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


kahuna1

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QUOTE (daj @ Wednesday 12/10/05 08:14am)

Hi Daj,

 

I still hold HDR and expect tevet 2 announcement with WPL around to be maybe Monday but more likely Tuesday. HDR just cant help itself it drifts off in the absence of anything and hoping to add some more lower. WPL ... less influenced either way by Tevet2 deep and if the fed acts which it surely will ... and oil has hit somewhat of a barrier for just now as I suspect above $65- ... at some stage WPL will drift off a bit ....

 

Depends on trading style I suppose. Yes I agree on ROC ... just thought at 292 was out there for now. WPL hoping to buy back at $30.50 ... run the risk of missing out on the move like when I sold out $33.99 and they went another 6-7%to $36.25 before they flopped. HDR ... either way I am long and hoping they catch the flu and I get to increase if they try that crucial support at $2.08-10.

 

I like HDR but not about to have all my money in one stock ... sure sometimes I go mad but long term the risks will get u every time if you have 1 or two stocks. Tend to have 10-15 stocks some overweight .... sometimes very overweight. Despite my enthuisam for HDR .... u never know but if we were to head lower I would just increase .....

 

Some times one doesn't want to be holding anything. When we had the correction earlier in the year ... despite being poo pooed by a few I felt very bearish at 4200 ... missed a bit on the rise up ... but even sold my HDR .... which surprised a few but it corrected like everything down 15% twice the market correction in size ... suppose if we go the same sort of distance this time from the high to eventual low ... same thing .... one wished we had the forsight to sell out and buy back here ... but not this time ... also despite feeling we have not seen the low still holding .... so for me it says something.

 

All goes well ... yep we see good things 2005/6 but one thing about super funds is they normally run at 95% invested .... kind of have the view even share I love longer term say HDR WPL BHP RIO CEY COA and so on ... will all do the same things ru too far and hard one side and then do the same the other on a pullback. WPL longer term I love safer than HDR ... but $36- to yesterdays low of $31.50 ish was a 12.5% pullback over double the markets pullback at its worst point.

 

As to percentages in individual stocks ... gee a top 20 ASX stock even I would limit it to 15% as a rule in any one ... sure I break it ... like Pluto stuff for WPL ... I went nuts ... but to do it long term ? I try not to do it often. HDR yes I have broken my own trading limit several times but it helps if say u had a 10% of capital limit for HDR which is high ... but lets say the market like last year corrected on tiof rubbish and it went down 25 % in price on rubbish ... it gives you room to play with. I have about 30 stocks I like or love their longer term prospects ... some have run their course MBL and CSL others and the majority getting slammed along with the rest of the market on the pullback. BHP with better earnings of 30% plus for this year expected alone ... has come back 10% off the highs ....

 

HDR goes lower ... I have a bit of room to buy 78% cash holdings at present. HDR biggest hold in percentage terms ... CEY number 2 ....

 

Just the way I do things ... doesn't suit everyone and may in fact be the worst type of trading for some out there. Very personal to every individual.

 

WPL vs HDR ... had a hunch last year .... if it isn't confirmed by the HDR taking WPL to court over costs ... and the HDR contradictions to WPL announcements both from ommisions of complete announcments to more information like Chiguetti as to why the costs have increased ... 70 mio more costs vs likely 1 billion more oil ... and this latest one is a classic .... drillers always have blowout prventers when drilling into test depth ... so when rig takes a hit from a pressure spike ... either water or oil ... and all old WPL says is problems as though its some sort of stuff up .... who knows as to water or gas or oil.

HDR was very level in its comments as it should be. Could be water for all we know.

Do remeber one drill in 2001 where massive blowouts of very deep wells due to pressure spikes took them a few times to get it right as the pressur in that case was off the scale ... but suspect this time with sidetrack they will be very very careful with blowout preventers.

If you hit virtually any pocket as identified on 3D seismic ... that deep and its under pressure .... its not as though the flow tests are induced.

 

At some time capital management and preservation comes into it. If correct I suspect will see a lot of my favourites off another 5% or more ... regardless of 2005/6 outlook.

WPL itself has I think a 30% projected increases in revenue from the lowest analyist for 2006 but still its off the 12.5% ......

 

U get the drift ,,, hope that helps.

Not very good with tiny stocks and don't follow them other than for amusement or tiny holds ... under 2-3% of capital. Tend to stick to ASX300 ...

 

Cheers

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In reply to: wolverine on Wednesday 12/10/05 09:55pm

Hahaha Wolv,

 

Short term top I should have said.

