# Is the market about to take another HIT?



## jet-r (11 July 2006)

1) the index is right on the trend line at the moment.

2) the Fibonacci retracement has reached back to 38.2% of the total length of the correction.

3) Its just slighly above the resistance of 5082.


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## wayneL (11 July 2006)

*Re: Is the market about to take another HIT??*

The key, of course, will be the US indicies.

The S&P doesn't look overly concerning ATM, but the NASDAQ is sitting at key support with VXN (nasdaq IV index) starting to creep up. Nasdaq can be a leading indicator of the overall market. That said, this support could hold and stage a rally, but, VXN is indicating a little bit of worry.

Will update with a chart a bit later.


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## kevo (11 July 2006)

*Re: Is the market about to take another HIT??*

Well, 2000 marked the grand super cycle top which would normally have been followed by a severe recession while creative destruction did its thing but it was politically impossible. Greenspan lowered rates to 1% which combined with the BOJ's ZIRP created a massive asset boom in housing and trillions of dollars of malinvestment. The past three years have been making progress to a B wave top. We began C wave down in May.  When the US market goes down don't forget to buy unhedged gold producers at the bottom. We are at the end of multple credit expansions and the degree of malinvestment is now so heavy all the money printing in the world won't support it. In the next few weeks the trend will resolve with a massive strong down move.

That's my call, anyway.

Kevo the big green bear.

www.kontentkonsult.com


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## lewstherin (11 July 2006)

*Re: Is the market about to take another HIT??*

I'm itching to short the likes of RIO, OXR, ZFX but holding on for some confirmation from various sources.

In my gut I have a feeling stocks are walking a tight-rope at present - particularly as a housing slowdown starts to pull US consumers back from feeling so cashed up.  I think Aussie fundamentals remain strong, but if the US goes down, ASX will follow (ala May-June).

From a bear perspective, another Fed rate hike (or a rumour thereof) could do the trick.  Sentiment is what it may come down to I guess.

Staying out for now...but something has got to give in the US of A.  And if the Yanks aren't spending, whos going to buy all of the cheap goods China/India is putting out?


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## wayneL (11 July 2006)

*Re: Is the market about to take another HIT??*



			
				kevo said:
			
		

> Well, 2000 marked the grand super cycle top which would normally have been followed by a severe recession while creative destruction did its thing but it was politically impossible. Greenspan lowered rates to 1% which combined with the BOJ's ZIRP created a massive asset boom in housing and trillions of dollars of malinvestment. The past three years have been making progress to a B wave top. We began C wave down in May.  When the US market goes down don't forget to buy unhedged gold producers at the bottom. We are at the end of multple credit expansions and the degree of malinvestment is now so heavy all the money printing in the world won't support it. In the next few weeks the trend will resolve with a massive strong down move.
> 
> That's my call, anyway.
> 
> ...




DAMN I like that bear talk!!!


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## swingstar (11 July 2006)

*Re: Is the market about to take another HIT??*

I'm waiting to see what the Dow does. It's currently sitting on strong resistance around 11200-11300. My view is bearish at least for the coming weeks. If true, could it be enough to send it down?


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## kevo (11 July 2006)

*Re: Is the market about to take another HIT??*

RIO, OXR, ZFX

Don't short those guys. They are the only thing still likely to go up. Short MAP or TEN or Multiplex. Commodities are in the opposite of of a cyclical bear. They might get a quick wack before they come pilling back...


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## michael_selway (12 July 2006)

*Re: Is the market about to take another HIT??*



			
				kevo said:
			
		

> RIO, OXR, ZFX
> 
> Don't short those guys. They are the only thing still likely to go up. Short MAP or TEN or Multiplex. Commodities are in the opposite of of a cyclical bear. They might get a quick wack before they come pilling back...




Good point, commodities not yet, maybe next yr or 2, where they will probably all crash as well

Btw u left out BHP, is there a reason?

thx

MS


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## Brissydave (14 July 2006)

*Re: Is the market about to take another HIT??*

The DOW has fallen through recent support at 10900, - gold, silver, and oil are the only commodities in the green - is this going to be a bad day or what ????


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## Sean K (14 July 2006)

*Re: Is the market about to take another HIT??*

It's going to be bloody. 60pts maybe. 

Go gold, oil, and uranium!


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## jet-r (14 July 2006)

*Re: Is the market about to take another HIT??*

ouch!!!!!    

this is the hit I was talking about.
100 pts so far....


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## RickG (14 July 2006)

*Re: Is the market about to take another HIT??*



			
				jet-r said:
			
		

> ouch!!!!!
> 
> this is the hit I was talking about.
> 100 pts so far....





Ohh you managed to predict the problems in Israel???  Maybe you should go work for the United Nations.

Sorry todays drop has nothing to do with All Ord trend lines, Fibonacci retracement or resistent lines.  Its to do with problems in the Middle East and worries about interest rates.


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## flyhigher (14 July 2006)

*Re: Is the market about to take another HIT??*

anyone benefit from plunge? the markets become volatile now.


