# Recovery Time For This Correction?



## constable (28 February 2007)

Just curious as to peoples ideas on how long before the market will bounce back after this correction has run its course.
1-2 weeks or are we talking 1-2 months?
Are some sectors that were already toppy ie resources going to take longer?


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## Realist (28 February 2007)

12:40pm today is my guess.    

If China opens up we're looking good.

If China plummets, I think I'll turn my computer off, turn my stereo on, and grab a large bottle of Jack Daniels...


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## Caliente (28 February 2007)

How about now - lol. Sure I'm haemorrhaging but it doesnt mean there isnt some nice opportunities hanging out right now!

Wanted to buy PDN for a while - picked it up cheap cheap this morning =)

On the other hand, across the board I've had about 3K wiped out elsewhere in a matter of minutes =(


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## dragonball (28 February 2007)

finally it is happening, been waiting for this, but still lost few thousands


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## constable (28 February 2007)

dragonball said:
			
		

> finally it is happening, been waiting for this, but still lost few thousands



After blowing out over 200 points it would seem ords is recovering somewhat at 176 points down.


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## nizar (28 February 2007)

Realist said:
			
		

> 12:40pm today is my guess.
> 
> If China opens up we're looking good.
> 
> If China plummets, I think I'll turn my computer off, turn my stereo on, and grab a large bottle of Jack Daniels...




I tend to agree.
If China plummets, then this correction will last for maybe 2-3 weeks.

So this carnage will either last 1 day or 2-3 weeks, no in betweens.

Alot of people are buying today for 2mrws bounce. If no bounce they will dump.

An hour to go.


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## megla (28 February 2007)

I'm having the time of my life, buying left right and centre. I think the bottom was hit a little while ago, because I've missed out on a few goodies that have jumped back up.


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## nioka (28 February 2007)

The saying that a week is along time in politics may be applicable here. A lot of todays fall has been generated by computer selling and stop loss orders which has a bushfire effect and the fire will soon be out. Good times are still ahead.


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## Knobby22 (28 February 2007)

We should be strong but is the US? Continuing big falls over there are bound to reflect on our market.


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## nizar (28 February 2007)

megla said:
			
		

> I'm having the time of my life, buying left right and centre. I think the bottom was hit a little while ago, because I've missed out on a few goodies that have jumped back up.




I sincerely hope you are still having the time of your life 2mrw, my brave friend


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## petervan (28 February 2007)

Recovery will be quick if tommorows U.S new housing data is strong. If not we might be off the freeway and taking the back roads.


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## constable (28 February 2007)

petervan said:
			
		

> Recovery will be quick if tommorows U.S new housing data is strong. If not we might be off the freeway and taking the back roads.



146 points down now ......bargains are being snapped up.


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## The Mint Man (28 February 2007)

Realist said:
			
		

> 12:40pm today is my guess.
> 
> If China opens up we're looking good.
> 
> If China plummets, I think I'll turn my computer off, turn my stereo on, and grab a large bottle of Jack Daniels...




mmmmm JACK :dance: 
can I come around? :bier: 
Ill bring my 1L bottle :alcohol:


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## nizar (28 February 2007)

constable said:
			
		

> 146 points down now ......bargains are being snapped up.




Yep i agree.
60pts recovery in 2 hrs trading is impressive.

Usually such a correction feeds on itself. ie. selling begets more selling.
Maybe its just a one-day thing?


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## Magdoran (28 February 2007)

constable said:
			
		

> Just curious as to peoples ideas on how long before the market will bounce back after this correction has run its course.
> 1-2 weeks or are we talking 1-2 months?
> Are some sectors that were already toppy ie resources going to take longer?



Hello constable,


If this is a major wave 3 top, then the wave 4 may well consolidate for quite some time once a bottom is reached, and may see some choppy markets for a while – maybe like the market post the May 10 2006 high…

I think this could be like the 1989 high (see chart), hence there may be some kind of consolidation in 18 days or less…

However if the Yen carry trade really goes to town, this could trigger a major meltdown that will last for a long period of time depending on how hard it hits the major players involved.  It would make the multi billion dollar hit amaranth took look like a walk in the park – got to watch this as the Yen is flying up hard today.


Regards


Magdoran

P.S. cleaned out all my longs over a week ago…

Sorry can't post any charts for some reasons...


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## constable (28 February 2007)

Magdoran said:
			
		

> Hello constable,
> 
> 
> If this is a major wave 3 top, then the wave 4 may well consolidate for quite some time once a bottom is reached, and may see some choppy markets for a while – maybe like the market post the May 10 2006 high…
> ...



Thank you Magdoran,
I have read about the cheap money coming from the yen trade and is a little scary to say the least!


