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The top of this cycle for ASX200, cash is king ?


kahuna1

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In reply to: dee27 on Wednesday 16/01/08 07:21pm

Further to previous post I see the respected TA analyst Colin Nicholson has the critical danger point for the All Ords at the August low of 5491 and the S&P 500's danger point at 1371 in his column in the AFR on Jan 7.

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Howdy

 

 

ASX technicals as I see them

 

5,850-5800 Maj

5,650 minor

5,500-5,450 Maj

5,130-5,030 Maj

4.600-4,500 Maj

 

Maybe like last time my top was 6,800 and the actual top was 6,853 ... so will be interested to see if the downside gets hit again in coming days.

 

Was that the low ? No idea ... suspect strongly it wasn't.

 

Market in the US at best nervous and one moment Dow is up 20 next its down 30. Close could be anywhere and suspect they try the upside as opposed to the bottom.

 

Market pauses here and thinks things over at least for a day or two. Our market will be very much the same. Only natural that they want things to go back up after a whole string of down days.

 

Still the long term picture for me at least does not make one little bit of sense and whilst I am sure the US fed will do everything in its power to stave off a recession most of it is already expected from a cut in rates to a deep cut in rates.

 

Last nights interest on the economic side for me was the US CPI numbers which came out about expected. For myself the 2007 numbers year on year were an interest and whether anyone besides myself even looks at them ? Well market certainly didn't and the 4.1% year on year number for US inflation is the worst since 1991. All besides the point I suppose until I look at the US bond rates and see their yield is below the inflation rate.

 

Oh well .... talked about this topic enuf ... the understating of the CPI in the first place and the fact that in a rising inflation environment they are cutting rates. Let alone negative real rates and the state of the economy and spending or overspending problems.

 

Interestingly the price of metals despite going down did a bit better than I expected overnight and the losses were 2% ish for most. Same for Oil ... on one hand lower oil is good for US inflation.

 

Our market will be interesting in light of this since as I type BHP is well down on our close and RIO the same so we will be at least soft on the opening in relative terms. Lotto game still has a while to play at 6.20 am Sydney time till the NY market closes and it could close anywhere.

 

Big picture we are down around 15% off the highs and certainly a stage two correction thing. One hell of a move and whilst suspecting we need that blowout to signal a low ... these stocks are looking very cheap at the moment. Problem for me at least is last time I thought this at similar levels last correction when the thing made its lows if I was still holding those purchased at these levels last time at the low ... the average low was 15% lower than when the index was 5,800. That was for decent stocks as well.

 

As one gent said they throw the good ones out with the trash in these corrections. If anything I think they at times hit them harder. Having devoted some time to this issue, as to why a company with much better outlook and EPS growth and expected ultra low P/E gets smashed harder during a correction .... I came up with nothing really intelligent. BHP which for many years was the love of my portfolio always during a correction got smashed at double or triple the rate the rest did. Shining stars which silly me didn't have but a much better picker of stocks had IGO was even worse. CSL another pet ... index down 5% CSL sheds 15% yet 2 years later its 4 times the starting price. JBH same ....

 

Might be there are a lot leveraged into these stocks and as it declines its people running for the hills and stop loss selling. That was the best I could come up with. So when markets correct its like a fiesta for stocks with very good earnings and fundamentals.

 

Interestingly the USD/JPY got into real trouble late last night but has bounced which is a good thing. Japan is in just as much trouble and risk of sliding into the red but in its case the lower the dollar slips the more likely it is its going to happen. Some strong numbers out of Japan yesterday but they reflected when the USD/JPY was 114 not at the 107 or the 106 level it nearly broke yesterday.

 

Yesterdays classic as is often the case mid morning a rumor about the US fed holding an emergency meeting did the rounds. So the spurt we saw at 10.45 am and the index's rising and then waking up was all to do with this.

 

Sorry typing and trading here .... 6.33 am ... 11 mins later suspected they wanted it higher ... no news ... and blip its up 81 points. They did try the bottom and the fact it held and any news despite it mostly being bad was expected and the only other way to go if it doesn't go down is up :}

 

Still a lotto as to the close ... its becoming like that. Have noticed the fact that instead of trying to massage the market if you have a decent sized order to buy or sell in recent times its just been the blunderbuss approach at times to thing sand if there are enough bids or offers 5 levels out they just take the lot of them out.

