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Archive through October 09, 2010

Chart Forum » Hilarius' Hall Of Fame » Our Daily Bread » Archive through October 09, 2010

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eblode
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Post Number: 1484
Registered: 11-2002

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Thursday, September 30, 2010 - 04:21 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)



Bridog,

Saw that double top too late. Had you warned me I would of remembered you in my will.

Eugenio


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ody
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Username: ody

Post Number: 5398
Registered: 10-2006

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Thursday, September 30, 2010 - 05:10 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)



"A nice drop"

Not of booze, but in the share market. Intellectually very satisfying.

Eugenio, your bet concerning that $1.27 of the AUD vs the A$ is on that in my view only a constitutional optimist would make. Sure, an advantage of your outlook is that you won't easily miss out on upside - but do you seriously think that a bet like this was "realistic"? You must be kidding, I am sure. But, it is quite charming to see such a joyous outlook on things in a world where so much is wrong!







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eblode
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Thursday, September 30, 2010 - 05:37 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)



Ody,my friend,
You are absolutely right on. When I made that outrageous bet that the dollar would reach 1.27 by October I knew it was impossible BUT for the hell of it I made the bet. All I could lose is a bottle of whiskey to a fellow comrade on IC and it was a pleasure as MM has given me many keen insights, as you have in the past.

Eugenio

PS But wait until the 15th of October. Who knows? $1.27 ??? Anything can happen.


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baysider
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Username: baysider

Post Number: 453
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Thursday, September 30, 2010 - 06:14 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)



And that dear IC readers is what makes Eugenio the man he is!


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market_mad
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Thursday, September 30, 2010 - 08:44 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)



Here, here Baysider - Eugenio, you are a legend my friend and I'll never tire of reading your posts!

Cheers
MM


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eblode
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Post Number: 1486
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Thursday, September 30, 2010 - 10:37 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)



Just heard that Tony Curtis died. I knew him by the name of Bernie Schwartz when he used to hang out at the Saturday night dances at the YMCA at 92nd street and Lexington Ave. He lived in the Bronx. I remember him telling me once that he auditioned for a job for Mae West and was completely flustered when he entered the room and she said " is that a gun in your pocket or are you just glad to see me".

Eugenio


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bridog
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Username: bridog

Post Number: 177
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Friday, October 01, 2010 - 07:25 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)



Eugenio,

You should include me in your will anyhow, as I gave notice in an earlier post that I would be out of EXS if it fell short of the previous high.

But on second thoughts, don't worry bout the will, you'll outlive me for sure!

Cheers
Bridog

ps Good story on Tony Curtis :>)


Old enough to know better . . .

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ody
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Post Number: 5399
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Friday, October 01, 2010 - 08:09 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)



Eugenio: May West's famous quote

What you said about West's possibly most famous quote as supposedly directed to Tony Curtis struck me at once as quite out of tune with everything I had previously heard and read about it - i.e. I felt certain that Curtis had nothing to do with it. Now Wikipedia may not be perfect, but it does present the facts as quite different, and I think there has to be at the least a big question mark about the Curtis connection. She appears to have made the remark on two occasions - one personal, and the other professional. I quote Wiki:

"Mae West remains notable for a large number of quips, some firmly tied to herself and her characters, and others widely borrowed for very different settings. A famous Mae West quip was "Is that a pistol in your pocket or are you just glad to see me?"[135] She made this remark in February 1936, at the railway station in Los Angeles upon her return from Chicago, when a Los Angeles police officer was assigned to escort her home.[136] She delivered the line on film to George Hamilton in her last movie, Sextette (1978)."


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eblode
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Friday, October 01, 2010 - 09:12 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,
I'm quite sure that Mae West had a standard number of original quips that she used on many occasions. One of my favorites was the one used when she checked her mink coat into a night club and the girl said "my goodness" and Mae replied "goodness had nothing to do with it".
Another celebrity of my era died this week who was my age, 82, Eddy Fisher. He was truly a pathetic figure. In many ways his career resembled Tony Curtis. Both came from poor Jewish backgrounds. Both had influential benefactors who gave them a tremendous leap forward in their careers. Eddy Fisher got some temporary work singing at "Grossingers" family resort in the Catskill mountains. The Catskills were what the Dandenongs are to Melbourne. The Grossinger family opened a family vacation resort on a modest scale in 1931 but soon became famous for it's reasonable tariff which included food and board. It was the food that made Grossinger's the most famous and largest resort in the area. The portions were enormous, and delicious. At that time Eddy Cantor was a guest at Grossingers and heard Eddy Fisher sing. Now Eddy Cantor was a famous American comedian, a big star in radio, movies and on stage at the "follies". But he was broke. He lost his money in the crash of 1929 and he had a gambling problem. With 5 daughters to support he had a real problem. However he saw an opportunity to enhance his fortune and took Eddy Fisher under his wing. Introduced him to the right people, got him national publicity, arranged his songs and soon Eddy Fisher was on his way....and Eddy Cantor paid his debts. When Eddy Fisher married "America's sweetheart" Debbie Reynolds, who had just completed "Singing In The Rain" it was, according to the mags a match made in heaven. Soon Debbie and Eddy had 2 children, success from every direction beckoned. Then without any warning Eddy Fisher committed commercial suicide. He dumped Debbie and with a huge smile on his stupid face announced he was marrying Elizabeth Taylor.
The American public was shocked. I choked on the news. Poor sweet Debbie cast aside for the vamp of the century. The fury of the public was enormous.
Coca Cola immediately cancelled his weekly coast to coast TV program and paid him out. His record sales plunged. He attempted a movie career helped by Taylor in "Butterfield 8". He was lousy. And then came the deepest cut of all. Taylor went to Rome to make "Cleopatra" with Richard Burton. Eddy tagged along. Then to his shock and the world's surprise Taylor carried on quite openly on the set a torrid romance with the married Richard Burton. There was nothing Eddy could do or say. He was told in no uncertain terms to get lost. So he returned to New York, wandered around cheap night clubs for dates, got married again, then again, then again. Went broke in 1972. Got caught up with drugs, had a face lift. Came to Australia in 1981, sang in some dumps and then finally ended his days married to a Chinese woman who died in 2001. To the end of his life he maintained that Elizabeth Taylor was the love of his life and he had no regrets.
Looking back on the lives of Tony Curtis and Eddy Fisher, who had 10 wives between them I outclassed them both by picking the girl who I would marry again tomorrow after 54 years.

Eugenio


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ody
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Friday, October 01, 2010 - 09:50 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)



Wall Street rally ending

A snippet from CNN:
-----------------------------------------------
Though September has traditionally been the market's worst month, the Dow surged 7.72 per cent this month, its biggest monthly point gain since October 2002.

The outsized gains came as modestly improving economic data helped ease fears over a double-dip recession. Widespread expectations that the US Federal Reserve is prepared to pull the trigger on additional stimulus measures have also propped up the stockmarket.

"All we needed was the economic data to stabilise and the Fed to raise their hand and say, 'Not on my watch,'" regarding deteriorating economic conditions, to prompt the rally, said Barry Knapp, head of equities portfolio strategy at Barclays Capital.
----------------------------------------------
I am sure Knapp is right, and that this is indeed how Wall Street proceeded. And what a way to push a market up. In essence the psychology is that if there are no dramatic new revelations of disaster, and some very questionable signs of possible improvement, you must "jump in" and make sure that you "don't miss out on the upswing". The risks are not appropriately paid attention to except - I do grant - by very "safe" and cautious short-term traders, and of course people like myself who stay out.

The truth is that a MAJORITY of people in the share market do NOT know what they are doing, as otherwise we'd not get the frequently repeated hugely damaging crashes that we do see. Noone actually wants to experience them, but conventional wisdom is that you cannot foresee them, are better off staying put, etc. That way what could have been truly significant gains are to a significant extent - depending on a person's entry sometimes wholly! - lost again.

