Australian (ASX) Stock Market Forum

Are we gonna get the predicted late October correction?

Jump to new
Realist

Realist

Billie Jean is not my lover
Joined
1 June 2006
Posts
2,057
Reactions
3
Hmm it was all looking so good early this morning for a new high on the ASX.

By lunch time the ASX turned and Wednesday is gonna be a rough day if other markets are any indication.

BHP and RIO down 2% so far overnight...

Zinc, Nickel and Copper down so far.

Wednesday's gonna be rough... :(

I hope I awake to see it's all changed, but I fear we may get a repeat of May's correction.

There you go Wayne another bear post...
 
Realist said:
Hmm it was all looking so good early this morning for a new high on the ASX.

By lunch time the ASX turned and Wednesday is gonna be a rough day if other markets are any indication.

BHP and RIO down 2% so far overnight...

Zinc, Nickel and Copper down so far.

Wednesday's gonna be rough... :(

I hope I awake to see it's all changed, but I fear we may get a repeat of May's correction.

There you go Wayne another bear post...
Click to expand...
A repeat of May's correction?? :eek: NOOOOOOO!!!

I would like to see one unfold in the next few days, but not a huge one! As sad as it may sound, I want to see a decent one... so that I can get in on stocks before the ASX200 breaks its previous high (in a pre-Xmas run).
 
DJ only down .4%. Nasdaq over 1% tho.

I think we are due for a small correction, but nothing to the extent of May (just yet :D).

Actually I wouldn't be surprised if tomorrow was an up day.
 
Agreed, a healthy pullback would be nice. Might present a few opportunities to pick up some of the runners that have showed their colors of late, particularily the Zinc ones!.
Pretty important the XAO holds above 5100, a fall below that will be concerning.
 
Realist said:
Hmm it was all looking so good early this morning for a new high on the ASX.

By lunch time the ASX turned and Wednesday is gonna be a rough day if other markets are any indication.

BHP and RIO down 2% so far overnight...

Zinc, Nickel and Copper down so far.

Wednesday's gonna be rough... :(

I hope I awake to see it's all changed, but I fear we may get a repeat of May's correction.

There you go Wayne another bear post...
Click to expand...

Realist
For someone who takes a "long-term" view and holds his stocks for "years", u do seem to show a great deal of concern about short-term price movements.

As far as I'm concerned, market sentiment on XJO and XAO changed roughly 3-4 weeks ago, instead of using any sort of rally as an opportunity to dump like what was happening since may-june, lately we've been using any pull back (eg. from a negative US lead) to BUY. Very bullish i reckon.

At the same time, we havent really built up enough positive momentum to "crash". There will naturally be some resistance as XJO approached the alltime May highs of 5363, expect a few attempts at this before it breaks through.

Wow the DOW now is getting a bit smashed, usually any rally is bought up but not today. This had to be expected though, i mean 8 RECORD highs out of the last 10 trading days its getting a bit too much.

I reckon DOW will close well off the lows tonight. Then we open maybe 30-40pts lower and finish 10-20pts lower (for the day)... :2twocents
 
Realist said:
By lunch time the ASX turned
Click to expand...
It started heading south from pretty early in the morning.

In fact, from minutes after I exited my last short position... :rolleyes:

GP
 
It could now come in November...

Stocks in U.S. May Have Further to Fall, Chart Watchers Say

By Nick Baker

Oct. 30 (Bloomberg) -- The rally that sent the Dow Jones Industrial Average to a record and the Standard & Poor's 500 Index to the highest since 2000 may end, according to some analysts who use price charts to make investment decisions.

Stocks rose too far and too fast, based on so-called relative strength indexes, before slumping at the end of last week. The indicators peaked at their highest readings for the Dow industrials and S&P 500 in almost a decade.

Another gauge, based on comparing an index with its average close for the previous 200 trading days, showed the S&P 500 rose above a level that preceded a slump at the start of 2005.

Surveys of investors suggest they are increasingly likely to be disappointed and sell shares when companies fail to meet their expectations. Optimism about stocks is the highest since the first quarter, according to a poll by UBS AG and the Gallup Organization released last week.

``You're near the end of the move higher,'' said Philip Roth, chief technical market analyst at Miller Tabak & Co. in New York. A market decline of as much as 20 percent is imminent, he said. ``It could start any time.''

Financial companies such as Citigroup Inc. and Bank of America Corp., which account for the biggest percentage of the stock market's value, dropped after both said higher interest rates reduced the profitability of loans.

Last week ended with the biggest decline in almost two months, triggered by a government report that showed the U.S. economy expanded at the slowest pace since 2003. The growth in gross domestic product suggested earnings estimates may be too high, and halted a weeklong advance.

