Australian (ASX) Stock Market Forum

How low can the All Ords go?

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rederob said:
I believe, from my research - and I spend typically around 20 hours a week reading on market related matters - that the allords is destined for a number in the 3000 range before global markets rally and we can again invest with some confidence.
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That is the sort of information that could only come from the "Lemming Daily News". That will give us great buying oportunities on the way down if many lemmings follow that advice.
 
rederob said:
Nothing contradictory in what I wrote: I have no idea if the allords will be higher tomorrow than today, or higher next year than today.
I am confident that significant falls are ahead of us as the global malaise we are experiencing has not resolved itself. Resolution could be less than a year, could be more?
I believe, from my research - and I spend typically around 20 hours a week reading on market related matters - that the allords is destined for a number in the 3000 range before global markets rally and we can again invest with some confidence.

People have good reason to be fearful of market direction: There is nothing on the horizon that suggests we a close to improvement. In fact the signposts clearly point to massive financial debt burdens in the US rolling across the world and dragging us further down. The 5 trillion debt carried by Fannie Mae and Freddie Mac alone suggest something more dire than than Northern Rock Building Society bailout is about to happen.

Unlike you, I'm not OK saying I don't know where the market is going. I have a very high degree of confidence that significant falls are ahead. By the same token, there will be some intermittent rallies as well, and I will sell several of my long term holdings into these, and retain only a few energy and metals (mostly gold/copper) plays.
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I think we can all agree that there is volatility around, however to suggest the all ords will drop to 4k is a big call let alone 3k. Correct me if I'm wrong however I haven't even heard economists talking these levels.You spend 20 hours reading on market matters, so you can further elaborate your findings,research and most importantly figures as how you come to the conclusion the market will reach these levels. I would caution anyone on this forum to others who make such big claims without evidence to support.
Other than reading about the market do you have any formal qualifications?
 
kennas said:
It's wedgeish, but too early to call anything bullish I think.

4800 ish support probably assisting and Uncle Ben self protective measures coming into effect.
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Yes, I'm still bearish but it will be interesting to see if the support level continues the wedge(ish) pattern.

Aurum.
 
r34ztune said:
I think we can all agree that there is volatility around, however to suggest the all ords will drop to 4k is a big call let alone 3k. Correct me if I'm wrong however I haven't even heard economists talking these levels.You spend 20 hours reading on market matters, so you can further elaborate your findings,research and most importantly figures as how you come to the conclusion the market will reach these levels. I would caution anyone on this forum to others who make such big claims without evidence to support.
Other than reading about the market do you have any formal qualifications?
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Economists generally make very poor forecasters of stockmarket levels. Find me one Australian economist that had the ALL ORDS at 5000 through June of 2008, 9 -12 months ago. Dr Shane Oliver had the ALL ORDS bursting through 7000 in the first quarter, Craig James of Comsec wasn't far behind either.

On the other hand, several members of ASF predicted a significant fall in the XAO in 2008. Wrong or right, rederob's opinion about the direction of the market is as vaild as any economists.
 
trend rider said:
does anyone else see a v large head and shoulder pattern, with a bearish sloping right shoulder.
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Yes, I can see the pattern and it adds to the importance of the 4800(ish) support level. If support fails then the H+S is confirmed and it's very bearish. If support is respected then the H+S fails which is very bullish. An interesting time ahead.

Aurum.
 
Trembling Hand said:
LOL, Formal Qualifications now thats funny.
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Yes, I'm much smarter and know more about the market than any economist with a Phd.

:banghead:

And, I know more about computers than an IT graduate too.

And, my local doctor knows crap about medicine!

:rolleyes:
 
kennas said:
Yes, I'm much smarter and know more about the market than any economist with a Phd.
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So you happily follow the Muppet's on the idiot box when they have a couple of letters after their names??????????????????
 
Kennas your H&S target is taken from the centre of the neckline whereas in theory it should be taken from the right shoulder, giving a much lower target, more in line with some of the levels being discussed. I'll try and post something later.

Cheers,


CanOz
FWIW, there are a couple of these patterns in US stocks too atm.
 
The following is a quote from J.K.Galbraith, A chapter titled " Financial Genius is Before the Fall"

"No feature of the Great Crash was more remarkable than the the way it passed from climax to anti-climax to destroy again and again the hope that the worst had passed. Even on the 30th, when the Crash was over, the worst was still to come. It was only that it came more slowly. Day after day over the next two weeks prices fell with monotonous regularity. At the close of trade on the 29 October the Times industrials stood at 275. In the rally of the next two days they gained more than fifty points. By 13 November they were down to 224 for a further net loss of fifty points. By then stock of investment funds was largely unsalable. Their creators had, by now, ceased to be men of genius."
"The levels of late 1929 were wonderful compared with what was to follow. On 8 July 1932 the average of the closing levels of the Times industrials was 58.46. This was not much more than the amount by which they dropped on the single day of 28 October, and considerably less than a quarter of the closing values on 29 October. But by then of course, business conditions were no longer sound fundamentally or otherwise. The United States, indeed the industrial world, was in a terrible depression."