The other reason for the upsurge is even worse: it is in essence one of the dependency of a drug-taker. You reason that, no matter what, the Fed will help you out, not least, at this juncture, by printing money. Hallelujah! That means that although the money becomes worth less, you plough it into the share market on the principle that the more money goes into that, the more "real assets" like shares go up in value, while in fact the American share market has, as a result of this self-deception, in real terms actually stood still for the last ten years or so.

And there is nothing to indicate that these dynamics are about to change: the US will continue to print money and thus to impoverish [CENSOR!] itself; it will continue to push share markets up while increasing debt and lowering the value of its currency, and it will continue to create crashes. Meanwhile, with speculation now a very important part of the US economy (if that's the right word), and real work and real assets having become increasingly unimportant/debased in that country, the nation is inevitably sliding further and further into decay. The whole mindset is utterly wrong, and really needs an inner revolution for which Americans, drugged as they are, won't have the strength.

The worst thing we could do is to underestimate the seriousness of this situation. The country HAS lost its way, and the impact of its further decline will have huge ramifications worldwide.

For the moment it looks as though we, in Australia, are being spared. But shall we be able to keep things this way? With problems of enormous magnitude in both the US and Europe, China seems to me certain to be affected at various times, and thus Australia with it. Whether the IMF is right or not about a possible collapse in the resources sector, only an utter optimist would consider it certain - as our Labor government does - that we shall continue to make money at the present rate, that the dollar will remain high, etc. The whole situation does, unfortunately, rest on a good many assumptions and uncertainties.


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ody
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Friday, October 01, 2010 - 10:48 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)



Deep-seated US problems getting more prominent - and seemingly insoluble (or likely to remain unsolved):
-------------------------------------------
Jobless a worry as US growth picks up

* ANALYSIS: Kathleen Madigan
* From: Dow Jones Newswires
* October 01, 2010 6:32AM

IF a 2 per cent annual growth rate is the best that the US economy can hope for, then labour markets are in for a long slog.

Real gross domestic product growth for the second quarter was revised to an annual rate of 1.7 per cent, slightly higher than the 1.6 per cent pace reported a month ago. But it's less than the original estimate of 2.6 per cent and the 3.7 per cent rate logged for the first quarter.

Bear in mind that the report is old news given that it is the last day of the third quarter, but the data highlight two problems for growth going forward: inventories and imports.

First, half of the puny growth rate last quarter came from businesses rebuilding inventories. Growth in real final sales was revised down slightly to 0.9 per cent from 1.0 per cent. With demand so weak, however, it's hard to see why companies will keep stockpiling goods at a rapid pace going forward.

Second, even weak demand is pulling in boatloads of foreign-made goods. Imports jumped 34 per cent in the second quarter. That was the fastest pace since 1984 and completely overwhelmed the 9.1 per cent gain in US exports.

The upshot is that foreign producers -- and workers -- are benefiting almost as much as US manufacturers are when it comes to US spending on goods.

Third-quarter growth is probably better than the second quarter. Steven Wood, chief economist at Insight Economics, said the data released so far for July, August, and early September suggest third-quarter GDP is still relatively "subdued" with many early estimates running between 2.0 per cent and 2.5 per cent.

Yet history suggests real GDP growth has to speed up closer to a 3 per cent pace in order to provide the high number of new jobs the US desperately needs.

No wonder initial jobless claims remain disturbingly high. They dropped 16,000 in the week ended September 25, but still are running above 450,000.

Such a level suggests businesses are keeping a tight rein on the labour force. Very early forecasts for September payrolls -- to be released on October 8 -- call for private jobs to rise only between 75,000 and 100,000.

That isn't large enough to absorb the new entrants to the labour force -- let alone provide work to the 14.9 million who were unemployed in August.

As a result, even though the economy is on track to grow at about a 2 per cent pace in the second half -- and avoid a double dip -- the unemployment rate is very likely to tick up again from its current 9.6 per cent.

Higher unemployment will have ramifications for Washington.

Weak labour markets push the Federal Reserve ever closer to more quantitative easing. Fed officials continue to eye inflation -- or the lack thereof -- as the primary driver for policy decisions. But they recognise inflation is unlikely to pick up unless wages and consumer demand do as well.

Politicians also face challenges. Polls show voters are upset on how incumbents have handled the economy.

The September jobs report is the last one released before the November 2 midterm elections. The chances that Democrats keep control of Congress are inversely related to how high the jobless rate rises.


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ehmu
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Friday, October 01, 2010 - 12:00 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)



Quoted from a John Mauldin newsletter:

""
In the wake of the newly appointed heir to the North Korean dictatorship position, I've been thinking about the 'cult of personality'. Traditional reporting will often focus on the personality of leaders or, in the case of democracy, the details of leaders' interactions. While it's interesting to think about, some would call it one-sided, even topical. When I've got investments on the line, those are two words I don't want to describe my research.

The decisions of a single personality seem unreliable. But when you look deeper, you can see that most nations and even leaders with personality are forced to make decisions in a reliably logical fashion. What may seem like a broad spectrum of choices when examined carefully are actually just one or two logical ones. The personality of the leader is of much less consequence than the nation's geopolitics.

For a full understanding of this analytical approach, which is very much applicable in the finance world, get to know STRATFOR, a global intelligence company founded by my friend George Friedman. Read George's report below on U.S. options in Afghanistan, and click here to sign up for their free weekly intelligence reports.


https://www.stratfor.com/campaign/read_more_intelligence_3?utm_source=JMF&utm_me dium=email&utm_campaign=WIPAJMF100930160409&utm_content=Freelist

John Mauldin
Editor, Outside the Box
""


_____ n a m a s t e

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ody
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Friday, October 01, 2010 - 12:48 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)



Just what we need ...

A country like Australia which is far too heavily exposed to just one economic source of wealth, viz. mining, needs to diversify into other areas of activity. But not only has productivity of our economy greatly declined in general over the last ten years, but now the high dollar - in part so strong because of our mineral resources - quite actively is affecting such industrial production as we have. In the end, it is extremely dangerous for a country not to value-add through industry, and to be dependent on primary production only. So we need a strong industrial sector, not one that is weakening and facing big problems. The news below is extremely serious, and shows various kinds of weakness and vulnerability in our economy. This is the kind of thing which suggests strongly that major headwinds are already beginning to occur.

Just ONE area stands our for me as one that may help Australia earn money as an alternative to mining: food production, now increasingly shifting to Tasmania. The price of various kinds of foods is certain to rise, as more people can afford to buy it, now, worldwide, while the cost of production is getting higher as the climate changes and there is less land available for cultivation. But, of course, this may take a while, and meanwhile the strong A$ will not help ANY exports.
------------------

Manufacturing sector contracts as strong Australian dollar hurts: survey

* Enda Curran
* From: Dow Jones Newswires
* October 01, 2010 10:04AM

The manufacturing sector is under pressure from the strong Australian dollar.

THE manufacturing sector contracted in September for the first time this year, hurt by a strong Australian dollar and rising costs.

A soaring Australian dollar -- which gained 8.4 per cent in September against the US dollar -- is hurting exporters across Australia while weak demand and higher raw materials costs are the other culprits hurting factories.

The Australian Industry Group-PricewaterhouseCoopers Australian Performance of Manufacturing Index fell 4.4 points in September from July to 47.3.

A reading below 50 separates contraction from growth.

Production levels tumbled 5.3 points to 46.2, slipping below 50 for the first time since March.

Steep falls in food, beverages, fabricated metals sub-sectors and clothing and footwear pulled back the index.

"The strength of the Australian dollar in particular, led by the large rises in minerals prices, is challenging the competitive position of the sector in both the domestic and export markets," said Australian Industry Group chief executive Heather Ridout.


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eblode
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Friday, October 01, 2010 - 03:23 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 feel that the next few weeks the market is going to be steady or begin a gradual decline towards 4500 and then surge in November. For this reason I unloaded most of my shares and will standby for the eventual drop only to pick up good shares at lower prices. That's the battle plan for October.

