# Don't get too excited by today's action



## mick2006 (23 January 2008)

I don't want to scare too many people, just don't get too excited by the powerfull bounce we are seeing this morning.

Yes the markets were oversold and due for a bounce, but given the horrible forward guidance given by Apple after the close of the US markets this morning, expect another down day in the US tonight.

Also don't be surprised to see a lot of selling in the afternoon as people start to sell into the rally.

I can't believe how some of the spec companies have just bounced back so strongly, I guess some traders have no fear.

Just be careful people as it could turn ugly again very quickly.


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## Nyden (23 January 2008)

Could not agree more Mick
But, we could still see some gains tomorrow. I'd be afraid about Friday though...long weekend, & all.


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## Joe Blow (23 January 2008)

All general threads on market action should be in the 'ASX Stock Chat' forum.

Have moved this thread there.


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## agro (23 January 2008)

well i am taking a contrarian viewpoint and believe it is the start of an uptrend..

it will be volatile on the way up, but overall i am bullish


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## mick2006 (23 January 2008)

If the US market ever needed a standout profit report from one of the tech giants it was today, and the fact that Apple reduced their revenue and eps for next quarter significantly will certainly spook the market.

Apple was off 12% in after market electronic trade.

What was also important is the fact that they questioned the ability of the american consumer to keep spending.

I don't want to sound too negative(as I am mainly in cash and missed the downturn and also today's bounce) but just want to warn especially the newbies not to get too excited by today's run.


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## chewy (23 January 2008)

An interesting take: 
http://www.compareshares.com.au/son13.php 


Market turmoil: the next 24-48 hours are crucial
January 23, 2008
Clifford Bennett, Chief Economist, Sonray Capital Markets

 The undeniable reality of any serious bout of market turmoil such as the one currently on-going, is that this is often when some smaller players rise to displace their larger competitors who may have over extended themselves. Both in the business world and the field of financial markets, further significant shake ups are likely. 

Our forecast remains that equity markets lead by the US would over-react to the US recession, and then eventually decouple and recover. 

This is a time of extreme opportunity. In saying this I am most certainly not suggesting immediately jumping back into the equity markets. Furthermore I am not suggesting that you “hang on for the long term”. In fact, who are these people, who tell investors from the professionals to the mums and dads, “don’t panic”? What sort of risk management philosophy is that? 


In eastern Australia the first cracks are appearing that suggest a historically repetitive following of the US economy toward flat to negative growth cannot be ruled out. 

This is the biggest shake out of equity and financial markets we will see in our lifetime. It still has a way to go. Those individuals and companies with excellent risk control procedures, with the guts to close out losing positions in a market like this, will be in a strong and cashed up position to take advantage of the opportunities as they occur. Watch for these companies, but there is no rush to buy back in. 

In this kind of market it is a far better approach to be willing to miss the bottom, to be able to take a higher price perhaps, but also a higher probability trade, a little further down the track. 

History shows us that some of the wealthiest families in the world attained their financial power through an intelligent approach to just such market melt-downs. All such stories relate to the early exiting of the market, a cash is king approach for a short period, then when the moment is right aggressive buying at bargain prices. Now I know that is a hell of a lot easier to say than do. Yet, on a day like today when the world is wavering, to remember this is a market opportunity, not something to be scared of, can provide an edge. 

The current opportunity may be to short sell, I am not making that call, as while we are likely to see significant further falls in the US today, as people panic sell at the first chance of some liquidity, we may well be only 1 or 2 days from the low of this down wave. 

I believe there is a very good chance that after next week’s corrective rally perhaps, the down-trend will again resume. Perhaps the most likely scenario is that global equity markets remain heavy for another 2-3 weeks, and then enter a long bottoming process, followed by our long forecast gradual de-coupling of global equity markets from the US equity market. The US equity market may well be left floundering near its lows by year end, while other markets recover sharply. 

Key Forecasts: 

- Fed will cut twice by 50 points in 2008. 
- US economy will flirt with negative growth Q1, Q2. 
- US equity markets remain at risk near term. 
- China to remain a powerhouse. 
- Global economy to remain firm. 
- Commodities volatile but bullish. 
- Gold target at US$495, US$800 achieved, US$1100 next. 
- US dollar to continue accelerated collapse over next 6 months. 
- Carry trade is old news and over, USD/YEN to decline to 103, 97.
- RBA to raise rates to 7.25% in H1 2008. 
- Australian dollar will continue to climb, 93 cent target achieved, next parity $1.00, but in 2008, then 1.08 1.12 in following year. 
- Global equity markets having suffered badly from US market weakness will nevertheless begin to recover.
- Australian equities increasingly aligned to global growth, and after some initial 2008 weakness can achieve 6,950, by year end .


