 8% downtime could be anytime leading to powered machinery etc anytime Blacking Out.

India is actually very involved in Alternative esp Solar Technology so they can avoid extending the Grid system.

Anyhow,we've all read how China has been building new Power Stations monthly or at least regularly and these seem to be Coal Fired and for ecological/smog reasons alone these will want to use Queensland/NSW Coal as opposed to Brown Dirty Coal from Victoria and WA SE corner.

However the Australian Coal Industry is Verboten around the cafe latte set.All that ETS stuff or any classification for tax on the Mining Industry will probably have Coal paying Top Whack so the 'climate' currently sets up a Risk Factor for Coal Investment.

Mentioned MCC and WHC.This is because they mainly Export while a lot/most of say NHC's production is for the domestic,Australian Market.I don't know if the International Spot Price flows thru to such Home Contracts.

Further I thought MCC was NOT Thermal but the 'other' one used for High Class Steel Production,PCI is it?
Anyway maybe this Glouster Deal is about getting Thermal Reserves happening for MCC,too.

Personally I'd be looking at Australian Run Off Shore Coal Operations maybe in Indonesia?I think I remember someone going BIG in Mongolia or Siberia but...well Mongolia!!!
Australian Infrastuture may be tired but at least we have some!!

Anyway,I'm on to Coal.Watching it for signs of regaining Momentum along with Iron Ore.No signs of encouragement spotted so far.My Watchlist just Ranges or should that be consolidates?

regards.


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

Sir Zelman Cowen c 1970.

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eagle
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Wednesday, June 02, 2010 - 01:37 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)



The following link provides an overview of coal industry from Aust Gov't perspective. The slides 8+9 are on Thermal Coal - show who is importing and who is exporting. Australia's nearest rival exporter is Indonesia and South Africa. India seen to be growing quicker than China from same base.

http://www.egcfe.ewg.apec.org/publications/proceedings/CFE/Korea_2009/(Session%204)Coal%20Demand-Supply%20Outlook%20in%20Australia.pdf


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ody
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Wednesday, June 02, 2010 - 01:42 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)



jaded and eagle: thanks both, on coal

MARKET: how interesting to see it plunge all of a sudden. I haven't got a clue as yet what trigger may have caused that, but it is certainly a sharp reversal. Bears waiting for a top for the day to go liquid? And ... how will the "professionals" end the market today??


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rdumas
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Will it channel or breach tomorrow

My gut feel is that it could be a pretty big move on the S&P500 tonight which would generate a similar move on the XJO. The 1067 level on the S&P500 is critical. A breach of that level would cause a significant move down to 1050 with a bit of support at 1055.

We can see that the XJO could go either way and obviously the US market tonight will determine the direction or our index tomorrow. It could go either way. My leaning is towards channeling but nothing would surprise me at this stage.




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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Wednesday, June 02, 2010 - 04:43 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)



Well, all in all that was quite a plunge

(written before I saw Rudy's post; simply taking this day in isolation I see no reason to change anything - but of course it OUGHT to be seen in context)

But 0.7% or so is not disastrous either. Even so, ALL sectors were in the red except three commonly held to be defensive: consumer staples, property trusts (not as defensive as they once were, but more so than in e.g. 2008), and telecommunications - the really strong sector, with Telstra up in a big way.

One presumes that these sectors may have been bought as more or less protective "investments" (not for rapid trading) by big funds, and possibly also by mums and dads, on the assumption that in any crisis people "will eat" (as the saying has it, with rolls of toilet paper etc often also getting a mention), and that property trusts and Telstra will provide a decent yield.

More speculative shares most often tended to end up in the red.

It appears to have been a rough sort of a day, with high volatility. Much of the underlying bearishness was shown not only in sector selection, but the fact that there were far more new lows than new highs, with down volume far outpacing up volume, and decliners much exceeding advancers. The turnaround was significant and strong (still don't know whether there was a trigger). At first blush volume seems to have been moderate to low, but at this point not all the figures are in. At the end of the day the index looked a wee bit stronger than just before, but not convincingly so: it had fallen quite a bit off its high for the day. If the second half belongs to "the professionals", then they were bearish.