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## wayneL (14 July 2006)

*Re: Is the market about to take another HIT??*



			
				RickG said:
			
		

> Ohh you managed to predict the problems in Israel???  Maybe you should go work for the United Nations.
> 
> Sorry todays drop has nothing to do with All Ord trend lines, Fibonacci retracement or resistent lines.  Its to do with problems in the Middle East and worries about interest rates.




It's just exposed a structurally weak market, that's why a hit was fairly predictable. All it needed was a trigger, any trigger.

If the market was confident the ME would be ignored.

Cheers


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## jet-r (14 July 2006)

*Re: Is the market about to take another HIT??*



			
				RickG said:
			
		

> Ohh you managed to predict the problems in Israel???  Maybe you should go work for the United Nations.
> 
> Sorry todays drop has nothing to do with All Ord trend lines, Fibonacci retracement or resistent lines.  Its to do with problems in the Middle East and worries about interest rates.




Which part of my post suggested that I was "PREDICTING?" the fall today? The market's movement is a result of technical and fundamental influences, the Israel product is unpredictable but the chart did generate some signals for an upcoming fall. 

I am simply trying to sharing some info and express my point of view here. Sarcastic comment like yours doesnt contribute to this forum.


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## RickG (14 July 2006)

*Re: Is the market about to take another HIT??*

Wayne, yea I agree.  Its just that using the XAO index to predict the market is a pet hate of mine is all.  Yes the market is weak atm and will probably stay like this until their is some certainty again in interest rates.  Therefore you should be trading accordingly (ie conservatively), but you dont need the XAO to tell you this. 

But that is probably best left for another thread.

Sorry, re-reading my last post I did come across a bit angry ant didnt I


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## chennyleeeee (14 July 2006)

*Re: Is the market about to take another HIT??*

I dont think anything will happen. IMO i think that the market will make back what it lost today. If you look at the BHP daily graph todays movement was predictable and it seems it will close quite higher than its low.

CHEN


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## Magdoran (14 July 2006)

*Re: Is the market about to take another HIT??*



			
				chennyleeeee said:
			
		

> I dont think anything will happen. IMO i think that the market will make back what it lost today. If you look at the BHP daily graph todays movement was predictable and it seems it will close quite higher than its low.
> 
> CHEN




Tend to agree for the short term… today’s price action looks exhaustive and volume is low (but I could be wrong – certainly the indexes are looking vulnerable to a significant move down – I suspect not quite yet).  I’d expect a couple of inside days.

If we get another rally and it fails, that may spell a bearish run.



			
				kevo said:
			
		

> RIO, OXR, ZFX
> 
> Don't short those guys. They are the only thing still likely to go up. Short MAP or TEN or Multiplex. Commodities are in the opposite of of a cyclical bear. They might get a quick wack before they come pilling back...




Agree on the commodities - they have been rallying currently, have a look at the comments in the commodity area – I’ve got a couple on oil and copper currently… just my musings.  I’m waiting for a clear pattern.  If I was shorting, I’d be looking at weak stocks in weak sectors…

This is a time for caution and limited risk.  If the market capitulates down, it will probably be a significant panic move, quite a wild horse to ride even if on the bearish side.

Regards


Magdoran


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## wayneL (14 July 2006)

*Re: Is the market about to take another HIT??*



			
				Magdoran said:
			
		

> This is a time for caution and limited risk.  If the market capitulates down, it will probably be a significant panic move, quite a wild horse to ride even if on the bearish side.
> 
> Regards
> 
> ...




I'm hoping for some inside days and a brief rally based on the positions I have. But it's all eyes on Israel (WTF are those people thinking?) and the Middle East.. oil, AND interest rate fears.

But where's all the socionomics followers? I thought all the Prochterites would be coming out being very smug.

Look at the social mood FFS!!! Wars, inflation fears, fear of terrorism, personal freedoms inexorably stripped away, bird flu, house prices on the verge of collapse, ludicrous personal debt/personal bankruptcies skyrocketing,  young people worried about ever owning a house, extreme polarization in politics etc etc.

The social mood is lousy folks. We in bear territory here.

Cheers


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## Realist (14 July 2006)

*Re: Is the market about to take another HIT??*



			
				lewstherin said:
			
		

> I'm itching to short the likes of RIO, OXR, ZFX but holding on for some confirmation from various sources.




Why on earth short RIO and ZFX?


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## wayneL (14 July 2006)

*Re: Is the market about to take another HIT??*



			
				Realist said:
			
		

> Why on earth short RIO and ZFX?




Because when folks realise that the China economy still relies on USA, they will dump.


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## lewstherin (14 July 2006)

*Re: Is the market about to take another HIT??*



			
				Realist said:
			
		

> Why on earth short RIO and ZFX?



RIO is more of a pure minerals (i.e. no major oil/gas interests) play than BHP, so would theoretically be more susceptable to a global downturn in demand.  RIO may have secured iron ore price increases, but they still need buyers to move product.  If the global economy slows, China's need for input materials slows, RIO sells less than expected.  Same goes for ZFX, assuming steel production slows.
BHP is at least cushioned to an extent by oil, gas and uranium.


