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The top of this cycle for ASX200, cash is king ?
AgentCooper
post Posted: Nov 19 2005, 08:25 PM
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In reply to: sprocket99 on Saturday 19/11/05 06:02pm

I think we will see only "long term market average" returns over the next 6-8 months - i.e. the 8%pa we all read about. After that I think we will have a nother couple of boom years to take us through to mid/late 2008 simply due to the weight of money coming into the market, the "stronger for longer" commodities cycle, lower oil prices killing inflation concerns.

After that, we're likely to see the bust.

Coop

 
sprocket99
post Posted: Nov 19 2005, 06:02 PM
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hi kahuna, love your work

I also get the deja vu feeling whenever the record highs are hit, I still rue the dot com crash. nothing like panic selling of an overgeared portfolio.

But the mining boom might have more legs - I actually think that BHP and others (OXR, ILU, NCM) are near enough to record highs that it doesn't matter. And we get the investment and financial services companies (AMP, CGF, CPU) benefitting from the rising tide. The good news is that most of these are still on pre bubble PEs, paying dividends and soaking up the superannuation billions flowing into the market.

anyway, this is my strategy and portfolio. It has been spinning off plenty of free cash for some time to pay tax and to play the speculative end.

SPROCKET........



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SPROCKET..........
 
kahuna1
post Posted: Nov 19 2005, 01:31 PM
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Howdy ... what a week ...

Old all time high basically taken out on Friday 4679.1 .... or close of 4671.6 ... we closed less than half a point off that.

Market seemed desperate to get there in the last hour.
Drove up things ... that well frankly I didn't agree with. Oilers for one .... up 2% in the last hour. Oil was down 3% on the day ......

Anyhow .... after listening and watching US ... they are all bulled up ... so too is Japan ....
which I suppose means us too.

Suspect all things being equal they go for the 4770-4800 target ... maybe even the 4865 one. Any higher and they will not be able to resist 5,000. If we close 4,930 ... just fill in the chart to 5,000.

MYself .. despite everything pointing in the one direction ... UP .... and knowing its more than likely we see it higher in coming weeks ... not impressed with the actual quality of the rises. The leaders up this time have been financials as opposed to the miners. Only rio on new highs ... but not even too sure it should be there and represents no interest despite copper being all time highs and expanded iron ore production.

US bond rates fell during the week which helped the financial sector here. It was a case of buy anything ..... and banks ... some with not so bright admitted outlooks were pushed up 5% in a week. Some even more .... from the other financial sector. Personally .... well they can have it ... just going to sit on my cash for a while.

Might miss the next 2/3/4/5 % but when a bank says its outlook for 2006 is not so flash or flat ... and they rally it 5% ... I know its time to hold on tight. Conversly when a pure oil or gas comapny sees the price of its product ... its one and only product fall by 7% over 2 weeks and the stock price remain the same such as a host of them ... WPL OSH ROC .... I suspect the market is on drugs.

Obviously ... they want it higher .... but for the above reasons being very careful with stocks I buy here. Buying one with flat outlook 2006/07 at 5% higher than last weeks price or one with a negative outlook about the same ..... I just dont know.

Must be getting old ... too many with Ho Hum P/E's and outlooks and potential pushed to all time highs in the last week for my liking. Wont stop them doing some more .... me the higher something goes the less enthused I become ... the market at present almost in a frenzy to buy stocks with p/e's of 18 or more and flat outlooks. A lot more companies outlooks have been downgraded in the last two weeks in Australia as a result of recent earning numbers than the market is showing. In fact the ratio is 2/1 on the side of price downgrades by analyists ... yet we still continue to advance.

Kind of like my favourite stock that was like a chicken with its head cut off .... pity to see they are relocating to the UK. Bye bye ....

I would like to say the small chart resistance on the top at 4,698 should stop them .... but boy oh boy. .... 4,770-4,800 ....

Market seems to think because the US has finally rallied and Japan also we should follow ... not so sure .... we were strongly up when they were at best flat 12 months ago. Do we see some money being switched ?