Eugenio


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market_mad
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Friday, October 01, 2010 - 03:32 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,

Good move I feel. I am with you in that October could see a real pullback and at this stage I believe we will have a pretty good rally into the New Year.

Cheers
MM


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bridog
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Friday, October 01, 2010 - 11:17 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,

Took profits and exited SDM and NWH today, with some regret as both have given a beautiful run but now look likely to retrace.

Yesterday I quit AQR, BKW, FGL, IFE and RCR.

Sometimes its about making profits, but now is more about not losing money.

Cheers


Old enough to know better . . .

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ehmu
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Saturday, October 02, 2010 - 04:01 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)



Should we bet against Institutional investors/traders ?


Here is the body of a promotional piece, but the embodied ideas are very interesting.

""
Can Institutional Buying and Selling levels predict the market's direction?

Using Institutional Buying and Selling data is not a trading system, but some people do base their trades on Institutional Buying and Selling activity.

We post the Institutional buying and selling data everyday on our paid sites, and today's chart shows the "Net" of Institutional buying minus the amount of Institutional selling for any given day.

Reading the chart is really easy ...

When the green bars are above zero, Institutional Investors are in Accumulation. When the green bars are below zero, Institutional Investors are in Distribution. When investing, don't try to go against Institutional investors because they will win.

So, are Institutional Investors in Accumulation or Distribution now?

Well, they are in Accumulation. BUT ... their Accumulation levels peaked on September 20th. Since then, the amount of Accumulation has been decreasing. That pausing is fairly normal right now, because the NYA Index is testing a critical, 3 month resistance line as shown on the chart.

Commentary: For the NYA index to break above its resistance line now, it will need the Institutional Accumulation levels to start rising again.

If Institutional Accumulation levels continue to drop, then the market and the NYA Index will also drop. (Today's Net Institutional Buying and Selling chart is posted every day on our paid site, and is being posted as a courtesy to our free members today.)
""





post script-------I did a comparison of the crosses using 34ema, and twiggs money flow, and they coincide with the crossing activity of the institutional investors---- fyi----you can probably save your money by using your own signals!!!


_____ n a m a s t e

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bridog
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Sunday, October 03, 2010 - 12:21 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 all, the following table sets out the changes to some commodities in Aussie $ terms at the end of September 2010 (current) and the two previous months:

Commodity Table

All prices appreciated over the 2 month period despite the upward changes in value of the AUD. I get annoyed when tv and radio commentators bash our ears about the skyrocketing price of gold, when the real story is the plummeting value of the USD. The PoG in AUD terms is quite ho hum and actually fell in September.

Silver is the precious metal which has taken off, up 13% over the 2 months.

Base metals were higher across the board lead by nickel, copper and zinc in that order.

Commentators have also been bashing our ears about copper, but in this case appear quite justified, with rising prices accompanied by a 40kt or 9% reduction in LME stockpiles.

The BDI is whiplashing around and can’t make up its mind whether it wants to be a bull or a bear. It’s down 14% in September but up 24% over the 2 month period.

All in all, I wouldn’t want to be short on copper . .

Cheers


Old enough to know better . . .

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paddy
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Tuesday, October 05, 2010 - 03:47 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)



Hi Ody: This perhaps of interest to you & others.

Roubini, Shiller, Others Agree With Buffett: Recession Isn't Over

http://www.moneynews.com/StreetTalk/RoubiniShillerBuffettRecession/2010/10/04/id /372380?s=al&promo_code=AE98-1



Paddy


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paint
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Tuesday, October 05, 2010 - 09:16 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)



This week:

Highlights ahead are the monthly biggie -- the employment situation report for September, which prints on Friday, Oct. 8. It will be previewed by the two main precursors of the week: Challenger Job Cut Report and ADP on Wednesday, and initial claims and Monster Employment Index on Thursday. Also the meat of Q3 earnings reporting kicks off on Friday with a report from Alcoa Inc. (NYSE: AA).

Monday: September factory orders. They were down 1.3% in August after rising 0.1% in July and 0.6% in June. Consensus forecast:: down 0.33%. Earnings: The Mosaic Company (NYSE: MOS).

Tuesday: SeptemberISM Non-manufacturing Survey. It fell 3 in August to 51.3, just a little over the breakeven level that signals growth. Consensus: 52.0. Earnings: Diamond Foods Inc. (Nasdaq: DMND), Wolverine World Wide Inc. (NYSE: WWW), Yum! Brands Inc. (NYSE: YUM).

Wednesday. Challenger Job Cut Report and ADP National Employment Report for September. Earnings: Monsanto Company (NYSE: MON), Costco Wholesale Corp. (Nasdaq: COST), Constellation Brands Inc. (NYSE: STZ), Marriott International Inc. (NYSE: MAR).

Thursday: Initial jobless claims. Last one was a nice fall of 16,000 to 453,000 and four-week average was down by 30,000 from a month earlier. Consensus: slight drop to 450,000. Consumer credit was outstanding for August. It contracted $3.6 billion in July and $1 billion the month before. Consensus expects a big $4 billion drop, with a range of -$7.5 billion to -$2.5 billion. Earnings: Pepsico Inc. (NYSE: PEP), Alcoa Inc. (NYSE: AA), Micron Technology Inc. (Nasdaq: MU).

Friday: Non-farm payrolls. They slipped 54,000 in August after falling 54,000 in July, though much of that was Census workers. Private non-farm employment rose 67,000 in August after a 107,000 boost in July. Initial claims have been coming down. Consensus calls for a fall of 75,000 to a gain of 25,000.

With the positive US economic news that has been printing of late the market must have already factored this in as it is refusing to push higher and the European markets are starting to lead the charge lower as PIIGS spreads start widen quickly again.

If the AUD reverses (RBA announcement today) we could see the international cash exit....


The XJO really looks like it has topped out - Slow Stoc has rolled over big time, volume has fallen off a cliff, CMF has crossed below zero, as has TMF, and the price action has busted back below the 200 SMA and looks to move under the 150SMA (both still downwards sloping). US banks are falling.

US earnings are now starting to be downgraded and I'm happy to remain short US dollar earners such as NWS and JHX. And would not be alarmed to see the heat come right out of the resource area.




Just my thoughts

Cheers


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peterloh
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Tuesday, October 05, 2010 - 10:35 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)



RED OCTOBER - Playing devil's advocate amongst the bears.

Considering we have such a strong month in September, momentum may carry through to October. As October is usually a bad month for the stock market, yet the market is unpredictable, this October may turn out to be a good month. As we are still under water by 1.5% for the calender year and our resources are still doing well, to date this has not been truly factored into the SP of these companies, we only have the last 3 months to catch up.The US are said to be still in recession, yet our economy are supposed to be doing well overall we are still to see this reflected in the stock market.Considering our currency is strong and our politics and economy stable, which will attract overseas investments, part of this will eventually ended up in the equities market.As there is so much money in the bond market, there is always a chance that a bubble may be created in this area, so it is not surprising that money may flow out from the bonds sector.It is said the fund managers and companies are flushed with trillions of cash which are earning next to nothing, these same people may consider that October is a month to get into the market, as entering the market in October may consider to be a low risk entry. October may not turn out to be rich pickings buy a DANGER to the bear.Bulls should take comfort from all these factors.


-------------------------------------------------
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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peterloh
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Tuesday, October 05, 2010 - 01:43 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)



Just came through, even the interest rates is on hold by Reserve Bank although the forecast was on a probability of 60% rise. Rising interest rates is normally a damper on the stock market.


-------------------------------------------------
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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billt
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Tuesday, October 05, 2010 - 02:48 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)



"Roubini, Shiller, Others Agree With Buffett: Recession Isn't Over...."

Shock'tober?

Surely not this?




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billt
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Tuesday, October 05, 2010 - 03:42 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)



Similarities to the US 1937 Double Dip Depression and the current day are striking.

