Imminent and severe market correction

[krisbarry]

In the month of May last year, I lost over $1,000 in my Hesta super fund, then switched it to Colonial First State and lost a further $3,500. So by the end of May $4,500 was lost just in super alone.

My personal shares went south by thousands too.

I do remember crying in May last year after I had lost so much money...I am being honest here...I truely started crying.

That is why I am protecting my wealth this time around, and by the way who said protecting wealth was a bad thing. As far as I am aware its one of the most basic trading rules that I did not follow last year, but am implimenting it this year.

Look at the charts people....find me a month of May that the market did not correct, its very rare!

 

[YOUNG_TRADER]

Going back through many, many years of charts the May corrections start anytime from now. Almost every year that I can find it shows May as being a pretty rough month.

So...what make you so sure this year will be different?

Take a look at 2005, we had a nasty correction in March and as a result May 2005 was one of the best months, fast forward to Feb/March 2007 again another nasty little correction, can May correct again in such a close time frame? I just don't think so but have hedged my bets anyway.

I do remember crying in May last year after I had lost so much money...I am being honest here...I truely started crying.

Its only money my friend it comes and it goes, nothing to cry about, seriously need to get things in perspective, perhaps a visit to a hospital to see what a real loss in life is.

 

[Rafa]

Its only money my friend it comes and it goes, nothing to cry about, seriously need to get things in perspective, perhaps a visit to a hospital to see what a real loss in life is.

Well said YT, you are spot on...
Its only money...

And whilst there is some art to the stock market, the overriding principle I always follow is that you should never gamble with what you are not prepared to lose.

 

[2020hindsight]

lol, yeah well I was probably talking about letting youre longs grow before cutting them and trading the spikes on the ones youd been following for a while, but were toppy prior .

YML would have been one of the last stocks I would have considered at that particular time/ever..............but thats just me.

Seems we just never gel on our conversations, probably worlds apart on how we trade the market. Thats what I like about ASF, its so interesting to see others views on investment/trading.

After a year posting its clear my methods are from Mars, but hey alls good!.

Lol , well i took what I THOUGHT was your advice, and still did ok - lol. How's that for luck.
Every now and again I remind myslf that with mt level of knowledge in the trading stuff, I'm lucky not to be even broker than I already am lol.

PS You say your ideas are from Mars. As long as your ideas are Sirius mate - and not from URanus, lol

 

[2020hindsight]

In the month of May last year, I lost over $1,000 in my Hesta super fund, then switched it to Colonial First State and lost a further $3,500. So by the end of May $4,500 was lost just in super alone.

My personal shares went south by thousands too.

I do remember crying in May last year after I had lost so much money...I am being honest here...I truely started crying.

Dont tell me YOUR problems STC, lol - I had just started investing in early May last year, put all my newly formed SMSF on, and before I got the oars out ready to start rowing to the big gold pot - I'd lost about 15% of it lol.

PS would you be kind enuf to post a graph of May trends over the years . pls - so we can check the accuracy of this "Maybe May, maybe not" thing .

 

[bean]

I am doing post on the Gold price to show when the correction may start.

I am a gold bull we look at markets a bit different to other Investers.

Because what I say there you have to understand the Gold Market and why we invest in Gold

So the top wednesday night and thursday night down and the is the start of the severe and immenent market corection.

Which may be bigger than you think

 

[purple]

People are reading very positive comments, such as this one - Commsec’s 4th May 07 commentary, here are excerpts :

 …Budget solidly in the black, the Government is well placed to announce tax cuts, increased assistance to families and greater infrastructure spending…

 …Government will probably estimate this year’s budget surplus around $15 billion or 1.5 per cent of GDP with the projected 2007/08 surplus expected to be around $12.5 billion.

 …the Reserve Bank should have few problems with any stimulus being applied to the economy…

 … construction sector is poised to boost activity in the coming year assisted by stable interest rate settings…

 … construction of houses and apartments should trend higher over the year given that interest rate settings are on hold…

 … job market data is likely to be healthy…

 …We expect that employment rose by around 20,000 in April with the jobless rate remaining at a 30-year low of 4.5 per cent..