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## Magdoran (14 July 2006)

*Re: Is the market about to take another HIT??*



			
				lewstherin said:
			
		

> RIO is more of a pure minerals (i.e. no major oil/gas interests) play than BHP, so would theoretically be more susceptable to a global downturn in demand.  RIO may have secured iron ore price increases, but they still need buyers to move product.  If the global economy slows, China's need for input materials slows, RIO sells less than expected.  Same goes for ZFX, assuming steel production slows.
> BHP is at least cushioned to an extent by oil, gas and uranium.





Good point, and if the metals tank, it'll make a great short candidate... I'm just watching those commodities... especially copper!



Magdoran


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## Magdoran (14 July 2006)

*Re: Is the market about to take another HIT??*



			
				wayneL said:
			
		

> I'm hoping for some inside days and a brief rally based on the positions I have. But it's all eyes on Israel (WTF are those people thinking?) and the Middle East.. oil, AND interest rate fears.
> 
> But where's all the socionomics followers? I thought all the Prochterites would be coming out being very smug.
> 
> ...



Hello Wayne,


While not wanting to sound like a pessimist, I agree with the main thrust of your comments.  The biggest problem we face besides hostilities is the impact of Crude oil peaking, and the potential for the full weight of economic structural adjustment depending on when the production tapers off, and how fast.

Also, all the factors you refer too are certainly worth considering, and I am certainly aware of the potential for a major correction…


Regards


Magdoran


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## wayneL (14 July 2006)

*Re: Is the market about to take another HIT??*



			
				Magdoran said:
			
		

> The biggest problem we face besides hostilities is the impact of Crude oil peaking, and the potential for the full weight of economic structural adjustment depending on when the production tapers off, and how fast.




LOL How could I forget that one.



> not wanting to sound like a pessimist




[toungue in cheek rant] In our society we have been trained by american (or amaricanized) motivational speakers to reject any sort of "pessimism" as an apostasy. Consequently lots of folks don't want to see the risks.

Folks who know I'm a trader often ask my view of the market. Earlier this year I said, expect a correction and expect it to be substantial, when, I don't know, but expect it at some stage.

I was shunned as a neg-head and a traitor to the australian (american) way, told I was nuts, what about china, india.... I've just sunk $400,000 of borrowed money into the market! It's going UP goddammit!!! Understand!!!!

So yes, don't sound like a pessimist fer gawds sake!![/toungue in cheek rant]

: Cheers


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## Realist (14 July 2006)

*Re: Is the market about to take another HIT??*



			
				wayneL said:
			
		

> Because when folks realise that the China economy still relies on USA, they will dump.




How long can you short it for?   It may take a while for folks to realise this, like years.

Actually here's a question...

What if you short a stock and it payed out a 4% dividend and the price drops 4% accordingly - how does that affect your short position. who gets the dividend?


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## wayneL (14 July 2006)

*Re: Is the market about to take another HIT??*



			
				Realist said:
			
		

> How long can you short it for?   It may take a while for folks to realise this, like years.
> 
> Actually here's a question...
> 
> What if you short a stock and it payed out a 4% dividend and the price drops 4% accordingly - how does that affect your short position. who gets the dividend?




A person who is short physical shares must borrow those shares from the broker.

Therefore the person who is short the shares must pay the dividend to the owner of the shares.

Cheers


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## globalreverb (14 July 2006)

*Re: Is the market about to take another HIT??*

Re: Did anyone make any money out of this XAO decline today. 

      My CQT shares rose 50% today, so I bailed out of half my holding.
      More good news to come on Monday.  Conquest was only one of a handful of spec juniors to post a gain on the ASX today I would guess.

Regards, Rob.

p.s.  and a big Hi to Magdoran.


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## Smurf1976 (14 July 2006)

*Re: Is the market about to take another HIT??*



			
				wayneL said:
			
		

> It's just exposed a structurally weak market, that's why a hit was fairly predictable. All it needed was a trigger, any trigger.
> 
> If the market was confident the ME would be ignored.
> 
> Cheers



Agreed there WayneL. IMO markets make the news, not the reverse.

On any given day there is ALWAYS some valid explanation for why the market went up, down or sideways. Which one the commentators use depends on what the market actually did rather than the news itself.

For example today could be described as (depending on what the market had actually done):

"Market plunges on ME fears"

"Stocks up on oil, gold"

"Market stable as investors expect rising oil prices to delay rate rise"

Which one to use depends on the market itself, not what actually happened in the world today.


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## Magdoran (14 July 2006)

*Re: Is the market about to take another HIT??*



			
				wayneL said:
			
		

> A person who is short physical shares must borrow those shares from the broker.
> 
> Therefore the person who is short the shares must pay the dividend to the owner of the shares.



Interestingly, as any options trader will know, people like Wayne and I can actually make money if the market just goes sideways or down if we use a credit position, like selling a call (but suggest using a hedged strategy like a bear call spread or maybe a ratio version to limit risk rather than go “naked”) to take advantage of a bearish/sideways market.

Shorting shares is a very risky process in my view, much easier to just buy a put or adopt a bearish strategy to limit risk, why run the risk of owing the dividend?


Regards



Magdoran

P.S. Hello globalreverb!  How do you like ASF?


