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sure is - on that chart the DT is confirmed below 800 with a target of 200
Isn't the double top target from that set up around 0!
That's some correction......
DJ Australian Shares Midday: Down 2.0%; Value Emerging07/01/2008 12:54PM AEST
SYDNEY (Dow Jones)--The Australian share market is down sharply midday Monday, with falls across the board, after Wall Street and the London Metal Exchange suffered Friday from a weak U.S. employment report.
The benchmark S&P/ASX 200 index was down 126.8 points, or 2.0%, at 6180.7 at 0145 GMT, earlier hitting a three-week low of 6148.1.
However, volumes remain light, with many institutional clients still on holiday.
Resources and financials have had the biggest negative impact, with BHP Billiton down 2.1% at A$39.99, National Australia Bank down 2.3% at A$36.46 and Westfield down 3.9% at A$19.04.
Despite the falls, analysts say the Australian economy is in good shape and value is starting to emerge.
"It's very much a case of follow the leader," said CommSec chief equities economist Craig James. "But it's still the case that our economy is in a whole lot better shape (than the U.S.). Valuations are very good."
James said the historic 2007 price-to-earnings ratio is about 14 times, compared with a long-term average of 15.7 times and a low of 13.1 times in August 2007.
"If it falls to about 13.5, it will represent a good long-term buying opportunity," said James, who has a midyear target of 6900 for the S&P/ASX 200.
Elsewhere on the share market, Zinifex was down 4.8% at A$11.59 after hitting a 16-month low of A$11.41 following a steep fall in LME zinc prices.
Telstra, Woolworths and Foster's have outperformed, thanks to defensive buying.
-By Sydney bureau; 61-2-8235-2950; djnews.sydney@dowjones.com
James is a Bull and his job somewhat depends on the market going OK, but I think he has some qualifications over my degree in beer drinking, and I couldn't call him a ramper.
Another correction another opportunity? Or, a 50 year Bear?
Market is just correcting itself
...AMP Capital Investors chief economist and head of investment strategy Shane Oliver expects investors to have a rough ride for the next few months but says the long-term direct impact of the downturn will be minimal.
"However, the main risk is if the crisis leads to a further slump in the US credit and share markets," he says.
"The US sub-prime mortgage crisis will get worse before it gets better.
"Total losses could be high - up to $US100 billion ($A116 billion) - but this is small relative to the US mortgage market overall.
"We don't believe it is enough to trigger a US recession."
Mr Oliver says over the next six to 12 months the market will continue to rise, as the $US100 billion loss represents only 1 per cent of the total outstanding mortgages in America.
Despite yesterday's almost 3 per cent fall to 6082.9 points, Mr Oliver is forecasting that the benchmark ASX 200 index will reach 6700 points by year end and break 7000 points in the first quarter of next year.
"There will a rough patch for the next few months but the market will rally hard in the last few months of the year," he said.
Historically, a collapse in the US mortgage market has never significantly affected consumer spending levels or kicked off a recession.
Anyone watching the S&P500? Those boys in the PPT are sure effective aren't they? Here I was thinking we'd get a weak close and whaddayaknow...
I still see this current move as sideways. Time passing as opposed to price rocketing (as it has) or falling (as many here reckon it already is). Time passing = waiting. There are still plenty of parachutes left to go around. Although, wasn't Friday night on the US markets rather entertaining?? Can't wait to see if a real support level is actual broken.
ASX.G
The Federal Reserve reported Tuesday that consumer borrowing rose at an annual rate of 7.4 percent in November, far higher than the 1 percent rise in October.
The 7.4 percent overall increase in credit pushed total credit up by $15.4 billion - much stronger than the $8.5 billion increase that analysts had been expecting.
The overall increase left total consumer credit at a record $2.51 trillion. The Fed's credit report tracks all debt not secured by real estate meaning that mortgages, a big chunk of the debt load carried by most households, is not covered
President Bush, meanwhile, conceded, "It's going to take awhile to work through the downturn," and Treasury Secretary Henry Paulson said he is concerned about the potential for additional home defaults.
Paulson said the administration is exploring expanding a deal it brokered with mortgage lenders last fall to include relief to people who borrowed at prime, conventional rates as well as those with subprime, adjustable-rate mortgages that were due to reset.
http://biz.yahoo.com/ap/080108/housing_outlook.html
U.S. Will Escape Recession as Consumers Hold Up, Economists Say
By Shobhana Chandra and Alex Tanzi
Jan. 9 (Bloomberg) -- The U.S. will skirt recession as consumer spending slows without collapsing, a survey of economists showed.
