Imminent and severe market correction

[treefrog]

dow uptrend still in tact but not the head and shoulders

momentum down highest in 5years with potential to sustain for another 2weeks

 

[Uncle Festivus]

It really boggles the mind how shills like Oliver keep their jobs. How far behind the curve can you get? Maybe it's time to get bullish, Oliver could be a good contrary indicator.

It's like everything else when things are going good in a bull market - you tell the masses all is ok and keep buying the dips & accumulating, because as we all know, shares/housing/(insert asset class here) keep rising in the long term.

The real test for these economists is when it starts to turn the other way, with reassuring words like - "we see some trouble ahead but Oz should be immune from it all because China will keep buying from us".

They like to have a bet each way, for when globalisation was the best thing since sliced bread, and global economies were so much more entwined that a downturn in one part would be countered by strength in another. But what happens when, due to globalisation, the downturn is synchronised?

That's were we are now, so there is unlikely to be any savours out there, not even China, who have a unique ways of dealing with the negative aspects of capitalism, in this case inflation - they just mandate to freeze prices - ultimate capitalism.

 

[doogie_goes_off]

Maybe this thread should be called "the sky is falling". I will be accumulating fundamentally good stocks over the next 2-3 weeks. If you are going to buy specs, just make sure they have $ in the bank that makes them "recession-proof".

 

[Uncle Festivus]

Maybe this thread should be called "the sky is falling". I will be accumulating fundamentally good stocks over the next 2-3 weeks. If you are going to buy specs, just make sure they have $ in the bank that makes them "recession-proof".

Yes, stocks are oversold in this cycle, but how do you pick recession proof stocks? Which stocks are 'fundamentally good' ? How do you know it's not the start of a bear market? Are you not admitting the sky will fall if you want recession proof stocks?

 

[ithatheekret]

How do you know it's not the start of a bear market? Are you not admitting the sky will fall if you want recession proof stocks?

Start of a bear market ? or continuation ?

 

[mayk]

Don't get me wrong, I thought sky would fall if there would be a depression (or worse)not a recession. It will help people to learn and try to avoid this happening in the future. Sure it will cause pain and suffering but that is life.

I think all the major recessions/depression happen for quite different reasons. The first major depressions sure helped to eliminate that happening again, till now.

I think american economy will continue to grow. Sometimes I wonder the media interest in 'making recession ' happen. It is a wonderful opportunity for the big money organizations ( all big US/UK banks) to buy property/ shares at a cheap rate.

Sure they sometime get it wrong ( the current subprime ) but then the government (and FED reserve) will help them out and they will be back on track.

Yes 2008 will be a bit jittery, but ultimately the loss of some will be the gain of other, the redistribution of wealth as they say!

 

[treefrog]

then there's the S&P index - most used as reference to to ozzie market because all the dow co's are far too big to compare with ours

- 5yr uptrend break but no break of the topping pattern support (you're sitting on it now madge)

 

[treefrog]

and the US engine room - the Russell2000 index

5yr weekly uptrend well broken and weekly downtrend established (lower high and lower low)

 

[MS+Tradesim]

The case for a bear market attached in PDF. Maybe too dire but I'm starting to agree as fundamentals are in place. I'm certainly not seeing any compelling reasons to disagree. Although maybe I'm missing something.

 

[bean]

Just to remind you of the Dow Theory. The US markets the primary trend is down.
http://www.financialsense.com/Market/wrapup.htm

The DOW of course during the year may make a new high as US interest rate make there way down to Zero.

 

[explod]

Just to remind you of the Dow Theory. The US markets the primary trend is down.
http://www.financialsense.com/Market/wrapup.htm

The DOW of course during the year may make a new high as US interest rate make there way down to Zero.

Dont' know how long a drop in interest rates will last. Money supply has almost dried up now and the flight from dollars when it really hits will be swift and catastrophic.

We are entering times that have not been experienced in any living memory and they will be interesting indeed.

In fact we could suddenly have a world war and a financial lock up prior to the change of Pres. in November. Desperate measures come in desperate times. Remember ole saviour Big Chief Burnin Bush is ralated to dem six shootin cowboys. Fastestdrawdewinner.

Should this be on the gloom/doom thread

 

[Whiskers]

In fact we could suddenly have a world war and a financial lock up prior to the change of Pres. in November. Desperate measures come in desperate times. Remember ole saviour Big Chief Burnin Bush is ralated to dem six shootin cowboys. Fastestdrawdewinner.

Should this be on the gloom/doom thread

Up until about August when this crisis hit the US I think it probably wouldn't have taken much for Bush to start another little war somewhere. But lately even his own party has been calling on him to spend more time on domestic issues and I think he is becoming acutely aware that given his domestic problems, he can't afford another conflict.

In fact he is probably only now starting to calculate how much extra Iraq is costing him in cash and fuel oil. It must be a pretty significent sum and would probably relieve some pressure on oil stocks and price.

I wouldn't be surprised to hear him call a significant withdrawl before he leaves office to conserve some of that cash and fuel oil to bolster the economy a bit to give his party a chance of winning in November.

