# Market Bottom?



## Ken (23 January 2008)

I had a look a chart back from 1985 and the 1987 crash basically is the only comparison as far big drops chart wise.

The all ords have dropped a bucket load.

Where is the bottom is anyones guess but for those who dont know the All ords in 1987 went back to the previous support level at the start of the 1986 run.

The start of 2005 run was in November and that was around 4800.

So it is possible that we still have one or two big days of carnage, a drop below 4800 level and your looking 4000.

Something just tells me we have not hit bottom, by the way the stocks didn't close on their highs today, and a number of stocks still in free fall closing on lows.

Its not a pretty place to be at the moment.

I think a lot of short sellers got squeezed out though with the bounce but the fall could still continue.


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## OK2 (23 January 2008)

*Re: MARKET BOTTOM*

I am a little confused. Market was down 400 pts on Tuesday which equated to 7% or so and was up 200 pts today which equated to 6% or so. Am I missing something in my calculations to get to where we are? 

And to add the majority of the shares I observed are still a long way off the Tuesday open and miles off the last fortnights highs.

Any thoughts or do I need to go back to school.


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## Ken (23 January 2008)

10 percent of $100  is $10

So a stock goes from 100 to 90 its a 10% percent fall.

10 percent of $90 is only $9, so it would be a 10 percent rise to $99.

If a stock wen down 10 percent everyday and then up 10 percent the next day, the share price would go downwards.

Its like when a a stock goes from $1.00 to 25 cents, it has gone down 75%.

But if it goes from 25 cents to 50 cents the next day, it is up 100% yet 50% less than the previous 2 days.


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## chewy (23 January 2008)

*Re: MARKET BOTTOM*



OK2 said:


> I am a little confused. Market was down 400 pts on Tuesday which equated to 7% or so and was up 200 pts today which equated to 6% or so. Am I missing something in my calculations to get to where we are?
> 
> And to add the majority of the shares I observed are still a long way off the Tuesday open and miles off the last fortnights highs.
> 
> Any thoughts or do I need to go back to school.




perhaps you need glasses: we went up 223 today which was 4.1%  (not 6)


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## OK2 (23 January 2008)

I get all that but what I dont get is why the average person thinks that the market is back to Mondays levels. A few mum and dad investors that I know were under the impression that they had returned the previous days loss, but their accounts were not showing this.

It is a little bit like going to the Casino. Any winning bet also incorporates the initial outlay, but most people do not distinguish this in the return.

In all reality there was not much to celebrate at todays close, if only the media were reporting with more tangible figures. Then we could see a real fallout.


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## OK2 (23 January 2008)

I didnt get a chance to check out the figures, just got home and jumped on the computer after hearing 3AW's financial updates throughout the day. 

My blind interpretation of the day through the media reports was that all of yesterdays losses were turned around today. I could not visualise what I was hearing with what was actually going on.

This conversation is a great example of how people can be mislead through media reports. Normally I would go through the numbers before commenting, but because I knew I was going to be busy at work these few weeks I went 100% cash a fortnight ago.

The moral of the story is that a hobby investor only pays attention to the markets when their money is in the mix!!!


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## Awesomandy (23 January 2008)

Ken said:


> 10 percent of $100  is $10
> 
> So a stock goes from 100 to 90 its a 10% percent fall.
> 
> ...




This reminds me of a trick question...
You hold a stock worth $2575. Then, its value drops by 100%, but it went up by 100% the day after. How much is your stock worth at the end of this day?


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## Nyden (23 January 2008)

Awesomandy said:


> This reminds me of a trick question...
> You hold a stock worth $2575. Then, its value drops by 100%, but it went up by 100% the day after. How much is your stock worth at the end of this day?




0  100% loss equates to total bankruptcy.

Let's assume for a fact you mean 99%
& let's simplify this by using a stock worth $100

It drops by 99%, making the stock worth $1
The next day it increases by 100% - a double of current value...which would be $2


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## numbercruncher (23 January 2008)

Awesomandy said:


> This reminds me of a trick question...
> You hold a stock worth $2575. Then, its value drops by 100%, but it went up by 100% the day after. How much is your stock worth at the end of this day?





I think the Q is backwards ?

stock worth 2500 goes up 100pc , then down 100pc, alot of people would answer 2500, but it would be zero.

I like trick questions though, fun fun ...


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## nioka (23 January 2008)

Awesomandy said:


> This reminds me of a trick question...
> You hold a stock worth $2575. Then, its value drops by 100%, but it went up by 100% the day after. How much is your stock worth at the end of this day?



 That's like a chap I know who decided to go into a business. To build up trade he decided to only work on a 15% markup. To promote he decided to advertise a discount business so he marked up 50% then advertised a 35% discount. Buy at $1, markup 50%= $1.50, sell less 35%= 2.5c loss for each dollar traded. He rented a shop from me, he didn't last long.


