Imminent and severe market correction

[Who Dares Wins]

Speaking of broken records Bean, I think you are starting to sound like one.

Since mid april when it was all this was supposed to happen the value of my portfolio has increased by 34%. And i've only made 1 trade during that time.

I'm seriously beginning to doubt this "program" that you're always raving on about.

 

[bean]

Speaking of broken records Bean, I think you are starting to sound like one.

Since mid april when it was all this was supposed to happen the value of my portfolio has increased by 34%. And i've only made 1 trade during that time.

I'm seriously beginning to doubt this "program" that you're always raving on about.

I trade Gold Stocks and most have not gone anywhere. Some are down.
I am in front too

So everyone is happy

But I might be the happiest soon

 

[tech/a]

Ah now I see.

Markets drop gold rises.

Hidden agenda's.
More hope and analysis fitting than actual market action analysis.

 

[>Apocalypto<]

Ah now I see.

Markets drop gold rises.

Hidden agenda's.
More hope and analysis fitting than actual market action analysis.

Totally agree with you tech.

Assuming one market will react to another's move is a dangerous way to trade.

Bean,

If your banking on that, have a good look at the charts last may, Gold and indexes dropped hard at the same time! Gold lost over $100's, $45 in a session!

 

[bean]

Totally agree with you tech.

Assuming one market will react to another's move is a dangerous way to trade.

Bean,

If your banking on that, have a good look at the charts last may, Gold and indexes dropped hard at the same time! Gold lost over $100's, $45 in a session!

I trade using the US Gold Indexes. I get buy and sell signals of them.
What I am saying is I do not have a buy signal could get one this week.
But I wonder why they have not given one as yet.
Do they expect the correction in the markets?
I am in the camp that expects a correction in US Gold Indexes and Gold
I may have to change to Bullish if I get a buy signal this week.

I know if the markets correct the gold stocks will fall
I do not have a buy signal as yet.
If I am not going to get one its because everything will be correcting

 

[tech/a]

Time to leave this thread.
Back again when something REALLY happens.

 

[brerwallabi]

My time frame window is now reduced to one possibly two days for the Markets to start correcting
Tonight and at latest Wednesday night

So your waiting for the US home sales Thurs and Friday morning then and then you can say told you so?
So you don't get a buy signal the market corrects?

 

[bean]

So your waiting for the US home sales Thurs and Friday morning then and then you can say told you so?
So you don't get a buy signal the market corrects?

No I said I would get a buy signal if the US Market went up and dragged US Gold Indexes with it (Tuesday or Wednesday)
Looking this morning they did not really go up.
US Gold Idexes hit for nearly 2%
Gold down
US Gold Indexes will going in the same direction as the market.

 

[wayneL]

There's hasn't been a decent short setup on my whole watchlist of stocks for ages. However, even though the US indices haven't shown much sign of a correction, some of my stocks are starting to look a bit dodgey.

No open shorts on stocks yet, but it just feels toppy to me. That said, lots are going like the blazes too... even some real crap like builders, that are warning, as well as releasing diabolical guidance.

Up is down, etc etc etc

If that sounds like a confused post... you're right! lol

 

[bean]

Why do I sound like a broken record and keep repeating myself

First posts were US Gold Indexes following US Markets (S&P)
I am in the Bearish Camp which sees a correction in Gold Indexes and Gold
The correction would be occurring the US Markets falling

Excluding todays prices lets look Dow 12076 on 13 March
We will start from 14th so we have 48 trading days
Dow up 37
Nyse up 33
Nasdaq up 32
S&P 500 up 31

XAU up 28

Not to far away with the number of days up. So running pretty much with the US Markets
XAU closing high in April 148.11 on the 16th April
Just about the time everyone was saying Gold ready to break above US $690

XAU closing May high 143.15 on the 7th May
I call the US Markets tops 9 May some have just passed then

I start calling correction or I get a buy on US Gold Indexes yesterday and day before
XAU 138.36 yesterday
Today 135.81

The XAU is making lower Highs????

It does not believe the US Market advance because it does not want to give me a buy signal
On saying that if US Markets advance it will take XAU with it and I will get a buy signal??
Do the US Gold Indexes know something????

