# This is more than a correction....?



## Realist (13 June 2006)

5318 down to 4836, and falling.

A 10% drop in 1 month.

discuss...


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## bullmarket (13 June 2006)

For me, things only start taking on more sinister implications if XJO closes below ~4800.  I posted the XJO chart and my view recently in another thread (can't remember which one but if you search for XJO or PER it should come up if interested)


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## lewstherin (13 June 2006)

I've been strongly in favour of a correction because I felt things were overheating...however I didn't envision/want such protracted carnage.  I've bought what I perceived to be dips, and have ended catching an express lift down   
Today is a major red day - and its not only the commodities stocks that are copping it...even the diversified funds will be showing red methinks.

Anyhow, I'm beginning to wonder whether this downturn is shorting & sentiment or is the something seriously wrong with the fundamentals I have been bullish on.


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## Realist (13 June 2006)

I've taken a beating today, and I regard my shares as pretty damn safe and boring.

Surely there's a speculative resource stock crash still to come as well?

Resource explorers that have not found any resources let alone made a profit will come crashing back to earth soon surely?


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## Sean K (13 June 2006)

Just a correction. A decent one! When these things are happening everyone panics to some degree. We'll look back and think, what a buying opportunity! I HOPE!!


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## Realist (13 June 2006)

> When these things are happening everyone panics to some degree. We'll look back and think, what a buying opportunity! I HOPE!!




We will indeed.  When though?

Next Monday ?

Mid July

or 2012?


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## dennisll (13 June 2006)

Define correction  

Anybody who thought that the market could keep rising at the rate it has been for the last 3 years were kidding themselves.  A return to the mean has always been the case through the years and the further the index went upwards the bigger the drop it would have to suffer just to get back to the long term trend.  We are nowhere near the long term trend yet so if this is the beginning of the return to the mean, I think we can expect more pain ahead.

From what I can see in the XAO chart, a return to the mean would send the index to about 3900.  

Cheers,

Dennis


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## wayneL (13 June 2006)

dennisll said:
			
		

> From what I can see in the XAO chart, a return to the mean would send the index to about 3900.
> 
> Cheers,
> 
> Dennis




DAMN, I like that bear talk!! :


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## lewstherin (13 June 2006)

3900!
Holy cow!

That will suck!


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## Magdoran (13 June 2006)

> Originally posted by *lewstherin*
> 
> 3900!
> Holy cow!
> ...




Unless you're short the market...


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## Prospector (13 June 2006)

I think the timing isnt helping either - so close to June 30.  I am doing some winter cleaning and pruning at the moment to get rid of some poor performers which will lighten the CGT bill, and am also lightening several holdings that had achieved some good growth.  So as soon as the sentiment changes I will go back in - hopefully that will be soon - pretty pleease!


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## dennisll (13 June 2006)

Haha sorry didn't mean to sound like a bear.  Just saying what the chart is showing me.

Personally, I think it is going to be a great opportunity to add to long term holdings should we approach and go below 4000, just as in hindsight it was a fantastic opportunity to cherry pick back in 02-03.  

Cheers,

Dennis


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## lewstherin (13 June 2006)

Magdoran said:
			
		

> Unless you're short the market...



Shorting is an option, but my problems with that are:
a) No experience shorting (nor with CFDs which I assume I need to use in order to short)
b) A lot of my capital is tied up in equities that have been hammered.  My fear is I liquidate in order to short, and the market bounces at that point - so I get doubly screwed on the shorts and the losses I take to get into the shorts


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## Ageo (13 June 2006)

Just remember this, the further down it goes the more of a discount you will recieve when purchasing the shares.


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## yogi-in-oz (13 June 2006)

Hi folks,

Some Gann-related analysis tells us that we may expect this slide to continue, until around 07 November 2006, which is 
180 days from the recent market highs on 10 May 2006 ..... 

07 November 2006 will also complete a critical time cycle,
projected from 13 March 2003 lows.

Expected XJO support levels may be found, around:

              4488 and 4040

happy trading

  yogi


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## Sean K (13 June 2006)

I know this an old cliche but I really do believe that it's 'TIME IN, NOT TIMING'. 

Well, that's for investing anyway, which I am 90% doing. 

You traders would be just sitting on cash now I suppose.


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## dennisll (13 June 2006)

Hi lewstherein,

Just a few questions.  What is your plan/method?  Are you a trader or an investor?  Do you have stops in place?  What are your exit parameters?  Just want to understand your own approach to the market.

I would think that most traders would either be stopped out by now and are looking for reentry, or have already gone short.  Very few experienced traders sit on trades that keep bleeding.  