In 1937 President Franklin D. Roosevelt's opponents complained that the budget deficit was too large, the dollar had weakened too much, and that excess bank reserves would lead to rising inflation. Roosevelt and the Fed gave in to the pressure, in part due to fears that Democrats were going to be hurt in the Congressional election of 1938. Back then, Congress cut spending and the Fed increased bank reserve requirements by about 50%. The federal budget went from New Deal stimulus-based deficits to essentially a balanced budget in 1938.

In the early summer of 1937 did anyone forecast that the stocks markets were about to collapse?

And what happened? The premature withdrawal of stimulus and Fed tightening were major factors that tipped the U.S. economy back into recession in 1937. Prices, which had experienced modest support from New Deal programs that increased demand, soon started falling. Deflation took hold, and the U.S. unemployment rate, which had fallen from more than 20% in 1933 when Roosevelt took office to about 10% in 1937, started rising again in 1938. As most economists now agree, the premature removal of stimulus and monetary easing lengthened the Great Depression.

Roosevelt did not however have a fast approaching 100% National Debt : GDP problem, nor a ballooning National Deficit, nor did the USA have such a massive Personnel Debt issue, nor a Nationalised Housing Debt problem, nor an enormous unfunded Health & Welfare programme, nor did they have 40 million on Food Stamps.. etc, etc…. Imagine how bad it would have been if Roosevelt had that too!

In 2010 President Obama’s opponents complain that the budget deficit is too large, the dollar had weakened too much…

Anyone spot the similarities?

Any solutions?


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bridog
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Wednesday, October 06, 2010 - 02:30 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)



Peter,

Good to hear from you, and that you are not suffering from bearitis!

I'm always a bit wary of possible corrections occurring in April and October. As you say, it doesn't always happen, and it doesn't keep me out of the market.

I just tend to limit buying, keep tighter stops and build up some cash. The XAO/XJO are looking a bit toppy just now, like a Weinstein stage 3.

But then maybe the market is just building up steam to forge ahead again.

Best regards

B


Old enough to know better . . .

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peterloh
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Wednesday, October 06, 2010 - 04:22 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)



Brian,

The world has 2 distinct types of people, the risk taker and the risk adverse. The others are somewhere in between.
There is no major benefits unless we take some sort of risks in life, mainly calculated risks.Those that do not take risks are generally well contented and not willing to exchange risks for the benefits.In general, most risks takers are also enterprising and able to accept changes. The world is constantly changing and unless we are willing to accept this aspect in life, we will never move forward.

In the Chinese language, there is a letter "danger" which also means "opportunity". In life everything is a perception and we see what we want to see, irrespective what is going on. Even in a perceived bear market, there is also opportunity to make money.Instead of letting the worse get by, the shorters will reap the reward instead of talking about the gloom and doom and not doing anything, they will chase this opportunity.The Chinese could have sat back last year and do nothing as they have all these foreign surplus and wait for better times to come. Instead they spend all these money to buy treasury bills in Europe and America when times were bad. They also venture into Australia, Africa and South America to buy companies and invest in these commodities countries.If you asked me, I would have said, they bought our jewels for a song. Now all they have to do is to help develop these wealth.They won't sit back and do nothing.

Likewise for risks takers, last year was a golden opportunity to buy all these resource rich companies. Instead of buying the top 50s, those that are willing to take some risks outside them and bear the fruit.Most of these companies had to share their assets at only a very small percentage for what they were worth. Today, many of these companies have no liabilities and have become "cash box", themselves. Their share price are relatively low.
Meanwhile commodities like copper which was about $1.50 per lb,last year is about $3.50 now, nickel about $15000 per ton is now nearer to
$25000 per ton and moving forward. We can said the same about most of the other base metals.Silver is the highest for 20 years and gold just keeps on and keep on going up.
The SP of these companies relatively have not caught up. I won't be surprise that M&A activities will pick up from here.The only bug is our saviours that came to our rescue may also prove to be a hindrance for these activities as they have substantial holding now and are more interested in getting commodities at a cheap price then to sell their soul.If you follow some other threads here, you will have an idea what these companies are.

As they said, in a bear market, there are sectors that will do well, all you have to do is to look for them instead of talking how bad things are and do nothing.We are all responsible for our own actions, so caveat emptor and DYOR. Disclosure: IMHO some of those beaten down resources shares I bought last year including a share by the name of PBG which I sang for or the saying paid a "song" for it.

My purpose is to stimulate some thinking and not to instigate anyone into action, for someone who is not use to taking any risk may risk their capital into an area where they are not familiar.

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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paint
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Thursday, October 07, 2010 - 07:20 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)



Good morning all,

Does anyone know of a website that provides current data on US household savings, bank lending, and real final sales?

Cheers


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paint
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Thursday, October 07, 2010 - 07:22 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)



UBS Tech Team sticks to their view:

US Trading: From a pure price point of view, the situation is virtually unchanged from last week, since the SPX and DJI have traded sideways in a tight range. However, with the higher volume last week’s trading clearly has a distributive character and together with the non-confirmations in momentum indicators, toppish weekly studies and the selectivity on the sector basis, we continue to see the market as being vulnerable to a significant tactical setback into deeper October. The upside remains limited to 1165 in the SPX. The pivotal support and potential short trigger remains the last reaction low at 1122. A break of 1122 would call for an initial setback towards 1113 and 1100.
US Strategy: Fuelled by the weak US dollar and mega-cap outperformance, the September bounce is stronger and lasting longer than expected. However, our cyclical roadmap is unchanged. Although we think a potential correction into deeper Q4 will be not as dramatic as previously expected, we continue to see a significant tactical setback into the late-October/early-November timeframe. From a price point of view we would expect at least a test of the June uptrend at around 1070. The worst case would be a retest of the June low at 1010.
European Trading: Europe continues to underperform the US aggressively. Most headline indices have posted a weekly loss. Daily trending studies have turned negative and with a fresh momentum short signal in the Euro Stoxx, SMI, AEX, CAC, IBEX and DAX, most of Europe looks vulnerable. 2709 is still a key support for the Euro Stoxx-50. A break of 2709 would call for increasing down momentum and a test of the May uptrend at around 2630. As long as the market trades below the September reaction high at 2827, we remain cautious on Europe.
Inter-Market Analysis: The USD is key driver for the outperformance and resilience of the US market. With this week’s trading, the USD is moving into the timeframe of an important short-term cycle low. In early June we called a major USD top and the underlying trend remains bearish into 2011. However, on a short-term basis we expect the USD to bounce into deeper October. Following the current correlation, this would suggest a setback in equities, commodities and related sectors.
In early August we called a bottom in gold and with the break of $1212 we advised taking a more aggressive, bullish stance on gold and the HUI. At $1331 gold is approaching a first major projection target. In the context of a potential USD bounce, we see further short-term upside in gold as being limited, so we wouldn’t chase gold/silver and mining stocks at current levels. However, our big picture call remains unchanged. Into 2011/2012 we expect gold to move into a bubble and with silver having triggered a relative buy signal versus gold, we continue to see a tactical setback into deeper Q4 as an opportunity to buy/add precious metals


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billt
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Thursday, October 07, 2010 - 05:29 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)



hey Paint

If you click onto any of the preferred US Economic Indicators, the links may take you to US Government websites. (I may have already given you this - so apologies if you already have it?)

Not sure if they have 'US household savings, bank lending, and real final sales' info, but worth a look:

http://biz.yahoo.com/c/ec/201031.html

happy hunting,

cheers

bill


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paint
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Thursday, October 07, 2010 - 06:59 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 Bill,

Thanks for the link - very useful. The general US releases don't really cover these specific areas which would provide a good insight to the effectiveness of QE in relation to the velocity of money. From what I'm reading the QE is not hitting the real economy - consumers are saving, the banks aren't lending to spur investment (except for div plans and M&A), and real final sales (ie strip-out inventory) are falling. Well I guess that's why QE2 is on the way..... but will this really add value or just deflate the USD?