As an indicator of days to come this did not look convincing for the bulls either. Even so, the fall was not large enough to show one anything decisive. But the general pattern of what happened would - over time at any rate - suggest bearishness rather than bullishness.

(Message edited by Ody on June 02, 2010)


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bridog
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Wednesday, June 02, 2010 - 05:04 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)



Got to agree with you Ody, my biggest loser today was ERA, which triggered a buy, and biggest winner Woolworths, unusual.


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ken
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Wednesday, June 02, 2010 - 05:06 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)



Hello all,

I have been analysing my spreadsheet of 4 years of daily results after a fairly depressing few days - I'm following my systems but wishing things were going better.

I decided on a whim to look at my performance by day of month (average of all the 1sts, 2nds etc.

To my amazement I found that four clusters of days were responsible for a huge amount of loss.

These days were

8th and 9th,
13th, 14th,15th,
21st and 22nd,
and 25th, 26th, 27th, 28th

Overall these "bad days" lost $97000

The remaining "good days" made $179000

I'll do some more work on this and let you know, but has anyone ever done anything similar?


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eagle
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Wednesday, June 02, 2010 - 05:08 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 - re potential trigger - Bloomberg has story that Japanese PM has said he will step down. Nikkei down over 1%. More instability in one of the largest (stagnant) world economies.

Bloomberg Dow Futures currently up about 20-30 points on last night's close.


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ody
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Wednesday, June 02, 2010 - 05:27 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)



eagle: thanks
ken: fascinating stuff - well worth researching, I'd say

I cannot remember seeing anything quite like this - so day specific. It does make you wonder.

In a more basic sort of way, and since this is 2010, the following by the editor of FnArena may be of interest:

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

History Suggests No Great Return For Year Zero

2/06/2010

Why is it the number zero and the share market don't seem to fit well together? Is it possible there is a ten-year cycle we seldom hear about?

Tracking down the performances of the Australian share market since the late nineteenth century it turns out the end of each decade usually ends on a subdued note.

Starting with the year 1890, which marked a negative performance for the Australian share market, only two years ending with zero have since proved to be very good years for owners of Australian shares: 1950 and 1980.

It has to be noted though, both these years yielded rather exceptional returns for Australian investors with the first generating more than 20% and the second more than 40% in share price appreciation alone.

But that's about as far as the good news stretches for the twelve decade-ending years we have had since then. This year will be number thirteen. When looking at the past hundred and twenty years, the share market performance during the first five months of the new calendar year doesn’t look like a big surprise.

Apart from the above mentioned two exceptional years, four others generated a minor positive result, but six years (50%) ended deep in the red. Three of these years (1930, 1970 and 1990) are in the top ten of all-time worst performances for the Australian share market, two (1930 and 1990) are in the all-time worst top five (together with 2008, 1973 and 1974).

It seems we've just discovered one hard and cold fact: years ending with a zero are usually not that kind to investors in the share market. Note for instance that the year 2000 was negative for shares in the US and in Europe as the tech and on-line media bubble burst post the Y2K-mania, but Australian shares still managed to post a minor positive return that year. Otherwise the picture would have looked even bleaker!

On pure statistical calculations, years ending with zero have a 16.66% chance for generating an exceptionally good result, but a 50% chance to end up in the red. Pushing the odds further into negative is the fact that the remaining four years only generated a sub-par result.

And looking at the two exceptional performances of 1950 and 1980, it appears overall circumstances were very different from where we are today. The performance in 1950 was, at the time, by far the best year since 1934, and investors had to wait until 1959 to beat that year's performance. The two years prior to 1950 proved dismal, the two years after 1950 turned out negative.

1980 has a similar story to tell, in that the two following years equally generated a negative return for investors. Prior to 1980, the share market had recovered from a negative year by rallying three years in a row and 1980, the fourth year, proved the ultimate pinnacle of that rally.

(One could say 1980 looked very much like 2007 did in our time).