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## visual (15 July 2006)

*Re: Is the market about to take another HIT??*

Looks like Israel is already talking cease fire,lets hope so,


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## visual (15 July 2006)

*Re: Is the market about to take another HIT??*

unfortunately doesnt look like anyone in the DOW is reading the papers.


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## swingstar (15 July 2006)

*Re: Is the market about to take another HIT??*

****e! That's what I like to see.


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## wayneL (15 July 2006)

*Re: Is the market about to take another HIT??*



			
				visual said:
			
		

> unfortunately doesnt look like anyone in the DOW is reading the papers.




I guess they decided to do something really different and read their balance sheets  

:  :


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## michael_selway (15 July 2006)

*Re: Is the market about to take another HIT??*



			
				wayneL said:
			
		

> I guess they decided to do something really different and read their balance sheets
> 
> :  :




Wayne ithink u are a happy bear!

CAnt believe this guy below might be right

http://www.depression2007.com/contact.htm

thx

MS


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## wayneL (15 July 2006)

*Re: Is the market about to take another HIT??*



			
				michael_selway said:
			
		

> Wayne ithink u are a happy bear!
> 
> CAnt believe this guy below might be right
> 
> ...




Ah! a socionomics adherant. It was just like reading Prechter.

I really think there is a lot to it


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## swingstar (15 July 2006)

*Re: Is the market about to take another HIT??*

I like that guy's way of thinking.

Socionomics... where has it been all my life?!


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## swingstar (15 July 2006)

*Re: Is the market about to take another HIT??*



			
				visual said:
			
		

> Looks like Israel is already talking cease fire,lets hope so,




Yeah, they sound determined.


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## wayneL (15 July 2006)

*Re: Is the market about to take another HIT??*



			
				swingstar said:
			
		

> Yeah, they sound determined.




This is insane!!    ...how many innocents are going to lose their lives now?

Sheesh!


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## jemma (15 July 2006)

*Re: Is the market about to take another HIT??*



			
				wayneL said:
			
		

> LOL How could I forget that one.
> 
> 
> 
> ...




Wayne,

Excuse my ignorance but why have you just sunk 400 grand into the market???


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## bunyip (15 July 2006)

*Re: Is the market about to take another HIT??*

I like the way everyone breaks out his or her crystal ball every time there's a bit of movement! 
Who cares which way it goes. We can trade both long and short can't we?
React to the market rather than try to predict it. Just trade it as it comes.

Bunyip


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## Magdoran (15 July 2006)

*Re: Is the market about to take another HIT??*



			
				jemma said:
			
		

> Wayne,
> 
> Excuse my ignorance but why have you just sunk 400 grand into the market???



Hello jemma,


When Wayne emerges from his crypt (standing joke), I suspect he’ll let you know that he was talking to someone at a social engagement who has just sunk $400,000 into stocks (probably unhedged), not wanting to hear that a significant correction is a real possibility, and that they thought he (Wayne) was nuts for thinking this way.  


I suspect the quotes didn’t quite come out right, hence the confusion.  If Wayne was to “sink” $400,000 into the market, it would all be hedged and risk managed I’m sure…

(Am I close Wayne?)


Regards


Magdoran


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## MichaelD (15 July 2006)

*Re: Is the market about to take another HIT??*



			
				bunyip said:
			
		

> I like the way everyone breaks out his or her crystal ball every time there's a bit of movement!



That's fear talking. Say it loud enough in a forum/wherever and the market's sure to hear and respond to the predictions and make the pain go away.

It's a lot like us TAs drawing resistance and support lines, proclaiming them in a forum and being surprised when the market goes ahead and happily ignores them.

Like you said, reacting, not predicting is the way to go.


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## wayneL (15 July 2006)

*Re: Is the market about to take another HIT??*



			
				Magdoran said:
			
		

> Hello jemma,
> 
> 
> When Wayne emerges from his crypt (standing joke), I suspect he’ll let you know that he was talking to someone at a social engagement who has just sunk $400,000 into stocks (probably unhedged), not wanting to hear that a significant correction is a real possibility, and that they thought he (Wayne) was nuts for thinking this way.
> ...




Just had to emerge from the crypt for a moment (had to get Mrs to sut all the blinds) :batman:   

But yes Mag... precisely


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## visual (15 July 2006)

*Re: Is the market about to take another HIT??*



			
				wayneL said:
			
		

> (had to get Mrs to sut all the blinds) :batman:




Sut?
please explain. :


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## wayneL (15 July 2006)

*Re: Is the market about to take another HIT??*



			
				visual said:
			
		

> Sut?
> please explain. :




oops! 

sut = shut


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## visual (15 July 2006)

*Re: Is the market about to take another HIT??*

I think I like the mystery of   SUT. : 
thanks Wayne.


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## YOUNG_TRADER (15 July 2006)

*Re: Is the market about to take another HIT??*

I am perplexed as regardless of fundamentals the mkt appears to be simply giving in to knee-jerk reactions and while I am a firm believer of the stronger for longer theory and do believe everything will eventually settle down in the middle east (notice I said settle down, not resolve itself or peace, there has been tensions and wars there since the BC times and I suspect it will continue like that)

But am I the only one who is getting fed up with the mkts random volatility?