Happy to hear any views on this...

Cheers


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paint
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Friday, October 08, 2010 - 07:44 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)



Good morning all,

It appears that the US market is looking for either a really good employment report tomorrow or a really bad one (which triggers QE2) for the market to rally. A so-so report should see the market fall as there would be an expectation that QE2 may sit on the dock for a bit longer. Uptick v downtick was a very strong positive last night (including block trades) DJI, but even across the market.

Should the employment numbers print in-line and the QE2 is expected to stall, USD should firm and commodities should follow through on this correction.


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paint
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Friday, October 08, 2010 - 10:02 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)



Megaphone?

A great battle in the making


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ken
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Friday, October 08, 2010 - 06:56 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)



Members,

I have been assuming that when the AUD starts falling it will be accompanied by our market falling, like last time.

The assumed mechanism is that at least a significant proportion of the incoming money moving the AUD up has been invested in the stock market, and that when the AUD falls, the value of the stock market investments will fall, and overseas investors will want to get out.

However the driver for the fall in both last time was collapsing commodity prices, which are less likely if the currency wars and quantitative easing continue.

Can you see a scenario where both the Aussie market and the ETF gold both fall together? What would be happening if this did occur?


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p3t3
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Friday, October 08, 2010 - 09:09 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 wrote on Friday, October 08, 2010 - 06:56 pm:

However the driver for the fall in both last time was collapsing commodity prices, which are less likely if the currency wars and quantitative easing continue.

Can you see a scenario where both the Aussie market and the ETF gold both fall together? What would be happening if this did occur?


Hello Ken

AUD, Oz Equities (particularly mid-cap Miners) and Gold are all crowded trades. When someone yells "fire" all the players rush the exits at the same time.

What could be the nature of the "fire" call?

Congress passes trade sanctions against China (for instance). International trade is likely to tank as everybody else puts up the barriers too. All players retreat to their home turf, where at least revenues and costs are denominated in the same currency. Economists call it "deflation". Everybody becomes even more focussed on reducing debt, not consuming. All asset classes fall in sync.

The Fed can buy all the Treasury Bills it likes (China can supply quite a large pile of them), no cash would be loaned out to credit-unworthy prospective borrowers - and anybody who "needs" to borrow is immediately suspect.

Currently the US and China are locked in a sub-optimal Nash equilibrium - the first to break out suffers most. The US reckons that's China because of the USD assets they hold. China reckons they have the solvent consumers and are busily stockpiling commodities.

Nobody knows the outcome.

How much do Markets like uncertainty?


Just my view
Pete


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ody
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Friday, October 08, 2010 - 10:24 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)



prt3: everything falling at once

I think you made quite a good job of it, Pete!

The truth is that we are, actually, living in a state of suspense, and it must be the case that this is widely realised. One of the strongest indicators of incipient panic is the buying of gold. The inverse relationship between the US dollar and gold is becoming quite extreme, with speculation in gold becoming a "necessity" for those many people who have no faith in the US currency. If confidence in that currency - until not long ago the currency "of last resort" - is so low that we need a real spike in the gold price to compensate for it, things are obviously in a very bad way. It is not as though there is any single OTHER currency that is actually "taking over": the Euro is doing better, but not well enough, and the AUD, though at a very high level, is not important enough to play the role of a leading currency. Thus rescue is sought in gold as the measure of last resort in wealth preservation. As gold is largely non-productive, and thought of as a wealth-bearer only, it is a bad sign for economies if that is where people are putting their money.

And let us note that it is particularly gold and other precious metals that people look to for "safety". This does not suggest confidence that general industrial activity, or specifically Chinese growth, will be sufficient to compensate for the anxiety that lies behind the fall in the US$ and the rise of the gold price.

This sort of extreme lack of equilibrium is to my mind ALWAYS a very bad sign, and particularly when concentration is so strongly focused on such "measures of wealth" rather than actual money-MAKING. What we see is in fact a very bearish market in one marker of wealth, the US$, and a very bullish market for gold, the other marker. This sort of ball game is not only inherently dangerous, but removes us from what should be actual economic activity.

So while SEEMINGLY we have a positive picture of wealth ("Look at how much people are investing in gold!") what underlies these moves is quite ugly, and we cannot see it as taking place in some other world, which we can isolate from the global economy as a whole. It shows that matters are out of kilter, and even belief in China is not strong enough to calm people's preoccupation with the USD and gold.

The major underlying fear is caused by the near certainty of yet more "quantitative easing", whereby the US authorities are now quite determined to try to activate the US economy by printing more money. Most people with any sense by now KNOW that we are in deep trouble and that this is evidence of that trouble, not a cure for it. The previous attempts at making everything easy by steps like these have not worked, and this is the real fear now: that printing more money is a sign of despair, will not work, and thus will make the crisis worse. People have lost confidence in the global economy at large, and gold towers for them as the only place which in panic they turn to in order to protect themselves, as they see it.

But ultimately gold is inactive. Turning there is yet another way of avoiding the painful truth that economies need to be revised - away from more and more debt, more and more bubbles, more and more stimulus, printing of money, etc. This way crisis - a real crisis - beckons.

We can only hope that this sort of pressure in two opposed directions will diminish and take us back to genuine economic activity, but for the moment the psychological effect of all this will be paralysing. Even Chinese activity does not yet inspire enough faith for people to turn away from gold. They know that if the USD continues to plunge, along with unemployment in that country, American consumption will decline; and in Europe the situation is really not good enough to make much of a difference: obviously the world does not consider China as strong enough to withstand, on its own, the fact that its exports will be harmed. It will be seen as doing better, and will continue to grow, but the world will ultimately not function well enough if both the US and Europe are to put it mildly essentially in a non-growth situation, while yet they have to contend with debt and numerous other problems.

So, most certainly one can foresee that this muddle will bring down anything, potentially, that was at one time or other regarded as absolutely "safe". And in one way or another we shall probably all suffer from the impact of all of this. I just cannot believe that the rise and rise of gold and the AUD will go on and on. Far too much of this is speculative, and built on the assumption that all wealth in the world will turn to China, or be created there, while most of the rest of the world is in significant trouble. Such extremely uneven situations are usually not sustainable, and lead to major corrections, to use a gentle term.


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peterloh
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Friday, October 08, 2010 - 11:55 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 metaphor of a doctor and his patient.

The good doctor knows his patient may eventually die one day, yet he does his best to save him. In doing so, there could be side effects and recovery could be slow.Yet the good doctor won't let his patient die. Like wise governments do their best to save their countries from going down the drain and there could be side effects,like too much money and inflation etc, yet the governments will still do it.We hear of some economists suggesting that the governments let the banks and big corporations go bursts and to start afresh. If governments let their economies collapse in a heap, it could be too difficult to get them up again and get going.

I expect, the US and China will find a solution to their problems. The world is too inter dependent on each other then to disconnect with each other.China buying government bonds in Europe and the States and investing in our commodities is a sign that the current state of affairs is the ideal set up. None of the countries will want to stop trading with each other or rock the boat irrespective of their rhetoric.


-------------------------------------------------
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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Saturday, October 09, 2010 - 02:21 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 CNN: information on US economic illness

Any country that adopts the following outlook, as reported by CNN, is to my mind sick in its economic thinking:

"Stocks rallied, with the Dow crossing 11,000 for the first time in five months, after a sharp drop in the overall jobs figure in September boosted the chances of stimulus measures from the Federal Reserve."

Here a FALL in employment is seen as a reason for rejoicing and hoping that it will cause the - effectively exhausted - Fed to provide opportunities (in one way or another) enabling Wall Street to make more money.

This utter dependency of Wall Street, like a bunch of drug addicts, on the Reserve to provide stimulus money paid for by taxpayers, or zero interest rates supposedly encouraging growth, or the printing of money (Quantitative Easing, so-called) can inherently only lead the US further down the swamp, as ALL of these measures are damaging to the economy, and don't tackle its problems but make them worse. The US's utter failure really to get to grips with its own, self-generated problems makes this a country causing its own undoing. And there seems no evidence whatever of any real change or any good sense prevailing: like lemmings they go to the abyss.