Towards the end of 2009, UBS's global risk appetite index had surged to "extremely high" levels. This, commented the analysts, was usually a sign that a major peak was forming and that rather poor results for share markets in the year ahead should be expected. The good news was that if UBS's historical pattern repeats, then 2011 should again prove a very good year for equities.

A closer look into the UBS index over the past four years, however, casts at least some doubt over the accuracy of such claim. The UBS Global Equity Strategy Risk Indicator, as the index is officially known, reached similar levels of "extreme high risk appetite" at the end of 2005/early 2006. As we know now, the year thereafter still proved to be very good for share market investors. Equally, in 2004 overall risk appetite surged to similar high levels, and that turned out a good year as well.

And would you believe: by the end of 2007 global risk appetite, as measured by UBS, was nowhere near any such levels of extreme investor optimism!

Regardless, UBS maintains the index has proved to be a reliable contrarian indicator when stretching into extremes. It bottomed to an all-time low in October last year and here we are, one year and a double-digit jump higher. Maybe UBS's indicator is simply telling us the same story as the historical data: cautious seems best?

This appears especially the case when we take note of research done by Harry S Dent Jr, the publisher of US financial newsletter HS Dent Forecast. According to Dent, 2010 will see two cycles come together -a four year cycle and the decennial cycle- and both are pointing in negative direction. This is why Dent predicts the present recovery in economic data will prove false and we will soon see renewed weaknesses in the global financial system burst to the surface.

Dent's research stretches back to 1960 and according to his conclusions, every time when four-year and decennial cycles have come together while both pointing downwards in the same year, major corrections in the US share market have followed. Typically, such occurrences point to major economic recessions as well.

The last two times when both cycles coincided in the same year? 1970 and 1990. Yes, that's right, both years feature prominently in the worst top five of all times for the Australian share market.

No doubt, Dent's forecast is music to the ears of many bearish commentators who like to draw comparisons with the 1930s, or with Japan's two lost decades.

Rudi Filapek-Vandyck
Editor - FNArena
---------------------------------
No doubt ... (Ody)


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bridog
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Wednesday, June 02, 2010 - 09:40 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)



Jaded,

Re Iron Ore pricing, glad you asked, otherwise wouldn't have looked. The following link will supply pricing for commodities including thermal coal and iron ore, but it is only up to April:

http://www.indexmundi.com/commodities/?commodity=iron-ore&months=60

If you find a better one would appreciate a link.

Cheers


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ody
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Thursday, June 03, 2010 - 05:48 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)



Rudy, - Your prediction for a likely jump on the S&P500 has proved remarkably accurate: there is now only some 15-20 minutes to go and the index is 2% up. Not only that, but South America is performing similarly strongly, and as a result of the American advance, futures (despite earlier mediocrity in Asia and Europe) are now up for most markets: 70 or so for the XJO.

Congratulations! I think this is one of your most impressive "scores" yet, especially because you ruggedly - though not dogmatically - stuck to this as your most likely scenario, and you would now seem to be "in business" with respect to the likely aftermath too.


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ody
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Thursday, June 03, 2010 - 06:48 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)



Triggers for rise on Wall Street

In share markets, what happens on a particular day is often due to (a) what happened on the previous day, and (b) something else that will steer people's minds in the direction of a positive or a negative attitude.

The piece below in essence reveals how this worked on Wall Street overnight (our time). The market had an incentive to go up from the previous down day, and as well there was a substantial reason for it to act positively.

Does this reasoning sit oddly with what Rudy analysed, and the basis of his analysis? Not at all. The advantage of what he does is that he can, with his analytic strategy, reasonably map out one or more possible scenarios as to how a market is likely to jump on the basis of well-demonstrated series of steps/waves (waves being a larger formation of steps adding up in a particular direction). If this methodology were constantly at war with sentiment in the market which can be seen operating by someone seeking to understand the market's psychology, that would be very odd.