 

Today, well ours will be held down a bit by the miner sand oilers on the open but a green day it looks like we shall have. Japan should take heart from the USD JPY coming back from the brink and the fact their market has had a total stinker and is off a massive 22% from its high compared to our own.

 

All scary numbers.

 

Each day its important to remember its only money. More important things out there than all this. The ones we love ... our kids if we have them .... to tell someone we actually love them rates a lot higher than where the stocks have gone overnight.

 

Gee .... I do just love these closing rallies ... not letting anyone get a breath who is short. Plunge protection team specials ... maybe ... unlikely ... possible but doubtful. DOW now up 100 ...

 

My screen must be broken ... thats a plus number :} 107 ... what does that mean ... there is only a sell button on my screen ? Look it works ..... 100 ... 95 ... 80 ...70 ... 60 .. 50 ah there is the buy button one covered in dust :}

 

I thought my hankering to stuff my face with twinkies was at an end ... two truckloads full ... suppose I shouldn't complain the market is much much lower than when the addiction started .... 500 points to be exact.

 

Rally today inspired by the news George W and his Thomas the tank engine PJ's from yesterday?

 

One has to amuse oneself however they can. Best and funniest story was the threat from Moody's the rating agency who got the credit crisis so wrong threatened the US govt about the ratings of AAA on their bonds and said they may downgrade them later this decade if they don't get spending under control.

 

Likely ? About as likely as the ratings agencies returning clients funds who lost money buying investment grade bonds which 18 months later are worth 15 cents in the dollar.

 

On a serious note the chances are slim. It would be viewed as unpatriotic to do something like that. Secondly at this stage the world has to have a benchmark and the likelihood of default despite my berating the US is very slim. The government side is a mountain of debt and overspending. with things slowing down and taxation receipts slowing and them proposing to relieve the slowdown with even more spending from the govt is ... well interesting. Thankfully Hillary is heading to the White House and the tax break on the capital gains which added 2 trillion to the Rich's pockets will be reversed along with I suspect some of the top end tax breaks handed out. Easy fix.

 

The rest ... the existing debt and structural problems with trade. I just don't think they are fixable without some serious pain. If the US dollar slides it will take the worlds second largest economy along with it into recession if thats not already going to be the case at 107 yen.

 

None of it an easy fix.

 

Well futures Dow futures up 44 on my screen now from up 107 ... a mere 10 mins ago.

 

Its like that. Just plain old scary from down 30 to up 110 without a pause to back up 40 ...

nothing new with these moves and if anything they are almost pathetic their scope.

 

I will leave you with this. The Japanese market hit by the sub prime woes and lower USD has shed 22%. The woes came out of the USA not Japan. Our own dear ASX 200 is down 15% from its highs and the same sort of story. Looking at the broader measure of the US market the S+P 500 index ... how far do you think its shed from its own highs ? Well the answer is 13.3%. Since its more a domestic problem in the US which has spread globally its a case of how you look at it. Have we and the Japanese gone too far or the USA just too little ? I am more of the the opinion the USA has not gone enough considering their economy is clearly slowing outside the credit and housing side.

 

Nothing about punishment or somethign that absurd. The impact is going to be in the USA and frankly their index high at 1,580 in the S+P 500 was a multi year high from back in 2000. And its off a mere 13.3% ?

 

Have fun

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In reply to: kahuna1 on Thursday 17/01/08 06:17am

Hi K1

Doesn't make sense does it, the yanks in trouble & we pay the price (so far). Unlike yourself, that is why I use 95% charts & 5% fa to make my trading decisions. From previous posts I think you are the opposite? Thats why I enjoy reading your ramblings, they keep the fa uninformed like me up to date, gives another perspective & it all helps.

The close on the DOW is telling the story imo - a corrective structured move up all day long has now turned to an impulsive move down to end the day in -ve territory below strong support. They didn't forget the concrete when they threw the bait overboard after the fish wouldn't bite by the looks.

Maybe this is the start of their REAL rout.