Cheers,

Dennis


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## Realist (13 June 2006)

> I know this an old cliche but I really do believe that it's 'TIME IN, NOT TIMING'.




Correct, it is clear to me that no-one can time the market.  Infact research shows those that try and time the market do worse than buy and hold investors.


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## The Mint Man (13 June 2006)

Im fairly new to the market compared to some of you on here but I was only saying to someone last week that I wouldnt be supprised to see 4750 by the EOM. And the way things have been going possibly 4600 or so a little further down the track.
Never the less this has all been a valuable lesson IMO, not just for people like me but also some of you that had forgot it.


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## lewstherin (13 June 2006)

dennisll said:
			
		

> Hi lewstherein,
> 
> Just a few questions.  What is your plan/method?  Are you a trader or an investor?  Do you have stops in place?  What are your exit parameters?  Just want to understand your own approach to the market.
> 
> ...



My plan basically involves investing on small cap commodities and energy stocks that my research indicates have good fundamentals, with a couple of blue chip diversified commodity mainstays.  I have used about 20% of my cash on hand to spec trade uranium, nickel, copper and other stocks along the way - that was more to learn some trading firsthand than anything too serious.

It (was) a high growth, high risk plan  and I was prepared for volatility of around 10-15%.

I've been able to essentially day trade when I wanted to while I'm at work (not too busy the past few months), so I've avoided stop losses since I am watching 90% of the time and would prefer to gauge market sentiment before pulling the trigger.

When researching NPVs of stocks I've used a 10-20% discount and 2005 prices for the particular products, because I felt the 2006 commodities prices were too inflated.  As such this has encouraged me to continue to hold the shares I do because I feel I discounted the NPVs enough to cater for the correction.  Problem is I envisioned a 15% correction max, and right now my holding is borderline 16% down.
So I'm pretty much on the verge of bailing.  In fact even if theres a bounce, I may well bail because I fear I have underestimated the vicousness of the correction!

In terms of the make-up of my holdings, I've stuck to oil as my favorite and backed gold, nickel and iron ore stocks that show promise for 2006-2007.
At this point my holdings are:
AED 30% - open at 1.30
BHP 30% - open at 26.55
JMS 30% - open at 16c
BMO 10% - open at 35.5c (this one is stinging at the moment!)

Lots of red for me at the moment!

So to answer your questions, yes I have a trading plan based on fundamental analysis that I tried to keep conservative, and I'm only "just" still in the market.  When I see BHP break $25, I'm probably gonna liquidate most of it and go find some shorts...

I came in expecting to learn, and the past 3 months have taught me much about real life markets.  I consider my losses the cost of education, and hopefully I can take some good lessons from this painful experience.


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## jet-r (13 June 2006)

personally,
I would start buying some quality assets like 
BHP RIO MBL QBE  etc...

the price seems good.  hopefully we can see a nice bounce back tomorrow


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## Magdoran (13 June 2006)

lewstherin,


Sorry, I didn't see your post above till now, but have posted an overview post in a new thread "Hedging Portfolios" in the derivatives section...  hope this gives you some ideas...


Regards


Magdoran


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## TraderPro (13 June 2006)

jet-r...

given the volatility of the market there's probably a good chance those highly volatile stocks you just mentioned might bounce back... 

I'd be worried if this was just a correction if the market falls beyond the support set in February this year.


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## dennisll (13 June 2006)

Thanks for the detailed reply, lewstherein.  I hope everything works out for you.

I remember when I first started trading the markets, I was in a similar situation -- lots of time to watch the markets and didn't use stop losses.  Not that I think you'd end up like me back then, but after a short time doing that I quickly learned the value of stops.  The main thing that caused my downfall then was that each day I would evaluate the market differently and this would most often keep me in a stock that I should have long sold.  

Cheers,

Dennis


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## Realist (13 June 2006)

I'm down exactly 2% today.

The market was down slightly more, about 2.3%


I beat the market.    :bananasmi 


 I'll think I'll have a beer to celebrate..


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## specman (13 June 2006)

U.S inflation data due out in the next few days will be crucial in determining if this is just a "healthy correction" or a full scale bear market.A 0.2% core reading will be positive for the market but anything over 0.3% will send investors panicking.Also,Bernanke is making a few speeches this week but unlike Greenspan,this bloke is too transparent with his intentions and will probably spook the market further.I fear the worst.


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## Sean K (13 June 2006)

Mmmm, I am hoping that the interest rate rise is now factored into the market. If the official report says all isn't too bad then the market might relax and we'll see the start of the next upleg.


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## ctp6360 (13 June 2006)

Yeah that's an interesting question, what will happen if the news out of the US is POSITIVE? I think we can already see what's going to happen/keep happening if its negative, but if its good news can we expect everything to go ape ****, or will it just gradually attempt to regain to where it was before.

