Correction or crash?

[Awesomandy]

Agreed, there was significantly more panic on August 16th, XAO was down more than 300 pts at one stage.

I think we should keep in mind that, on that day, the futures exchange was closed for a period of time for, er, "maintanence", so fund managers had to short on the physical exchange to manage their risks. When the exchange opened again, XAO made its way back up to only around 120 points down for the day.

 

[adobee]

I am surprised the banks are doing so well..

I think correction.. some dodgy reforms by bush in next week will cause a bounce back.. I would be buying but I am already fully in..

 

[megla]

Well, I've been holding on to some dogs since the last 'correction' (crash for me) watching them painfully crawl back, almost to break even point and then only to watch them dissapear again.

Good thing I've got more patience than money! Wish I had some spare capital to dive in now - so many bargans !!

Still - swings and roundabouts

Someone should do a poll to find out paper losses again!

 

[wildmanchris]

Today has been a great bargin hunting day - leaving a little more in the cash account just in case..........

 

[Fung]

Suffered huge losses on BHP and ZFX, I am going to prepare more cash and sit still til I find a good time to go back in.

 

[radar23]

Have we not already passed the third stage of the bull market, and now running into a change of trend?

 

[chewy]

I think that is the more important question - is this a correction within a continuing bull run for Aus or is this the beginning of a bear market? I'd like to think the bull still has legs from a fundamentals point of view anyway - but I guess sentiment is the more important thing and that isnt so good.

 

[Nyden]

I think that is the more important question - is this a correction within a continuing bull run for Aus or is this the beginning of a bear market? I'd like to think the bull still has legs from a fundamentals point of view anyway - but I guess sentiment is the more important thing and that isnt so good.

Yes, but sentiment is very easily swayed. A week of positive news could set us up for weeks of gains. I'm still undecided as to which path I'm taking in this market though

 

[wintermute]

Personally I don't think we have seen the exhaustion peak that I would anticipate preceding a crash. I think this is the first major correction we have had in about 6 years though.

Have a look at the quarterly chart for the XAO attached. the market had been in oversold territory for about 2 years It's finally let of some steam. whether it is going to continue down or not is anyones guess, and largely depends IMO on how blindly the Australian investment community at large follows the lead of the US.

Looking instead at the daily XAO chart it is now in very oversold territory so I am expecting at a minimum a dead cat bounce next week. Whether today was the bottom or not I'm not sure... I suspect it will rally then drop somewhat lower than today and then we will see it on it's merry way back up again when the world doesn't end just because of the flushing sound coming from the US... Of course as with any real correction (I don't consider the other ones earlier this year to have been real ones, the recovery was too quick IMO (unfortunately not the case for some of my holdings) there will probably be a period of high volatility following for a number of months, but if you are a trader with nerves of steel it may be an excellent opportunity to make some money.

Anyway that's my 2c worth for the moment!


note I would have preffered a log scale on this chart, but bigcharts won't do a candlestick chart with log scale, and IC won't do quarterly's....

Tony.

 

[bunyip]

doing exactly that.. plenty of nice prices alright..

Plenty of nice prices?
Don't be fooled.....the 'nice' prices on offer at present mightn't look too nice a bit further down the track if the market keeps dropping.

The smart investors will wait for the bear market to end and the next bull market to get underway, before they buy.
It's a difficult and risky business trying to be a bull in a bear market. Far better to be a bull in a BULL market, particularly if you know something about trend identification and can time your buying early in a new uptrend.

Better still, the really savvy investor will be shorting the hell out of this market at present, then will turn bullish only after the overall market finally turns bullish.

Bunyip

 

[jman2007]

personally I don't think we have seen the exhaustion peak that I would anticipate preceding a crash. I think this is the first major correction we have had in about 6 years though.

Have a look at the quarterly chart for the XAO attached. the market had been in oversold territory for about 2 years It's finally let of some steam. whether it is going to continue down or not is anyones guess, and largely depends IMO on how blindly the Australian investment community at large follows the lead of the US.

Looking instead at the daily XAO chart it is now in very oversold territory so I am expecting at a minimum a dead cat bounce next week. Whether today was the bottom or not I'm not sure... I suspect it will rally then drop somewhat lower than today and then we will see it on it's merry way back up again when the world doesn't end just because of the flushing sound coming from the US... Of course as with any real correction (I don't consider the other ones earlier this year to have been real ones, the recovery was too quick IMO (unfortunately not the case for some of my holdings) there will probably be a period of high volatility following for a number of months, but if you are a trader with nerves of steel it may be an excellent opportunity to make some money.