It's just a guess but I suspect that in late 1929 and in 1930 People were contemplating a similar question to the one raised in this thread.
 
CanOz said:
Kennas your H&S target is taken from the centre of the neckline whereas in theory it should be taken from the right shoulder, giving a much lower target, more in line with some of the levels being discussed. I'll try and post something later.
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Thanks, I've been doing it wrong for some time then. :eek:
 
orr said:
The following is a quote from J.K.Galbraith, A chapter titled " Financial Genius is Before the Fall"

"No feature of the Great Crash was more remarkable than the the way it passed from climax to anti-climax to destroy again and again the hope that the worst had passed. Even on the 30th, when the Crash was over, the worst was still to come. It was only that it came more slowly. Day after day over the next two weeks prices fell with monotonous regularity. At the close of trade on the 29 October the Times industrials stood at 275. In the rally of the next two days they gained more than fifty points. By 13 November they were down to 224 for a further net loss of fifty points. By then stock of investment funds was largely unsalable. Their creators had, by now, ceased to be men of genius."
"The levels of late 1929 were wonderful compared with what was to follow. On 8 July 1932 the average of the closing levels of the Times industrials was 58.46. This was not much more than the amount by which they dropped on the single day of 28 October, and considerably less than a quarter of the closing values on 29 October. But by then of course, business conditions were no longer sound fundamentally or otherwise. The United States, indeed the industrial world, was in a terrible depression."

It's just a guess but I suspect that in late 1929 and in 1930 People were contemplating a similar question to the one raised in this thread.
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Well if things are ever to even approach the circumstances of the Great Depression in current times then everyone is completely screwed - even all those who sell out of all their shares and property and deposit their cash in the bank! Remember during the Depression, numerous major banks, pension funds etc etc all went completely bust - if you had cash on deposit you LOST IT, every cent. Even keeping the cash under your mattress didn't help much due to inflationary pressures. There was no protection against these events back then from governments/regulators etc, (such as is in place today for exactly that reason)

So I guess I raise this point just to contrast against the current situation, which although presenting some serious financial challenges for us all as individual investors and the global economy more generally, really is incredibly unlikely to lead to the equivalent circumstances as seen in the Great Depression. Unless you are one of those guys wandering around the city with an "The End is Nigh" placard hanging over your back and chest!

We have had recessions and other general economic slow downs before in more recent times, and whilst they were unpleasant, there were also recoveries from them. They didn't end up being any where near as bad as the 30s Depression, even though on each occasion there were (as there are now) people running around predicting the next Great Depression was upon us and trying to draw various parallels. I would think for those of us looking to the past to try and divine what the future *might* hold, looking at some of those other more recent downturns would be much more relevant than crying "the Great Depression" - seems a little "Chicken Little"-esq to me!

And besides, as I stated at the start of my post, if things did get that bad then we are all screwed no matter what anyhow, so may as well just go and jump off the cliff now and get it over with! :) (PS - that's a metaphor and not meant to be taken seriously by anyone reading this who MAY in fact subscribe to the Chicken Little economic outlook!).

Cheers,

Beej
 
Beej said:
Well if things are ever to even approach the circumstances of the Great Depression in current times then everyone is completely screwed - even all those who sell out of all their shares and property and deposit their cash in the bank! Remember during the Depression, numerous major banks, pension funds etc etc all went completely bust - if you had cash on deposit you LOST IT, every cent. Even keeping the cash under your mattress didn't help much due to inflationary pressures. There was no protection against these events back then from governments/regulators etc, (such as is in place today for exactly that reason)
Beej
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Time to buy gold me thinks.:D

Aurum.
P.S. couldn't resist with a name like mine.
 
Good post Beej,

All the canniest investors seem to use simple stuff, like Buy in gloom and sell in boom.

It's pretty gloomy out there (and in here).

Question??. If the US is going to drag us down, and there are billions/trillions in losses, and everyone can see with the emerging figures what a basketcase it is, then why has the DJIA/SP500 only fallen 20-25%???

All this gloom has been around for a year now (subprime etc), communication is better and faster than the past, yet bear markets of the past did most of there damage in the first 6 months or so. hmmm...

This market may not get much lower at all.

brty
 

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