Didn't I read somewhere that the US bond credit rating is, or is likely to be rerated down for the first time ever? That must have him worried a bit.

 

[numbercruncher]

Didn't I read somewhere that the US bond credit rating is, or is likely to be rerated down for the first time ever? That must have him worried a bit.

This is true but subject to the US not addressing and fixing the health-care and pension systems soon.

The US is in massive trouble when you look at the grand scheme of things, massive foreign debt that grows by the day, Unfunded pension system with Millions of baby boomers retireing, unfunded health system , financial system/banks under immense pressure , A consumer driven economy where everyone seems maxed out on debt, falling asset prices and rising Inflation.

And thats before the Climate change wildcard putting pressure on emissions and potentially lowering economic output.

Inflation seems to be the only out for them ?

It wouldnt be a far stretch of the Imagination to consider the USD status as world reserve as somewhat under threat ! Nations of the World must be starting to freak out at their ever dwindling USD reserves purchasing power.

 

[ithatheekret]

I think they're in a tough call zone. Here they have low growth that was deliquent anyway , now that growth is slowing further . The stimulus packages to date have all been inflationary , the cuts and stimulus to come will also be inflationary .

So why would the Fed. be wanting to tempt hyper fate in a stagflationary enviroment ?

Well , we can see that houseprices are falling ( still ) , this is a recessionary effect by itself , where stimulus and debt issues for raising have now been able to be spread through a borrowing market , that it turn spreads it out again to the ones lending .

When it gets down to a point where the borrowers become an extinct species , due to lack of capitalization , compounded by the fact that lenders are stuck in a contractive zone of their own , it get's rough , then rougher , then ......

Every capital market collapse has led to a recession , but the two fold effect caused by housing added to the financial squeeze or freezing up , can go much farther than that as we once saw during the Great Depression , but those numbers were mild compared to the mountain we have before us now .

If my case is right , we will go deeper into stagflation , which we have had for the last 8 years , yet it has been denied , then have a period of hyperinflation , until the breach of the banking code is revealed and the real data is laid out for true examination . This will eventually make things so unafforable that consumers will just stop buying and look at alternatives , like repairs before replacement etc.

Once business has felt the effects of that by-product , deflation will step in as competition forces the exporters to drop prices . That leaves only companies with true organic growth as the ones seen to be attractive on risk and the lower beta stocks of the yesteryears brought back up in index reratings if need be , to be looking for value alone is really insuffice .


What get's me is where's the deflationary effects they're worried about ?

Could it be the lack of manufacturing and reliance on services ?

Or is it just the oversupply of stimulus that created the housing dilema , to now have the trucks back up to pour in more ?

Now , if it's organic growth , we really need , it leaves only few select areas to choose from , this includes gold stocks etc . , I look at the utilities and can see no prospect of organic growth , the only growth that can really be achieved is through acquistions .

I hope that's not over the top for members to understand , I've put it as simply as possibly .

 

[Kauri]

Where are the Trillions of sub-prime fallout/losses hidden??? The banks are slowly owning up to some of it, I guess it's the packaged vehicles that they didn't have time to on sell for thier slice/commission. Some hedge funds have been caught, and even a few councils here in Aus.. but it falls far short of the trillions talked about. Are hedge funds hiding it temporarily by not marking to market, are pension and or super funds sitting on a pile of it, would insurance/wealth management firms be up to thier necks in it?? Does anyone have any idea as to where it is buried, before it bloats and rises to the surface??
Cheers
........Kauri

 

[Kauri]

Even if you lose one eye you can still see with the other.. :bloated:
Cheers
.........Kauri

Jan 14th. Finally a cheery piece, this time from Anatole Kaletsky in his regular economic piece for the UK Times entitled "Goodbye to all that: the worst is over for the global credit crunch." Kaletsky argues that "in Britain, there seems to be almost no chance of economic and financial disasters comparable to those suffered from 1990 to 1992." This is because Kaletsky is upbeat about the prospects for the global economy in 2008.
Kaletsky argues that (1) the credit crisis is almost over with any residual action required readily taken by either banks or governments; (2) "there will be no US recession" as real rates remain low and the Fed has indicated a willingness to cut. Cheap funding should ensure that consumers and businesses keep on spending. And (3) "stock markets around the world will rise". Share prices have already discounted a recession therefore making stock valuations look attractive.

 

[treefrog]

dumb question

do we have any of these yet??

cheerz

 

[Nick Radge]

For those that missed it, the US night session S&P just dropped 60-points. Thats 750 Dow points...

...but it bounced straight back.


Could have been a sell order out of Europe.

 

[Gundini]

For those that missed it, the US night session S&P just dropped 60-points. Thats 750 Dow points...

...but it bounced straight back.


Could have been a sell order out of Europe.

So what does that mean Nick, was the sell order cancelled/mistake/pending?

 

[Gundini]

Do you mean night fluctuations on the weekend in the US (Futures or Index), or on this chart. Can't see it, but maybe you had to be watching live...