Lets look at the issues that have been the No 1 concern of investors

- Bird Flu, so what happened again?

- Chinese Economic Slowdown, hmmm nothing here

- US Economic Slowdown, maybe slight signs but nothing of real concern

- Collapse of the US $, nothing yet

- Collapse in real-estate prices both here and US, hmmmm nothing in AUS, nothing yet in US

- Iran and its nuke ambitions, still there but not on front page news anymore

-  N Korea, well this is certainly up there on the list


And now Israel-Palesting-Hezbulla dispute, well clearly we should sell our resource stocks and hide under our beds, its the only thing to do!


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## MichaelD (15 July 2006)

*Re: Is the market about to take another HIT??*



			
				YOUNG_TRADER said:
			
		

> But am I the only one who is getting fed up with the mkts random volatility?



It's not random. It's GREED or FEAR. The madness of crowds. Right now, its FEAR for bulls (but not yet GREED for bears) so down it goes.

When the bears get greedy and the bulls despair, then up it will go again.


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## Smurf1976 (15 July 2006)

*Re: Is the market about to take another HIT??*

It took me quite a long time, and lots of $ in losses, to realise that it's better to react to the market than try and predict it. More profit that way and a lot less stress.

Just look at how often professional economists get it wrong and I think you'll see the point in how difficult prediction of financial markets really is.

The one exception is if you have some kind of deep knowledge in a specific field and could use this to your advantage. For example, if you have your own oil production model   then you've got an advantage when it comes to predicting oil prices over the long term. You could still get wiped out by economic cycles, wars etc in the short to medium term though unless you've got some good knowledge of them too.


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## Realist (16 July 2006)

*Re: Is the market about to take another HIT??*



			
				YOUNG_TRADER said:
			
		

> But am I the only one who is getting fed up with the mkts random volatility?




Personally I love volatility. The more the merrier.


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## blinkybill (16 July 2006)

*Re: Is the market about to take another HIT??*



			
				YOUNG_TRADER said:
			
		

> I am perplexed as regardless of fundamentals the mkt appears to be simply giving in to knee-jerk reactions and while I am a firm believer of the stronger for longer theory and do believe everything will eventually settle down in the middle east (notice I said settle down, not resolve itself or peace, there has been tensions and wars there since the BC times and I suspect it will continue like that)
> 
> But am I the only one who is getting fed up with the mkts random volatility?
> 
> ...




I think the March 2003 bull market is over and the warning signs have been there for a long time now.

Although some of the issues might not be on the front page everyday they are nonetheless still on most investors (fund managers') minds imo and so influencing their decisions.

It looks like oil prices will go even higher in the short term at least and it looks like this is now starting to seriously affect consumer spending in the US, which is the main driver of the US economy.

I think our markte will most probably go sideways from here but if you look at the chart for XJO you will see that if it falls below around 4800 then we will be in a true bear market the way I see it.

I doubt very much our market will return to its previous all time high any time soon.


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## Smurf1976 (16 July 2006)

*Re: Is the market about to take another HIT??*

Add the global tightening of monetary policy to the list of potential triggers for a bear market.


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## wayneL (16 July 2006)

*Re: Is the market about to take another HIT??*



			
				Realist said:
			
		

> Personally I love volatility. The more the merrier.




In a few years, you will have a different view


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## Porper (16 July 2006)

*Re: Is the market about to take another HIT??*



			
				wayneL said:
			
		

> In a few years, you will have a different view




I can't see why anybody would like a volatile market.It just makes it impossible to trade from what I can see.The only winners here will be those that can guess the direction, gyrating up and down.Most people will lose.

I suppose long term investors may do ok, but even after the 87 crash it was a hell of a long time before those losses were made back.Stand aside seems a good philosophy, everybody is saying the top has been made, so it probably hasn't, fact is nobody knows.That makes it a 50/50 chance in my eyes.

When a trend, up or down is obvious, that will be the time to jump in with both feet, until then I am playing with my pocket money to stay in the game.


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## bunyip (16 July 2006)

*Re: Is the market about to take another HIT??*



			
				Porper said:
			
		

> I can't see why anybody would like a volatile market.It just makes it impossible to trade from what I can see.The only winners here will be those that can guess the direction, gyrating up and down.Most people will lose.
> 
> I suppose long term investors may do ok, but even after the 87 crash it was a hell of a long time before those losses were made back.Stand aside seems a good philosophy, everybody is saying the top has been made, so it probably hasn't, fact is nobody knows.That makes it a 50/50 chance in my eyes.
> 
> When a trend, up or down is obvious, that will be the time to jump in with both feet, until then I am playing with my pocket money to stay in the game.




Porper

You echo the views of many, but I have to disagree with you.
Irrespective of market conditions, there are always stocks trending strongly upward and stocks trending strongly downward. 
And they both offer the opportunity of pulling regular profits from the market.
Profitable trading has nothing to do with guessing direction, but everything to do with finding the stocks that are trending strongly and consistently in one direction. Admittedly there are less of these stocks during volatile times, nevertheless there are still enough of them to supply us with more trades than we can ever utilise. 
The trick is to follow plenty of stocks, and have scanning software to help you find those that are trending well. 
Trade only these good trenders, use money management and stop losses to ensure that your losses are kept small, ride the winning trades as long as they keep moving strongly in the right direction.
Do this consistently and you'll make money under all market conditions. 