Totally agree its a correction .......

We most certainly saw a short term top 2 weeks ago at 4679.1 in the ASX200.

Very little quetions about that one.

 

Was that the low we saw the other day with the ASX 200 around 4430 ... myself I doubt it.

 

Inflation word being used even by the RBA now.

Numbers out late this month but frankly they are so cooked that the boys at the ABS are looking like dessicated mummies from being so close to something so overcooked.

 

Transportation index we were told went up 3.5% in the year ended June 2005 by the ABS.

So when public transport between out capital cities went up 8%. Seniors in Sydney got smacked 40% increase in their tickets. petrol Went up 20%. How they arrived at 3.5% overall is a work of art. By substitution and upgrades in quality is how. New car prices may have fallen slightly in 2005 .... but I suspect the ABS boys decided that a Hyundai Excel was now the same quality as a Lexus ..... so they used this to make the overall average 3.5% for the year ?? Kind of leaves 2005/6 numbers in trouble .... I saw a $700- mountain bike .... maybe a $14,000- Hyundai becomes a Mountain bike in 2006 to balance the books ?

 

Overall the year to June 2005 prices went up 2.5% for everything.

 

Well according to ABS.

 

Just got my power bill and being a little green was pround to see I used 33% less power over winter this year as opposed to last year. Could have something to do with the drought and it being very warm :} .... but bill was for $367- ... and glanced at last years bill $432- ..... they didn't seem to be 33% different. If one does the maths .... the effective rise was 15%.

 

Looking at my council rates .... same thing almost exactly the same rise .... there should be in this set of numbers ? Council slipped in a 15% rise ... maybe something to do with rising land value ? Over and above the general increase .....

 

ABS ... we love it.

Sure some things have actually fallen but the balance is not there. If a family is on a $50,000- after tax income ... power is 1k P/A its rise I suppose offset by the ABS boys taking the lowest DODO phone bill as the new norm ... Rates ... what will we offset them with ? Oh new computers are 25% more powerful than the old models but the price is the same ... so adjusting for quality one has fallen by 25% against the increase in rates.

So on and so on ...... computers being 100 times more powerful than they were 10 years ago has been a real saviour.

 

Cook the books all u like ... in the end the real dollars and cents price is the same ... but the rises in other things will eventually lead to higher wage demands, higher prices passed on in products due to increased wage costs ... and so on. Having a CD as standard in a car is now expected ... adjusting the effective price down by the ABS for quality by $300- is another.

 

Rates have only one direction ... and its up.

Higher rates means lower P/E's demanded on stock investments.

overall downward pressure if anything ....

Higher NPV % rates used mean lower NPV. Same for IRR ect ect ....

 

Still I agree our market over time advances but its going to be patchy and not fond of stocks with high borrowings, real risks with higher rates, exposed to property markets like banks, retailers ... if consumer demand is squished ..... do still like the exporters and miners/oilers but some sectors and prices we saw recently I suspect were the highs to be seen for many years !! However Miners with expected 20% plus improvements in 2006 earnings and massive expansion plans acrros the board .... stand alone for me ....

 

Next 6 months will be wilder than most think.

If the fed was to act and move 0.5% as opposed to 0.25% to counter inflation ... and then did the same 6 weeks later ... boy. RBA usuing the inflation word ... whilst I doubt it in 2005 ... by mid 2006 ..... I expect the next CPI numbers to be another classic fudge 2.5% yeah right ... they will run out of tricks soon.

 

Dont expect a whole swag of shares to break new highs for many years now.

 

Cheers

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Howdy,

 

Have been looking at the timetable looking forward.

 

The inflation word seems to me to be driving things certainly in the US and our market is taking its lead at present from there.

 

Last night saw some shockers on that front with export prices going up 1.1% for the month of September but even worse was the import prices going up 1.2% the largest rise in almost 15 years. Frankly theses are terrible for the US.

 

Fed funds currently stands at 3.75% and comments out of two of the voting Fed members in recent weeks have highlighted the US feds fears on this front.

 

Next Fed reserve meeting is 1st Nov 2005 and it is expected by all and sundry for there to be another rise in fed funds to 4%. My own feeling they may do something even more unusual and go 0.5% is not even on anyones radar even after last nights shocker.

 

Numbers and announcements to watch going on and leading up to the meeting at

CPI out in the US tonight ... market was expecting 0.8% for the month prior to last nights numbers but has been upped to an expected 1% increase for the month ....