Just remeber the higher a thing goes the less enthused you should be and pull some money out. I see this move ... right now off the financials as being built on fluff ... but hey thats just me.

Cheers



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All views expressed are my own opinions. While I take every care when posting no guarantee to the absolute veracity of the postings is given or implied. Please do your own reseach and consult a professional investment advisor before investing.
 
auroraoz
post Posted: Nov 15 2005, 07:51 AM
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If bush can place bernanke into the fed (who wrote the slash interest rates to support a deflating bubble formula) then what other magic have they up there sleeve?
Electronic money means rich now (children pay later). It is new territory, but there with that are new and unforeseen dangers.
Bernanke's offshore savings glut essay shows a partof his mentality.
All this on the condition that bush cheney stay in power and rewin favour.
Infinite possibilities.

aoz

 
kahuna1
post Posted: Nov 15 2005, 07:18 AM
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Hi guys,

Happy ... yes suppose I am bullish but am with Norm longer term about a fundamental weakness in the US market .... but it wont stop us at least for a while.

Yesterday was a classic, one half of the market was up strongly and the other down just as strong. Coalers in particular smashed and reaching my own targets to start. CEY at 371 ... thats 8% in a week ... EXL same sort of stuff. Must just be me on the bid ... it sure felt like it yesterday with everyone and their mother selling. Some of the oilers as well also weak despite the reality of the AUD/Oil numbers. HDR finally to my own target area and the share at a low for recent times down 27% off the high not long ago. OSH strangely also weak and to my own target area. WPL didn't make it and ROC ... well too expensive for me.

As to the high this move .... too hard to pick. As to is trying to pick when the market is turning or going to turn. All time high is not far away 4679 in the ASX 200 but strongly suspect the market again reaches new highs for a few reasons. Its been a contrast I havn't seen for a long time in the market in recent days. One half of the market is up and up stongly with the leaders up 2% and in contrast miners/oilers or coalers down 2%. Obviously this cant go on. Dont really expect it to either. Mining sector has been in the doldrums for about a month ... but the reality with the AUD/USD exchange rate falling below 73 cents ... for most things couldn't be better. Sure a couple of commodities have fallen but others the fall in US dollars has been halved by the exchange rate. On the other hand the market has pushed the prices down by double the move in US dollars and ignored the benifit of the lower currency. To me long term shares which didn't actually represent their real value in the first place before this move are the ones that I suspect will propel the index to even newer highs as time goes on. Selling a share off by 30% off its highs in the case of one of the coalers ... when most of its production the market is worried about is covered already by long term contracts ... well its intersting.

As for the oilers ... before they came off this 30% were trading barely at a US$35- long term oil price let alone where they are now. WPL is only off 13% from its high .... so it has in terms of the others performed better and roughly reflected the fall in the AUD/OIL .... but the crunch is its trading at a NPV longer term oil price around US$32- per barrel without taking into account my own suspicions regarding Pluto's size or Browse Brecknock or Mauritanian gas. I saw a broker NPV and he assigned only a 20% chance to Browse .... and it was worth $1.40 to NPV ... so I expect when WPL comes out with more on Browse over and above the already very positive comments ... yet again the sheep will follow the pack. Going from 20% to 80% ... will add $4.20 to the valuation. Pluto ... if what I suspect is correct and it being 7-10 trillion cubic feet as opposed to the 1.5 trill already being allowed ... add another $5- to the valuation. Since WPL is rated as a buy overall by the 14 brokers that cover it with an average target of $35.65 .... u can see what will happen when they sharpen their pencils again. Current price $31.60 ... their target now $35.65 ... add another $5-10 to that ... and its why I suspect we go higher.

WPL is numer 9 or 10 on the ASX 200 and I suspect it will have a fair bit to do with us reaching new highs early 2006. In fact some of the stocks the market hates right now even worse case will come in with P/E's well under 10 for 2006 financial year. Even HDR with Ching starting up Feb 2006 ... lowest profit call I hae seen for their new financial year Jan-Dec is 135 mio NPAT ... p/e of 9. And 2007 with no Tiof or anything lowest by the same broker is 155 NPAT usuing an even lower oil price .... p/e 7.92. Lots out there ..... coalers ... boy ... some have production risks looking forward but say EXL which commented last set of financials about receiving prices double last years for their premium coking coal ... but still they sell ... good o ....