Bunyip


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## NettAssets (16 July 2006)

*Re: Is the market about to take another HIT??*



			
				bunyip said:
			
		

> Trade only these good trenders, use money management and stop losses to ensure that your losses are kept small, ride the winning trades as long as they keep moving strongly in the right direction.
> Do this consistently and you'll make money under all market conditions.
> 
> Bunyip



Have to agree with you Bunyip
How do you determine if a stock is still moving strongly in the right direction - what sort of exit do you recon works best

Thanks
John


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## lewstherin (17 July 2006)

*Re: Is the market about to take another HIT??*

Damn the Dow took a serious hit on Friday.  If the ASX stays true to form, I guess we're gonna see more red come Monday...the longer the Middle East stays hot, the higher oil is gonna go, the less attractive long term boom theories look.
Time to fill up my car methinks 
Also considering place some short positions for the first time


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## Porper (17 July 2006)

*Re: Is the market about to take another HIT??*



			
				bunyip said:
			
		

> Porper
> 
> Irrespective of market conditions, there are always stocks trending strongly upward and stocks trending strongly downward.
> And they both offer the opportunity of pulling regular profits from the market.
> Profitable trading has nothing to do with guessing direction, but everything to do with finding the stocks that are trending strongly and consistently in one direction. Bunyip




Bunyip,

Totally disagree.When the market shoots down 2.3% as it did on Friday, I for one don't want to be in a position where I lose more than my initial stop loss due to stocks gapping down, especially when using leverage.

2.3% Friday, but what about when that becomes 5%, or worse.You will wipe out a large percentage of your trading capital.

Yes, we can all short the market, but at the moment it is just as likely to shoot up as down.

I will stick to my trading plan and have most of my funds in cash until we see a trend develop, or at least the markets stabilise.


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## bunyip (17 July 2006)

*Re: Is the market about to take another HIT??*



			
				NettAssets said:
			
		

> Have to agree with you Bunyip
> How do you determine if a stock is still moving strongly in the right direction - what sort of exit do you recon works best
> 
> Thanks
> John




John

Signs of an uptrend are higher tops and higher bottoms, moving averages heading north, price above moving averages. 
If you want to get more technical you can use tools that measure trend strength, e.g ADX or ROAR.

As for exits, I don't think you can say that any one exit strategy works best under all conditions. 
Stops based on moving averages can do a pretty good job. A crossover of two moving averages can be a handy exit signal to take you out of a trade. The longer the moving averages, the longer they'll keep you in the big trends, but also they leave more profit on the table when the trend is over.

An exit from a close below a longer term moving average such as 100 day EMA or 20 week EMA will often do a good job of snaring the bulk of a big trend.

Swing lows....another handy exit system, trail your stop under each higher swing low until you're taken out. Daily or weekly charts, your choice. Trail you stop under the swing lows on a daily chart if you're happy with smaller but more frequent profits. Or trail your stop under the swing lows on a weekly chart if your aim is to nail those really big trends that can go for months or years and return hundreds of percent profit.

Alan Hull has some useful exit strategies based on his indicators, but of course you need software that includes his indicators. Most software doesn't.

The simplest way to trade is probably with patterns......your entry, stop loss and profit target can all be set at the same time, thereby removing the dilemma of where to exit.
The disadvantage is that quite often the move will go well beyond the profit target, meaning you missed out on profit you could have had.

I could name dozens of entry and exit strategies, all of which work. I think you just have to settle on one or two entry setups and exit strategies that work for you, and fit in with your lifestyle. 
And always go for simplicity. No system or strategy can do more than take a bite out of a trending move, and I don't care what the system is.
A simple system that can achieve this is always preferable to a more complex system that can (maybe) achieve the same thing.

Bunyip


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## happytrader (17 July 2006)

*Re: Is the market about to take another HIT??*

I notice the slow stochastics on the XAO are at the bottom of the oversold zone. Of course this is a secondary indicator only. However, its significance is that it indicates their is a lessening of downside at this point and to watch for consolidation leading into consensus. BTW my views are very short term observations only.

Cheers
Happytrader

The views expressed are merely personal opinions only.


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## NettAssets (17 July 2006)

*Re: Is the market about to take another HIT??*



			
				bunyip said:
			
		

> John.............A simple system that can achieve this is always preferable to a more complex system that can (maybe) achieve the same thing.
> 
> Bunyip




Thanks  
lots to look at
John


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## bunyip (17 July 2006)

*Re: Is the market about to take another HIT??*



			
				happytrader said:
			
		

> I notice the slow stochastics on the XAO are at the bottom of the oversold zone. Of course this is a secondary indicator only. However, its significance is that it indicates their is a lessening of downside at this point and to watch for consolidation leading into consensus. BTW my views are very short term observations only.
> 
> Cheers
> Happytrader
> ...