So we can see, with fascination, how in a case like this the market jumped up according to what Rudy expected, but also in a way which any normally intelligent person can understand without using his methodology. Where that methodology is extremely powerful and useful when applied with Rudy's finesse is that it suggests the move the day BEFORE it happens. And, indeed, of course Rudy's interpretation of what would happen started much earlier than yesterday. The success, in a case like this, of his approach is undeniable, and as I think I said before, it is a prediction often in tune with - and thus in fact predictive of - some "real" events which make the market move the way it does, even if of course it cannot be expected to foresee just what those real events are. It can obviously put to use the fact that human behaviour tends to follow certain patterns and therefore have a reasonable go at predicting what "will come next", in terms of the pattern. What it cannot do, and cannot be expected to do, is to know just which events will trigger off the behaviour forming the event. But that does not mean that there aren't such events, or that the market operates totally in some sort of psychological void. On the contrary: the virtue of Rudy's analysis that it is in tune with the real world, not just some supposedly totally arbitrary and incomprehensible "internalised" psychology. For those of us who have been analysing for years just WHAT at any time makes the market move, there are usually perfectly understandable reasons (whether in tune with "normal" logic or seemingly defying that) which can make us comprehend what is driving people.

The fact is, however, that although a study of such conduct, and particularly over time, helps one to understand what prompts markets to act in the way they do, what one learns from the observations is often not helpful on a day to day basis to the extent that it will help one precisely to understand BEFORE matters happen just what will happen next. One will often develop some fairly clear view as to where a market is likely to be heading over some time, and in particular if one has been CLOSELY observing it will at times pick a turning point quite exactly, in advance, when one is near it; but quite often one's timing is not exact even though one's sense of what is building up, and will build up further, reasonably helps one to decide when to do what.

But, as someone who in general can judge the mentality of the market better than most, going by my own record, and thus reasonably establish when it makes sense to be "in" or "out" for a fairly substantial time-frame (I am only interested in divisions between "up-phases" and "down-phases" of some length), I know that I have never been able to achieve, and never will, such an accurate prediction as Rudy made of what Wall Street would do tonight (our time; it is still night as I write).
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Wall Street rebounds on energy, home sales

Reuters

NEW YORK - US stocks rose as investors grabbed shares beaten down in the previous session's sell-off and data showed pending home sales rose more than expected.

The major indexes advanced more than one per cent, reversing yesterday's slide in which energy shares had tumbled.

Stocks have struggled to build upward momentum since reaching a 19-month high on April 23, with the S&P 500 climbing from recent support at 1,060.

Data showed pending sales of previously owned homes increased to a six-month high in April, though analysts pointed to a rush to take advantage of the home buyer's tax credit before it expired.

Investors seized on the housing data as a reason to get back into the market.

"The fact that the market is reacting to a data point that some people feel deserves a pretty big footnote is indicative of a market that does seem to be skewed to the oversold side," said Craig Peckham, equity trading strategist at Jefferies & Company in New York.

The Dow Jones industrial average rose 107.62 points, or 1.07 per cent, to 10,131.64.

The Standard & Poor's 500 Index gained 14.27 points, or 1.33 per cent, to 1,084.98.

The Nasdaq Composite Index climbed 32.03 points, or 1.44 per cent, to 2,254.36.

In company news, Ford Motor Co said its US sales rose in May for all brands from a year earlier and announced an increase in its second-quarter North American production plan, sending its stock up 2.5 per cent at $US11.70.

The Dow Jones US Home Construction index rose two per cent and KB Home gained 2.3 per cent to $US14.04.

Energy shares were among the best performing stocks, recovering from Tuesday's losses while BP Plc embarked on its latest effort to halt the oil spill in the Gulf of Mexico. Even so, the plan hit a snag as BP attempted to cut away what is left of the well's riser pipe.

US-listed shares of BP climbed 1.9 per cent to $US37.21 but since the rig explosion on April 20, the shares have lost more than 38 per cent.

The PHLX Oil Service Sector index climbed 4 percent as Halliburton Co jumped 11.5 per cent to $US23.57 and Schlumberger Ltd advanced 7.9 per cent to $US55.85.