This little period has taught me never, EVER to look at a market in isolation, the affects of the US are ridiculously strong on the ASX to the point where I wonder if its better just trading the US market directly!


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## wavepicker (13 June 2006)

As has been previously stated on other threads, this correction was always going to be much deeper than most market players expected. 
Just 5-6 weeks ago people were raving on about how great the market was performing. "it's different this time they said, the Chindia story is very compelling" 
All I have learnt over the years is that the market is very efficient. Efficient at taking $$$ out of the crowds pockets and placing it into other parties pockets!!

When most of the crowd are utterly disgusted with their positions in resource stoxx, and are convinced that they will not see former glory any time soon, that is when the market will finish the current bear campaign and turn upward  again.

The Dow is falling impulsively and is toward the later stages of a 3rd wave downward. I beleive the XAO will find support in the 4660-4720pt range before a rally will occur, probably by early next month. Any subsequent rally should be in the order 240-315pts, and lasting approximately 2 months before a nasty wave C leg takes it out for the rest of year/early next year and find a solid low betwen 3900-4050pts. This should be a sold point for the market to rally again and trade in a sideways range for a number of years, before it blows off into a final high in the 6000-6500 range


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## x2rider (13 June 2006)

MMMM I think I will sit on the sidelines for a bit longer yet . I was kicked out of the market about two weeks ago on my stops and the temptation to buy again is nearly killing me . I did have a very small dabble on shorting using CFD's but couldn't get the timing right . 
 Remember the old sayin  "Buy the rumour , sell the fact " or in this case the other way around . 
 There are certianly some prize shares to be picked up at the moment but with the price of gold still dropping and the sentiment in the states what it is , I feel the hurt isn't over yet . 
 I do have some managed funds that I used to look at fairly often.  Well I have since deleted the shortcut to them and I will ride those out . No sense in being depressed about it . 
 But i'll have to admit the balance don't look as good as it used too 
 cheers Martin


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## Realist (13 June 2006)

> find a solid low betwen 3900-4050pts.




Not a hope in hell of going that low.    

Fortunately all of my stocks pay dividends, hopefully I'll average around 4 to 5% from that.  About what i'd get if I had it in cash anyway.


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## wayneL (13 June 2006)

Realist said:
			
		

> Not a hope in hell of going that low.




LOL We're halfway there already.


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## coyotte (13 June 2006)

attached chart shows it all --- don't have to be a guru -- mid- term us elections 
expect a decline into oct then a pick up -- only odd one out in over a 1/4 of a century was 1987 -- 2006 is presumed , of course

Just have to nut how POG relates to all this


Cheers
If your not Short CFDs by now , you might be in for a HARD lesson -- NO Bargains untills Sept/Nov

Coyotte 
Even Shorted shares in Acme !!!


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## coyotte (14 June 2006)

You guys/gals  have it sooo easy now !

online tradeing
Real time prices
$10 bucks brokerage
Actually to to be able to SHORT --- (get to KNOW  stock & ride it UP & DN )
overwhelliming on line data 
really sophisticated T/A

In my day, if U was lucky enough to get a referall to a Broker , then  $100 bucks to just see a Broker -- then Brokerage added on (ave T/M wage @ $160 pw) -- then you only could buy stock that was recomended 

my first T/A book was put out by the Financial Review & was based on POG , 21ma & trend line -- that was it for T/A 

as for prices -- yesterdays Close in the morning paper 

Charting --- U did your own -- on a  Lotus 123 SpreadSheet (cost a heap for the software ) or by hand  graph paper 

Yet some of us acctually did make a profit on a annual basis


Cheers


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## wayneL (14 June 2006)

coyotte said:
			
		

> In my day, if U was lucky enough to get a referall to a Broker , then  $100 bucks to just see a Broker -- then Brokerage added on (ave T/M wage @ $160 pw) --




Yer... I remember paying 2.5% commish. 

1c or less per share now.

LOL


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## nizar (14 June 2006)

Realist said:
			
		

> Not a hope in hell of going that low.
> 
> Fortunately all of my stocks pay dividends, hopefully I'll average around 4 to 5% from that.  About what i'd get if I had it in cash anyway.




yeh i guess u can say that 2 urself if u wanna make urself feel better
losses in double digits and less than 5% dividend... HMmmm...


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## Realist (14 June 2006)

> yeh i guess u can say that 2 urself if u wanna make urself feel better
> losses in double digits and less than 5% dividend... HMmmm...




Haha, I am not even down this year  (yet   ), and have alot of dividends to come.

I have no worries!!


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