In short ... half yearly financials due late Jan thru end Feb are going to be a spur to even higher levels. Expect some recovery Dec from this selloff as companies fail to hose down the estimates. Dont expect too much from oil for some time ... range trading ... maybe a bit lower but also will have trouble above US$65- unless some disaster befalls a large producer. Its hard to buy things when they have already advanced so far ... but the new pricing reality for a lot is a thing that will not go away quickly. All time highs for a whole host of commodities and firm outlooks going forward ... this correction in some I see as somewhat human nature.

Next couple of days will be interesting. US yet again has its inflation numbers tonight and tommorow night. With a great deal of amusement I see the economists are calling flat numbers for this set. Personally I feel after the massive spike seen with Katrina ... this months PPI and CPI numbers for the US will be negative and reverse some of the pain seen over Katrina ... I suspect a bit this month and even more next month. If what I suspect comes true ... off to the races the yanks will go and push the dow higher.
Again I must see I agree with Norm ... not a big fan of the US longer term. Massive twin deficut problem there .... and no end in sight. US has deluded itself that ohhh we are so big and the economy so large its not a factor ... but both in terms of GDP are reaching silly levels let alone the numbers in dollars and cents !!!

These two factors ... recovery off recent lows for miners/coalers/oilers and the US market being bouyed short term by the perception inflation is reversing and the Fed may slow down raising has me thinking we get to my targets on the top. First stop is the old high 4,679 for the ASX 200. Almost there .... then 4,770-4800 and above that around 4,865. If we go thru there ... well 4955-80 ... but it will be like a red flag to a bull the 5,000 level.
Sounds a long way but with BHP's estimated P/E for next years numbers at 11 ... it aint that far.

Anyhow all the best .... see how my crystal ball works this week :}



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All views expressed are my own opinions. While I take every care when posting no guarantee to the absolute veracity of the postings is given or implied. Please do your own reseach and consult a professional investment advisor before investing.
 
normc
post Posted: Nov 14 2005, 10:24 PM
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Fascinating subject this one. I've been following the thread for a while with great interest. Love your insights Kahuna.

I've been around long enough to realise I am incapable of picking the top of the market. One of the lessons I have learned is that markets over react. The highs are generally higher than can be justified via fundamentals (often with the benefit of 20/20 hindsight) and lows are almost always much lower than they should be.

Now, based on my lack of faith in the fundament strength of the US market, I think it is more likely than not the peak of this bull run will come in the next 6 months or so, certainly within 12 months. Actual timing will depend to some extent on action by the Fed with interest rates and the continuing appetite for risk from the lenders to the US. The US deficiet and debt are now so big, my calculator won't accept the numbers. But it could also happen very suddenly with with an unexpected event. As much as we might claim we are a different market, our cycles largely follw the US.

Even if I'm right, to some people 6 to 12 months is a loooong time. To me it is not. Almost all my shares are in my SMSF. With the benefit of the bull market of the past couple of years, there is now enough money in the fund for us to live pretty well once I reach 55. Add to that the fact that I haven't worked for 3 years and don't plan on returning means I am probably getting a bit more risk averse than the average ShareScene investor.

Just 2 weeks ago I was 98% invested (just 2%cash). For the past year I have not had more than 10% in cash at any time. I now have 10% cash, with a plan to move to at least 25% cash within a couple of months. I suspect I am doing this a little early, but I'd rather be early than late. I'll review again when I get there to decide if I want to go further.

Planning to hold 75% in shares (and some funds) for the time being doesn't make me bearish; but I am leaning that way with my medium term view.

The cash will do 2 things for me. Protect a reasonable slice of my funds if things go pear shaped, and just as important; it will give me some flexibility if (when?) good buying opportunities arise.

