The Bull shall Return

[nizar]

XJO has been leading the way in global equity markets in the 3 years or so.
Lets not forget that while we increased by 22% last year, the DOW closed just as where it began ie. 0% return. So those that think we follow the DOW lead need to review the data.
And because of a poor calendar 2005, it makes sense for the DOW to outperform now ie. mean reversion.
Remember that while the DOW likes lower oil, XJO is more resource-heavy and lower oil and gold means stocks will be dumped.
RIO and BHP to XJO is just like BP and Shell to the FTSE-100.

While we have been rallying for years, the DOW hasnt, so the market is predicting that it is likely that the years of double digit returns on the XJO may be over. And history suggests the same.

LOng term view still looks good but im sticking to pure plays in zinc and pure plays in uranium. But be prepared to hold through volatility.

 

[dj_420]

Is it just me or were you watching a different lateline last night?
There was a whole segment dedicated to an interview with Bruce Teele, who stated quite clearly that comoditiy stocks such as BHP had been oversold.
So to suggest that lateline business was being bias is plain wrong IMO, otherwise thay wouldnt have ran the interview full stop...
Here is a link to that interview if anyone is interested:
http://www.abc.net.au/reslib/200609/r107760_333673.asx (windows media)
here is the link to the plain text Transcript http://www.abc.net.au/lateline/business/items/200609/s1745802.htm

Also, I consider myself new to the market compared to some on here but, correct me if Im wrong, the US markets are much more diverse then the ASX. In other words we rely on the commodities more so then the US. Looking at the commodities list today (a sea of red) its not hard to see why were reacting.

cheers

i was been sarcastic

although on lateline they have been refering to resources as a bubble that will pop, any wonder sentiment turns negative. to compare the resources boom to the internet bubble is rididulous. i was watching couple nights ago and they were broadcasting a very negative mood


anyways we will see what happens

 

[scsl]

The Federal Reserve left the interest rate unchanged again last night. Will it be up from here for our market or will commodity prices fall and drag down our resource/energy stocks?

Experts think the Fed could be finished raising U.S. interest rates
The Associated Press

Published: September 21, 2006


WASHINGTON It is looking more and more like it could be 17 and done for the Federal Reserve.

There is a growing view that after 17 consecutive rate increases, the longest stretch in Fed history, the U.S. central bank will keep rates steady for the rest of this year.

Some economists are forecasting that the next Fed move will be to cut rates, possibly as early as next spring, in response to a slowing economy and falling inflation pressures.

As widely expected, Fed Chairman Ben Bernanke and his colleagues held rates steady at Wednesday's meeting, issuing a statement that was virtually identical to the one the Fed released after its Aug. 8 meeting, the first time it paused after two years of raising rates.

The action left the federal funds rate, the interest that banks charge each other, at 5.25 percent. That meant that banks' prime lending rate, the benchmark for millions of consumer and business loans, will stay at 8.25 percent.

The vote to hold steady was 10-1 with Jeffrey Lacker, the head of the Richmond regional Fed bank, dissenting in favor of a further quarter-point hike. He had also dissented in favor of a rate hike in August.

Fed officials kept the door open to further rate increases, saying as they had in August that "some inflation risks remain." They also repeated their August view that any further rate hikes "that may be needed to address these risks" will depend on how the economy performs.

But private economists noted that all the small changes to the statement seemed to be in the direction of staying on hold and letting the current economic slowdown do the job of pushing inflation rates back down to acceptable levels.

"This was a very financial-market friendly statement," said Mark Zandi, chief economist at Moody's Economy.com. "The minor tweaks in the verbiage suggest the Fed is finished tightening."

The Fed meeting occurred against a backdrop of a number of developments that suggest the central bank's goal of having an economic slowdown take pressure off inflation was unfolding.

Oil prices, which had soared above $77 per barrel in mid-July, have fallen to close to $60 per barrel. That has helped push down gasoline prices from record highs above $3 per gallon to around $2.50 per gallon nationwide.

The favorable development on energy is already showing up in the government's inflation statistics with both consumer and wholesale prices slowing sharply in August.

At the same time, the overall economy has slowed to a growth rate of just 2.9 percent in the spring after racing ahead at a torrid 5.6 percent pace in the winter.