 …retail trade probably rose by around 0.5 per cent in March...


Craig James
Chief Equities Economist


There still exists a large portion of investors who are not the fundamental analysis type, who merely read the papers, go by friends’ gossip and analysts’ reports. With the air being so positive, it feels like more people are going to be lured out to put their money into the market.

I do foresee a correction coming, but perhaps not so quickly, perhaps not in May.

When I look into the market depth and see a long, long list lot of small parcels being bought, and share prices just inexorably increasing with each buy, I’ll know that the bubble is near the bursting point, too many small retail investors queing up to buy often signifies the peak of the trend. At the moment, it doesn’t look like it yet.

 

[Who Dares Wins]

I have made up various programs on DOW US markets and gold etc.
The DOW has been Up, its short term trend up. I have been saying the DOW in a final blowoff. I have aslo said the NASDAQ above 2550 will be back in bubble territory. 2554 yesterday and 2557 today.
If I enter monday as a down day the NASDAQ will turn its trend to down and it doesn't have to be a big day down. If Monday is down and continues for tuesday it is set up for a 2% - 3% down day on NASDAQ tuesday.
Is the top in I do not Know but will wait for what happens monday.
It may be a short term top is in?

The DOW may rise but the NASDAQ ? The DOW may carry the NASDAQ higher?

People can keep on posting things like this on here every few days and there is nothing more certain than they will be right....eventually. Its true, the market will correct one day. Its just WHEN is the question. Last week they say its going to happen tomorrow then nothing, then again this week.

What I laugh about is after 3 or 4 months it happens and they say 'there told you so'. Haha Go on, keep on predicting disaster guys, if you say it enough you'll be right.

I don't know how you have the nerves to trade when you think this every day?

 

[Wysiwyg]

People can keep on posting things like this on here every few days and there is nothing more certain than they will be right....eventually. Its true, the market will correct one day. Its just WHEN is the question. Last week they say its going to happen tomorrow then nothing, then again this week.

What I laugh about is after 3 or 4 months it happens and they say 'there told you so'. Haha Go on, keep on predicting disaster guys, if you say it enough you'll be right.

I don't know how you have the nerves to trade when you think this every day?

The response to the question/exclamation posed is what the thread starters are looking for.They have no idea when things are going to change and try to gauge public response.The feedback is never definitive but creates an active topic nonetheless.

 

[YChromozome]

What are your thoughts on the new super laws?

I was aware of the extra money flowing into super, that the fund managers have to park somewhere. Other than that, I hadn't really put much thought into it.

Talking to some people in that age group last weekend, and all of them think drawing tax free super out after 1st July is wonderful. Some are picking out their 4WDs to buy, others the colour scheme for their kitchen or bathroom renos. Others are going to draw upon super to give their kids a start in the housing market.

You have to wonder if there will be a binge come 1st July? This could be good for retail trade and services later in the year, but I assume the super funds are liquid enough to pay those funds out. I assume they are probably holding so much in cash now, or will they be forced to sell assets?

 

[constable]

I am doing post on the Gold price to show when the correction may start.

I am a gold bull we look at markets a bit different to other Investers.

Because what I say there you have to understand the Gold Market and why we invest in Gold

So the top wednesday night and thursday night down and the is the start of the severe and immenent market corection.

Which may be bigger than you think

And should you be incorrect, exactly what will be your excuse and what is your timetable for trying again on this prediction?????

 

[nizar]

And should you be incorrect, exactly what will be your excuse and what is your timetable for trying again on this prediction?????

I second that.

I remember bean called a top 2 weeks ago that was going to happen last week. DIdnt happen. But thats okay. If he keeps trying he will eventually be right.

Interesting to see this thread started on 4th of April.
Imminent??

 

[chops_a_must]

Imminent??

I asked for a definition of that. None forthcoming and was told I wasn't contributing to debate and just arguing on semantics. Lol!