Now I have no particular insight. But I have been through a few market cycles; a couple of crashes (not suggesting one is on the way), a lengthy bear market and I had a big (well big for the time) mortgage when interest rates hit 17%. I've also benefited from a couple of good bull runs, particularly the current one.

My view is probably tainted somewhat by personal circumstance, but it is still my view.

Despite the overriding view, I see some good buying opportunities coming up, so I may have to sell enough to get to 35% cash, allowing for buying some more good oilers when they are down!!







 


happy2
post Posted: Nov 14 2005, 07:13 PM
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In reply to: kahuna1 on Sunday 13/11/05 08:34am

Hi Kahuna,

You are certainly bullish. Knocked off the 4602 today in good style. 4,679 by weeks end, do you think?





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Have a good one

Happy 2





"Knowledge is a process of piling up facts; wisdom lies in their simplification".

Caveat Emptor: the above comments are merely opinion, not advice.
 
kahuna1
post Posted: Nov 13 2005, 07:34 AM
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In reply to: happy2 on Saturday 12/11/05 07:39pm

Hi Happy,

Well the last downmove went exactly where was expected.
4311 on the ASX 200 .... was

a 25% retracement of the 2 year H/L 4679/3138.8 and had a target of 4299 ... close enuf
and a 33% retracement off 12 mth range 4679.1/3552 and target of 4307.2

Right now we are miles away from there on the bounce.
Leaders have switched from resource stocks to others ..... oilers are looking sick ... its the end of the world there !!! Coalers even worse ....

Short term not much between here and the old high of 4679 .... in fact very little.

Been sq miners/coalers and oilers .... has been a long wait .... felt like I was short.
Have been waiting for oil to eventually get to this target I had in mind post katrina ....
initial support was US$ 58/59 and then 57 but a close below 56.23 was the big hurdle.
Now personally don't see it happening ... but who knows .... hard call.

As to the oilers and miners ... they are pretty much well off their highs of not so long ago and coalers have been the worst hit at this stage. Personally stocking up on Friday on one and looking for slightly lower in a continuation of selling on Monday. EXL is down 50% of recent moves and is value below $6.45 .... I am long. Hoping for a little more in CEY but its getting there .... below $3.75 ..... not long.

Oilers .... confounding stuff some of them but Fridays catch up has me happy ;}. Was confused with oil going down and some oilers going up on the day .... WPL reversed it on Friday and expect a little more weakness on Monday. Have a target of $30.80 for WPL ... not long other than super. HDR has been the best behaved ... its gone down with the fall of oil and as such its shed 26% of its price off the highs ... has been very hard sitting sq when u like the stocks prospects long term ... anyhow ... still sq HDR even super ... target 186-182 ... and lower if they bash it ... but have plenty of room. OSH ... again same sort of story as the rest target 310-305.

Miners .... well BHP would love to see $20.60 ish to stock up again. Rio for me represents zero value here and has lower prospects as I see it as compared to BHP yet RIO's price has held up better. As such my target for RIO is miles away ..... miles.

A few smaller miners and upcoming ones getting thumped along with the rest .... SRL for one ... highly spec but new mines on line last quarter ... gold and copper and already impressive profits and also interesting intersections from its controlled TTT ... yet they slapped it on Friday along with the rest. Must have been the high in copper ? :} SRL highly spec ... and volatile ... may go a bit further but with yet again record copper highs ..... 2006 will be intersting ... let alone the massive jump in gold production coming this quarter.

As for the rest ... its very much a tale of two cities. Miners/oilers/coalers smacked and to somewhat stupid levels. On the other hand a host of other favs leading the pack. CSL one I chatted about not too long ago on SS ... was being crunched in May down near $27- and again in this recnet move to $34- at $39.50 .... its up 50% since May and 15% off its low a month ago. Same for a lot .... PPT and some of similar ones RCD ... near all time highs. CAB ORI PTD RHC RMD TCL UGL all near highs and its what has been dragging the index up as opposed to the lacklustre stuff from miners/oilers/coalers.