Beware of reading too much into Stochastic or any other momentum based indicators. In a strong downtrend the Stocahstic will fall into the oversold zone and stay there as long as the downtrend continues. Even if Stochastic was to climb out of that zone because prices rallied, that in itself is no indication that the downtrend is over. Any rally during a downtrend is likely to be short lived, followed by the resumption of the downtrend.

Conversely, look at Stochastic on any strongly uptrending stock or market. Chances are that Stochastic went into the overbought zone and stayed there while prices continued to climb.

The way to use momentum based indicators like Stochastic, RSI, ROC, W%R etc is to ignore any signals they give contrary to the direction of the trend, and to only take the signals they give in the direction of the trend.

For example, if the stock or market is downtrending, only act on sell signals from Stochastic, while ignoring its buy signals. To give a sell signal, Stochastic must climb into the overbought zone. This can alert you to a shorting setup, but is not in itself a signal to go short. The actual signal to go short is when the rally ends and the downtrend resumes.

If the trend is bullish, Stocastic sell signals should be ignored and only its buy signals should be acted upon.

Bunyip


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## bunyip (17 July 2006)

*Re: Is the market about to take another HIT??*



			
				Porper said:
			
		

> Bunyip,
> 
> Totally disagree.When the market shoots down 2.3% as it did on Friday, I for one don't want to be in a position where I lose more than my initial stop loss due to stocks gapping down, especially when using leverage.
> 
> ...




Markets spend approximately one third of their time trending well. Sideways markets can last for a considerable period of time. You could be sitting on the sidelines for ages if we go into a prolonged sideways market. 
In the meantime, there will be numerous stocks that defy the overall market by trending strongly either up or down. No, these stocks are not just as likely to shoot up as down, what they're likely to do is continue trending decisively in the same direction long enough to give you a profitable trading opportunity. Momentum breeds momentum as increasing numbers of traders and investors quit falling stocks, pushing them lower. Or buy rising stocks, pushing them higher.
The important thing is the strength of their trends, and the amount of volume pushing them along. Trend strength and volume are a big influence on a stocks likely future direction.
Some of these strong trenders exist right now during these volatile times. If you have the right tools and the ability to identify strong trends, you can find them and trade them profitably. It's not as impossible as you think. 

Bunyip


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## happytrader (17 July 2006)

*Re: Is the market about to take another HIT??*

Hi Bunyip

I agree with most of your observations. As I have stated stochastics are a secondary indicator and  their significance is to watch (be on the alert). I also stated that my observations are short term only.

Primary indicators such as trend, pricebars and volume are my call to action.

Cheers
Happytrader


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## wayneL (17 July 2006)

*Re: Is the market about to take another HIT??*

4:30 AM in Chicago:

The bears are up early.....

ES = SP500
NQ = Nasdaq
YM = Dow
ER2 = Russel 2000


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## mit (17 July 2006)

*Re: Is the market about to take another HIT??*

Wayne,

I was surprised that the ASX had that late rally. If anything the middle east is in a worse state with Israel getting hit back. I assumed we would have gone the other way unless the markets are passe about this as well.

Golds down as well I have 663 against around a 675 high today (According to CMC so it is more ballpark)

MIT


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## wayneL (17 July 2006)

*Re: Is the market about to take another HIT??*



			
				mit said:
			
		

> Wayne,
> 
> I was surprised that the ASX had that late rally. If anything the middle east is in a worse state with Israel getting hit back. I assumed we would have gone the other way unless the markets are passe about this as well.
> 
> ...




Yes, gold & oil futures are selling off before the open.

Index futures not so negative at the moment.



> U.S. stock futures get a lift, then come off, after a report that Israel could end its military operation in Lebanon within "days." Crude turns lower on the news.




I suspect that sans any really crappy news from the Mideast or elsewhere, that the market has run out of sellers for the moment.

Just a suspicion mind you!!

I think a brief rally from here, then more blood. FWIW.


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## mit (17 July 2006)

*Re: Is the market about to take another HIT??*

I'm short S&P at the moment. My stop is at 1250. If it doesn't get hit tonight I might build up the stake a little.

(Also short Euros and look at that sucker dive)

MIT


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## YOUNG_TRADER (17 July 2006)

*Re: Is the market about to take another HIT??*

Wayne do you have links to this article or source that cites possible cease fire in Mid East?


_U.S. stock futures get a lift, then come off, after a report that Israel could end its military operation in Lebanon within "days." Crude turns lower on the news.  _ 

Thanks


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## wayneL (17 July 2006)

*Re: Is the market about to take another HIT??*

http://www.marketwatch.com/News/Story/Story.aspx?column=Indications&siteid=


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## wayneL (17 July 2006)

*Re: Is the market about to take another HIT??*

CNNNNN not reporting it though

http://www.cnn.com/2006/WORLD/meast/07/17/mideast/index.html


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## wayneL (17 July 2006)

*Re: Is the market about to take another HIT??*



			
				mit said:
			
		

> I'm short S&P at the moment. My stop is at 1250. If it doesn't get hit tonight I might build up the stake a little.
> 
> (Also short Euros and look at that sucker dive)
> 
> MIT




Mit,

You trading CFD's/forex or futures?


