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When will a short term correction happen?

Chart Forum » Stocks - ASX: short term (strictly TA) » Archive through 2004 » Archive through October 08, 2004 » When will a short term correction happen?

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lightsaber
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Username: lightsaber

Post Number: 19
Registered: 08-2004

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Tuesday, October 05, 2004 - 08:54 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)



With the all ords powering from 2670 to 3700 since march 2003, when do people think a short term correction might be due?
Last year the largest correction for the current bull run formed between 20th of Oct and 20th of november. could we see a similar thing again?

While the market does look pretty strong, if you look at a 10 year monhtly chart, it also shows that the uptrend line from march 03 is about equal in distance to any previous large uptrends, which were followed by a correction.


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silvastar
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Username: silvastar

Post Number: 10
Registered: 08-2004

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Tuesday, October 05, 2004 - 10:14 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 Lightsaber,

Yes you do have good reason to suggest that a short term correction might be due, however, it appears no one is listening to those thoughts...as we can see by the amazing uptrend we are experiencing. My thoughts are never to fight the current trend until I get confirmation of a change in trend. It tends to keep me out of trouble this way.

Another thing I usually look for to confirm the trend has been halted is a series of lower highs and lower lows. In the last 12 months I thought we experienced that twice, however, the market just powered on through.

Looking back over the last 15-20 years you will notice that there have been 3 huge rallies (including this one) where the market has formed pretty much a straight line up. This has then been followed by some of our worst corrections in history....87' and 94' and 0?. So time will tell how it all pans out but until then I am happy to be long in the market.

Happy trading.
Silvastar.







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greatdane
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Username: greatdane

Post Number: 131
Registered: 12-2002

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Tuesday, October 05, 2004 - 10:43 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)



Bull market 'heading for 3900 points'
Scott Murdoch and agencies
05oct04

THE power-packed run of the Australian financial market is far from over with analysts tipping a further 10 per cent hike in the bourse by early next year.

Seemingly insatiable demand yesterday led the market to a fresh record high – the latest in a number over the past month – although volume was down because of a public holiday in several states.

The bull run has analysts and market observers now wondering exactly when the peak will be reached.

Some confident pundits predict a 10 per cent gain in the next few months as the market continues to be driven by the rebounding resources sector.

In trade yesterday, the All Ordinaries rose 34.1 points to close the session at 3703.1 while the key market indicator, the S&P/ASX 200, found another 34 points to close at 3693.6.

ABN Amro Morgans and southern investment bank HSBC have predicted 3900 is the ceiling while a more conservative Macquarie believes 3825 is more than likely for the ASX 200 by March.

Yesterday, any companies associated with base metals shone. The major end of the market, BHP and Rio Tinto, surged while the juniors were not forgotten.

BHP was again the star, rising 47¢ to $14.75. Its shares have soared 20 per cent in the past nine months.

ABN Amro Morgans private client adviser Clare Mazzetti said while turnover on the market was low yesterday, appetite for investment was still fervent.

"The market was buoyed by strong movements from the United States over the weekend," Ms Mazzetti said.

"Resources traditionally move on a 20-year cycle and we are coming into that very strong period again."

The demand for resource companies, she said, was stemming from China and the ever-increasing price of oil.

"The market is trading in line with its 15-year price earnings growth average," Ms Mazzetti said. "We saw in the reporting season that earnings per share growth is strong and we see that as a big factor in why the market can continue to grow."

Interestingly, the market's strength has not been dimmed by the lengthy election campaign.

Speculation over the future movements of interest rates dominated the campaign early on but the bulk of the focus has now shifted to health.

Michael Heffernan, market and economics analyst at FW Holst, said he was certain the market would keep powering ahead.

"You also have the interesting feature that since the election was called, this period is usually characterised by uncertainty and the market goes down a bit, but not so this time," Mr Heffernan said.

"It continues to move on and up, which shows real fibre in the backbone of the market. That is a good portend as to how we finish the year."

AMP Capital Investors head of investment Shane Oliver said he would not be surprised to see the market take a breather in the next few weeks after such a strong run.

Beyond the short term though, he sees more upside with the index topping 3850 points within 12 months.

"On a valuation basis the market is still quite cheap with recent strength in earnings helping to hold the price earnings multiples down to reasonably low levels," Dr Oliver said.

"Over the next year, I think, earnings growth will be around 8 per cent or so, which is lower than the past 12 months but still a fairly decent rate of profit growth, and that in turn should underpin further growth in the sharemarket."

http://www.thecouriermail.news.com.au/printpage/0,5942,10970010,00.html


Regards, GreatDane

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lightsaber
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Username: lightsaber

Post Number: 20
Registered: 08-2004

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Tuesday, October 05, 2004 - 11:32 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)



thanks for the input.

i'm considering going long on the asx200 index through CMC.. now to consider wether to wait a few days for a short term correction on jump or the ol' bandwagon.


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gurutrader2005
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Username: gurutrader2005

Post Number: 14
Registered: 10-2004

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Tuesday, October 05, 2004 - 11:45 am:Edit Post Delete Post Print Post    View Post/Check IP (Moderator/Admin only) Ban Poster IP (Moderator/Admin only) Move Post (Moderator/Admin Only)



Lightsabor you were saying on the first post that you feel we could be heading for a correction, now you are saying that you might go long the ASX200, why the sudden change, lets hope greatdane was not the reason you have changed.

Who is to say you will not be right and greatdane wrong, never change you mind solely based on one persons post, your trading decisions should be based on your own reasons and perspectives, there is nothing wrong with taking advice, but that is all it should be.

I also feel we might be heading for a correction, so I agree with you first post.


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lightsaber
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Username: lightsaber

Post Number: 23
Registered: 08-2004

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Tuesday, October 05, 2004 - 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)



Gurutrader,
i made no opinion either way, i simply stated some things i'd noticed about the trend and asked for others opinions. Sometimes its best to play the devils advocate to try and get some criticism about your own idea. Which I was thinking of going long, before i posted the thread :-)

even the heading 'when will a short term corection happen' -corrections always happen thats inevitable , question is when. Tomorrow, or in a years time?

I am a cautious trader, my opinion is i think the market over the next couple years will continue to grow, i think sometime between now and then we will have a short term correction. I think by keeping a close eye on the XAO we should be able to see some signs before this happens (if we are lucky) :-)

cheers.


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greatdane
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Username: greatdane

Post Number: 133
Registered: 12-2002

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Tuesday, October 05, 2004 - 12:55 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)



Guru trader:” Who is to say you will not be right and greatdane wrong, never change you mind solely based on one persons post”

Guru, just to make sure that there is no misunderstanding.
The content in my post was a newspaper article from this mornings press.
Authors name and link to paper was included.

I did not express a view or an opinion one way or another.
Simply posted an article by a third party.
I think lightsaber was looking for input.

Got it?
Thanks. End of story. Have a nice day.


Regards, GreatDane

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lightsaber
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Username: lightsaber

Post Number: 25
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Tuesday, October 05, 2004 - 01:19 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)



Yep I was, appreciate the input too.







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gurutrader2005
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Username: gurutrader2005

Post Number: 15
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Tuesday, October 05, 2004 - 01:47 pm:Edit Post Delete Post Print Post    View Post/Check IP (Moderator/Admin only) Ban Poster IP (Moderator/Admin only) Move Post (Moderator/Admin Only)



Yes I understand now, thanks for the replies:-)

 
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