Core CPI out as well ... ex food and energy ... still a muted 0.2%.

 

18/10 PPI

19/10 Beige book

20/10 Philly fed survey.

 

Should have a very good idea on things after all these.

 

Interesting to note the US number for a single month is expected to jump 1% on the back of higher oil prices post Katrina.

 

Last months CPI numbers prior to this were no tea party either rising 0.5%.

 

Last Fed meeting for 2005 is on the 13/12/2005.

 

Where for us in the meantime. Well our weaker than expected employment numbers has the rate question well off the radar in Australia. Our own CPI out later this month but exepect the numbers to be smoothed and adjusted to death as in the past. Australia if we move will not be till 2006 one would expect. In the face of rising US prices I wonder how long the boys can smother the ABS CPI series down and remain credible ... not that they are now mind you.

 

Certainly the US stock market is going to be like a cat on a hot tin roof certainly till the beige book comes out next Wednesday their time/ Thursday morning ours. In light of recent US fed reserve board members comments and the shocking numbers out last night and even if tonights CPI was lower at 0.8% for Sept ..... its going to put a very big hole in the annual numbers when a single month comes in 33% of the years whole target.

 

Suspect more of the same until 1/11/2005 and the US fed announces its decision.

Remains to be seen what the low is during this correction.

 

Sorry trying to be positive but even if we take Katrina effects out the month prior to it were still shockers for US inflation and I suspect we eventually catch the US cold.

 

Some of the inflationary impacts over the last 12 months in Australia have been saved by our currency appreciation off its lows a few years ago. Slowly these savings have been passed in the way of cheaper imports and cheaper prices to consumers. This time ......

 

All the best ....

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In reply to: kahuna1 on Thursday 13/10/05 09:20am

ok, i was (mostly) stirring but it really speaks to what kind of investor/trader you are.

 

for those with weekly timeframes clearly it has been a time to keep some cash, for those with monthly outlooks there are plenty of stocks you would keep full weighting and a few where you would have eased a few out. for those with yearly outlooks there are not that many stocks you would be holding that have broken down so at the quality end staying fully invested makes sense (letting the div cheques build up).

 

too much cash is what numerous LIC's are sitting on eg. Metanomski and Wilson. it has been a large miscalculation in the last few years.

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In reply to: kahuna1 on Friday 14/10/05 09:01am

Just another correction in my opinion...

 

As I see it, we have just completed phase 1 of a 3 phase correction cycle...

 

Phase 1:

 

Initial sell-off...relatively quick and stops at support, giving the market the false sense that the previous trend is still intact.

 

A period of sideways trading follows as various groups buy in or sell out depending on their particular interpretation of events.

 

Phase 2:

 

Secondary sell-off...usually much quicker and more sever than the initial sell-off, as the market realsises the initial trend has broken and sell...even if only for a short period.

 

Once again, a period of sideways trading follows, as once again various market groups bet on whether a bottom has been found, while others exit their positions.

 

Phase 3:

 

Final sell-off...usually less convincing, slower and less severe than the previous 2.

 

As on the previous 2 occassions, a period of sideways trading follows along with a rather unconvincing rally...as with the previous 2, a sell-off ensues, but on this occassion, it fails to fall below the previous low.

 

The correction cycle is over and a buy signal is triggered.

 

We saw a very good example of this typical correction pattern on the XAO just months ago...see attached image.

 

Cheers!

post-38-1129242599.jpg

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QUOTE (wolverine @ Friday 14/10/05 08:16am)

Hi Wolv ...

 

Very well put.

Long term investors this is just a blip for your stocks.

Myself ... a more active trader. Trader being the operative word.

 

Thanks trade4profit .... yep about where I see it .... maybe a little more progressed than you ... honestly not to confident even on my low 4,250 call ....

 

Do however see the recent highs seen in a lot of stocks as levels we will not see again for some time ... years. TLS at 518 ... Personally I don't think so. Banks the big four ... whilst not too far away from recent highs I just wonder in light of higher rates. Sure they will probally get back there ... but advances beyond that with higher rates .... Westfield recent high of $18.50 .... nope ... GPT ... gen prop trust $4.07 ... not unless the market goes mad again ....

 

Not too rosy this morning after having a look at the US calander and the numbers out last night. It could all change for me ... this bearish view overnight but suspect it continues for another 2-3 weeks .....

 

ASX 200 had a nudge at the second support around 4,400 yesterday.

Still feel 4,300-4,250 ..... and going to wait and take my lead.