Five-Week Advance

The Dow industrials dropped 0.6 percent to 12,090.26, cutting their gain for the week to 0.7 percent. The 30-stock average reached all-time highs in 13 of the last 19 sessions, including the first four days of last week.

The S&P 500 ended last week at 1377.34 after a 0.9 percent drop from the highest level since November 2000. Its 0.6 percent gain for the week was the fifth consecutive weekly advance, the longest streak since November. Should the index rise this week, the rally would become the longest since September 2004.

Stocks rose last week as the Federal Reserve kept its target interest rate unchanged at 5.25 percent for the third straight meeting. The Nasdaq Composite Index added 0.4 percent to 2350.62.

Economic reports this week may show manufacturing increased in October and the unemployment rate held steady at 4.6 percent, the lowest since 2001.

14-Day Readings

Procter & Gamble Co., the biggest U.S. consumer-goods maker, and Verizon Communications Inc., the second-largest U.S. telephone company, are among companies releasing profit reports. About 73 percent of S&P 500 companies reporting third-quarter earnings have beaten analysts' forecasts, according to data compiled by Bloomberg.

Corporate profits are used in so-called fundamental analysis, a method of determining whether stocks are cheap, expensive or fairly valued. Technical analysis, an alternative, holds that prices of securities move in patterns that show when investor demand is too high or too low.

The relative strength index, or RSI, identifies possible turning points for a stock or market by calculating the degree by which gains outpace losses in a given time period. The most commonly used interval is 14 trading days.

The 14-day reading for the Dow industrials rose to more than 80 last week for the first time since November 1996. The RSI for the S&P 500 climbed to 79.9, the highest since December 1996. Readings more than 70 suggest to chart watchers that a stock or index is poised to fall.

Looking Ahead

Relative strength for the S&P 500 is higher than it was before the index's 7.7 percent retreat between May 5 and June 13. Its RSI peaked at 64.3 before the drop.

The S&P 500's position versus its 200-day moving average also signals the benchmark may decline. The index was 7 percent higher on Oct. 26, matching its peak at the end of 2004. In the first three weeks of 2005, it dropped 4.1 percent.

``The indexes are overextended,'' said Michael Sheldon, chief market strategist at Spencer Clarke LLC in New York. ``A better buying opportunity may lie ahead.''

The UBS/Gallup Index of Investor Optimism increased in October to 79, the highest level since March. Many technical analysts see excessive optimism as a sign that the market has peaked, assuming bulls have invested about as much money in stocks as they plan to spend.

`Fully Invested'

Global fund managers have 3.8 percent of their assets in cash on average, down from 4.4 percent in August, according to Merrill Lynch & Co.'s October survey. That's the lowest reading since the first quarter.

When investors are ``already bullish, they're fully invested and they're more likely to be sellers,'' Roth said.

Citigroup, the largest U.S. bank by assets, dropped 0.6 percent on Oct. 19 after third-quarter earnings showed rising interest rates made loans less profitable. Bank of America, the second-largest, fell 1 percent. Financial companies account for 22 percent of the S&P 500's value.

``Financials are giving an early sign that the equity markets may be nearing a peak,'' Mary Ann Bartels, a technical analyst at Merrill Lynch in New York, wrote in a report last week. Declines in shares of banks, brokerages and money managers are worrisome because their industry is the only one that has avoided a ``serious'' loss this year, she wrote.

`Reasonably Valued'

Stocks have defied technical indicators in their rally. The Dow and S&P 500 have both gained 2 percent since their relative strength indexes first crossed 70 on Oct. 4. Since that date, the Dow's RSI has stayed above 70.

Some investors, including Benjamin Pace and Keith Wirtz, said growth in profits and the economy will slow but not cease, supporting the market.

``Stocks are reasonably, if not under-, valued,'' said Pace, who oversees $17 billion as chief investment officer at Deutsche Bank Private Wealth Management in New York. The S&P 500 is priced at 17.6 times earnings in the last year, about half the highest level reached during the bull market begun in October 2002.

Still, the jump in stock prices that produced the technical readings has given pause even to optimists. Wirtz, who manages $21 billion as chief investment officer at Fifth Third Asset Management in Cincinnati, is one of them.

``It feels like we may be ripe for a selloff,'' he said.
Click to expand...
 
Statistically, if you discount the down years, October has always been an up month. :eek:

Three statisticians went out hunting, and came across a large deer. The first statistician fired, but missed, by a meter to the left. The second statistician fired, but also missed, by a meter to the right. The third statistician didn't fire, but shouted in triumph, "On the average we got it!"

:D
 
Top