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bridog
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Saturday, October 09, 2010 - 02:38 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)



AXM: A disaster or a turnaround story? (Update #3)

The saga continues. The June P & L shows a net loss of $115m for the 2010 year. A look at the annual report shows they have also lost a number of senior personnel and directors.

Not a good look.

But if we turn to the Cash Flow Statement we see the negative cash flow from operating activities was just $10m. Hardly wonderful but not as bad as $115m.

Now look at the June quarterly report and we find a positive operating cashflow of $3.7m after deducting leasing payments.

I’ve cut the following commentary from the June report:

As announced on 18th June, Allan King has been appointed Chief Operating Officer of the Company and will commence in early August 2010. Allan was most recently General Manager, Operations at Resolute Mining and has a distinguished record in the Australian mining industry, having held several senior positions across a diverse range of companies and commodities.

In the Investor Update announced to the market on 21 May 2010 Apex advised that it was going to assume the maintenance activities undertaken by Atlas Copco Australia Pty Ltd (Atlas Copco) at Wiluna in August 2010. This actually occurred on 7th July 2010 and is expected to result in significant cost savings for Apex.

Unquote

The September report is 3 weeks away.

What could go wrong? Almost anything can and probably will judging on past performance.

What could go right? Just maybe the turnaround which commenced in the June quarter could continue in the current quarter and accelerate in the 4th quarter as the new COO and self managed maintenance cost savings start to work.

The stock is a lottery, but at 1.9c per share if something does go right, it should be like winning the lottery. High risk but maybe high rewards. Remember they have a resource of 3 million oz of gold.

I have some “risk” funds imvested.

Do your own research!


Old enough to know better . . .

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bridog
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p3t3 wrote on Friday, October 08, 2010 - 09:09 pm:

AUD, Oz Equities (particularly mid-cap Miners) and Gold are all crowded trades. When someone yells "fire" all the players rush the exits at the same time.




"Crowded trades" is a tough call Pete, most midcap miners, while they are off their lows, are less than half the price they were 3 years ago. PEM is 1/10 the price of 3 years ago. I don't see any rush happening to buy any of them. I wish there was!

Cheers


Old enough to know better . . .

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p3t3
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Saturday, October 09, 2010 - 03:49 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 wrote on Saturday, October 09, 2010 - 03:14 am:

.....while they are off their lows, are less than half the price they were 3 years ago. PEM is 1/10 the price of 3 years ago.....


Hello Bridog

Seems likely that there might be less "risk" money around these days. After all, such a lot has gone into fixed interest in our "post-GFC" world....not everybody is convinced the original crisis has run its full course yet. I think the perspective of many market participants is that the 08 highs represented an over-leveraged feeding frenzy.

A return to those levels sometime soon would seem to imply another GFC-type event in the process of building up a head of steam. Is that what we're all hoping for?

Just my view.
Pete


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ehmu
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ody wrote on Saturday, October 09, 2010 - 02:21 am:

"Stocks rallied, with the Dow crossing 11,000 for the first time in five months, after a sharp drop in the overall jobs figure in September boosted the chances of stimulus measures from the Federal Reserve."




CNN, the US treasury, and the US fed are all very powerful and are very focussed on getting the best for Americans in these tough times.

Throwing money at wall street protects the insulated value of about 100M retirement funds of American people, while diluting the investments of outsiders. Since this action keeps $ in the pockets of retirees, it also supports the health of consumption within the US.

Printing money to dilute the value of the $US hurts foreign investors, and takes money out of the pockets of whoever holds american currency. It devalues the $US, making their export industries more competitive with other countries export industries, increasing the probability of putting more americans to work.

One influence that it has on growth in resource countries, is that it lowers demand. Since the US is a net consumer of resources, it benefits US residents by forcing them to be more frugal with their consumption, and lowering world demand (thus lowering prices, and reducing the outflow of funds from the US).

The things that the US are doing (many more than the several I have mentioned) are forcing a large portion of the burden of world recovery on the rest of the world. This in my view is diabolical and cunning. By the time the world figures out what is going on, US citizens will have seen benefits for a couple of years.

Protecting their citizens this way, causes other countries to respond by trying to protect themselves, and the trend will become deflationary.

I'm not sure how to quantify world deflationary pressures other than to look at the Baltic Dry Index, which for me infers the health of world commerce by virtue of measuring the movement of materials. You can see by the flaccid price chart that I have attached, that world commerce isn't exactly flourishing, or bouncing back even. I credit the spikey bounce from the credit crisis almost entirely to Asia jumping on the low prices.

This post is of course only my opinion, so feel free to correct any misperceptions. It is after all everyones privilege to express their views in this forum.

I am not an American, so I don't particularly enjoy their initiatives in this regard, but they are definitely going pedal to the metal to save their own butts, no two buts about it.





_____ n a m a s t e

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eblode
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Saturday, October 09, 2010 - 07:08 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,
Your post 5403 reflected the exact lecture that Glenn Beck gave to the American public yesterday on Fox News. Quite frankly for the first time I am concerned that we are going to have a severe downturn on the DOW as Beck emphasized that most wealthy people including CEO's of major companies are selling out their shares for Gold. It is indeed a time to pause and take stock of where the market will head.

Eugenio


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ody
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Eugenio: Glenn Beck

That's interesting. I can swear with complete honesty that I had not heard that talk, and was producing completely my own thoughts. They many not be entirely accurate, but I do think they are likely to point in the right direction and at a real malaise. The other posts here also diagnose some very real dangers, with people aware that matters are not "right".

And the greatest difficulty is that if they continue to move in this kind of way, there is unfortunately no place where you can calmly place your money. Gold? Good for now, but you'd have to be prepared to get out before it collapses. The AUD? Fine for now, probably, but it is very high - and at some point we could thus all curse ourselves for not having chosen some antidote if the Aussie collapses on us: its history is that of a very volatile currency.

I look for NOT LOSING money, always, rather than GAINING it, although of course I try to gain as well - you have to do that somehow, or else eventually the value of your money gets eroded in some way or another. But coming at matters as someone primarily to protect himself against loss, the current situation is one that I find quite unusually difficult. Almost always I can find some place to park or invest money which will make me some gain, and which at least will not LOSE me money. Right now, I don't really know where to turn.

The best SHARES would probably in principle be in Asia and emerging markets elsewhere ... but, if we are to see a really significant slide in the fortunes of the US and Europe, then Asian shares will most probably also be affected: that is the historical record, usually. Currency plays are both difficult and dangerous. Gold cannot ultimately be the only investment destination of choice either. Real estate? On the whole very highly priced, in Australia. Art? Vulnerable, particularly in periods of real disarray.

In other words, I think that an assault on one's wealth is not at all unlikely, one way or another, unless one is remarkably skilled, as I am not, at picking every short-term opportunity and getting out soon enough every time. We are seeing a very unstable world with rapid and more or less chaotic changes.


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ody
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Alan Kohler this morning: part of a regular column he writes for the Eureka Report on Saturday morning

I think this is well worth reading, as an overview. What I quote is followed by a piece I leave out, on the Australian dollar, in which Kohler gives a historical account of how that has gone up and down, and concludes - reasonably, I believe - that the fact that it moves freely (except that of course such things as our interest rates impact upon it) has all in all proved a benefit, in comparison with earlier attempts at manipulation by e.g. politicians and bureacrats, because those give in to interest groups rather than the national interest. Also, in countries where manipulation occurs that usually leads to severe economic distortions. (Thus, I add, attempts on the part on Americans or the Chinese to "fiddle" with their currencies are likely to be quite damaging.)

I quote what Kohler writes BEFORE he discusses the Australian dollar specifically.