Many analysts believe that growth has slowed even further in the last half of this year to a pace of around 2.5 percent.

That could translate into the Fed's hoped-for soft landing in which the economy slows enough to keep inflation under control but not so much that the country tumbles into a recession.

But one major question mark is what will happen to housing, which has sagged significantly this year. The government reported this week that new home construction plunged 6 percent in August, the fifth decline in the past six months.

The concern is that a steep decline in housing could rattle the economy much as the popping of the stock market bubble did in 2000.

"The jury is still out on a soft landing. We think we are going to succeed, but we can't be sure yet," said David Wyss, chief economist at Standard & Poor's in New York.

Wyss said he expected the Fed to remain on hold for the rest of this year and by next June, it could start cutting rates.

Zandi said he could see rate reductions as early as this spring if the core rate of inflation, which excludes food and energy, has fallen closer to the Fed's comfort zone of 1 percent to 2 percent. The Fed's preferred measure of core inflation has risen 2.4 percent over the past 12 months.

As long as the Fed stays on the sidelines, analysts predict that other interest rates set by financial markets will likely stay about where they are.

The 30-year mortgage, which hit a high this year of 6.8 percent in late July, has now fallen to 6.4 percent, according to Freddie Mac, reflecting optimism in financial markets that inflation pressures are easing and the Fed won't raise rates any more.

Many economists said they believe 30-year mortgages will hover in a range around 6.5 percent for the next 12 months.

http://www.iht.com/articles/ap/2006/09/21/business/NA_FIN_US_Fed_Interest_Rates.php

 

[YOUNG_TRADER]

An excellent report out by Abra on Aus and Commities and China and the world and well you get the picture, highly recommended reading!

http://www.abareconomics.com/publications_html/ac/ac_06/ac_sept06_2.pdf


Zinc forecast is higher next year than current spot

 

[YOUNG_TRADER]

Well Oil's down under $60 a bl, Gold fell again to $570 level, Aus RBA left cash rate unchanged, most commodities are still enjoying solid demand and prices have really been strong in terms of a 12 month view my favourites Zinc and Uranium are doing especially well, this combined with how the US mkts are performing leads me to ask the following question......


NEW YORK (MarketWatch) -- U.S. stocks ended higher Tuesday, with the Dow Jones Industrial Average logging a new record close, after the price of oil slumped to a 14-month low, raising hopes falling energy costs will boost consumer spending and moderate any slowdown in the economy.


......Will the bull finally return to the Aus mkt? I think the first step would be an overall acceptance of the stronger for longer thesis followed by a return to stability,

 

[Sean K]

Morning YT.

Yep, we need steady oil prices for the long term bull to continue. I've read in places that between $50 and $70 will keep US cars on the road and consumers, um, consuming trinkets from Chindiapaniawan for some time to come. Let's just hope the US interest rates stay lowish, US housing market settles, yada yada yada... China keeps growing at around 10%.....The Bull Continues....

kennas

 

[YOUNG_TRADER]

Gold down to $560ish Oil still under $60 a bl and the dow all I can say is WOW


$INDU Last: 11,850.61 Change: +123.27 +1.05% Volume: 281,862,582


Dow's triple-digit gain blows away record
S&P 500 at multi-year high; Optimism on the economy spurs rally


NEW YORK (MarketWatch) -- The Dow Jones Industrial Average ended at its second record high in two days Wednesday, and the S&P 500 rallied to its best level in more than 5 1/2 years on increasing optimism that economic growth will continue at a pace that will sustain job creation and corporate profits.

Base metals are weaker so look for more silly selling today in our miners and oilers, BHP OXR LHG BDG WPL STO will suffer today

 

[MichaelD]

If you ask me, the bull is definitely back. My in depth study of my patented, super-secret bull market indicator reveals...

An outstanding breakout has occurred in the number of posts on Aussie Stock Forums.

The bull must be back.

 

[Sean K]

I've noticed there are a lot more people logged on to ASF at any one time.

Surley this is a sign more punters are back in the market. When was the last peak? Around 14 May? No coinsidence.

The bull is back.

 

[rocket_science]

but some of those aliases are mine

not as many as you think are logged on

btw, I think the market is a little more bullish. lets see for how long though.