Bean's posts kind of strike me as paranoid and forceful. Kind of like one of those crazy people you meet and see on movies and such that try and convince you that something they are halucinating is in actual fact real.

If the Nasdaq if if if if then
If the S&P if then if if then then if
blah blah

It's simple though. If the markets go up, they go up. If the markets go down, they go down. If they go sideways, they go sideways. Have a plan for all of these situations and lets look at ways for trading the situations at hand, rather than speculating on future situations at hand.

Cheers,
Chops.

 

[bean]

I second that.

I remember bean called a top 2 weeks ago that was going to happen last week. DIdnt happen. But thats okay. If he keeps trying he will eventually be right.

Interesting to see this thread started on 4th of April.
Imminent??

True but I am trying to call a top In gold - gold indexes - the Dow - and a bottom US$
So I need all to be alinged to give the reaction

True as well that eventually I might right.

The thread started on the 4 th of April why to show that Gold and Gold indexes have alinged themselves to the general market
So by starting it then I was able to show the Gold investors what was happening. Some gold investors are expecting gold to correct. I found the reason why because it had jioned the movment of the stock market.
I also started it then because I could see the DOW forming a top.
I did not know at first a double top or blow off top
Well I know now.
If you read the last part on the Gold Price its easy to know if I am going to be wrong.
If I am wrong then next week Gold is breaking out to new highs as the US$ collapses?
What would the US markets do
Rise or Fall
They would rise would you say

 

[chops_a_must]

I also started it then because I could see the DOW forming a top.
I did not know at first a double top or blow off top

But how do you know this for certain?

Does this mean that as soon as any stock reaches all time highs it is blowing its top?

I agree the DOW is toppy, but whether or not it will crash, come down to previous highs as support, or if this is a part of some long term re-rating... then who knows?

It's just funny when people only see doom when things go up.

 

[bean]

But I was looking for a reason why gold stocks were going to correct (may/June) and I remembered months before a chart showing US gold indexes moving with the S&P 500. and they still are so if the ones that are expecting a 30 % correction in stocks are correct. and they are moving with US markets..
If the US markets fall so will gold stocks.
This correction will get gold on a wave three up.
I was was looking at what would make the gold stock correct and its a market correction because the US$ is at its lows.
Gold is rising - one has got to give
I am looking for a V bottom occuring in Gold.
The markets can continue down to what all the doomstayers have been predicting for years. I don't care because I'll be in Gold
Is this top in the DOW one of the reason I have been investing in Gold for about 7 Years. most probably.

One of the days Monday or Tuesday is wrong then I will have to revalulate and see why thats wrong. Before I was looking for weakness appearing in the Markets.
But is should have been strength. To a final top
Everything would fall into place spot on.

Look I may may wrong but if I had said this on tuesday or wednesday night so what. I said it Know you have three days to watch. If one day is out doest do what I said you know I am wrong.
But if each day is right what will you do wednesday night.
Thursday night is not a crash. may just be start of correction

 

[Kimosabi]

How about everyone on ASF pulls their money out of the Market on Wednesday and then we can see if we can trigger an ASF led correction...

 

[krisbarry]

A 3% increase in the Aussie market in the past week surely we will see profit taking over the coming weeks. Also note tax time is looming...selling will occur anytime now as investors will be getting in early ready to take profits before share prices start to go south.

 

[krisbarry]

Take a look at 2005, we had a nasty correction in March and as a result May 2005 was one of the best months, fast forward to Feb/March 2007 again another nasty little correction, can May correct again in such a close time frame? I just don't think so but have hedged my bets anyway.

So you can only find 1 example of a year out of many years that May has not had a correction, the odds are stacked againts you my friend I need more examples to convince me...can you do some more research please and post more evidence to support your case.

