Black September/October coming?

[Warren Buffet II]

Hi guys,

I am starting to think that after all this reporting season we are going to have another correction in what is called the Black October.

1) Thinking about it, October has been mostly a bad month for investing in the sharemarket and large funds will start doing some clean up towards the mid-September, preparing for that month.

2) Interest rates are looming again and probably going up again befoer the end of the year.

3) Resource shares losing their shine even with the best results ever. Look at RIO best results ever and is lacking there, ZFX stuck, OSH plunch, CBH stuck and I want to see what happens with BHP next week with the biggest Australian result ever (probably the price will go up 1%)

So here we are, no going up no going down at the moment but seems the direction is down in my opinion.

Any thoughts?

WBII

 

[money tree]

Actually, October is one of the best months.

September is the worst I think.

 

[Warren Buffet II]

Interesting article

http://www.fpb.org/YT-IW15o5lMmUA.html

September 'worst month' for stock market
10/08/2006

London traders and shareholders across the country should brace themselves for a rough September, according to research by stocks and shares website ADVFN.

A historical analysis of the FTSE 100, an index comprising the 100 largest companies on the London Stock Exchange (LSE), has found that, despite October’s reputation for market plunges, September is the month most prone to crashing.

ADVFN’s analysis found that the FTSE 100 drops an average of 1.37% during September, making it the month that sees the worst market performance of the year.

The research showed that the FTSE 100 has posted negative returns in 14 of the last 22 Septembers.

The study found that the much-maligned October has recorded an average index drop of just 0.25% over the same period, and if the effects of Black Monday in 1987, which helped account for the index plummeting 29.14% in a month, are excluded, October would see an average rise of 0.89%.

“Typically, investors get spooked by the month of October, with market events such as the stock market crash of October 1929, Black Monday in 1987 and the Asian currency crisis in October 1997 burned into their consciousness,” said Clem Chambers, chief executive officer of ADVFN.

“With so much focus on October, the poor returns of September are often overlooked. However, whilst it is interesting to note the worst and best performing months of the year, it pays for investors to remember that having a diversified portfolio will help defend them from crashes and other negative market anomalies.”

June is the second-worst performer, according to ADVFN, losing an average of 0.75% each year, while December is the best month for the FTSE 100 with the index climbing an average of 2.03%.

 

[Realist]

I tend to agree, September/October is usually a poor time.

And this one will probably be no exception. May's correction was a nice reality check, and we could be in for another similar correction in the next 2 months.

Maybe you wanna short the SPI up to end of October?

And after the drop it'll be a great time to buy long.

 

[Kauri]

Something I came across a few years ago... is actually based on the ASX...

 

[nizar]

End of the year for funds in the US is september 30th, they will dump non-performers and lock in profits, no doubt

 

[Big Jim]

End of the year for funds in the US is september 30th, they will dump non-performers and lock in profits, no doubt

Which means they might pump them before dumping?

 

[Smurf1976]

Which means they might pump them before dumping?

Fund managers tend to want to be seen as having been in the "right" stocks when they report, hence the desire to get rid of anything that didn't perform and keep those that did (whether or not they will perform well in the future being and entirely different matter).

 

[Freeballinginawetsuit]

I reckon the last few months have been pretty black. If we dont get a spike shortly of all the big boys, BHP etc and 'Black September" comes their SP would have done nothing for 6 months, despite the quite obvious profits they have been making. Maybe November will see the bull run from hell, otherwise how is their SP reflecting the Companies profit increases.

 

[dubiousinfo]

Ford move will loosen supply of commodities
By Tom Stundza
Purchasing
August 18, 2006

Ford Motor Co. slashed its second-half production plans and announced that 10 North American plants will be shut for extended periods much of the rest of the year as it tries to trim costs and deal with slumping sales of its light trucks. Upshot: A substantial amount of steel, aluminum, plastics, copper wiring, electronic components and other production materials will be available to buyers through the rest of the year. The automaker said Friday its moves will result in a 21% drop in production in the fourth quarter compared to a year ago, as it makes 168,000 fewer vehicles. The company also trimmed third quarter production by an additional 20,000 vehicles from its previously announced production target, leaving it 78,000 vehicles short of year-ago production. "We know this decision will have a dramatic impact on our employees, as well as our suppliers," said a statement from Chairman and CEO Bill Ford. "This is, however, the right call for our customers, our dealers and our long-term future."

Independent automotive market analyst Dennis DesRosiers e-mails Purchasing that “what’s behind the Ford move is that the U.S. market is very soft and is paying for all the foolish incentive dollars poured into the market over the last few years. Pay me now or pay me more later. Well, it is later and the U.S. market is not going to get better without major incentives--and nobody can afford big incentives and nobody has the appetite for big incentive money.” Besides the fact the marketplace pie is shrinking, Desrosiers says that “Ford continues to struggle in the market.” While the Dearborn, Mich., firm isn’t losing a lot of market share in North America, “they are losing some share and this creates a doubling up of the problem. To lose share in a declining market forces companies to react.”