 

[Sean K]

Why do I sound like a broken record and keep repeating myself

First posts were US Gold Indexes following US Markets (S&P)
I am in the Bearish Camp which sees a correction in Gold Indexes and Gold
The correction would be occurring the US Markets falling

Excluding todays prices lets look Dow 12076 on 13 March
We will start from 14th so we have 48 trading days
Dow up 37
Nyse up 33
Nasdaq up 32
S&P 500 up 31

XAU up 28

Not to far away with the number of days up. So running pretty much with the US Markets
XAU closing high in April 148.11 on the 16th April
Just about the time everyone was saying Gold ready to break above US $690

XAU closing May high 143.15 on the 7th May
I call the US Markets tops 9 May some have just passed then

I start calling correction or I get a buy on US Gold Indexes yesterday and day before
XAU 138.36 yesterday
Today 135.81

The XAU is making lower Highs????

It does not believe the US Market advance because it does not want to give me a buy signal
On saying that if US Markets advance it will take XAU with it and I will get a buy signal??
Do the US Gold Indexes know something????

Golly...

 

[nizar]

Well looks like the 7-year s&p500 record all time high will be broken tonight.
I think the figure is 1527.

Currently sitting on 1530.

 

[barney]

Not sure how "imminent and severe" the drop will be, but the all ords has been giving us plenty of warning over the past couple of weeks .......... Rising prices on falling momentum from my limited experience is the most reliable "indicator" of the lot ............ A 200 point drop over the next week or so would be no surprise imo ............ after that who knows ........

 

[Kimosabi]

Um, I don't want to crash anyones party, but is anyone else slightly disturbed by the following article???

Looming Crash Prompts Most Hires for Distressed Debt Since 2002

The biggest winners from the global buyout boom are hiring distressed-debt bankers in Europe at the fastest pace in five years.

Goldman Sachs Group Inc., the world's most profitable securities firm, hired Andrew Wilkinson, the lawyer who advised creditors in the bankruptcies of Eurotunnel Plc and Parmalat Finanziaria SpA, to help lead its restructuring business in London. Morgan Stanley, the third most-active merger adviser this year behind Citigroup Inc. and Goldman, added seven bankers in the past year, boosting its group to 61. Blackstone Group LP, poised to become the world's largest publicly traded buyout firm, is starting a corporate restructuring group in Europe.

``When the turn does come, it will be unlike anything we have ever seen before,'' said Iain Burnett, 43, managing director of Morgan Stanley's special situations unit in London. ``The scale of it could be considerable because of the size of some of these leveraged deals,'' said Burnett, who began his career in London a month before the October 1987 stock market crash.

Firms are paying as much as $3 million a year for bankers who advise bankrupt companies and for traders who specialize in defaulted debt, according to Heidrick & Struggles International Inc., the world's third-largest recruiting firm. That's on par with derivatives and commodities traders.

Adding Debt

Restructuring groups are growing faster in Europe than in the U.S. as companies in the U.K., France and Germany pile on record amounts of debt, according to Standard & Poor's. European companies borrowed a record $252.6 billion in loans and bonds rated below investment grade, according to data compiled by Bloomberg.

European companies acquired by buyout firms had debt equal to 6.2 times earnings before interest, tax, depreciation and amortization in the first quarter of this year, according to Fitch Ratings. That's up from 5.1 times in 2004 and 4.8 in 2003.

Heidrick & Struggles, based in Chicago, says it's placing more distressed-debt bankers in London than at any time since 2002, after Internet-related companies crashed. So far, there isn't much work to do. Near-record-low defaults have reduced Europe's market for distressed debt to 150 billion euros ($202 billion), a quarter of the size five years ago, according to data compiled by Deutsche Bank AG.
Little to Do

Only one European company -- Teksid SpA, an auto-parts maker based in Turin, Italy -- has defaulted this year, and only four companies worldwide have missed interest payments, according to Moody's Investors Service.

``Banks have to pay market rates to attract quality employees, but the problem is the employee may be sitting on his or her hands for six to 12 months,'' said Lee Thacker, capital markets partner at Heidrick & Struggles in London.

Companies are classified as distressed when they're in default or their bonds yield at least 10 percentage points more than similar-maturity government securities, according to S&P. Traders of distressed debt buy bonds and loans in a bet the securities will appreciate when the company's finances improve. If there's a bankruptcy, they may demand equity in the reorganized company in return for the debt.

