How Far Will The Market Fall?

[IFocus]

Putting this forward as a serious thought and not wanting to turn this into a political thread but I pose a question.

Are the comments from Donald Trump about the US going back to work really just aimed at the stock market and nothing else?

That is, I'm suggesting that there's no real thought on his part that what he's saying is actually going to happen, he's just been told to say it in order to help ignite a bounce in the market and avert a straight down crash. A bounce which will end once it becomes undeniable that the plan won't be implemented.

I don't intend that as political comment but as trading comment. My basic thinking being that the idea is at least possible, it has indeed brought about a bounce, and from a timing perspective the idea that we get a second up move ending just before Trump's back to work date (as per gartley's charts #377 in this thread) does seem plausible.

Thoughts?

As I said, my point is a trading one not a political one.

My take on Trumps comments is that they are for political positioning, blame sharing for the coming election there is no way he would be getting advise along those lines the only cravat is the comments coming from the Texas lieutenant governor.

Wining an election in the US with an economy dead in the water is unlikely no matter what the circumstances are.

The position could go along the lines how he wanted to start up the economy but the Democrats or who ever wouldn't let him so it wasn't his fault........maybe

Or as you said just a throw away line to get people distracted.

 

[tonyparis]

I changed my strategy from buying all the way down, to selling on rallies. I want to free carry as much as I can.
Bhp has treated me well as has afterpay. Props to those who pointed them out.
Afterpay has been swinging back and forth a lot. Roughly 30% a day in some instances.

I had some flops like Wpl though. I'm just at breakeven with the potential of it going negative on any drop from here.

Hi moXJO
Newbie here...My plan was to buy all the way down (boring bank shares) with a plan that the further down it went, the more I would buy but then it stopped going down!
I was expecting to hold long term but would you recommend selling when I can turn a profit greater than 5% or so and then buy again if they go down?

 

[moXJO]

Hi moXJO
Newbie here...My plan was to buy all the way down (boring bank shares) with a plan that the further down it went, the more I would buy but then it stopped going down!
I was expecting to hold long term but would you recommend selling when I can turn a profit greater than 5% or so and then buy again if they go down?

None of us can give advice.

For me personally, only bank share I'd look at is anz. Banks are in for hard times ahead though. So buy cheap.

I sold on the rally at a profit to buy back in cheaper(hopefully) at a later date. So I'd get more bang for my buck.

In my opinion everything will get cheaper from here. But there are a lot of things that could happen:
Too much stimulus and then we get a vaccine/cure.

Massive deaths worldwide.

Banks fall over.

The world gets on top of the virus before too much damage.

Or it sticks around for months causing problems.



Just remember I'm in gambler territory. I try to play with money I'm prepared to lose.

 

[Annica]

Hi aus_trader,

nice post and share your gripe with Options trading fees in Australia but i came across a new entrant into this market called https://impliedvolatility.com.au/. They are offering options for as low as $24.95. I know that they are not as low as some of the US brokers but still better than some of the big brokers in Australia like nabtrade and commsec.

Thanks,

I have probably said this before, but will say it again in case there are innovative little companies like Selfwealth Ltd (SWF) and maybe the dinosaur brokerage firms that want to re-invent themselves are listening in...

The reason why there are hardly any retail traders in the ASX option market is it's freakin' expensive to trade options on the ASX. No local broker offers Options trading brokerage below $34.95 which is ridiculous compared to other developed countries such as the US that offer options trading at around US$5 per trade.

First hurdle in trading the ASX options market was broken thanks to the ASX that removed the contract size from 1000 shares to 100 shares a while back, so even I can buy/sell CBA(even the ridiculously high priced CSL) options if 2nd hurdle was removed. The 2nd hurdle of bringing down the options brokerage cost still remains. When it comes to brokerage, I think disruptive innovators like Selfwealth that offer CHESS sponsored share trading at Australia's lowest price at A$9.50 may eventually offer similar brokerage for ASX ETO (Exchange Traded Options) one day... Till then don't expect to find dumb clueless retail mum & dad investors/traders to offer cheap options on the market (to take the opposite side as you said).

 

[aus_trader]

Hi aus_trader,

nice post and share your gripe with Options trading fees in Australia but i came across a new entrant into this market called https://impliedvolatility.com.au/. They are offering options for as low as $24.95. I know that they are not as low as some of the US brokers but still better than some of the big brokers in Australia like nabtrade and commsec.

Thanks,

Cheers Annica. This is an improvement on the current ETO pricing offered by the local brokers. I think eventually they can come down to the same prices as stock trading which is around the A$10 mark. So still a fair way to go...

 

[Annica]

Cheers Annica. This is an improvement on the current ETO pricing offered by the local brokers. I think eventually they can come down to the same prices as stock trading which is around the A$10 mark. So still a fair way to go...

I agree. As with anything, the more the competition, the lower the prices!