Cheers

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The doom and gloom indicator must be very positive now, often this means we are very close to buying. Its about 95% total gloom and doom according to the tone of posters, a positive side thinker is considered nuts. It would appear that all experts are of the view that a recession is certain and that there is no way out. Even if they are correct we are getting very close to a big bounce now, remember a bear market spends more time going up than down. We could see a very good package from the Fed sooner than later to cause this bounce.We see overseas countries saving US banks as the doomers point out, but whats wrong with that? US has done it for years overseas. At some point foreign money could pour into quality US stocks you dont have to be a genius to work out how cheap they must be to someone holding overvalued Euro's.In simple maths their Euro's buy almost double the amount of stock they would have a few years ago plus US stocks are down, this double "Whammy"looks very cheap to me. Foreign money is pouring into US simply because its cheap and they see a bargain where the doomers cant.
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RIO's take on the potential impact of a US recession on resources demand :

 

RIO Tinto boss Tom Albanese has issued a fresh rallying call to the market ahead of a likely takeover bid from rival BHP Billiton, saying Chinese mineral demand was set to be resilient in the face of fears over slowing developed world economies and a possible recession in US.

 

Rio Tinto boss Tom Albanese says Asia's material demand will drive growth, even if the US slips into recession.

Mr Albanese said the outlook for mineral demand remained strong, while financial markets were fixated on the ongoing fallout from the sub-prime crisis, the run on British bank Northern Rock and the potential forthe US economy to slide into recession.

 

He said even if the US went into recession, it would probably only shave one percentage point off Chinese GDP growth, which he added was otherwise expected to be about 10 per cent.

 

"The macro conditions are continuing to lead to strong markets in China and Asia," he said.

 

Mr Albanese unexpectedly dropped in at a dinner Rio's iron ore management team had with visiting journalists in Perth on Tuesday night, and reiterated that he saw no value in BHP's informal three-for-one offer, and that the strong independent value outlook for Rio was unchanged by the global financial ructions.

 

And he said the British market remained wary of BHP's takeover strategy, concerned that it might not be able to deliver significantly higher value from what would be the biggest merger in mining, if not corporate, history.

 

Britain is expected to be the key battleground in any takeover fight, given that the London market accounts for 78 per cent of Rio's total capitalisation.

 

While conceding that a merger with BHP would achieve synergies, he said these were small compared with the value offered by Rio's independent growth outlook, and that he was not prepared to pursue merger synergies at the expense of shareholder value.

 

The UK Takeover Panel has given BHP until February 6 to either launch a bid for Rio or walk away for at least six months.

 

Mr Albanese noted that despite the concerns over the US and European economies, there had been no easing in the strong iron ore market in Asia.

 

Rio's head of iron ore sales and marketing, Ian Bauert, said the market was the hottest he had seen in his 30 years with the company, and that Asian steel mills were not expecting the US slowdown to affect them.

 

"Customers are saying that it isn't going to have an impact on them," Mr Bauert said.

 

Mr Bauert said Chinese steel production was being driven more and more by rising domestic demand within China, rather than the pace of exports that the Government was taking steps to slow.

 

Mr Albanese said the danger of Chinese growth stalling in some post-2008 Beijing Olympics hangover had receded, with the scale of the country's industrialisation now having a "national momentum" beyond just a few key cities.

 

 

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In reply to: albion on Thursday 17/01/08 07:49am

Hi albion

I might be a "doomer" atm & no I can't see any bargains technically. Maybe fundamentally they are cheap but that doesn't mean we have seen the bottom.

I'll start buying again after a capitulation day showing a hammer candle & then a confirmation day to follow. Or some other bottom reversal pattern.

We MIGHT be close to a big bounce but we haven't even stemmed the flow of the downside momentum yet imo.

I do understand how the contrarian thinker can make a correct decision when the "doom & gloom" is at it's worst. I just don't think it's today.

Cheers

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Well I'm predicting a green day for our market today!! Pluck a figure out of up around 40! http://www.sharescene.com/html/emoticons/biggrin.gif

 

Mind you I always look as negatives being positives so don't listen to me!! http://www.sharescene.com/html/emoticons/biggrin.gif

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In reply to: kahuna1 on Thursday 17/01/08 06:17am

"Each day its important to remember its only money. More important things out there than all this. The ones we love ... our kids if we have them .... to tell someone we actually love them rates a lot higher than where the stocks have gone overnight."

 

Endorse strongly.

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