 

[Sean K]

but some of those aliases are mine

not as many as you think are logged on

btw, I think the market is a little more bullish. lets see for how long though.

Great avatar Rocket. You MUST be bullish!

 

[bowser]

Does that also mean another correction just around the corner?

October 25th's fed reserve meeting might be critical for the bulls....

 

[rocket_science]

who knows bowser

what with Nth Korea and OPEC possibly cutting oil production to keep oil above $60

 

[YOUNG_TRADER]

NYMEX shows Oil at a yearly low around $58.40 bl

Also re Noth Korea and Nuke, Mkts seem to be ignoring the issue, Dow had held strong and even moved higher a bit, while FTSE has rallied strongly towards previous highs as has our All Ords and S&P 200, no to mention the fact that Gold, the so called 'safe haven' asset has failed to rally, its sitting around the $575 oz level, so looks like the financial markets are not to convinced there is a real threat,


Have the Bulls finally returned in force? If BHP and RIO start to reach their MAY highs then the XAO and XJO will most certainly hit new highs,


http://www.fnarena.com/index2.cfm?type=dsp_newsitem&n=34A2ECDD-17A4-1130-F5DFD3458E4D6133

 

[YOUNG_TRADER]

Oil dropped again overnight to $57.50 bl,

Gold did nothing, even with the so called threat of North Korea and the possible Terrorist plane attack which turned out to be an accident (Gold is a dud now)

DOW closed down slightly in the face of hawkish Rerve Bank minutes, North Korea threat and plane attack confusion, but given strong rally over past couple of days its amazing that it didn't close lower on profit taking etc

So isn't it funny how little the mkts seem to care about this N Korea situation, sentiment really is everything and I think the heard of sheep are really starting to bunch together behind the Bulls,

Interesting read
http://www.fnarena.com/index2.cfm?type=dsp_newsitem&n=37AB0BFF-17A4-1130-F58E3D477B208B70

Items of significance over Oct,
- Zinc spot prices heading towards $1.8 high watch for breakout
- US Fed meeting 24th Oct
- Aus CPI figures 25th Oct (according to our new RBA Gov they hold the key for future rate decisions)
- Lots of 1st Qtr reports coming out

 

[Sean K]

Gold did nothing, even with the so called threat of North Korea and the possible Terrorist plane attack which turned out to be an accident (Gold is a dud now)

No YT, Nooooo!!!!!!!!!!!!!!!!!!!!!

Gold to $1000 by end next year. Why? Because I own a ton of gold! It's shiny, it's bright, $US to become worthless (maybe), war against the Axis of Evil, oil to $100 when the wells run dry (and war against Iran), BRICs stop investing in $US and turn to the Yuan , Euro, and gold. blah blah blah....

 

[YOUNG_TRADER]

I can maybe see Gold turning after US elections when the powers that be no longer need to prop up the US $ and keep the Gold price low so as to help win an election, I reckon Gold will hit $1000 sometime during the next 12 months, but will wait for the trend to form before I move back in, good luck

 

[Sean K]

I can maybe see Gold turning after US elections when the powers that be no longer need to prop up the US $ and keep the Gold price low so as to help win an election, I reckon Gold will hit $1000 sometime during the next 12 months, but will wait for the trend to form before I move back in, good luck

He, he, cheers YT.

I still agree with you that it's a bizaar commodity, and maybe it is just all sentiment driving it, but it is still there. I mean inherantly, what value does gold have? What does it power? What does it hold up? What other function does it have other than to just BE. Gold fillings? Give purpose to Fort Knox? Represent 1st place at the Olympics? Give relevance to the term 'that's gold dust'? So Ian Flemming can use it in every second book title? So Indians can represent their wealth in some way? Bizaar.

"Go for gold!" Laurie Lawrence, circa last Olympics.

 

[YOUNG_TRADER]

So Ian Flemming can use it in every second book title?

I know of a chap named Scaramonger who has a gun made out of gold :

 

[YOUNG_TRADER]

Oil still under $60 and the records continue to tumble

FTSE is less than 15 points (0.1%) away from its may highs thats a whisker!

DOW up nearly another 1% to another record high

Even the Latin American mkts are closing at record highs,


Once the FTSE passes May high, the Aussie mkt will well and truly be lagging the global trend