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## Magdoran (28 February 2007)

constable said:
			
		

> Thank you Magdoran,
> I have read about the cheap money coming from the yen trade and is a little scary to say the least!



Indeed, constable,


What many people misunderstand is the house of cards nature of this kind of trade, where significant downside exists if the Yen appreciates strongly since so many players are short the Yen.  What is important about this is the question about how much this will effect many organisations since derivatives are often hidden off the books.

This was at the root of the demise of Enron (amongst other things), hence if this scenario pans out, the financial impact may be substantial, and long lasting, torpedoing a great many companies.


Regards


Magdoran

P.S. Wish I could post the chart to show people what corrections looked like in the past for some ideas of how this may pan out.


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## ducati916 (28 February 2007)

*Mag's*

You won't see the Carry trade unwind in the stockmarket as much as the *BOND market*

But as yields jump in the Bonds, so will the stockmarket continue to weaken and crumble.

A one day mini-crash like today gives you warning............
Go to cash or *Market Neutral* strategies.

If you can't, or don't know how to go market neutral, then cash may be a better alternative.

If you had your shares from 2/3yrs ago, and they are good dividend payers, relax and hang on. 

jog on
d998


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## Magdoran (28 February 2007)

ducati916 said:
			
		

> *Mag's*
> 
> You won't see the Carry trade unwind in the stockmarket as much as the *BOND market*
> 
> ...



Agree, but still think this may have a longer term bearish effect to be considered...


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## CanOz (28 February 2007)

Magdoran said:
			
		

> Agree, but still think this may have a longer term bearish effect to be considered...




I think you and Duc would be best to give us some light as to the various unwinding scenarious that may take place around the globe.....to me, a big drop like this should have rippling effects into hedge funds that would for huge losses. 

Would this take days and weeks to settle?

Cheers,


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## ducati916 (28 February 2007)

The Bond Yields have been inverted for the best part of a year in the US.
Maintained inversion almost guarantees a recession as it kills the credit cycle.

The first to go is always the Junk.
Sub-prime is imploding.

Quite a large number of the top tier banks have large exposure. Most will have covenants to cover the reselling...........but if your counter-party is already dead, then guess what you eat the consequences.

China was unrelated, but, it was the emotional trigger that may accelerate the process in the US.

China was political manipulation, and they will continue to crash only if for no other reason their *investor* is margined to the eyes, and inexperienced to boot.

Add to that the Yen Carry Trade and Greenspan and his comments and you have added to the *perfect storm* that is still brewing.............long way to go yet

jog on
d998


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## rico01 (28 February 2007)

At 12.25 the hang seng is currently down another  604 points [ 3%]           , I think we could in for a wild ride the next few days  
    Every body enjoy


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## Magdoran (28 February 2007)

CanOz said:
			
		

> I think you and Duc would be best to give us some light as to the various unwinding scenarious that may take place around the globe.....to me, a big drop like this should have rippling effects into hedge funds that would for huge losses.
> 
> Would this take days and weeks to settle?
> 
> Cheers,



Just consider the Enron scenario and how ling this took to unravel.  Also, consider the Orange county scenario with CDOs and CMOs in the early 90s (around ’94) for a basis of potential time frame… months and years… but what this will do to the wider market Duc would be better at measuring this than I would, he sees the ledger better than I do.


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## Bush Trader (28 February 2007)

Beware of the Dead Cat Bounce!  Remember back to May/June correction, I was sucked in to buying BHP & RIO etc (I was always taught to always to buy blue chip stock on a resources), sit back, relax, hold your nerve, watch China this arvo, US tonight.  Friday will tell the true story of what's in stall as the big end of town weekly long positions are either held or exited.  On the other hand there are fund managers with baby boomer's super cash being thrown at them left, right & centre that just have to park it somwhere, and none of them want to look silly having missed out on an oportunity.

Good Luck


Cheers


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## carmo (28 February 2007)

Ummm, change of strategy, hang on to stocks for 12m + , collect three dividends, then sell with a 50% discount on CGT.


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## mmmmining (28 February 2007)

Bush Trader said:
			
		

> Beware of the Dead Cat Bounce!




Where is the dead cat? It would not happen with out a few down days.


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## Bush Trader (28 February 2007)

mmmmining said:
			
		

> Where is the dead cat? It would not happen with out a few down days.




Im Sorry mmmmmining 

I meant Dead Cat Bounce that may happen after a few down days, that punters are likely to believe is the sign of a recovery.

Cheers


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## Atomic5 (28 February 2007)

Any suggestions for tommorrow on the ASX if the US is down again tommorrow? (most likely) 



*GLOBAL MARKETS-Asian stocks skid after China, Wall St slides*
Wednesday, February 28, 2007 2:19:30 AM 
http://www.reuters.com 


Perhaps the most remarkable sign of the recent irrational exuberance underpinning China's stock markets is that during the past year, when a company has announced bad news, its stock price has been shooting through the roof.