Economic growth will average 1.5 percent in the first six months of 2008, matching the fourth quarter's pace, according to the median estimate of 62 economists surveyed by Bloomberg News from Jan. 3 to Jan. 8. The rate of expansion would be the weakest since the last nine months of 2001.
It's soft economic activity that feels like a recession, but we probably won't have one,'' said Mickey Levy, chief economist at Bank of America Corp. in New York. ``The state of the consumer is clearly softening, but spending is not declining. That's very important.''
The Federal Reserve will cut interest rates more than previously anticipated, economists said, triggering a reacceleration in growth by the third quarter that will keep the economy from stalling.
http://www.bloomberg.com/apps/news?pid=20601068&sid=aEUZyMLV9TMo&refer=economy
In a brilliant article in the Wall Street Journal, Carrick Mollenkamp and Serena Ng detailed the rise and fall of a collateral debt obligation (CDO) called Norma, ushered into existence by Merrill Lynch. This is a $1.5 billion CDO created in March of 2007 with over 90% of its paper rating "A" or better, and $1.125 billion rated AAA. In November 2007, the entire CDO was downgraded to junk.
That is not particularly news, as there are a lot of subprime CDOs that are being downgraded. What caught my eye was how this CDO was created. Quoting (and emphasis mine):
"For Norma, [the manager] assembled $1.5 billion in investments. Most were not actual securities, but derivatives linked to triple-B-rated mortgage securities. Called credit default swaps, these derivatives worked like insurance policies on subprime residential mortgage-backed securities or on the CDOs that held them. Norma, acting as the insurer, would receive a regular premium payment, which it would pass on to its investors. The buyer protection, which was initially Merrill Lynch, would receive payouts from Norma if the insured securities were hurt by losses. It is unclear whether Merrill retained the insurance, or resold it to other investors who were hedging their subprime exposure or betting on a meltdown.
"Many investment banks favored CDOs that contain these credit default swaps, because they didn't require the purchase of securities, a process that typically took months. With credit default swaps, a billion-dollar CDO could be assembled in weeks.
"UBS Investment Research estimates that CEOs sold credit protection on around three times the actual face value off triple-B-rated subprime bonds. 'The use of derivatives "multiplied the risk," says Greg Medcraft, chairman of the American Securitization Forum, an industry association. 'The subprime mortgage crisis is far greater in terms of potential losses than anyone expected, because it's not just physical loans that are defaulting.'"
The article goes on to detail how the entire CDO world is one large daisy chain of credit default swaps. Who's got your back? And who's got the back of the guy who has your back? And .... you better hope it is not ACA.
Never heard of the company? You will. ACA has dropped 95%, from $16.55 to $0.86 today. Why? Because the company sold credit insurance on CDOs. "If now junk rated ACA can't come up with an additional $1.7 billion in capital by January 18, it will be insolvent and the $69 billion in credit default swaps on CDOs it underwrote will be worthless." (Shilling) $69 billion? That is huge. Think that won't hurt balance sheets all over the world?
Jan. 10 (Bloomberg) -- Capital One Financial Corp., the largest independent U.S. credit-card issuer, reduced its full- year profit forecast by about 20 percent because of swelling loan losses in a weakening U.S. economy.
The New York Times reported that Merrill Lynch (MER, Fortune 500) is expected to take a $15 billion hit when it reports, nearly twice the loss it original estimated
In other words, there is increasing evidence that the US downturn
is spreading from the housing sector. What’s more, the latest surge
in energy prices has only added to pressure on the US consumer and
inflation worries have arguably slowed the Fed in cutting interest
rates. These considerations suggest that it is now a 50/50 call as to
whether the US will go into recession or not.
Given the high risk of a US recession, it’s worth being aware of
what it could mean for shares. Recessions are normally bad for
shares, as profi ts slump undermining valuations. Every US recession
since 1960 has been associated with a sharp fall in US shares. The
average decline has been 30%, spread over an average 15 months.
Australian shares have had a bad run through past US recessions,
with an average decline of 33.8%.
AMP are late to the party, but at least they are starting to face the facts:
http://www.ampcapital.com.au/K2DOCS...A6CB-46E1-B4DB-FBC8900FA3B9/OINo43.pdf?DIRECT
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