Imminent and severe market correction

[Kauri]

Something has "spooked" the markets overseas.In half an hour,the S & P lost
.67%,the Nasdaq 0.4%,the Dow 0.4% and the FTSE 0.8%.

For better or for worse I actually closed out a short last night (SP500) as I see the market playing out a flat W4 here.
(Would post a chart but it wont take??)

Cheers
..........Kauri

 

[Uncle Festivus]

I agree chaps.

The market will do what it wants to do regardless of news.
Trying to predict reaction to news is crazy IMO.

Perhaps, but reality triumphs over ignorance in the end (just ask US, British, Spanish, and Irish home owners). Shanghai down 3.5% yesterday. Keep watching China for cracks?

 

[sassa]

How true and so I repeat this post-

weak data = Fed ease, stocks rally
consensus data = lower volatility, stocks rally
strong data = economy strengthening, stocks rally
bank loses $4bln = bad news out of the way, stocks rally
oil spikes = great for energy companies, stocks rally
oil drops = great for the consumer, stocks rally
dollar plunges = great for multinationals, stocks rally
dollar spikes = lowers inflation, stocks rally
inflation spikes = will inflate all assets, stocks rally
inflation drops = improves earnings quality, stocks rally

And the opposite to the above is-

Bonds? No- Inflation is going to rage.

- Stocks? Overvalued! Overbought! All this global liquidity has inflated prices. It's going to come crashing down.

- Gold? It provides no dividends or interest, has already increased a lot, and will not be a bubble. You could buy some, but have missed out on gains over the past few years. Plus, people recommend holding 5-10% gold. Where does the rest go?

- Commodities? same as gold.

- Currencies? Dollar is depreciating, Euro is already high and I can't find an ETF that sells Renminbi... meanwhile, the Yen might be a good play, but it returns a paltry 0.5%, if that.. and currency is not long-term strategy for lil' ol me.

Housing? Don't even think about it.

International Stocks? Will take a big hit if and when the US markets take a nose dive of several thousand points. China stocks in a major bubble. Europe slowing from high Euro valuation..

Cortesy fourthirtysix at iTulip.

 

[bean]

The Past Performance of the Hindenburg Omen Stock Market Crash Signals 1985 - 2005
http://www.safehaven.com/showarticle.cfm?id=3880

 

[Flying Fish]

And the opposite to the above is-

Bonds? No- Inflation is going to rage.

- Stocks? Overvalued! Overbought! All this global liquidity has inflated prices. It's going to come crashing down.

- Gold? It provides no dividends or interest, has already increased a lot, and will not be a bubble. You could buy some, but have missed out on gains over the past few years. Plus, people recommend holding 5-10% gold. Where does the rest go?

- Commodities? same as gold.

- Currencies? Dollar is depreciating, Euro is already high and I can't find an ETF that sells Renminbi... meanwhile, the Yen might be a good play, but it returns a paltry 0.5%, if that.. and currency is not long-term strategy for lil' ol me.

Housing? Don't even think about it.

International Stocks? Will take a big hit if and when the US markets take a nose dive of several thousand points. China stocks in a major bubble. Europe slowing from high Euro valuation..

Cortesy fourthirtysix at iTulip.

That does leave many outs...

 

[Wysiwyg]

Perhaps, but reality triumphs over ignorance in the end (just ask US, British, Spanish, and Irish home owners). Shanghai down 3.5% yesterday. Keep watching China for cracks?

Agree, it `aint going away in a hurry.

Oct. 20 (Bloomberg) -- Asian stocks had their biggest weekly drop in two months, led by financial companies, on concern losses from the worst U.S. housing slump since 1991 will spread.

Good information with this story here.

 

[Bushman]

And the opposite to the above is-

Bonds? No- Inflation is going to rage.

- Stocks? Overvalued! Overbought! All this global liquidity has inflated prices. It's going to come crashing down.