Anyway that's my 2c worth for the moment!


note I would have preffered a log scale on this chart, but bigcharts won't do a candlestick chart with log scale, and IC won't do quarterly's....

Tony.

Well said Tony,

Fundamentally, I support most of what you have said. I believe the ASX's current trend to consistently take its lead from Wall St is starting to wear a bit thin. The panic selling in the first 15 minutes of this morning, was well...just panic selling! Investors are looking for any excuse to drop shares at any price and run like hell for the hills. I don't believe the world is coming to an end, and I also don't believe we will see this irrational behaviour continue forever.

Granted, if we have entered bear market territory, I expect to 2008 to be a somewhat choppy year of trading, with numerous "failed rallies" as investors pour back into stocks, only to desert again in droves at the slightest sign of trouble.

I also agree there are some fantastic bargains out there atm, personally I'd be putting away some cash under my mattress for this purpose. Look how quickly the market rebounded after the Sept07 selloff to new all-time-highs. I believe our economy is sufficiently de-coupled from US sub-prime woes to keep investors interested, and in addition China and India will have significant ability to "soak up" the damage done due to sub-prime.

jman

 

[krisbarry]

The smart investors will wait for the bear market to end and the next bull market to get underway, before they buy.

A 100 point buy-back this afternoon and a 14% correction from Nov. top till now suggests we have hit the bottom. The smart investors get in at ground floor, many may have entered today

 

[wayneL]

A 100 point buy-back this afternoon and a 14% correction from Nov. top till now suggests we have hit the bottom. The smart investors get in at ground floor, many may have entered today

Better hope nobody presses the button for the basement then.

 

[Gundini]

Better hope nobody presses the button for the basement then.

I am not falling for it either...

 

[ROE]

Better hope nobody presses the button for the basement then.

and many more has face the margin call in the last 10 days

 

[dhukka]

Until today, the XAO had only fallen 10 days in a row, once in the last 25 years, so I think the odds are pretty good that we will see at least a couple of green days next week.

 

[Gundini]

Until today, the XAO had only fallen 10 days in a row, once in the last 25 years, so I think the odds are pretty good that we will see at least a couple of green days next week.

Green days I am sure, but return of the Bull I doubt!

Opportunity to bail with a little less pain more likely...

 

[nomore4s]

A 100 point buy-back this afternoon and a 14% correction from Nov. top till now suggests we have hit the bottom. The smart investors get in at ground floor, many may have entered today

A bit early to be calling a bottom I would think.

While I think we will get some sort of rally in the next week or so I seriously doubt it will be the bottom or the last time we test the 5500-5700 area at the very least.
The bar from 18.12.07 has a lot of similarities to todays bar and look at the weak rally we had afterwards.

 

[Smurf1976]

It is not easy to answer your question.

Obviously we are seeing a correction, and we are heading for a crash in percentage terms. I would suggest we are watching a gradual crash unfold.

In my opinion we should see some sideways consolidation around the 11000 mark on the Dow.

The next question should be, are we in a Bear market?

For mine, I think the US may well be entering a Bear market, but I believe we will find a bottom a little sooner. The biggest risk for our market is if the credit crunch starts to drastically bite here. I know it is biting me, and I am aware of plenty of people living off credit cards and massively geared. I seriously think our market will find a bottom around the 5000 mark. Whether it goes sideways or up from there is the gozillion dollar question.

IMO we're in a bear market and have been for longer than most acknowledge. If you look at the Dow then, adjusted for inflation, it's been an outright dud investment as a buy and hold for the past nine years.

Yep, that's a bear market and we're still in it (talking about the US here). All the recent rally etc is simply the ongoing bear that dates at least as far back as the dot.com crash. A basically sideways market where you lose your money due to inflation.

Either trade in and out or alternatively buy and hold something that isn't in a bear trend.

 

[ithatheekret]

and many more has face the margin call in the last 10 days

I like the tag R.O.E. must be 20 years since I saw that written anywhere appropriately . I think that's the heading for the next investment boom ROE .