While there's still investor caution over the outlook for the stocks, "the genuine blood bath in the sector yesterday certainly seems to have drawn in some fundamental value seekers," Mr Peckham said.

Also giving the energy sector a lift was a 1.3 per cent gain in oil prices to $US73.55 a barrel. The S&P energy index rose 2.8 per cent.

Amgen Inc helped boost the Nasdaq, gaining 8.4 per cent to $US55.03 after the US Food and Drug Administration approved its osteoporosis drug.


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ody
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Latest on the RSPT

Kevin Rudd has by now so many good reasons for re-examing his RSPT that he would be committing electoral suicide if he did not seriously start doing so now. It is still not too late. If he can honestly admit that he made a mistake, and in particular in listening to Ken Henry's idiocy, but develop a sensible tax plan instead, in consultation with the industry and others who know more than bureaucrats, he can earn the respect of his fellow citizens. If he adopts pigheadedness instead, the country will suffer more and more, and political chaos would probably result as neither the government nor the opposition can then run the country convincingly on its own and the greens in effect will hold the balance of power.

Rod Eddington is chiefly famous for his outstanding re-shaping of British Airways. His strategic insight should not be ignored.
-------------------------------------------------------

Restart tax plan: Kevin Rudd's man Rod Eddington

* Dennis Shanahan and Jennifer Hewett
* From: The Australian
* June 03, 2010 12:00AM

KEVIN Rudd's chief adviser on major building projects has told the government to restart its proposed resource super-profits tax from scratch and engage in proper consultation with the mining industry.

Rod Eddington, the head of Infrastructure Australia and a board member of mining giant Rio Tinto, said last night good policy process had been absent in the debate about the new tax.

He said the negotiation process with miners left much to be desired, saying good policy flowed from proper process while "a failure of process can even lead to serious divisions in the community".

Addressing the Minerals Council of Australia annual dinner in Canberra, he urged the government to comprehensively consult the mining industry. "The process must begin now," he said. "Cool heads must prevail."

Sir Rod's comments came as billionaire mining chief Andrew Forrest claimed Treasury secretary Ken Henry told him privately the proposed tax was pointless if one of its key components - a pledge to refund 40 per cent on failed projects - were abolished.

-------------------------
Intermezzo: poll conducted by The Australian (see the result, - Ody)

Do you think Kevin Rudd should back down over the resources super profits tax?

* Yes 74.88% (3633 votes)
* No 25.12% (1219 votes)

Total votes: 4852
--------------------------------------------------

One of Australia's most respected economists, Chris Richardson of Access Economics, also rejected the modelling behind the RSPT, effectively telling Treasury it got it badly wrong.

Tony Abbott yesterday warned the mining industry not to listen to "honeyed words" from the Prime Minister about consultation and compromise on the proposed mining tax and urged the industry to continue the fight against the $12 billion impost.

And Chang Zhenming, head of the biggest Chinese investor in the Australian mining sector, Citic Pacific, told The Australian he was "shocked" and concerned about the potential impact of the tax on his $US5 billion ($6bn) iron ore project in the Pilbara region of Western Australia.

The government is fighting a furious backlash from the mining industry to its plans to impose a super-profits tax on the sector, which were announced in its response to Dr Henry's tax review early last month.

Miners claim there was inadequate consultation with the industry before the tax - which will raise at least $9bn a year - was announced and that they can't negotiate with the government's consultation panel because of its narrow guidelines.

Sir Rod - who was appointed by the government to provide advice on significant infrastructure projects, to sort out the priority for spending billions of dollars in commonwealth funds and to remove "disincentives to greater investment in public infrastructure" - said last night the importance of the new mining tax meant there had to be proper consultation over a long period.

He was backed by Leigh Clifford, the chairman of Qantas and a former Rio chief, who told the MCA there was room for a profit-based tax on the industry but what had been put forward was "not good policy . . . was ill-considered and poorly implemented".

Amid speculation that the Prime Minister and Wayne Swan were preparing to withdraw the planned 40 per cent refund and increase the rate at which the tax kicks in as part of a compromise deal, Mr Forrest said yesterday Dr Henry told him last month that the logic of the tax would "collapse" if it were significantly altered.