- Gold? It provides no dividends or interest, has already increased a lot, and will not be a bubble. You could buy some, but have missed out on gains over the past few years. Plus, people recommend holding 5-10% gold. Where does the rest go?

- Commodities? same as gold.

- Currencies? Dollar is depreciating, Euro is already high and I can't find an ETF that sells Renminbi... meanwhile, the Yen might be a good play, but it returns a paltry 0.5%, if that.. and currency is not long-term strategy for lil' ol me.

Housing? Don't even think about it.

International Stocks? Will take a big hit if and when the US markets take a nose dive of several thousand points. China stocks in a major bubble. Europe slowing from high Euro valuation..

Cortesy fourthirtysix at iTulip.

So what do you suggest the mug punter invests in? I hear there is a ripper horse in race 5 at Flemington next week. Oh that's right - equine flu means horse racing is out. So see you all down at the pokies down at the Parkview hotel. Potential returns of 1000% and peanuts on the house.

 

[>Apocalypto<]

and peanuts on the house

MMmmm peanuts....................

 

[wavepicker]

So what do you suggest the mug punter invests in? I hear there is a ripper horse in race 5 at Flemington next week. Oh that's right - equine flu means horse racing is out. So see you all down at the pokies down at the Parkview hotel. Potential returns of 1000% and peanuts on the house.

How about good old cash, or if that is too boring learning to trade both ways

 

[Bushman]

How about good old cash, or if that is too boring learning to trade both ways

Ha ha WP - just a bit of black humour to keep it all in check.

Cash is a beauty at 7% and learning some defensive manoeuvres is on the 'to do' list. I actually set up an IG account with the intention of placing some shorts but you need time to manage those and I work full time plus study so some action in an interest bearing account is the more likely possibility.

Personally I think we will still have a selective bull in all things steel (iron ore, coking coal, nickel, moly etc), gold and oil so I will take some pain on Monday and Tuesday and then ride the wave into the new year on the back of the selective commodities bull. Uranium will also have another run and then there are the new wave of green energy stocks that will one day become a force as fossil fuels inevitably give way to new 'clean & green' energy solutions. What better country to be investing in than Australia in the next 5 years. Personally I am excited at the long term prospects of the ASX.

If the Yanks slow, the effects wont be felt in China for a few more months. Then there is the once in a 100 year boom going on in China and India that should see Aussies through for a while longer yet. Still looking to diversify away some risk with a purchase of Woolies, Metcash, Westfield and the like. Diversification is the key to me. Get some low and high beta blue chips and get some cream on the cake with a few gold, oil and iron ore speccies. A work in progress for me.

As for property, retail is a beauty, commercial is good in the right location and residential will feel some pain in areas that are not effected by long term trends such as gentrification. Also we will not feel anywhere near as much pain as the Yanks because we don't have much water, have much fewer cities and therefore have a lot less land to service a growing population.

Good luck all. Enjoy the ride.

 

[noirua]

The true 20th Anniversary of Black Monday in 1987 is infact Monday 22nd October 2007.

Markets in the boom of the last 5-years are looking quite similar to the 5-year run up in 1987. There is a big difference in interest rates and inflation, however, Asian markets have risen rapidly.

 

[Aussiejeff]

How about good old cash, or if that is too boring learning to trade both ways

Apparently there was a thriving black market in soup kitchen vouchers way back in "The Big One"... bound to be some opportunities there if those times come again

Still, this drop by Wall Street last Friday was *only* a tiddler... the whole media thing is to concentrate on how many "points" are lost ... not so much emphasis on the actual "percentage" lost. So, with the market points historically climbing over the long term (ie INFLATING the points), ever bigger RECORD "point crashes" - or "pull backs" (take your pick of which media hype you prefer) are going to keep on occuring. It's the % size of movements that matter in the end...... somewhere in the not too distant future there will no doubt be a "crash" of 1,000 points - THE BIGGEST POINTS CRASH EVERRRRR! It might also only be 2% again.... so what?

