Don't get too excited by today's action

[mick2006]

I don't want to scare too many people, just don't get too excited by the powerfull bounce we are seeing this morning.

Yes the markets were oversold and due for a bounce, but given the horrible forward guidance given by Apple after the close of the US markets this morning, expect another down day in the US tonight.

Also don't be surprised to see a lot of selling in the afternoon as people start to sell into the rally.

I can't believe how some of the spec companies have just bounced back so strongly, I guess some traders have no fear.

Just be careful people as it could turn ugly again very quickly.

 

[Nyden]

Could not agree more Mick
But, we could still see some gains tomorrow. I'd be afraid about Friday though...long weekend, & all.

 

[Joe Blow]

All general threads on market action should be in the 'ASX Stock Chat' forum.

Have moved this thread there.

 

[agro]

well i am taking a contrarian viewpoint and believe it is the start of an uptrend..

it will be volatile on the way up, but overall i am bullish

 

[mick2006]

If the US market ever needed a standout profit report from one of the tech giants it was today, and the fact that Apple reduced their revenue and eps for next quarter significantly will certainly spook the market.

Apple was off 12% in after market electronic trade.

What was also important is the fact that they questioned the ability of the american consumer to keep spending.

I don't want to sound too negative(as I am mainly in cash and missed the downturn and also today's bounce) but just want to warn especially the newbies not to get too excited by today's run.

 

[chewy]

An interesting take:
http://www.compareshares.com.au/son13.php


Market turmoil: the next 24-48 hours are crucial
January 23, 2008
Clifford Bennett, Chief Economist, Sonray Capital Markets

The undeniable reality of any serious bout of market turmoil such as the one currently on-going, is that this is often when some smaller players rise to displace their larger competitors who may have over extended themselves. Both in the business world and the field of financial markets, further significant shake ups are likely.

Our forecast remains that equity markets lead by the US would over-react to the US recession, and then eventually decouple and recover.

This is a time of extreme opportunity. In saying this I am most certainly not suggesting immediately jumping back into the equity markets. Furthermore I am not suggesting that you “hang on for the long term”. In fact, who are these people, who tell investors from the professionals to the mums and dads, “don’t panic”? What sort of risk management philosophy is that?


In eastern Australia the first cracks are appearing that suggest a historically repetitive following of the US economy toward flat to negative growth cannot be ruled out.

This is the biggest shake out of equity and financial markets we will see in our lifetime. It still has a way to go. Those individuals and companies with excellent risk control procedures, with the guts to close out losing positions in a market like this, will be in a strong and cashed up position to take advantage of the opportunities as they occur. Watch for these companies, but there is no rush to buy back in.

In this kind of market it is a far better approach to be willing to miss the bottom, to be able to take a higher price perhaps, but also a higher probability trade, a little further down the track.

History shows us that some of the wealthiest families in the world attained their financial power through an intelligent approach to just such market melt-downs. All such stories relate to the early exiting of the market, a cash is king approach for a short period, then when the moment is right aggressive buying at bargain prices. Now I know that is a hell of a lot easier to say than do. Yet, on a day like today when the world is wavering, to remember this is a market opportunity, not something to be scared of, can provide an edge.

The current opportunity may be to short sell, I am not making that call, as while we are likely to see significant further falls in the US today, as people panic sell at the first chance of some liquidity, we may well be only 1 or 2 days from the low of this down wave.

I believe there is a very good chance that after next week’s corrective rally perhaps, the down-trend will again resume. Perhaps the most likely scenario is that global equity markets remain heavy for another 2-3 weeks, and then enter a long bottoming process, followed by our long forecast gradual de-coupling of global equity markets from the US equity market. The US equity market may well be left floundering near its lows by year end, while other markets recover sharply.

Key Forecasts:

- Fed will cut twice by 50 points in 2008.
- US economy will flirt with negative growth Q1, Q2.
- US equity markets remain at risk near term.
- China to remain a powerhouse.
- Global economy to remain firm.
- Commodities volatile but bullish.
- Gold target at US$495, US$800 achieved, US$1100 next.
- US dollar to continue accelerated collapse over next 6 months.
- Carry trade is old news and over, USD/YEN to decline to 103, 97.
- RBA to raise rates to 7.25% in H1 2008.
- Australian dollar will continue to climb, 93 cent target achieved, next parity $1.00, but in 2008, then 1.08 1.12 in following year.
- Global equity markets having suffered badly from US market weakness will nevertheless begin to recover.
- Australian equities increasingly aligned to global growth, and after some initial 2008 weakness can achieve 6,950, by year end .

 

[Nyden]

If the US market ever needed a standout profit report from one of the tech giants it was today, and the fact that Apple reduced their revenue and eps for next quarter significantly will certainly spook the market.

Apple was off 12% in after market electronic trade.

What was also important is the fact that they questioned the ability of the american consumer to keep spending.

I don't want to sound too negative(as I am mainly in cash and missed the downturn and also today's bounce) but just want to warn especially the newbies not to get too excited by today's run.