"Ken Henry himself does not believe this tax works if they tinker with it," he said.

The Fortescue Metals Group chief said it was clear that financiers - including those for his planned multi-billion-dollar iron ore expansion projects in the Pilbara - placed little or no value on the 40 per cent guarantee and were walking away from the Australian mining sector.

Mr Forrest launched a scathing attack on Mr Rudd, accusing him of targeting the mining industry for "purely political purposes" and launching an "aggressive misinformation campaign".

"It leaves me aghast that we have a Prime Minister prepared to trade the sovereign status of his country for a chance at improving an election process or plugging a hole in a budget," he said.

Mr Richardson, chief of Access Economics, said the tax would slow the development of new projects and that while minerals might not be mobile, investment in them was. He said the prospect of the tax raising mining output - as the Henry review predicted - would take 50 to 100 years and would only occur once Australia had returned to its intitial, relative position on the global cost curve.

A Treasury spokesman said Dr Henry was on leave and had no comment.

The Opposition Leader vowed to fight the tax with "every breath", saying Mr Rudd would offer consultation all the way to the election to stifle the argument over the tax.

Mr Rudd did not address the MCA annual dinner last night but did host pre-dinner drinks in his parliamentary suite for senior mining company executives.

The talks over drinks last night came a day after Mr Rudd publicly called for consultation between the government and industry rather than "through the media".

Earlier, Resources Minister Martin Ferguson told the MCA seminar the government wished to "work with" the mining industry and offered "generous transition" concessions in negotiations about the new tax.

"The government wants to continue to work with you," Mr Ferguson said. "We are only at the very beginning of what will be a long and detailed process."

But Mr Abbott told mining company executives in Canberra Mr Rudd would attempt to get them to drop their campaign against the RSPT before the election and then a re-elected Labor government bring it in afterwards.

Additional reporting: Andrew Burrell


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baysider
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Rudy and MM
You never cease to amaze me. MM you said we have to hold 4380, despite a very volatile day we did - just and look at the results! As Rudy predicted a major rebound of 2%+. Well done guys.

You'd expect the Gold ETF to fall today and more if there is a good rally, what level are you looking for Rudy to buy back in? $128?


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rdumas
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Hi Ody,

Thanks for your kind comments above. As you know I have never agreed with the sage views of a small number of posters who suggested that it was impossible to determine likely future events in the share market. There is no doubt that in life anything is possible and what is even more certain is that when we say to ourselves that something is impossible that thought in itself has the power to cut the legs of the possible from beneath us.

The use of technical analysis has never been to accurately predict the future. Its purpose is to make an attempt to determine the likelihood of higher probability events. It is our role as technical analysts to use as many tools as possible to give us an edge in that area.

I have often been amazed at the comments from these experts who has stated that attempting to determine the likelihood of an increasing share price for a share we wish to invest in was a complete waste of time. It totally defies reason. Each investor who makes an investment must (regardless of whatever method that they use to determine the suitability of their purchase) believe that that investment will give a return. Hence at some level they must be making a determination about their view of the future direction of the value (share price) of that investment. To say otherwise is a complete nonsense.

What I do agree with though is that the proper selection of a suitable investment is only part of the job that needs to be done in order to increase the chances of a profitable investment or, if not, to limit any possible losses.







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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Hi Baysider,

The question of when to get back into ETF GOLD isn't that simple. In the words of my friend Andrew, what I will be looking at in order to determine my re-entry will be a combination of price, time and pattern. All three need to line up to get it spot on and getting it spot on is not simple. As I said in my last post, the best we can do is to increase our probabilities of getting it right. That in no way suggests that we will get it right.

At this stage I am not expecting a higher order turn around in ETF GOLD until around the 19th to 21st of June but I will be monitoring the pattern carefully. As the time and pattern approaches likely turning points I'll look at the appropriate Fib levels to take a stab at the likely price. Until then, I'll just watch and attempt to interpret what I'm seeing.


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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