European companies almost doubled borrowing this year to $225 billion of loans from the same period in 2006, Bloomberg data show. They sold an additional $27.6 billion of so-called junk bonds, a 30 percent increase from a year earlier. Such debt is rated below Baa3 by Moody's and BBB- by S&P.

Lowest Rates

The riskiest companies, those with a CCC credit rating or worse, are able to get the lowest borrowing rates ever, at 3.3 percentage points above benchmark European government debt, Merrill Lynch & Co. indexes show.

The yield gap reached a high of 42.1 percentage points in the month after the terrorist attacks of September 2001.

``It's like a hangover, people will wake up and say, `what have I done?''' said Michael Weinstock, who helps manage $3 billion of distressed debt at private equity firm Quadrangle Group LLC in New York. Quadrangle this month hired a second banker to focus on European distressed debt.

``Record-high levels of financing now mean record levels of defaults in the future. There's every reason to believe we're near a market top.''

The ranks of distressed debt bankers in Europe have swelled by about 30 percent to 400 this year, according to London-based financial recruiter Kennedy Associates. Worldwide, there are about 1,500 bankers specializing in debt of troubled companies, including 800 in the U.S. and 300 in Asia, said Jason Kennedy, founder of Kennedy Associates.
European Pace

``The U.S. market is larger and more established,'' said Kennedy, who has hired distressed-debt bankers in London for clients including Goldman, Citigroup and Lehman Brothers Holdings Inc., all based in New York ``Many banks here are just starting to build up their distressed desks.''

Investing in Europe's troubled companies picked up 14 years ago when Frankfurt-based Deutsche Bank hired Martin Dent, followed a year later by Julian Nichols, who is head of distressed debt in Europe for Germany's largest bank. Deutsche Bank, which doubled its distressed-debt staff over three years to about 120 bankers worldwide, more than any other bank, is planning to increase, Nichols said.

``Distressed debt will continue to grow,'' Nichols said. ``As the value of leveraged loans in the market increases, the absolute level of defaulted debt will increase, even if the ratio remains similar to what it is currently.''
Goldman Hires

Goldman last year hired Lachlan Edwards from London-based investment bank NM Rothschild & Sons Ltd. to head its restructuring unit. In March, it brought in Wilkinson, the former managing partner at law firm Cadwalader Wickersham & Taft in New York.

Goldman co-President Gary Cohn said ``the institution that figures out first that the credit environment has changed will be best positioned,'' according to a May 17 note to clients by Jeffery Harte, a Chicago-based analyst for Sandler O'Neill & Partners.

Greenhill & Co., the investment bank established by former Morgan Stanley Group Inc. President Robert Greenhill, hired Martin Lewis, 52, in February from Miller Buckfire & Co., the firm advising bankrupt energy company Calpine Corp. of San Jose, California, and auto-parts maker Dura Automotive Systems Inc. of Rochester Hills, Michigan, on their reorganizations.

Greenhill, chairman and chief executive officer of the New York-based investment bank, said in a release at the time that the hiring was ``in preparation for when the economic cycle turns.''

Ramping Up

ABN Amro Holding NV doubled a group that deals with troubled companies to 20 in the past year, and plans to have 40 in the ``medium term,'' said Boe Pahari, global head of special situations and distressed capital in London for Amsterdam-based ABN Amro, the largest Dutch bank.

New York-based Merrill Lynch in November hired Ben Babcock from Lazard Ltd. to set up a corporate restructuring business in London. Babcock has since added one person dedicated to restructuring and can pull in people from Merrill Lynch's corporate finance business as needed, he said.
BNP Paribas SA, France's biggest bank, hired Steven Franck from New York-based Morgan Stanley this year to increase its distressed debt operation in London to four.

``People have been forecasting a meltdown in credit in the next 12 to 18 months,'' said Michael Gibbons, head of the special situations desk at Paris-based BNP Paribas. ``We tend to crash when we least expect it, rather than when we forecast it.''

Adding Staff

New York-based Blackstone in December hired Close Brothers Group Plc's
Martin Gudgeon, who advised creditors of Eurotunnel and the management of Polestar Group, a Milton Keynes, England- based magazine printer that agreed to a $1.6 billion restructuring in December to avoid collapse.

Houlihan Lokey Howard & Zukin, the Los Angeles-based investment bank, employs 20 in Europe for its restructuring business, up from two when it started in 2002. The bank is looking to build a similar group in Asia, according to Joseph W. Swanson, its London-based managing director.