Early this year, for instance, when a group of 17 Chinese companies was cited by regulators for misappropriating corporate funds, their stock prices all skyrocketed. When the Tianjin Global Magnetic Card Company failed to report quarterly earnings last April, its stock doubled.

With shares in Shanghai tumbling, stocks listed in Shenzhen also collapsed, falling 9.3 percent. In Hong Kong, the benchmark Hang Seng Index fell 1.76 percent, and in Japan, the Nikkei dropped about half a percent to 18,119.92.

But none of the world's major stock markets has been as volatile as in China, where people refer to the stock market as "dubo ji," or the slot machine. The gyrations have become almost commonplace for a stock market that suffered through a five-year depression until 2006, when it rose more than 130 percent, the world's best performance.

The Chinese government, however, is worried about an exuberance that could produce a bubble and then a crash that could send bankrupt individual investors into the streets in protest.


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## greggy (28 February 2007)

After a strong rise thus far, this correction is unfortunately necessary before we reach new highs.  I feel that at worst that this correction will be short term. This market will head to new record levels by Aug- Sep 07.
DYOR


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## Atomic5 (28 February 2007)

Bright northern summer then hey?


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## Dr Doom (28 February 2007)

Sell in May & go away? Maybe nothing rhymed with February or March


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## CanOz (28 February 2007)

If Friday was the buying climax, then i'll be looking for volume to absord the selling before i get back in.


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## greggy (28 February 2007)

Atomic5 said:
			
		

> Bright northern summer then hey?



Too early to predict a crash.  I feel that this market will recover strongly and go to 7,000 sometime this year before a major correction commencing in Oct 07, the 20th anniversary hoodoo.
DYOR


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## >Apocalypto< (28 February 2007)

latest from Shanghai exchange looks like the selling has stopped but Japan had a terror of a day.


China exchange is up selling has stopped

2007-02-28- 13:17
Indexes Prev. Closing Last High Low Change%
SSE 180 5629.34 5636.35 5697.72 5536.41 0.12
SSE New Composite 2359.52 2375.75 2396.05 2327.49 0.69
SSE A Share 2910.76 2929.10 2953.66 2870.31 0.63
SSE B Share 173.27 174.09 177.86 167.33 0.48

if you want to see then web address is http://www.sse.com.cn/sseportal/en_us/ps/home.shtml#

so has the government come to the rescue?

so as long as wall street has a recovery we could see it all over very soon


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## Out Too Soon (1 March 2007)

Dr Doom said:
			
		

> Sell in May & go away? Maybe nothing rhymed with February or March




It wasn't translated to Chinese!


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## kerosam (1 March 2007)

how about the listed investment companies? i would thought, though not bullet proof, they tend to move otherwise in a falling market or move north but slowly.   

the ones like GFL, CDM, FAT & CAM didn;t move that much...


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## 2020hindsight (1 March 2007)

sell in feb and watch the web?


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## numbercruncher (5 March 2007)

ducati916 said:
			
		

> The Bond Yields have been inverted for the best part of a year in the US.
> Maintained inversion almost guarantees a recession as it kills the credit cycle.
> 
> The first to go is always the Junk.
> ...




^ I concur with this Bloke ^


Perfect way to sum up China too, it was the " emotional " trigger.


g'Luck All!


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## Kauri (5 March 2007)

Reading the posts on this forum it seems confidence has been dented but not crushed, so I *guess* we have a ways to go yet.


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## reece55 (5 March 2007)

Kauri said:
			
		

> Reading the posts on this forum it seems confidence has been dented but not crushed, so I *guess* we have a ways to go yet.




I agree Kauri........

Whilst it is difficult to look at some stocks (WPL comes to mind) because the brain inevitably says "but it's so cheap now, this would be a good fundamental buy....", now is no time for a long position! Every stock's market depth shows sellers are abundant... the bears are in full flight. I think tomorrow will test the wills of even the strongest buy and hold investors....... Most will sell I suspect.....

Personally, I am either short or cash.... No longs for me in this environment!

Cheers


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## champ2003 (5 March 2007)

1 more good strong down day and then it may bounce from there just in my opinion.


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## gavmit63 (5 March 2007)

I think this bear run has someways to go yet. The market has been rising well above its long term average for some time and to borrow a euphanism from a well known Treasurer "This is the correction we had to have". If I was highly geared I'd be reducing my holding but since I'm lowly geared and have a long term view I'll look for buying opportunities in the coming weeks when I see a sustained turn or the All Ords heads below 5500.


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## tech/a (5 March 2007)

https://www.aussiestockforums.com/forums/showthread.php?p=130668&posted=1#post130668

Bit of analysis over here if interested.


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