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## sideshowbob (23 January 2008)

OK2 said:


> My blind interpretation of the day through the media reports was that all of yesterdays losses were turned around today. I could not visualise what I was hearing with what was actually going on.
> 
> This conversation is a great example of how people can be mislead through media reports. Normally I would go through the numbers before commenting, but because I knew I was going to be busy at work these few weeks I went 100% cash a fortnight ago.
> 
> The moral of the story is that a hobby investor only pays attention to the markets when their money is in the mix!!!




You are right.

The market started well, but pulled back throughout the day. But the media didnt tell you that it was actually falling back (until the 6:00pm news) 

Its probably mostly due to their lack of updating news reports. Of course they were quick to update us on bogus allegations about how Heath Ledger might have died. RIP. 

They had a report from the ASX in the morning... and they ran with it for the rest of the afternoon. 

I got home and saw.... BNB recover less than half of yesterdays loss. 
And the all ords not even close to reclaiming the losses. 

But I wasnt surprised because DOW never ended in the green last night. 

Im so glad I got out of BNB the other week. It has plummeted since.


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## son of baglimit (23 January 2008)

OK2 said:


> My blind interpretation of the day through the media reports was that all of yesterdays losses were turned around today. I could not visualise what I was hearing with what was actually going on.
> 
> This conversation is a great example of how people can be mislead through media reports.




from this quote you have answered your own questions.
one day the media is hung up on trying to create a story about some 16yo brat, the next the lead story comes from hollywood, and the next will possibly combine the 2.

and then this same media is trying to provide ''authoritive & concise" financial stories, but as always has no idea, and it talks to who - mums & dads looking at the boards (which dont tell anyone much), and trading house heads who have a vested interest in telling us what they want us to hear.

dont ask radio or TV to educate or inform - that is now gone forever.

we now live in corey/bigbrother/fifteenminutesoffame world.


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## Seaking (23 January 2008)

Alan Kohler's segment on the ABC news is pretty good. No bull and gives a brief overview of what has occured during the day. Tonight, using an intraday SPI chart, he pointed out that we are still trending down with yesterdays action occuring on a much lower, parallel trend line and todays open action just reverting back to the original trendline..


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## Snakey (23 January 2008)

chart wise... bottom 4000 settle at 4500 time frame with in two months


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## cordelia (24 January 2008)

i am glad i am not holding overnight..at least I can sleep well...up, down makes no differencel


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## chewy (24 January 2008)

Anyone think we may have already hit the bottom now? 

The US recession concerns seem already priced in. And it appears it will be minimised by the big rate cuts and the stimulus package. The Bond Insurance issue was the big dark cloud hanging over from subprime - but now there is talk of the Gov stepping in to protect them. Seeing a big rally in the DOW this morning (apparently massive volumes on DOW too) Have we seen the worst now? 

Anyone even prepared to say this will now be a correction and the bull run will continue??

I hope so - but too inexperienced (naive even) to know.


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## korrupt_1 (24 January 2008)

Last night movement of restesting the lows (high 5100's) followed by a strong 300 point rally would be a good sign that the near term bottom has been defined...

*fingers crossed*


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## Kauri (26 January 2008)

global growth  still looks possibly negative with the Baltic Dry Index continuing to fall. The index is now down almost 50% from the highs in November. The index fell another 168 pts today or 2.82% to 5,780. The fall reflects a decline in global shipping demand as economic strength slides around the world.
Cheers
...........Kauri


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## cordelia (26 January 2008)

what's the point of worrying about percentages. If your down $100 your down $100. I took a good look at xao chart over the last couple of weeks (as everyone else has) and I can't see it going straight back up to where it was in the same way it has been falling. If you look at any of the other big drops in the past there's always been a bit of a recovery before further falls. This bounce is really dramatic but I am not confident enought to put my cash back in yet. In fact I bought some shares yesterday and sold them 2 minutes later. I even made $100. I don't care if I miss the bottom. I would rather invest in a market where there is less uncertainty. 

Also if it is such a recovery why are all these people selling their stocks. For every buyer there is a seller.


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## Julia (26 January 2008)

cordelia said:


> Also if it is such a recovery why are all these people selling their stocks. For every buyer there is a seller.



Possibly at least some of the sellers yesterday had bought during the big fall and were taking short term profits.


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## clowboy (26 January 2008)

Yes, but a lack of sellers is what makes the market go up, a surplus and it goes down.


Still I aggree the worst is yet to come IMHO


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## osmosis (27 January 2008)

I still think that the DJIA is yet to have a big one day dip. When this point is reached (say 10-20% fall in one day), there will be a few more aftershocks and then then a plateu. The ASX will then follow suite. Tuesdays big decline was just a starter imo. Wait and see.


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## overule (27 January 2008)

But analyst said there will be a US interest cut down to 3% and i think this would calm the market.


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## Kimosabi (27 January 2008)

overule said:


> But analyst said there will be a US interest cut down to 3% and i think this would calm the market.