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## dutchie (18 July 2006)

*Re: Is the market about to take another HIT??*

Could be a short bounce starting today going on XJO rally yesterday and US markets overnight. Bounce could be for a week or so and then futher weakness.

Cheers 

Dutchie


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## mit (18 July 2006)

*Re: Is the market about to take another HIT??*



			
				wayneL said:
			
		

> Mit,
> 
> You trading CFD's/forex or futures?




CMC CFDs/forex. Only small positions. With all the volatility this small account has doubled in a month (never more than 2% risk) while my normal long only portfolio has taken a hit. If it was the other way around I would have made a years salary. Makes me wonder whether to increase the capital in the account. I certainly like this kind of trading. My mechanical portfolio trading is good but like all portfolios you have 2% risk on each position which can add up over 10-12 positions if the market takes a hit. 
While keeping a max of 3 positions for my discretionary, if you are on the wrong side of the market it's a smaller hit and doesn't seem to limit the upside as I am more selective of my positions. Also the correlation between the markets still exists but is weaker than within a market.

Long term mechanical trading is good because it only takes very little time to maintain but currently I do enjoy trading

MIT


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## mit (18 July 2006)

*Re: Is the market about to take another HIT??*



			
				dutchie said:
			
		

> Could be a short bounce starting today going on XJO rally yesterday and US markets overnight. Bounce could be for a week or so and then futher weakness.
> 
> Cheers
> 
> Dutchie




Yesterday's rally really surprised me. Though oil and gold are down so this may have a negative impact. I reckon it will open positively and flat to slightly positive at the close.

MIT


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## TheAnalyst (18 July 2006)

*Re: Is the market about to take another HIT??*

Hamas, Hezzabollah and the Syrian and Iranian traders have taken short positions on the sp500 and they are long oil and gold, so what does that tell you?


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## mit (18 July 2006)

*Re: Is the market about to take another HIT??*



			
				TheAnalyst said:
			
		

> Hamas, Hezzabollah and the Syrian and Iranian traders have taken short positions on the sp500 and they are long oil and gold, so what does that tell you?




And gold dropped and the S&P went up because the CIA has entered the markets and are trying to drive them broke.

MIT


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## noirua (18 July 2006)

*Re: Is the market about to take another HIT??*

From the comment made by President Bush to Prime Minister Tony Blair yesterday, picked up by a microphone accidentally, - or was it?
The US seems to be taking some pleasure in Israel's soldiers not being released and the hell being beaten out of the Lebanon. He probably, President Bush, would like to knock out the key nuclear facilities in Iran and chase some of the Taliban taking refuge in Syria and indeed all those Iranian missiles being brought into the Lebanon and bomb making materials into Iraq, from there.

This does look like being a long-term situation which will zigzag its way through 2006. If you'r a bit of a speculator these markets should be enjoyable, but keep lots of your money in cash in case the pack of cards come tumbling down.


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## TheAnalyst (18 July 2006)

*Re: Is the market about to take another HIT??*



			
				mit said:
			
		

> And gold dropped and the S&P went up because the CIA has entered the markets and are trying to drive them broke.
> 
> MIT




This is reality


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## mit (18 July 2006)

*Re: Is the market about to take another HIT??*



			
				TheAnalyst said:
			
		

> This is reality




I wasn't making fun. Isn't that what happened by 9/11, there was some massive shorting of the S&P. I just thought it funny that all their positions went the wrong way overnight.

MIT


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## mit (18 July 2006)

*Re: Is the market about to take another HIT??*



			
				noirua said:
			
		

> From the comment made by President Bush to Prime Minister Tony Blair yesterday, picked up by a microphone accidentally, - or was it?
> The US seems to be taking some pleasure in Israel's soldiers not being released and the hell being beaten out of the Lebanon. He probably, President Bush, would like to knock out the key nuclear facilities in Iran and chase some of the Taliban taking refuge in Syria and indeed all those Iranian missiles being brought into the Lebanon and bomb making materials into Iraq, from there.
> 
> This does look like being a long-term situation which will zigzag its way through 2006. If you'r a bit of a speculator these markets should be enjoyable, but keep lots of your money in cash in case the pack of cards come tumbling down.




Pox on all terrorists but it is annoying that there is a knee jerk reaction in America that Israel can do what it likes. I thought the proper approach would be to get both sides to a table not to automatically say that Israel is a "white hat" and that it's overreaction is always okay.

MIT


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## CanOz (18 July 2006)

*Re: Is the market about to take another HIT??*

Well personally I've had a guts full of this volatility. TAP oil opened, dropped and hit my stop and then climbed another .06!!!! There comes a time where it’s more profitable to sit back, watch and learn. 

That time has come for me.


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## rub92me (18 July 2006)

*Re: Is the market about to take another HIT??*



			
				TheAnalyst said:
			
		

> Hamas, Hezzabollah and the Syrian and Iranian traders have taken short positions on the sp500 and they are long oil and gold, so what does that tell you?




Really? ;one would think that OFAC would't be too happy to hear that recognised terrorists are openly trading. Where do you get your info on this?


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