About coalers .... its interesting ... some have had reports which have been less than splendid ... most are going thru massive expansion ... massive ... in most cases 50% plus and the bent of the market has been to punish them across the board despite the fact some have problems that are shall we say tiny compared to those with big headaches.
Also one idiot miner reported that spot coal a deal was struck at US$40- per ton as opposed to the closing last night of US$58. What the idiot who mentioned the price failed to mention was it was very low quality thermal coal and full of rocks with a high ash content .... so for some reason every analyist has downgraded coalers. They really are a bunch of sheep. CEY which sells most of its thermal coal to NSW electricity stations has its prices set off a long term average of the US coal price ... the US$58- .... it has locked in contracts for 82% of production and even the planned expansion is almost covered by yet again contracts ..... so our analyist friends have pretty much gone from having most coalers as a strong buy a few months ago ... to now being just a hold. In CEY's case it is covered by 9 brokers .... it was rated as its strongest buy ever at $5.20 not so long ago ....
and the last update was at $4.10 and it is now rated a hold .

Reality for it and other decent coalers ... spot coal has had a range in the last 12 months of US$62.75 to US$53.87. The low was in May and the high was September with Katrina rubbish. Now coalers have been smacked for the last 5 days without letup in Austrtalia ....
whilst the underlying coal price for coalers like EXL and BHP coal and RIO coal and CEY ... the price has actually been going UP. In fact the high for the last 3 weeks was on the 8/11 and was USD$58.50. So coal moves ... at present make not much sense to me.

Same sort of stuff for BHP .... I kind of find it amusing but thats just me. BHP produces across the board and some have been going down and some up. Copper up vs oil down.
Interesting BHP and Olympic Dam .... when expansion plans originally came out ... it was a doubling of production ..... then a tripling ... now the number is quadrupling. Sure its a long way off and no one knows where copper or Uranium will be in 2010 ... but putting it into context ... Olympic dams main product is copper ... not Uranium .... but .. boy .... if it quadrupled Uranium production it would produce around 21,000 tons of yellowcake or 47 million Lbs of the stuff which is about 33% of the global demand !! The amount of copper it will produce at ramped up rates will also be staggering. Market ... yawn .... BHP expansions in virtually every area prior to 2010 ... oil, iron ore, coal and so on ... yawn from the market and its interesting BHP with the others being dragged lower.

RIO as a contrast ... price behaving well ... despite the fact it forgot to renew a mining lease in the Pilbara for iron ore and was gazumped by a small miner. Remains to be seen if this is not reversed ....

Oilers .... WPL ... yes its seriously undervalued ... probally around US$35- per barrel long term oil price. This does not include any of my own thoughts on Pluto's actual size or Browse/Brecknock upgrades or Gas in Mauritania ect ect. But WPL's share price was going up when oil was going down ... Fridays correction has brought back some sanity to me ...
long term value below here. HDR as usual no friends .... great value here.
OSH getting there.

ROC on the other hand has defied the price of oil move down to a great extent and to me needs to go further .. or others are more attractive. ROC on Friday was flat for a long time ... it finally did crack but to mee needs another 5% or so further. WPL OSH HDR BHP are pretty much there. EXL saw what I thought was a great level of Friday ... CEY maybe 2% further to go down.

From here ... see some of the leaders ... the non miners topping out here and the lead being taken over as the miners recover over the coming months. Results for the quarter ending DEC 31 will start to come into play and late Jan 2006 will be an interesting reporting season for the miners ... expecting some serious jumps.

ASX200 ... firt hurdle is the 4602 level but pretty much a done deal Monday.
Next is the old high 4,679 .... not sure how long that will last.
If we see some bounce in the energy sector and the dow holding its gains ... sooner rather than later. Oil I expect for some time range bound ... seems well bid lower from here and winter storms in the US will be interesting.

Next levels on the top in the ASX 200 .... 4602,4679,4770-4800 .... target 4865 ish for now

Support ... minor 4585 ... 4550 ... important 4495 !! minor 4450-30 ... important 4400 ish.

All the best .... sorry for the ramble.

In short .... everyone hates miners/oilers and especially coalers .... must be time to buy again !!