 

[CanOz]

You know its just around the corner when the "analysts" are calling for a breather. From CNBC a few minutes ago:
Market Outlook: Analysts Say Proceed With CautionBy Phyllis Burke Goffney | 06 May 2007 | 05:33 PM ET Font size: The bull market roared on this week, with the Dow hitting its 19th record close of the year, but many analysts believe stocks are poised for a breather.

The Dow Jones Industrial Average has risen 23 of the last 26 trading days, while the Nasdaq traded at a 6-year high and the S&P 500 hit a fresh 6 and 1/2-year high. The S&P 500 also crossed the 1500 mark, heading back upward toward its record close of 1527 reached in March 2000.

"I think we're getting to the point of being overbought," Bill Nichols, senior managing director of equity trading at Bear Stearns, told CNBC.com. "A little bit of caution should be used when you have these big moves up because we tend to have a bit of a pullback."

"We are very extended and in need of a pause to refresh," said Al Goldman, chief market strategist for A.G. Edwards. "The environment is set for a very normal pause, particularly when I see people say we are never going to correct."

Shifting Focus

This past week, corporate earnings and reports of mergers and acquisitions drove the markets. Analysts say that is likely to change next week as earnings wind down.

"I think we start to shift our focus," said Steven Lord, chief investment strategist for The Trend Investment Group. "After we get through earnings, we'll be looking at the economy, the price of oil and that nut job (Mahmoud Ahmedinejad) over in Iran. None of that is very good."

On Wednesday, investors will get the latest interest rate decision from the FOMC and, undoubtedly, sift through the Fed's comments for any signs of future action. Economists expect the Fed to hold rates steady at 5.25%. Wall Street will also get more economic data including retail sales numbers and the producer price index.

A slowing economy, the slump in the housing market and inflationary pressures have prompted analysts to look for good economic news.

"This market has been one of surprise, surprise, surprise," said Peter Cardillo, chief market economist at Avalon Partners. "Even though we have a drag from the housing market, the industrial sector is doing nicely. With the exception of import prices and inflation data, I think the economic reports will come in at expectations or even beat expectations."

Expect More M&A

Even if the market takes a dip, most analysts believe there are several strong factors giving stocks support including a wave of M&A activity. This week, Rupert Murdoch's News Corp. made a $5 billion unsolicited offer to acquire Dow Jones and there were reports that Microsoft was in talks with Yahoo either over a combination or joint venture. Also, Reuters confirmed it received a preliminary bid to be acquired. Several sources said Thomson was the interested buyer.

"I expect M&A to continue to be strong due to the global economy," said Cardillo. "It isn't the only thing boosting the averages in general, but the bottom line is that it's a strong positive sentiment."

"I think the M&A activity is going to be a constant drum beat that we're going to be seeing for the next 18 months," said Peter Andersen, portfolio manager of Dreman Value Management. "Even though the consumer seems a little weak now, we have to put that in perspective and also weigh that against the very, very strong situation in corporate America right now. We see balance sheets are very, very firm and cash has built up."

However, the constant frenzy of M&A activity is what has The Trend's Lord worried. "It's insane," he said. "How many more drinks can a drunk have. Sure, the M&A activity could continue, but this is not healthy for the markets. There are a lot of companies, like Microsoft and Yahoo, that are looking to get bigger because they can't get better."

Trade Cautiously

While most analysts appear to be bullish on stocks long-term, many advise investors to be careful in the near-term at these market levels.

"I wouldn't disturb long-term money," said Goldman of A.G. Edwards. "But if you're looking at putting new money in the market, I would take a walk around the block and wait until we get a pullback."

"The question is, Do you fight a charging bull?" said Cardillo. "Long-term, I'd agree with staying the course, but short-term traders should certainly be cautious.

And many analysts say, if you still want to put new money to work in this market, be selective.

"With so much investor cash sitting on the sidelines, I still think there's more momentum in this market, but you have to be selective," said Alan Lancz, president of Alan B. Lancz & Associates. "We like healthcare stocks like biotechs. I think you are going to see more acquisitions with large pharmaceuticals trying to replace their patent revenues. There are still opportunities to make money even with the market advancing."