How low can the All Ords go?

[Sean K]

Hey Rick,

Sentiment. Which includes fear/greed and is seen within historical patterns.

I don't think we need a capitulation low (and probably won't see one the way the market has been behaving lately), though these usually form pipe bottoms which are a highly probable reversal pattern.

Perhaps something to consider at this juncture is the diference between a 'low' and a 'capitulation low'.

There is going to be a point soon (IMO) when the smartish investors will take the plunge, for the long term, for a long term gain.

God knows where that is, but IMO, we are approaching an unprecidented opportunity for those who have some collatoral to invest at the right time and make an absolute motza!!!

A MOTZA!!!

There have been quite a few people ranting this mantra for at least 12 months and adjusting their portfolio accordingly to make the most of this opportunity.

On the other hand, we may all be fighting something....else....

 

[MRC & Co]

ha ha, yes, there could be a MOTZA to be made, but the timing is definately extremelly hard at the moment. A captulation low would be the best opportunity to dump back in.

Just hope it's not like the late 1800s and the subsequent 30-40 years or so.......

 

[Bushman]

Just hope it's not like the late 1800s and the subsequent 30-40 years or so.......

Then we all die poor...
:

 

[Muschu]

Now Kennas and MRC: As you know from our previous exchanges I am kinda older [= more mature? ] than you guys. So don't try to confuse me.

Lows Vs Capitulations Lows?

Is most of the bad news out I wonder? Or does it matter?

Sentiment / greed / fear can certainly conquer reason.

My scanning of ASF has suggested [if I read more experienced views correctly] that we would experience 4800 (We have), then a bounce [to what point - not sure if there is a popular view here - 5200/5400?] and then a drop / plummet / whatever to maybe 4200. [I know others are suggesting even lower but 4200 seems a more common analysis / view].

I know that we are talking opinions and not advice, but is that 4200 still the common view I wonder?

Got an opinion on what the near future holds because on Saturday I'm heading overseas for 7 weeks? Planning to drop in on George W and ask him, after dinner, to provide Australia with some advice....

 

[Wysiwyg]

Got an opinion on what the near future holds because on Saturday I'm heading overseas for 7 weeks? Planning to drop in on George W and ask him, after dinner, to provide Australia with some advice....

Please don`t mention Australia to Georgey Porgey.

Anyway Rick matey I have Tharpy`s thoughts on the situation.He reckons we`re in a bear market for an indefinately long period.His perception is his perception but the simplicities ring true.

I don’t know how many people on our database consider themselves to be average investors as opposed to professional traders, but it’s probably quite a few. The media is basically controlled by its advertising and they want you to think the following:

*You should buy and hold to make money.

*You cannot time the market.

*Making money is all about picking stocks.

*If something goes wrong, you picked the wrong stock.

*If Warren Buffett holds on through 50% drops because then things really are a bargain, then you should do so as well.

*Now that the market is down, it’s especially attractive and you should buy all you can and just hold it.

As I said in the article, this is very, very dangerous for the average person. It’s pretty much like trying to build a bridge or managing a computing system or operating on someone all without any training. You could NOT do those things in your respective occupations – instead, you get many years of training. But you can do that in the market. And the result is financial suicide. Only day trading systems and swing systems are working in today’s environment, so position traders should probably be 100% cash – although that position might change next month and I’d say that in my monthly update.

 

[MRC & Co]

lol, ok, I will try make it simple for you Rick, don't want to confuse that old brain

A low is simply supply petering out, you will normally see low volume and a sign of a lack of sellers, the path of least resistance is then up, it will form a base and continue to just move sideways for a while. You may also see very tight spreads and high volume, a sign that any last remains of selling is being sucked up by demand.

A capitulation low, is a sudden large impulse lower on high volume, then a swing back up. IFocus I think posts the chart of a capitulation low back on the last page.

My view is that of the 'majority' you talk about. Perhaps 5400 being hit over the next few weeks and then a run down to the 4000 mark over the next year or so.

 

[Muschu]

......
My view is that of the 'majority' you talk about. Perhaps 5400 being hit over the next few weeks and then a run down to the 4000 mark over the next year or so.

Here I am, and now should be rick63, surrounded by all you young optimists... mind you even my late father-in-law used to say the only place to keep your money is under the bed. Could he have been right?

 

[Muschu]

And, before I go to bed over here [it's almost 5pm], I suppose you guys will tell me the market won't recover from 3999.99 or thereabouts as a whole but sector by sector?
Where did I read that financials dictate market movements? Or was it oil? Or.....

 

[JTLP]

On the other hand, we may all be fighting something....else....

LOL...i remembered you said you were in the army and couldn't help but think of the predator with this line...classic!

 

[milken$]

4100 ish my targte

 

[nizar]

4100 ish my targte

Timeframe?

 

[cutz]

My 2 cents worth,

I think we have already seen the lows of this bear market, i don't think we will see a sickening capitulation stage, ( depends how you look at it).
A slow grind has been happening for a while and i reckon the taxi drivers may be out of the market.
If this is not a time to accumulate i don't know what is, but i could be wrong, i haven't really experienced a deep bear market yet with a large stake (till this year).

Cheers,

Cutz.

 

[rederob]

It's been a while since this thread was opened.
Low 4ks are a shoe-in.
High 3ks are coming more and more into play.
Oddly enough the US has not yet sunk into a technical recession, let alone depression.
So technical recession will lock in a 3k scenario.
And depression thereafter looks like a good bet, with the allords possibly dipping into 2k range.