IMO the markets probably could do with another nip back by a further 5% or so to re-establish a less heated, forward looking momentum. Its healthy to have a breather.... so my tip is ... DON'T PANIC!!.... yet

AJ

 

[bean]

The Past Performance of the Hindenburg Omen Stock Market Crash Signals 1985 - 2005
http://www.safehaven.com/showarticle.cfm?id=3880

The criteria required for this was met on friday on the US Markets

 

[sassa]

So what do you suggest the mug punter invests in?

Are you in for the long haul or the short?Let's see what happens in the Dow,Nasdaq and S & P 500 tonight.
After a weekend to digest the news,if the Friday trend continues,profits will be taken in fear of losing them.The speculators will sell to cover their margin calls due today.
An interesting 9 days before the Fed meets.

 

[Bushman]

The criteria required for this was met on friday on the US Markets

Here are the omens I will be looking for this week, starting with Amex & Merck this evening. If another CEO mouthes the R word, feathers will fly.

'But next week is another peak week for earnings reports, with 163 more S&P 500 companies reporting, including six Dow components: American Express Co. and Merck & Co. Inc. on Monday, Dupont on Tuesday, Boeing Co. on Wednesday and Microsoft Corp. on Thursday.'

 

[explod]

Here are the omens I will be looking for this week, starting with Amex & Merck this evening. If another CEO mouthes the R word, feathers will fly.

'But next week is another peak week for earnings reports, with 163 more S&P 500 companies reporting, including six Dow components: American Express Co. and Merck & Co. Inc. on Monday, Dupont on Tuesday, Boeing Co. on Wednesday and Microsoft Corp. on Thursday.'

Yep Bushy, right with you on that. Unless you are prepared to sit on screens monitoring that chart for many hours, which I am not, then the bottom line is the go. And if the reports follow the lead of Friday then a very interesting time coming indeed.

 

[bean]

Tonight the US markets could open up to 2% down.

Tonight is all a matter of traction as to what support levels will hold.

And fear if support levels fail to hold in the first few hours

 

[sassa]

Here are the omens I will be looking for this week, starting with Amex & Merck this evening. If another CEO mouthes the R word, feathers will fly.

'But next week is another peak week for earnings reports, with 163 more S&P 500 companies reporting, including six Dow components: American Express Co. and Merck & Co. Inc. on Monday, Dupont on Tuesday, Boeing Co. on Wednesday and Microsoft Corp. on Thursday.'

Can help you with estimates-
Amex-(TTM- last 12 months)3.29
(EPS-current Q)0.85
(NYT-next year estimate)3.90
Merck-2.20
0.69
3.25
Boeing-4.62
1.24
6.04
Microsoft-1.42
0.39
1.95
No Dupont estimates available.

 

[sassa]

I've just watched it and heard it.An analyst on Bloombergs does not expect the Merril loss of $7.9b. to have much affect on the market tonight as some were expecting the news to be as much as $12b.He expects the market to rise on the techs and the looming advent of a further 50 basis point cut by the Fed next week in response to the Merril report.

 

[Bushman]

I've just watched it and heard it.An analyst on Bloombergs does not expect the Merril loss of $7.9b. to have much affect on the market tonight as some were expecting the news to be as much as $12b.He expects the market to rise on the techs and the looming advent of a further 50 basis point cut by the Fed next week in response to the Merril report.

No way. And there I was about to jump from the window dressed in my suit. Lucky I live on the ground floor hey.

Now the question for ML's is what more is to come? Two scenarios as far as I can see -
1. They have been ultra conservative and have written off everything bar the photocopier and the water cooler; or
2. There is more sitting on or off balance sheet which will come back to haunt them (& us, goddam them) at some future point.

Please let some sanity have prevailed and it be 1!! Otherwise I will most definitely be leaping from my window into the flower bed. Man and I just had my suit dry cleaned. Oh brother...