Among the products targeted for production cuts is the F-series pickup truck, the nation's best-selling vehicle, but one which has seen its sales hurt by high gasoline prices. Ford's sales of the pickup were off 46% percent in July compared to a year earlier; for the year, sales are down 12.5%. The companies four F-series plants--in Kansas City, Mo., Norfolk, Va., Dearborn, Mich. and Louisville, Ky.--are among the plants that will see the additional downtime between now and the end of the year. The other six plants that will see periods of closure are in Chicago, St. Paul, Minn., Wayne and Wixom Mich., St. Thomas, Ontario, and another Louisville plant that makes the Ford Explorer and Mercury Mountaineer.

Some of the plants with additional downtime this year have already been identified by Ford for eventual closure as it tries to trim costs long term. The company plans to close 14 plants in the coming year as part of an effort to cut costs and return to profitability.

 

[YOUNG_TRADER]

Something I came across a few years ago... is actually based on the ASX...

If you notice July had an 80% + probability of rising and it didn't so I wouldn't place too much value in the probabilities (ie they are not to be taken as testimonial)

The only way I can see a correction again in Sep/Oct is if there is a bit of a rally in the lead up, the mkt got whacked in May and has been going sideways for 3 months now, to fall again in Sep/Oct without a preceeding rally would signal a bear mkt, ie fall in may, then stagnent, then fall again,

Given the profit reports being released I find this hard to believe so while anything could happen, I think that we may see a rally into Sep/Oct, with a subsequent correction, the size of the correction will depend on the size of the rally.

 

[Warren Buffet II]

I actually believe the "rally" is happening now and will continue until the end of august beginning of September and then the market will go down.

Everything everywhere is slowing down, for instance US is going down (there are even worries of how fast) and China trying to slow down(interest rates up last friday), I believe something will happen soon.

Another problem which affects the mining companies are the costs, they are skyrocketing and those without enough diversification will suffer the most. I saw this interview with the WPL CEO yesterday and even they are in the GAS/OIL mining industry their costs have increased 67%, and the CEO says we need to check exactly where we are spending each dollar we put in because of costs issues, I guess that statement is against any boom market that I can believe exist.

So, I believe a mini-rally in the next 2 3 weeks and then what I will call a September/October correction.

WBII

 

[noirua]

The problem with people all thinking something will happen, is they act together and create the situation themselves.

 

[nizar]

The problem with people all thinking something will happen, is they act together and create the situation themselves.

Precisely; the market works in mysterious ways...

Corrections become a self-fullfilling prophecy - last year the correction began on October 1

 

[Dr Doom]

I reckon we are already in a bear market, it's just that very few realise it. Just waiting for an X factor to tip the balence.

Whilever oil prices are above (_insert your price above $50 here_) there will be continual cost increase pressure on everything that is associated with oil use, which is pretty much everything.
The saving grace for Aust markets is the 'weight of super money' argument, holding the market together. Untill such time as there is a meaningful deteriation in the employment rate, the market will at worst tread water, go sideways, at best it will have spurts of pent up fund buying. All of that super money flooding in every week may even be finding a place in cash at 6%, but who wants to borrow in this climate (rising interest rates)?.
Lots of money looking for a place but no one wants it. Sounds like we need a purging recession. (or a war, see how the US offloads excess money).

Bottom line - US consumers are in debt so deeply that a syncronised world downturn is a distinct possibility, with ramifications for Australia's resources, and in particular Perth.

 

[Realist]

It seems our predictions are proving to be correct.

 

[nioka]

The problem with people all thinking something will happen, is they act together and create the situation themselves.

a most correct ststement of this weeks events.Stop loss selling creates the trend that creates the trend etc. etc,( and don't the brokers love it.)

 

[Realist]

a most correct ststement of this weeks events.Stop loss selling creates the trend that creates the trend etc. etc,( and don't the brokers love it.)

Yes a self fulfilling prophecy!!

And yes stop-losses and people buying in agains suits the brokers just fine!

 

[juddy]

A market 'crash' just before the US mid-terms? I don't think the Republicans would let that transpire.

Who believes in the PPT?

 

[wayneL]

A market 'crash' just before the US mid-terms? I don't think the Republicans would let that transpire.

Who believes in the PPT?

Good point Juddy

It's interesting that only the resource sector is being crunched (why the ASX is screwed). Otherwise, in the industrial stocks, it's business as usual.

Oil selling off, along with gold (will only hurt those pesky lefty liberal pinko apocalypic types) may actually be good for the Neocons.