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## Nyden (23 January 2008)

mick2006 said:


> If the US market ever needed a standout profit report from one of the tech giants it was today, and the fact that Apple reduced their revenue and eps for next quarter significantly will certainly spook the market.
> 
> Apple was off 12% in after market electronic trade.
> 
> ...




That's nothing Mick, on a few of my positions not only did I hit the downturn, but I also missed the bounce! :


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## ta2693 (23 January 2008)

I think after Fed cut 75bps the inflation is going to be a problem more difficult to handle for US.

I sold out the shares I loaded yesterday and Think about buying Gold future.
I think the gold price will shoot to roof. 

What do you think? Is there any reason why gold price should not rise significantly?


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## skating101 (23 January 2008)

That sucks nyden i know the feeling man but noone was picking an early 0.75pc bp cut last night and as mick says it could only lead to more market insecurity about the US economy and hence further losses for a while yet


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## Nyden (23 January 2008)

skating101 said:


> That sucks nyden i know the feeling man but noone was picking an early 0.75pc bp cut last night and as mick says it could only lead to more market insecurity about the US economy and hence further losses for a while yet




Oh, I had a feeling the US might do something to prevent that 600pt plummet, but; I am still convinced I made the right choice closing those final positions.

As I don't quite think the sea of red is over yet.

Dead cat bounce :


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## barnz2k (23 January 2008)

Not just because I hate apple, but really I dont think their profit would be as high for next quarter.
They have already had the miss buy in of ipod touch and iphone, its too expensive to keep that buy rate up, and very lukewarm response to the recent macworld thingy and their cardboard laptop. The fanboys werent happy.

Im just glad it has (so far anyways) clawed back some of yesterdays ridiculous fall.


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## ASK (23 January 2008)

Nyden said:


> Oh, I had a feeling the US might do something to prevent that 600pt plummet, but; I am still convinced I made the right choice closing those final positions.
> 
> As I don't quite think the sea of red is over yet.
> 
> Dead cat bounce :




Looking back on some of your previous posts, I think you sold out on ZFX at the right time ... I cant see them coming back and breaking ten today, especially after missing that first hour of trading. Thoughts?


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## chops_a_must (23 January 2008)

And terrible inflation data comes out... 25% worse than expected.


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## Gundini (23 January 2008)

chewy said:


> An interesting take:
> http://www.compareshares.com.au/son13.php
> 
> 
> ...




Gee, this guy is bullish on the AUD...


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## mick2006 (23 January 2008)

The market certainly didn't like that inflation number, dropping around 50 points in 10 minutes.

Increases the chances of a rate rise in early February.


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## ged (23 January 2008)

What I wonder in times like these is why does the Fed continue to drop rates? especially with a .75 bp cut. I just think with inflation looming and people fearing it would get out of hand and a recession, they believe cutting it will boost the economy. Something like this will only result in a short term gain. 

I fear the inevitable (recession/depression) is coming, and the feds just keep postponing it, thus it will make it bigger when it comes.


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## MR. (23 January 2008)

ta2693 said:


> I think after Fed cut 75bps the inflation is going to be a problem more difficult to handle for US.
> 
> I sold out the shares I loaded yesterday and Think about buying Gold future.
> I think the gold price will shoot to roof.
> ...




Well you just answered my private post I was going to send to you. I wanted to know (since you are correct with yesterday's decision) when are you going to sell? Good call... I bought on the 16th of august but could not convince myself to buy yesterday.   I sold the last of my asx shares a month ago. 

Leveraged investors buying Leveraged companies selling to Leveraged consumers. It can only end one way! 

I thought it all would have happened before now. I missed out on some good gains! How many invest in cash? Who actually has cash? 

Above is some down ramping for your next quick profit. Gold? It always seems to go up in volitile times. (It is safe) But are "YOU" serious?


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## dj_420 (23 January 2008)

I agree with quite a few of these comments, I liquidated one of last positions this morning and sold into the insane strength we saw.

Now only have 10% left in market. 

What I think we have seen over past couple months is the market pricing in downgrades in earnings overall, which will mean the market also has to adjust lower to maintain its PE ratio. 

What do people think our chances are of us breaking 7000 again in the near term??? I think we actually ran up that high due to explosive growth in the US, China and India. Now one of those factors has been removed been the US. We are also expecting a slowdown in China growth.

So the downgrading of earnings will mean the market will be lower overall. I would say at best it is going to be a flat year (2008) and I am not jumping back into the market just yet. I think US downgrades such as Bank of America (95% downgrade) are yet to filter through.

For me this year I plan to learn how to trade indices and futures properly which will allign with my sentiment and maintain very short term positions in the market.


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## rub92me (23 January 2008)

This morning's explosive opening was helped by bears that strapped on their shorts yesterday and had a good cr@p in their shorts this morning. Those shorts will be washed and dried over the next couple of days and the bears will be back for another round


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## sideshowbob (23 January 2008)

The market has recovered too hard!