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All views expressed are my own opinions. While I take every care when posting no guarantee to the absolute veracity of the postings is given or implied. Please do your own reseach and consult a professional investment advisor before investing.
 
happy2
post Posted: Nov 12 2005, 06:39 PM
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QUOTE (kahuna1 @ Saturday 22/10/05 03:49pm)

G'day Kahuna,

You are a wily ol' fella. But then experience begets skills of a fox.

I was having a look at the XAO and trying to work out where the elliot waves were. Very hard for me to determine where we are in the cycle. In some respects it looks like we might be about to enter the third wave. But when we look at the corrections, in the larger scheme of things, they have not really been that big.

Some pundits in the states expect the current rally to continue into the New Year. But I think it looks suspect myself.

Oil has come under the MA200 and some hooters are saying that this is a bearish signal for oil. Personally, can't see this being the case. As for those figures coming out of the states regarding inventory, one never knows if they are accurate or not. I tend to think people play the market and feed false information for mouths to throw up smokescreens.

Right now I believe there is a lot of long buying on oil This should augur well for WPL. The question is will we break 5600 with the XAO.

biggrin.gif



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Have a good one

Happy 2





"Knowledge is a process of piling up facts; wisdom lies in their simplification".

Caveat Emptor: the above comments are merely opinion, not advice.
 
kahuna1
post Posted: Oct 22 2005, 02:49 PM
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In reply to: neutron on Thursday 20/10/05 09:07am

Hi Neutron.

I feel very old when you say that .... and I am not that old.

Expect we now have seen the lows for a few stocks with Fridays opening madness.
BHP at $19.40 ... seriously ....

Oilers still have a ways to go possibly but WPL was irresistable below $19.50 ... I was being greedy and hoping for $30.50 on this move but .... nothing like a gift.

Oil market reacting as per normal to old news. They will wake up soon. Inflation being beaten up by the US press and shocking US numbers ... all caused when oil was US$72- .... I expect the oil traders also being influenced by this and oil set to test US$60- and close below the magic number .... problem is and I am sure they will work it out in a week or two ... the high spike in inflation at US$72- per barrel and oil at US$60- ... its 20% lower in price ... other side is the demand side still rages on and expect some serious covering by a lot of users the lower we go. Since Demand is equal to supply and we ar enow seeing the lowest oil prices for many months it will only get worse. First winter storms of the US only 6 weeks away ....

Still target for oil $58-59 with another support at US$57- ... either way doesn't really matter too much when analists still have their NPV calculations for 2008 oil and beyond at best US$40- and the ASX large oilers are trading 20% under that NPV price right now.
Just being a pig seeing how far one can push it. Best oil analyist I know has WPL valuation at $36- so at $29.50 ... its seriously low .... oh and he has pluto at 2 trillion as opposed to what even WPL admits is 3 trillion ... reality being 6-10 ... my call is 8 but what do I know ?

Anyhow ... safe for some of the miners I feel. Still not a fan of financials, banks ... property trusts and so on.

I wonder how they will take the CPI and PPI numbers for next month when they reverse the spike seen last month ......

It is like chickens running around without their heads on.

Expect the FED to pull the trigger on 1/11. With oil down here only 0.25% .....

Funny how the media can change ones perceptions on things .... probally why I don't watch the news very often.

Good luck .... hopefully end of this thread till next correction in 6 months or so.

Do expect it maybe to try that 4,300 level in the asx 200 ... but some are waking up to the fact that it had gone silly on Friday .... for me it was the classic signal of the low ... lots opened very weak down 2-3% but came back all day Friday closing near their highs.
Despite thinking oil may go a bit lower ... the lows in some of my favourite oil stocks on Friday ... well WPL 5% down at some stage .... with what is going on at the company and discoveries and earnings numbers at record levels ... boy its keen to see the stock off nearly 20% from its high a month or two ago ...

Good luck



--------------------
All views expressed are my own opinions. While I take every care when posting no guarantee to the absolute veracity of the postings is given or implied. Please do your own reseach and consult a professional investment advisor before investing.
 
 


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