That's nothing Mick, on a few of my positions not only did I hit the downturn, but I also missed the bounce! :

 

[ta2693]

I think after Fed cut 75bps the inflation is going to be a problem more difficult to handle for US.

I sold out the shares I loaded yesterday and Think about buying Gold future.
I think the gold price will shoot to roof.

What do you think? Is there any reason why gold price should not rise significantly?

 

[skating101]

That sucks nyden i know the feeling man but noone was picking an early 0.75pc bp cut last night and as mick says it could only lead to more market insecurity about the US economy and hence further losses for a while yet

 

[Nyden]

That sucks nyden i know the feeling man but noone was picking an early 0.75pc bp cut last night and as mick says it could only lead to more market insecurity about the US economy and hence further losses for a while yet

Oh, I had a feeling the US might do something to prevent that 600pt plummet, but; I am still convinced I made the right choice closing those final positions.

As I don't quite think the sea of red is over yet.

Dead cat bounce :

 

[barnz2k]

Not just because I hate apple, but really I dont think their profit would be as high for next quarter.
They have already had the miss buy in of ipod touch and iphone, its too expensive to keep that buy rate up, and very lukewarm response to the recent macworld thingy and their cardboard laptop. The fanboys werent happy.

Im just glad it has (so far anyways) clawed back some of yesterdays ridiculous fall.

 

[ASK]

Oh, I had a feeling the US might do something to prevent that 600pt plummet, but; I am still convinced I made the right choice closing those final positions.

As I don't quite think the sea of red is over yet.

Dead cat bounce :

Looking back on some of your previous posts, I think you sold out on ZFX at the right time ... I cant see them coming back and breaking ten today, especially after missing that first hour of trading. Thoughts?

 

[chops_a_must]

And terrible inflation data comes out... 25% worse than expected.

 

[Gundini]

An interesting take:
http://www.compareshares.com.au/son13.php


Market turmoil: the next 24-48 hours are crucial
January 23, 2008
Clifford Bennett, Chief Economist, Sonray Capital Markets

- Australian dollar will continue to climb, 93 cent target achieved, next parity $1.00, but in 2008, then 1.08 1.12 in following year.

Gee, this guy is bullish on the AUD...

 

[mick2006]

The market certainly didn't like that inflation number, dropping around 50 points in 10 minutes.

Increases the chances of a rate rise in early February.

 

[ged]

What I wonder in times like these is why does the Fed continue to drop rates? especially with a .75 bp cut. I just think with inflation looming and people fearing it would get out of hand and a recession, they believe cutting it will boost the economy. Something like this will only result in a short term gain.

I fear the inevitable (recession/depression) is coming, and the feds just keep postponing it, thus it will make it bigger when it comes.

 

[MR.]

I think after Fed cut 75bps the inflation is going to be a problem more difficult to handle for US.

I sold out the shares I loaded yesterday and Think about buying Gold future.
I think the gold price will shoot to roof.

What do you think? Is there any reason why gold price should not rise significantly?

Well you just answered my private post I was going to send to you. I wanted to know (since you are correct with yesterday's decision) when are you going to sell? Good call... I bought on the 16th of august but could not convince myself to buy yesterday. I sold the last of my asx shares a month ago.

Leveraged investors buying Leveraged companies selling to Leveraged consumers. It can only end one way!

I thought it all would have happened before now. I missed out on some good gains! How many invest in cash? Who actually has cash?

Above is some down ramping for your next quick profit. Gold? It always seems to go up in volitile times. (It is safe) But are "YOU" serious?

 

[dj_420]

I agree with quite a few of these comments, I liquidated one of last positions this morning and sold into the insane strength we saw.

Now only have 10% left in market.

What I think we have seen over past couple months is the market pricing in downgrades in earnings overall, which will mean the market also has to adjust lower to maintain its PE ratio.

What do people think our chances are of us breaking 7000 again in the near term??? I think we actually ran up that high due to explosive growth in the US, China and India. Now one of those factors has been removed been the US. We are also expecting a slowdown in China growth.

So the downgrading of earnings will mean the market will be lower overall. I would say at best it is going to be a flat year (2008) and I am not jumping back into the market just yet. I think US downgrades such as Bank of America (95% downgrade) are yet to filter through.

For me this year I plan to learn how to trade indices and futures properly which will allign with my sentiment and maintain very short term positions in the market.

 

[rub92me]

This morning's explosive opening was helped by bears that strapped on their shorts yesterday and had a good cr@p in their shorts this morning. Those shorts will be washed and dried over the next couple of days and the bears will be back for another round

 

[sideshowbob]

The market has recovered too hard!

People are crazy to buy at these prices.... What on earth are they thinking.....??
the market is going to keep rising and rising now?!

Its pure gamble....

The market just got its first V rebound.... you know.... those dangerous little glimmers of hope... that only serve to tighten the noose as you follow the fall all the way down.

I applaud those that bought on the close yesterday... they saw a FEd cut coming.. somehow... but to not sell off the profits today is crazy.
Volatile times... inflation up... credit crisis... bonds... recession looming.

This is all one big gamble