People are crazy to buy at these prices.... What on earth are they thinking.....??
the market is going to keep rising and rising now?! 

Its pure gamble....

The market just got its first V rebound.... you know.... those dangerous little glimmers of hope... that only serve to tighten the noose as you follow the fall all the way down.

I applaud those that bought on the close yesterday... they saw a FEd cut coming.. somehow... but to not sell off the profits today is crazy.
Volatile times... inflation up... credit crisis... bonds... recession looming.

This is all one big gamble


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## mick2006 (23 January 2008)

Seems a fair bit of the rally today has been eaten into by people selling/taking profits into the surge.

Surprised that the Nikkei is now less than 100 points up, could see a bit of a sell down in the ASX in the last hour.

Also Nasdaq futures are already 2% down, due to the poor outlook from Apple.

Hope people didn't get caught buying at the highs of this morning.


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## treefrog (23 January 2008)

mick2006 said:


> Seems a fair bit of the rally today has been eaten into by people selling/taking profits into the surge.
> 
> Surprised that the Nikkei is now less than 100 points up, could see a bit of a sell down in the ASX in the last hour.
> 
> ...




right there mick - at market open for CBA $52, now near $50 and trending down


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## Kauri (23 January 2008)

lifes hard... then you die...
it's what you do that counts
Cheers
.........Count Kauri

  :alcohol:


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## cordelia (23 January 2008)

I bought in and out of the same share 3 times....and made a reasonable profit..not huge but better than a days wage. There's a lot of movement so it wasn't so hard...I don't want to hold over night in this market.....


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## wildmanchris (23 January 2008)

MQG looks a bit the same - given lots back from the days high of 63.49 - back to 59.17.


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## BIG BWACULL (23 January 2008)

IM EEEXXXXCITED, Had a paper profit then a paper loss, then back to a paper profit, AHHH Well still got a while yet before i realise some good gains (The life of an investor) Good luck to all with their emotional roller coaster after all its only money just make sure you have some in the kitty to live and get to work


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## Wysiwyg (23 January 2008)

Traders heeding your thread title with much downward pressure in the last hour today.But what if the incline continues?


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## chewy (23 January 2008)

Looked pretty possitive to me -I saw no evidence of "much downward pressure in the last hour" actually it rose over the last half hour - isn't that a good sign?. I think the Aus inflation data tempered the rally a bit with concerns of another rate rise (but personally I still believe the RBA will hold off on this one). 

Fingers crossed for the following to occur in the near future: 
- US Fed cuts another 50 points at end of month
- RBA holds Aus rates steady
- Bush's stimulus plan rises to > 150billion and details are well recieved
- Iron Ore negotiations conclude >30% increase in conract prices
- Aus companies start reporting record profits
- Subprime related issues begin to dwindle rather than expand

heh call me an optimist


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## korrupt_1 (23 January 2008)

chewy said:


> Looked pretty possitive to me -I saw no evidence of "much downward pressure in the last hour" actually it rose over the last half hour - isn't that a good sign?.




I'd say the last hour rally was caused by traders closing their shorts... adding massive amounts of BUY orders into the system.


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## blablabla (23 January 2008)

Last night there was panic in USA. Due presumably to political pressures they are refusing to let their market correct, so the big crunch has yet to come. Despite the huge rate cut, the DJI fell 128 points last night to 11971 and the DOW futures are now at 11872.

Meanwhile here in oz inflation is up and another rate hike may be on the cards.

Prediction for tomorrow: it's game on - bargain hunters vs reality. Hard to pick who will be the winner.


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## Temjin (23 January 2008)

chewy said:


> Fingers crossed for the following to occur in the near future:
> - US Fed cuts another 50 points at end of month
> - RBA holds Aus rates steady
> - Bush's stimulus plan rises to > 150billion and details are well recieved
> ...




Personally, I would love these to occur because it means inflation will get worse and gold price will rise even further.


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## jersey10 (23 January 2008)

cordelia said:


> I bought in and out of the same share 3 times....and made a reasonable profit..not huge but better than a days wage. There's a lot of movement so it wasn't so hard...I don't want to hold over night in this market.....




which share was it cordelia?


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## Smurf1976 (23 January 2008)

ged said:


> I fear the inevitable (recession/depression) is coming, and the feds just keep postponing it, thus it will make it bigger when it comes.



Strongly agreed. The last recession was "missed" through ultra low interest rates and it looks like they're trying it again. All that means in the end is we fail to address the massive imbalances that have built up in the economy - recessions are necessary and normal in order to do that.

The whole game is very much like trying to win a motor race by missing pit stops. Short term gain which leads to something failing catastrophically.


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## Awesomandy (23 January 2008)

HSI rose 2332.54 (10.72%). Now, that's exciting. 

(Still, I wouldn't hold anything over night right now.)


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