All in all I am personally inclined to stick with this currency even though I think at some time it will probably fall significantly. We are not there YET, I think, and I am just hoping that - as happens often - some opportunity will lead me towards what will be the "right choice for the time". At the moment I still have reasonable confidence in the A$, and it is difficult for me to think of a real alternative, anyway. Buying euros, American dollars or British pounds does not yet give me the sense that with any of them I'd have a winner. Gold may well still go up a fair bit, but I think it is dangerous even so, and you can neither eat nor produce a yield on it. If I get MORE Australian dollars that won't help me greatly if the Aussie goes down the chute, but ultimately it should stabilise at a reasonable level over time, and it will be better to have many dollars then only a few. In other words, I am still adding to my capital in Australian dollars, and will only change course if I see a CLEARLY preferable alternative to that. For the moment, fixed interest in any case is still a winner and I believe is likely to continue to be. Not everyone will or can invest in gold, and people will be looking for yield: for that, this country is in my view EXCEPTIONALLY good, with high, and probably rising, interest rates. And you get also get good yields on a number of shares, of course, the only trouble being that the shares themselves may well decline in value. I'd rather accept a declining currency than a declining share market. If the share market does eventually decline, then I would still have the money in which the market is priced, and can if the prospects are good enough put that money to work THEN.
------------------------------------------------
Saturday, 9 October 2010


Week in View


By Alan Kohler


Last night
Dow Jones, 11,025, up 0.7%
S&P 500, up 0.8%
Australian dollar, US98.60¢
Gold, $US1346.58, up $12
FTSE, down 0.1%
Shanghai stocks yesterday, up 3.1%


Past week
All Ordinaries, up 2.3%
S&P 500, up 1.8%
Gold, up 2.2%
Australian dollar, up 1.4%
China stocks, up 3.1%
Oil, up 1.4%


Dow 11,000

The Dow Jones has gone above 11,000 for the first time since May because employment fell by 95,000, thus boosting hopes that the Federal Reserve will intervene with what everyone is calling QE2, the good ship "quantitative easing". That is, printing more money. The news was just great really: employment fell, U6 – the broad definition of unemployment that includes those who are working part-time but would prefer to work full-time – increased from 16.7% to 17.1%. The "discouraged workers" classification has also gone up, and "structural unemployment" (those unemployed for more than 27 weeks, now stands at 6.4 million. Before now, this has very rarely gone above 2 million.

Yes folks, Americans are standing on a sinking ship and today they cheered when it suddenly lurched lower and the water went above their knees, because they think it means the rescue boat will get there faster. Unhappily, even if gets there the rescue boat will be too small.

What I mean is that the US is in a liquidity trap, which occurs when monetary policy becomes impotent and can't stimulate the economy by lowering interest rates or increasing money supply. It means QE2 won't do much to help the real economy because it won't get beyond the shipyard. Another way of putting it is that you can lead the horse to water, but you can't make it drink: the Fed can give more cash to the banks, which is what QE involves, but it can't make them lend it.

It could be enormously bullish for share prices in the short term, though, because the money has to go somewhere, but any rally could be artificial and therefore short-lived – not based on real economic strength. The US recovery is jobless, and therefore flawed. The authorities are desperately hoping that if share prices can rise enough as a result of extra liquidity, that will repair household and bank balance sheets sufficiently to get money and credit moving again, even though real estate prices are still on the floor.

File that under 'W' for Worth a Try. The financial system has had plenty of liquidity for at least 12 months, but the real economy is not responding. It continues to flirt with deflation. That's why you have the weird situation where the bond market in the US is predicting virtually zero inflation (the 10-year yield on inflation-protected bonds is 0.75%) while gold is predicting inflation (it's back up to $US1346 this morning).

The gold bulls are pessimists about the US, because they think it faces the potential of monetary ruin and the collapse of its currency, with hyper inflation. The bond bulls are also pessimists, but they are forecasting a different sort of ruin: deflation and stagnation. Tony Boeckh, the founder of Bank Credit Analyst and now independent adviser and investor in Canada, points out that the bond market is far bigger and more sophisticated than the gold market and the disconnect between them should serve as a reminder to the gold bulls to tread carefully.


China vs the Rest

China is basically the mirror of the US: it is threatened by inflation while the US faces deflation; it has huge government trade surpluses versus America's deficits; and too little consumption versus America's too much. Consumption represents 35% of China's economy, the lowest share of any economy in history, while in the US consumption is 70% of GDP, easily the largest in history.

In each country the government is actually motivated to worsen its imbalance. In the United States politics is arguably too democratic. The huge populist pressure on the political classes from the competitive 24-hour media, bolstered by the First Amendment guarantee of free speech, means the solution to every problem is to cut taxes and to generally boost the spending power of the "American People".

In China the reverse is true. The political elites own the means of production and wealth and believe the way to national prosperity is to suppress the currency, increase exports at the expense of domestic consumption, and for the government to direct the spending of all the money rather than let it be distributed to be people.

It's just socialism versus capitalism, and this time socialism is winning. The Soviet Union, the last great socialist empire, lost in 1989 because it couldn't bring itself to peg its currency to the US dollar and to create an industrial empire based on exports to American consumers. The Russian industrial machine was built around the arms race, which was a dead-end street.

The great genius of China's rulers has been to create a totalitarian socialist political regime on top of a capitalist export economy that exploits Western decadence.

Last night there was yet another display of the first part of that sentence when Norway's Nobel committee awarded the Nobel Peace Prize to Liu Xiaobo, a Chinese dissident currently serving an 11-year jail sentence. China has gone into a frenzy of denunciation, describing the award as an "obscenity" and warning that relations with Norway will be harmed.

More important is China's refusal to increase the value of its currency, which is at the heart of what everyone is now calling the "currency wars". The Chinese Communist Party is the direct beneficiary of the undervalued currency because, as George Soros wrote in the Financial Times this morning, the arrangement allows the government to skim off a significant slice from the value of exports without interfering with the incentives that make people work so hard and make their labour so productive. "It has the same effect as taxation," says Soros, "but it works much better."

China's undervalued currency is the root of the currency wars. Other countries are trying to imitate China and gain advantage by depreciating their currencies (except Australia). As a result the whole world is becoming awash with liquidity, which is great for asset markets but bad for the real global economy because it risks inflation and high interest rates. Ultimately it would turn into a war of trade sanctions, not just competitive devaluations.

The thing is that global currencies represent a zero sum game: for every winner there is an equal loser. Right now there are no volunteers to be a loser. [CONTD]
--------------------------------------


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ody
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Saturday, October 09, 2010 - 11:11 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)



Gradual slowing down of investment in shares by fund managers

I look from time to time with some seriousness at the US newsletter StockTiming, to which you can subscribe for free. The latest issue concentrates on what institutional investors are doing. Although I cannot reproduce the graph shown, investment by these instituations, which started with enthusiasm in early September, is now perceptibly - though not (yet) dramatically - slowing.

Perhaps more tellingly, and from other sources, I gather that even an increasing number of CEOs are turnint their shares into cash and from their into gold. If that is indeed happening on a significant scale, it shows just how little confidence those running companies actually have in their future just now, at least as money-making propositions.

One function of this thread, I have always felt, has been that we are all private investors trying to help each other along, as it were, and IN PARTICULAR *NOT TO BE SWAYED BY THE PROPAGANDA OF THE FINANCIAL INDUSTRY* but to make sure that individual investors on the one hand take advantage of opportunities in good time, no matter what the financial industry might be saying, for making money - but also for protecting it. Thus repeatedly people have made money here (short-term traders far more so than someone like me) which they did because of seizing positive opportunities, while on the other hand those who have been here for some years have had timely advice as to how not to LOSE their money.

I would say now is certainly not a safe period for shares, particularly because the obsession with gold and fixed interest shows that too many people have no faith in the ways major economies like those of the US and (partly) Europe are run. And it would appear that those who are cautious are not, on the whole, the ignoramuses or those who have a bad record of spotting dangers in timely fashion.