Market usually has a massive cleanout the day it makes the bottom with widespread panic before it resumes in the longer term uptrend ... so until one or the other happens shall be a good boy and count the cash.

 

Better go take some happy pills :}

 

CHeers

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K1,

 

Do you think the FED would go up by 0.5%? Surely it would be madness. The DOW would crack wide open, which the US definitely does not want!

 

I would have thought that a sudden raise would undo all the gradual work they have to date.

 

Surely it would be better to create new model that decreases sensitivity to increases in oil price with a deflator of some kind adjusting for the increased costs of finding the oil?

 

http://www.sharescene.com/html/emoticons/wacko.gif

 

H.

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QUOTE (Harold @ Friday 14/10/05 11:24am)

Hi Harold,

 

Well the reality is US Fed funds are 3.75% . I suspect this puts them with real negative interest rates. Agree totally with your view about the dow, it will not be pretty if they do.

On the other hand fed has sent very clear signals ... for them at least they are concerned about inflation ... so if they only go 0.25% there will be more to follow.

 

Adjusting for things I suppose is fine if the spike in prices is seen as a one off but would have to disagree on long term energy prices. Its not just oil thats gone up but gas,coal uranium and end user electricity prices. Goverments getting involved in moving things in and out of price index's has seen the real CPI and purchasing power lag well below what is being reported by the likes of the ABS. One cant tell me the transportation index prices in the Australian ABS CPI only went up in the year ended June 2005 by 3.5%. Not with public transport prices up 8%, petrol up 20% and so on.

 

We all hear the cries of the massive increases in the average wage to $50k or so .... thats $38- k after tax .... now if you are living in say Sydney ... it wont even cover the mortgage payment on the average house price within 20 km of the city. Its $730- PW ... poor single income families living on that ... wife and two kids .... can it be done? I suppose a lot are sadly ... the working poor.

 

US index's less played with than our own .... so the last three months they estimate prices there in the US went up by 1.8% or an annual 7.2% rate I wonder what our own ABS will produce on the 24/10/05. We certainly are not the US but if as they have been doing of late come out with a number of 0.6% for the quarter ... we all know its BS.

 

All power bills went up last quarter and the rise for the year for myself on the same consumption was 15% higher than last year. Same for council rates .... petrol .... my gosh ...

25% from 12 months ago ...

Water rates the same ....

Public transport up 8% ...

 

Between all those I would suggest something of the order of 18% of total spending goes that way and even at a measly 15% increase across the board the number for actual CPI increase is well in excess of the ABS estimate of 2.5% ... it is in fact 2.7%.

 

If we are to accept the numbers did everything else across the board fall a little bit ?

I don't think so .... some things yes ... but didn't they raise rates not so long ago ? I remeber the government of the time many years ago took house prices out of the index last housing boom in the mid 1980's ... so are they going to put them back in now ... because if they raise rates ... the level of mortgages most people carry now ... yikes.

 

Not gloom and doom Harold ....

I missed the top of this boom in the ASX 200 ... but I am thanking myself right now to be mainly cash ... market just cannot help themselves right now .... if in doubt ... sell.

 

I watched the news briefly last night ... all shocking news ... terrible around the world .. then pollies arguing .... there was not a single feel good story in the news last night.

 

Suppose it must have rubbed off this morning ... I am even having serious doubts about 4,250 and its miles away ....

 

Just going to wait and see.

 

Have an excellent day .... smile at someone if you live in a capital city ... it shocks them :} :}

 

Cheers

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K1,

 

Yep Yep Yep. Agree about adjusted figures, was just having a lend of ya!

 

I know that prices in all of those things you mentioned have been rising but they are only a percentage of the overall CPI, most of the finished good are decreasing in price, and if house prices flatten and rents stay low then do you think inflation might slow, as energy and materials don't make up a huge portion of the index?

 

I have been listening to the hyper inflation crowd for a while now. "Get into hard assets and everything will be fine".........BUT what happens if the FED gets a Volker Mk II. No one seems to discuss the possibility of this scenario? What are your thoughts on:

 

The print money and through it out helicopters to prevent deflation crowd

 

and

 

The higher interest rates/inflation fighter crowd.

 

 

The biggest problem I see for the US is ensuring that the US dollar doesn't fall below 80 on the US dollar index.

 

The Iranian oil bourse, priced in Euros, should decrease the need to buy US$'s to pay for Crude. Will this exacerbate the problem?

 

TIA.

 

Cheers

 

H.

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