A month since the last post here and nothing really has altered my view on likelihoods.
The US Fed's actions, in concert with other Central Banks, will open the door of a bear trap to unwary investors who might think "confidence" has returned.
If there is any confidence, on my part it is that a "domino" event is now "paused" (or playing out in slo mo) and will pick up pace again when the spate of current bailouts and buyouts has ceased.
What is most apparent is that a myriad of debt instruments remain deeply embedded in the financial market and are taking their time to work through. Rather than allow capitalism to run its course and rid itself more quickly of this insidious disease, the bastions of free markets are contorting themselves into radical socialists in a vain attempt to stave off the inevitable.
Unfortunately it is the least well off who will again suffer as governments effectively use their tax revenue bases to prop up failed and capitulating financial institutions.

Back on topic, yesterday marked a new cyclical low, which could hold up for a month or longer. It also showed how easily a few hundred points can disappear from the allords. It is very doubtful the worst is over.

 

[rederob]

A few people dipped their toes into this thread.
More probably read it and reckoned it was a crock.
Low 3ks looks like it's a reasonable chance now.
I think 2ks will be in play on a depressionary scenario - which we are a long way from.
Whoever re-enters this market at the bottom will do handsomely as the next global growth phase will make the past look quite anaemic.
I intend waiting this out for a good while longer as the domino effect is now rolled into a snowball and gathering pace.

 

[Dowdy]

It's peak was 6000. I reckon it'll lose 60-70% of it's peak value

 

[rederob]

Recession now locked in: Low 3ks are a dead cert.
Depression in the wings with 2ks an ever increasing chance in 2009.

 

[Smurf1976]

Recession now locked in: Low 3ks are a dead cert.
Depression in the wings with 2ks an ever increasing chance in 2009.

I'm not really into charts, I'm more of a fundamental long term (10+ years) investor, but I've been thinking the bottom will be in the 3000 - 3500 range for quite some time now. It just seems reasonable to me considering the overall situation and a casual look at the long term charts.

That said, I'm continuing to hold some stocks that I bought for long term investment where there is potential for an upside surprise - eg companies drilling for oil etc. I've no intention of selling for years and don't really care what happens in the meantime with the share price.

With the fall in oil prices making many smaller fields unviable, the economy is going to have to fall in a hole big time to see sustained lower prices there. And by that I mean big % cuts in oil use rather than the few % we've seen in previous situations.

Likewise I'm keeping my gold as I do think we'll see high inflation at some point and I'm prepared to wait. Thus far it's doing better than I expected.

Agreed that recession now seems certain. The only question is how bad - I'm thinking the bottom is probably 2 years away for the overall economy and we haven't seen the end of big companies failing yet. The share market should, in theory at least, bottom first since it's supposedly looking to the future.

All in my opinon, I'm not a financial adviser and so on. Do your own research before investing in anything.

 

[Indie]

Based on where we are now, around 4000, I think we will head much lower. Unless you believe the market has already priced in likely housing market declines, consumer spending retreat, debt implosion, etc. I don't think these (future) realities have set in with the average investor. What happens when they do? When it all unfolds in 09? The last thing on their mind is going to be getting back into the market, or waiting for a new All Ords high. They'll be more concerned about their job, mortgage, putting food on the table. When those things are safe then some will consider re-entering the market.

I think we will probably see sub 2500. Unfortunately.

 

[YOUNG_TRADER]

Based on where we are now, around 4000, I think we will head much lower. Unless you believe the market has already priced in likely housing market declines, consumer spending retreat, debt implosion, etc. I don't think these (future) realities have set in with the average investor. What happens when they do? When it all unfolds in 09? The last thing on their mind is going to be getting back into the market, or waiting for a new All Ords high. They'll be more concerned about their job, mortgage, putting food on the table. When those things are safe then some will consider re-entering the market.

I think we will probably see sub 2500. Unfortunately.

Interesting, in response to this the RBA will no doubt cut interest rates and I can tell you what that does, it makes people like me with lots of cash in high interest savings accounts go hmmm yield is dropping was 8% guarnateed now 6.5% I think, if it gets to say 5% I will start looking for stable earning stocks with good dividend yield, may also start looking at getting back into property,

Food for thought

Also how/what will drag the All Ords below 2500? BHP $10? RIO $30? CBA $10? NAB $7?

I would say 3400 is what I would have thought as an all time low target

I am still a firm believer in the industrialization of over 2Billion People

 

[Smurf1976]

Unless you believe the market has already priced in likely housing market declines, consumer spending retreat, debt implosion, etc. I don't think these (future) realities have set in with the average investor. What happens when they do? When it all unfolds in 09?

I may not have this quite right, but one commentator (Jim Puplava) was saying that the US mortgage situation has further rounds to go over the next couple of years.

Due to the way these mortgages work, they have a "reset" date when the required repayments will (in general) greatly increase. Apparently there's plenty more of this to come and in a significant portion of cases he expected the end result to be defaults on the mortgages. Overall, this sounded worse than what's already happened in terms of scale and duration.

I'm generally a bit sceptical about commentators, but Jim's been pretty right in the past. He was on about this whole situation with mortgages etc years ago so he seems to know what he's on about.

One point worth noting is that if you made an investment in the Dow or other broad US stock indices at this time in 1999 then you're still sitting on a loss in nominal terms. And it's a big loss once inflation is factored in. Sounds like we're half way through a 15 - 20 year secular bear market to me.