Anyway, here is the StockTiming piece (sorry, without the graph presented).

---------------------------------------------------
Institutional Investors still control over 50% of the stock market and because of this, they are a predominant force in the trending direction of the market.

Therefore, it matters ... it matters if Institutional Investors are in Accumulation or Distribution.

So, let's go back to September 13th. and see what they have been doing since then.

In the chart below, the blue line shows the amount of daily buying by Institutional Investors, and the red line shows the amount of daily selling.

So, obviously, if the blue line is higher than the red line, then the amount of buying exceeds the amount of selling which would indicate that Institutional Investors were in Net Accumulation. And that has been the case for the past month. (Actually, they started into Accumulation on September 2nd.)

The next thing you may want to know is this:
Is the Institutional Investor "rate of expansion" in Accumulation rising or falling?

If it is rising, then their bullishness would be increasing. If it were falling, then their bullishness would be diminishing.

If you look at the chart below, I drew a line from the levels on September 13th. to yesterday's level at the close. What can you observe?

You should be able to see that the amount of buying has actually trended a little bit lower, while the amount of selling has trended a little bit higher.

So, from this you can say that Institutional Investors have remained in Accumulation, but that their Accumulation levels have been lessening. It says that they are less aggressive about increasing their accumulation than when they started on September 2nd.


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paddy
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Saturday, October 09, 2010 - 11:31 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 : Here be the chart.




Paddy


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ehmu
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Saturday, October 09, 2010 - 11:34 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)




ody wrote on Saturday, October 09, 2010 - 11:11 am:

Anyway, here is the StockTiming piece (sorry, without the graph presented).




chart from above article showing reduced consolidation in sept2010---see chart below for bigger picture







chart from a previous stocktiming article showing the bigger picture of institutional acc/dist--note the shrinking accumulation after about the first week of september until now





compliments


_____ n a m a s t e

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ody
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Saturday, October 09, 2010 - 11:54 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)



Remember that falling US dollar in reading!!

I read a lot of material that - understandably - is focussing on the US with its problems yet seemingly well-performing share market. And many of these articles talk about "the market" without making proper distinctions between currencies.

With any consideration of seemingly attractive rises in the US share markets, we need to remember, here in Australia, that the longer-term performance of Wall Street has over the last ten years been a very poor one in Australian dollar terms. Also, that in the recent past, particularly, anyone thinking that an investment in the US markets would have paid off handsomely in Australian dollars would have been disappointed.

The situation is the more deceptive because, in its silliness, the Australian share market to a significant extent tends to be influenced by Wall Street's moves. One regularly sees the two markets discussed as though they are virtually a joint couple. And there is truth in the observation that we tend to follow Wall Street fairly closely.

But do NOT make the mistake of believing that a similarity in PATTERN also means a similarity in making money!

THIS IS ESPECIALLY IMPORTANT BECAUSE ANY RISE ON WALL STREET SHOULD BE SEEN AS IN PART A RESULT OF THE DECLINE IN THE VALUE OF THE USD, WHEREAS IN OUR CASE ANY RISE IS CURRENTLY ACCOMPANIED BY A RISE IN THE CURRENCY AS WELL. IN THIS REGARD THE MARKETS ARE QUITE SIGNIFICANTLY DIFFERENT AND MUST NOT BE CONFUSED WITH EACH OTHER.

One reason why a rise on Wall Street should NOT be interpreted as a positive sign for us that things are OK is that in fact WALL STREET HAS BEEN, AND IS, RISING *IN DESPAIR*. AMERICANS ARE PUSHING UP SHARES BECAUSE THEY SEE THEIR CURRENCY LOSING VALUE, AND HAVE NO SIGNIFICANT YIELDS IN DEPOSITS, BONDS, ETC TO PLAY WITH. THIS IS ALSO A REASON FOR THE FRENZIED RISE IN GOLD.

In Australia rises are less idiotic to the extent that our economy provides a better basis for investment in shares, which is not to say that it provides an ideal one. And we must also be aware, particularly if we tend to follow Wall Street, that any rally there is little more than an attempt to evade the falling dollar: it is NOT based on a healthy economy with sound prospects for company earnings. IN OTHER WORDS: RISES ON WALL STREET SHOULD BE SEEN AS A DANGER SIGNAL IN THAT THERE IS NO SOUND FINANCIAL BASIS FOR THEM. THEY CAN GO ON FOR QUITE A WHILE, BUT IN THE ABSENCE OF GOOD ENOUGH EARNINGS, AND IN THE PRESENCE OF A FALLING DOLLAR, GROWING UNEMPLOYMENT ETC, A WALL STREET RALLY SHOULD BE SEEN AS POSITIVELY DANGEROUS AND IRRESPONSIBLE, RIGHT NOW.

In our own case, our own rising dollar MAGNIFIES, on a dispassionate global view, the price for our shares. So this, too, should be realised in pushing up our share market. The price of our shares is, for foreign buyers, pushed up by the high dollar even if the price in AUD has not changed. The currency is - on any slightly longer view - bound to have a significant effect on our market.

As far as the companies are concerned here in Oz: those importing goods for sale here, provided they are goods Australians really want to buy, should do well, while conversely those exporting will be harmed by the rising currency.

Has our currency peaked? In the past one would probably have said yes, as parity has for long proved impossible to reach, but in the current climate there is A GOOD POSSIBILITY THAT OUR DOLLAR WILL RISE FURTHER YET. This is a factor that should be borne in mind with every investment, along with the possibility that at, say, 110 rather than the current 98 or so the AUD might well suffer a correction (if not before). But on current signs the currency should for some time still remain very strong, particularly against the USD. That will itself here and there probably also rally up a bit, but the overall trend for the USD continues to be down, and that for the AUD up.


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ody
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Saturday, October 09, 2010 - 12:07 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)



Rudy's market wrap:

I have just caught sight - with gratitude - of Rudy's latest market wrap, and note that some of the things I say in my previous post are also noted by Rudy. This, dear readers, is not the result of any influence either is exercising on the other: on the contrary, we have quite independently come to the same conclusions about the matter of currencies in relation to share markets, the factors driving markets, etc. This is, and has for long been, an interesting point, in that we often don't pursue our analyses from the same point at all. But I think that our records show that usually when we converge in this way - and completely independently - we are usually on to something quite important. So, readers, please read both of us, and make up your own minds. We may also both be wrong.







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ody
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Saturday, October 09, 2010 - 12:23 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)



Conclusion of Rudy's market wrap:

"Whilst I believe that this upward trend is based on all of the wrong reasons I also believe that it will continue to do so. At this stage from a technical perspective I believe that there is not a great deal of evidence supporting a huge decline. Yes, indications are that a decline is overdue but not a large decline at this stage. Until the upward trend is broken, it remains in place and tradable."

While I tend to provide fundamental and medium-term warnings much of the time, I think that Rudy's conclusion may well be correct. I don't feel any strong urge towards participation in our market, but I strongly agree with Rudy that one must distinguish between fundamentals on the one hand and market sentiment on the other, and I too don't see a big fall just yet. If the mistaken policies that are pursued by the US and others continue, and if gold goes up seemingly endlessly, then, for sure, we shall see a significant fall. But the "moment of truth", though more and more people are seeing things for what they are, may well be quite some time away yet - months, perhaps, rather than weeks. (I don't think it will be years, i.e. a significant fall is, on current trends, to my mind very likely by - at the latest - mid-2011.) In the interim, we may well have, as Rudy suggests, a smallish fall by way of a correction: this would then be seen by many as getting rid of excesses and doing justice to the caution of bears, but such is the tendency of share market investors to dupe themselves, that it is indeed quite possible that after a comparatively minor fall they will happily buy and push the markets up further.

If, on the other hand, the news flow SIGNIFICANTLY DETERIORATES in the weeks to come, we could see a substantial fall sooner rather than later. The markets, and market sentiment, ARE vulnerable just now.

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