The Fed could cut interest rates to 0%, but it won't stop the slaughter.  

US Interest rates should be going up to accelerate cleaning up the mess and to save the dollar.

The Fed dropping rates is actually the worse thing they could be doing...


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## clowboy (27 January 2008)

Why would they need to cut rates so dramatically?

with the Australian average home loan at 240,000 the same rate cuts would give the "average" australian an extra $70 a week to spend.  Quite a tidy payrise for a week?


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## JTLP (27 January 2008)

osmosis said:


> I still think that the DJIA is yet to have a big one day dip. When this point is reached (say 10-20% fall in one day), there will be a few more aftershocks and then then a plateu. The ASX will then follow suite. Tuesdays big decline was just a starter imo. Wait and see.




Yikes! If it dropped by a 1000 or 2000 points in a day now I think there would be a few window jumpers


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## mfp (27 January 2008)

JTLP said:


> Yikes! If it dropped by a 1000 or 2000 points in a day now I think there would be a few window jumpers




Had helicopter Ben not stepped in Tue night with his emergency 0.75% rate cut, a 1000+ point drop on the DOW was a virtual certainty. IMO all he has done now is postpone an even bigger one day fall. And anyway, 1000 points would have only been around 8% for the DOW. Our market fell 7% Tue and we aren't the ones with the problem!


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## Kauri (27 January 2008)

what has caused this problem... people who cannot afford repayments being given the hard sell on credit, be it housing, cars, credit cards, et al... drop the rates AND keep credit availability tight so the problem is not added to, but, as in all cycles the worm eventually turns and rates via inflation created lift again... lets just hope that all of those Ninja's have paid out thier loans before they rise, or they will once again not be able to afford them...   .. The stimulation package with it's tax cuts may stimulate a touch of spending, but that won't be helping the Ninja's who by definition don't have a job and therefore no tax to cut. Stimulate job creation ... not further debt creation.. or so far as bottoms go, you ain't seen nothing yet... I thunk..
Cheers
........Kauri


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## CFD (28 January 2008)

Pity we couldn't wise up and outlaw mortgage brokers.


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## SophieSweet (28 January 2008)

The following link from the New York Times gives some food for thought on where the market may go. Anyway, the gist of the article is from a company that tracks the buy/sells of corporate insiders, like directors and the sentiment  of  business media. The report generally shows the  media are traditionally wrong and the  ratio of buys to sells of the corporate insiders generally indicate how the market will go. Bottomline is that the report suggests the market looks good.

http://www.nytimes.com/2008/01/27/business/27stra.html?em&ex=1201669200&en=9d92d675831a957b&ei=5087


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## josjes (28 January 2008)

SophieSweet said:


> The following link from the New York Times gives some food for thought on where the market may go. Anyway, the gist of the article is from a company that tracks the buy/sells of corporate insiders, like directors and the sentiment  of  business media. The report generally shows the  media are traditionally wrong and the  ratio of buys to sells of the corporate insiders generally indicate how the market will go. Bottomline is that the report suggests the market looks good.
> 
> http://www.nytimes.com/2008/01/27/business/27stra.html?em&ex=1201669200&en=9d92d675831a957b&ei=5087




Don't bet YOUR own money on this article. 
Mark Hulbert basically said the same thing on Dec19. and Nov21.
http://www.marketwatch.com/news/sto...x?guid={21EF12A3-9729-4AFB-A8D3-5F137A8C34C8}
http://www.marketwatch.com/news/sto...x?guid={3193D685-5A61-4CC4-B61E-83D55693931D}

Look where the stock market is heading after that ?? 
Bottom line: Stand aside whilst the Bear Market train is heading towards you.


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## numbercruncher (28 January 2008)

I never trust these guys, I assume from the outset they have alteria motives and work backwards from there


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## Nyden (28 January 2008)

Everyone keeps using the word *bet*, that alone tells me to keep away from the markets.

At the moment, they are nothing but a gamble. Long term fundamentals, market sentiment, & many other factors are all teetering on the edge between heads, & tales; and I refuse to engage in such gambling.

Examples of fundamental unknowns;
Will the US have a recession?
Will the US recession have an impact on China, & this commodities bull?
   - & If so, are all of our resources companies overvalued? Obviously the   fact of a 'never ending' resources bull is priced into these companies, can they really handle a drastic price reduction of commodity prices? Will many spec mining companies suddenly become economically impractical?

& Let's face it, if our market cools down, less 'easy money' may equate to less money spent, the uncertainty in the property market may keep home buyers away - less mortgages, less profits for even our banks ...


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## marklar (31 January 2008)

OK... so... a few people have posted XJO targets for picking the bottom, but does anyone have some combination of signals (chart, astral, momentum, tea leaves, chicken entrails, etc.) that they would care to share?

m.


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## cordelia (31 January 2008)

well i looked into my crystal ball and I could see that the bottom has been reached but then I asked the pendulum and it said no......Think I am oing to throw the runes next...


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