 

[aus_trader]

I agree. As with anything, the more the competition, the lower the prices!

Absolutely. I am optimistic that the prices for Stock and Option brokerage is headed in one direction in the future. That direction is down

There is various disruptors like SelfWealth already shaking up the market. I read somewhere that even the US firm tastytrade Inc. will be offering services in Australia in the future. So as technology improves and there will be less paperwork and staff required for running a brokerage firm, therefore bringing the costs lower. Any brokerage firm that doesn't adapt will be fossilised as what happened with the dinosaurs.

 

[Annica]

Absolutely. I am optimistic that the prices for Stock and Option brokerage is headed in one direction in the future. That direction is down

There is various disruptors like SelfWealth already shaking up the market. I read somewhere that even the US firm tastytrade Inc. will be offering services in Australia in the future. So as technology improves and there will be less paperwork and staff required for running a brokerage firm, therefore bringing the costs lower. Any brokerage firm that doesn't adapt will be fossilised as what happened with the dinosaurs.

and obviously US is leading on this front with fintech companies like robinhood (who is offering cheap options trading) and M1 finance (Amazing concept of fractional investing!) cutting through the crap paperwork obstacles as you mentioned. hopefully we get some more rub of that low investing fees pattern and fintech advances in the US.

 

[aus_trader]

and obviously US is leading on this front with fintech companies like robinhood (who is offering cheap options trading) and M1 finance (Amazing concept of fractional investing!) cutting through the crap paperwork obstacles as you mentioned. hopefully we get some more rub of that low investing fees pattern and fintech advances in the US.

We Aussies got the crap handed to us big time in the past. I started in the days of $29.95 brokerage just to buy or sell some shares in a company ,

Yes it have come down to about a third of that these days

But there is still room for improvement, especially in the Options trading realm, to buy and sell ETO's

 

[moXJO]

Fed is talking about buying US stocks.

 

[aus_trader]

Fed is talking about buying US stocks.

It's the Era of free and independent markets, so that wouldn't be surprising

 

[lusk]

Fed is talking about buying US stocks.

How do we know they don't already do it, they can't be audited.

 

[moXJO]

How do we know they don't already do it, they can't be audited.

They are passing legislation or something so they can do it.

 

[moXJO]

Well now I'm not so sure of market direction. $2trillion stimulus passed on Friday. Now Fed putting a floor under stocks.

 

[aus_trader]

Well now I'm not so sure of market direction. $2trillion stimulus passed on Friday. Now Fed putting a floor under stocks.

Funny country. President couldn't care less about the countryman dying till very recently saying it's just the 'Wuhan flu' but putting all the efforts to look after himself and his rich buddies from having a dent to their wealth.

I think the FED circus will only end one day when the poor and average have had enough of taxes and the wealthy getting wealthier. I think there will be social unrest or a civil war that may bring about a revolution.

When that happens stocks will come back to the fundamentals of what they are actually worth in terms of Earnings Multiples. Stock markets may go back to being free markets around the world once more... one day, if the FED money flooding the markets around the world disappears

 

[moXJO]

They are passing legislation or something so they can do it.

Sorry this is wrong they are considering still but will need legislation. I'm not sure how it works just yet.

 

[aus_trader]

Sorry this is wrong they are considering still but will need legislation. I'm not sure how it works just yet.

As I said it wouldn't be a surprise to me one bit. It's just an extension of buying the stocks directly as opposed to all the backdoor asset purchases via QE, rate cuts, bailouts, share buy backs and asset/debt purchases that has happened thus far anyway.

 

[InsvestoBoy]

Here's the chart of a market where the Central Bank is actively buying equity ETFs for years now, to the point where they are a Top 10 holder of many companies via ETFs.

Not to mention extremey low rates for a long time, QE, QQE, yield curve control, ZIRP, NIRP, you name it.



It's almost as if none of that matters at all.

 

[OmegaTrader]

Here's the chart of a market where the Central Bank is actively buying equity ETFs for years now, to the point where they are a Top 10 holder of many companies via ETFs.

Not to mention extremey low rates for a long time, QE, QQE, yield curve control, ZIRP, NIRP, you name it.

View attachment 101805

It's almost as if none of that matters at all.

Look at the big picture.


.... "Bank of Japan’s (BOJ) exchange-traded funds
(ETFs) purchasing program that has conducted since December 2010; this program is part of the BOJ’s unconventional monetary policy, which has accelerated after the introduction of the Quantitative and Qualitative Easing (QQE) in April 2013."

 

[InsvestoBoy]

Look at the big picture.

I do. Do you?

All of those magical CB programs and they couldn't even get to the past highs that were achieved with no QQE, no ETF, no ZIRP, no nothing.

All of those magical programs and still underperformed the global index, an underperformance that only accelerated with ETF purchases and QQE



No inflation, no growth, no magical stock "floor".

Almost as if Central Banks aren't even relevant.