Zurich-based UBS AG, Europe's largest bank by assets, has been adding staff to its distressed-debt business this year, said Doug Morris, a spokesman in New York who declined to provide details.

Jeff French, a spokesman in London for Citigroup, the most active merger adviser this year, declined to comment. JPMorgan Chase & Co. spokeswoman Stefania Signorelli, Credit Suisse spokeswoman Rebecca O'Neill and Lehman Brothers spokeswoman Ruth Lavelle, all reached at their offices in London, also declined to comment.

Apollo Coup

Banks are looking for opportunities like the 2003 takeover of Zurich-based Cablecom AG by Apollo Capital Management LP, along with Goldman and Soros Private Equity Partners. They bought the distressed debt of Switzerland's largest cable TV company, swapped it for equity and in 2005 sold it to John Malone's Liberty Global Inc. for $2.2 billion.

S&P forecasts the default rate, which was 2.3 percent in April, will rise above 2.5 percent by year-end in Europe. In the U.S., the 12-month default rate is 1.4 percent.

``The risk in all of this is that the higher we fly, the further we could fall as and when the market turns,'' said Paul Watters, S&P's London-based director of debt recovery ratings. ``Many borrowers are tacitly acknowledging the growing vulnerability.''

Link

 

[excalibur]

I think that its not new news any longer.
The reaction of the market has begun.

 

[KIWIKARLOS]

hahahahaha BS

People gettin edgy and taking profits, we were hitting highs last week and its hardly a freefall. Alot of companies will be posting big profits in a few weeks, buying opportunity if anything.

A big market correction needs a trigger and there simply hasn't been one yet. Sure the US housing market is kaput but there is alot of signs showing postives. In my opinion line ball atm, there will be more highs to come in the next weeks /months

 

[moxy]

Hi all

I'm going to throw my cap in with you Kiwi and agree that this is another blip on the radar. Your spot on with those earnings announcements...God, leighton came out recently with an upgrade of 50%!. I think we will see a few more companies with these "surprises" over the coming weeks.

 

[hacheln_mice]

Looking at the Dow Jones, from a fibonacci time cycle perspective (if anyone believes in this sort of stuff), we're nearing a 'correctional' phase, especially since 3rd major leg matches the 1st major leg in height (on a linear basis).

The long term bull will most definitely continue, but not without a very lengthy consolidation/churning period in my view. The projected Feb/March bottom will probably be the beginning of some 'base building' rather than a straight up move.



---------------------
For the All Ords, the next 2 week's action will be critical.



So far, the market has found strong buying interest, and I suspect that is due to superfund money flowing in, but that'll end by 6/30 (right?). Even if we do have a strong showing in the coming weeks, I suspect that'll only delay the 'inevitable' correction. Another sign that a correction may be nearing is the change of leadership since March, as the materials and energy sector started to strongly outperform the other sectors. Typically, strong runs in materials and energy come near the middle or the end of an intermediate term trend rather than the start of it. Then you've got the dodgy investment banks upgrading companies left right and center trying to create demand cautious. My belief is that investment banks soak up supply when everyone is looking to sell, and release supply when everyone is looking to buy so that they can buy later at a lower price. I suspect investor sentiment is strong/resilient enough to suggest investors are all bulled up and willing to buy all dips, even after this week's slide (although I can't prove this...it's just a feeling) which is the kind of environment needed for a correction (ie. release of supply) to occur. MBL's equity issue, and kneejerk ramp and dump is a prime example. Then there's Shane Oliver calling for the All Ords to double or something like that. Generally, retail investors are the first one to buy in a drop, and the last one to sell in a bullish run.

If you look at the Index of new 30 week closing highs vs new 30 week closing lows in the All Ords, you can see that the market internals are very weak despite the indices being near all time highs. This suggests the rally is narrowing rather than broadening so stock selection at the moment is critical to making money in the markets. Not everything an investor buys at the moment is going up.



For now I'm neutral/bearish on the markets. Longer term, I'm still very very very very bullish.

 

[bepra1]

Indeed, Imminent and severe market correction has happened :bloated:

 

[Kimosabi]

Indeed, Imminent and severe market correction has happened :bloated:

Ha, this is only the beginning...