The Crash of 05

[DTM]

Sorry to be the dissenter. I think the Aussie markets have had their run and are now getting ready for the down side. The US will go into a recession but will recover from it, not as quickly as it did before, but recover it will. Watch out for the boom in Australia once the Americans start powering up again.

Otherwise, I wouldn't be holding shares but Cash, in USD.

 

[Milk Man]

Some may try to call the crash, other just acknowledge the possibility.

I used to drive past this big shed in the middle of a paddock. (you could see it from the highway) This shed was old, rusted and dilapidated; and had a bit of a lean to it.

Everybody knew that one day it would fall over, heck, it looked as though it shoulda gone ages ago.

But there it stood resolutely and defiantly, against every storm and strong wind. We used to have bets on when it would go over. It never did....

....so we gave up betting on it. The bloody thing will never fall down!!!!

One day I was driving past not long after we had given up and there it lay, in a crumpled twisted heap! It had finally gone over.

I'm glad I never stored anything valuable in that shed.

Cheers

This shed wasnt in Canungra (Gold Coast hinterland) was it? Coz' we used to do the exact same and the exact same thing happened!

As for the world economy: china/india's growth is being driven by US consumers. Once that cherry pops so does theirs! Being that their main resource is man-power I cant see that any sort of consumerism is sustainable on any level. Does anyone know whether they have to import food? If so theyre FUBAR IMO.

 

[Hanrahan]

I'm unconvinced that India and China could replace the Yanks as "consumer of last resort". In spite of America's huge trade deficit with China, China is in deficit with the rest of tthe world so exports are absolutely critical to them.

I look at America's "China experiment" as their second great venture into slavery.

The first finished badly when the slaves were freed and were not sent back where they came from. This time they contracted the Chinese Mandrins to be slave masters of their own people. This way the slaves remain on the other side of the world

This cosy arrangement is unravelling now :goodnight How this will play out is what this discussion is about and I don't claim any foresight. ergo I am heavily into PMs. I will also admit to having a little of Hanrahan in me and I'm trying not to be rooned.

 

[markrmau]

ASX is getting cained because of concerns of poor world growth leading to crash in commodities prices.

Look at the continuos commodity index. Is it trending up or down? And this includes the big drop in oil last week. It doesn't show the same drops as seen in SP500 or XJO. I just don't see the need for panic YET.

 

[Yippyio]

It is worth considering what COULD cause a crash (timing unknown).

First thing to leap to mind is a US currency crisis. We all know of the inherent instability of the US deficit - asian nations lending the US money so the US can buy the stuff that asia produces.

All we need to find is a trigger which could cause the US consumer to falter......

October 4 – Bloomberg (Kathleen M. Howley): “Manhattan apartment prices fell 13 percent in the third quarter, the most in 16 years, evidence the most expensive market in the U.S. may have peaked. The average apartment price dropped to $1.15 million from a record $1.32 million in the second quarter, according to a report today from Miller Samuel Inc…and Prudential Douglas Elliman, a Manhattan real estate broker. Prices had soared 30 percent in the previous three months.”



October 4 – New York Times (David Leonhardt and Motoko Rich): “A real estate slowdown that began in a handful of cities this summer has spread to almost every hot housing market in the country, including New York. More sellers are putting their homes on the market, houses are selling less quickly and prices are no longer increasing as rapidly as they were in the spring, according to local data and interviews with brokers. In Manhattan, the average sales price fell almost 13 percent in the third quarter from the second quarter… The amount of time it took to sell a home was also up 30.4 percent over the same period. In another sign that the housing market might have reached a peak, executives at big home builders have sold almost $1 billion worth of company stock this year. Outside Washington, in Fairfax County, Va., the number of homes on the market in August rose nearly 50 percent from August 2004.”

Property slow down in the states, that is excellent news for equity markets, people pulling out of real estate will be looking for new areas to park their money and it's either in real estate or it's in shares or it's under the bed.

This sounds more to me like the beginning of a bull market. Thanks for the update.

 

[johnno261]

Re: Outlook

Property slow down in the states, that is excellent news for equity markets, people pulling out of real estate will be looking for new areas to park their money and it's either in real estate or it's in shares or it's under the bed.

This sounds more to me like the beginning of a bull market. Thanks for the update.

Do agree, our housing market is in the same situation here in Oz and there will be lots of money looking for a home and I do believe this is the start of even a stronger trading period than we have had before.

 

[Milk Man]

Property slow down in the states, that is excellent news for equity markets, people pulling out of real estate will be looking for new areas to park their money and it's either in real estate or it's in shares or it's under the bed.

The smart thing to do would be to pay off their debts.

 

[TheAnalyst]

it aint a crash and what about 4 months ago when hey were saying that was a crash and it wasnt.

That would mean we have had two crashes this year.

 

[Porper]

Re: Outlook

Do agree, our housing market is in the same situation here in Oz and there will be lots of money looking for a home and I do believe this is the start of even a stronger trading period than we have had before.

:iagree: I think that it maybe simplistic and I may be naive but money is moving out of property, so it has to go somewhere, and why not the stock market.The Dow Jones has performed poorly compared to other markets so, yes, America in a bit of a state but maybe that won't affect the US market as much as we think.Just maybe the surplus money will be invested in shares.

 

[penfisher]

We see cycles after the fact. If we could see them before, then there would be no market activity per se. The Reserve will fear inflation and raise rates; stocks will fall because - wink wink nudge nudge - and property will not take the excess money from share sales... hung property market till mid 2006. The money will go where it always goes... offshore banks.

 

[happytrader]

Who cares! Start hedging!

Happytrader

 

[wayneL]

Who cares! Start hedging!

Happytrader

The smartest thing said so far!

Cheers

 

[Fleeta]

As a Pisces, i guess i should stick to stocks that deal with water.

Cracker of a line this. I'm a libra so what stocks should I be buying?

 

[el_ninj0]

The smartest thing said so far!

Cheers

Sorry for my ignorance, but hedging? Care to explain please.

 

[Milk Man]

Sorry for my ignorance, but hedging? Care to explain please.

Its when you grow plants in close proximity to each other then prune them so they look like one plant. :

Nah- its like having one each way; so if the market crashes youre not completely FUBAR. As in buying gold if you fear a market crash.

FUBAR: Of 'Tango and Cash' fame. Last 4 words= up beyond all recognition.

 

[wayneL]

This shed wasnt in Canungra (Gold Coast hinterland) was it? Coz' we used to do the exact same and the exact same thing happened!

This one was in Victoria, but funnily enough, I used to live on Biddaddiba Rd (you'll know where that is ) and recall similar sheds...that black soil virtually spits the posts from those sheds straight out of the ground eventually LOL.

FUBAR

LMFHO!

 

[Stan 101]

just left New York and while waiting for a plane on a very rainy day in downtown, I started listening to some economists on a tv economic roundup show. They ´ve noted that in the last 8 (?) interest rate increases, consumer spending has not waivered. This is quite amazing considering that fuel prices have doubled in recent times (still good by world standards, though). Americans are still dipping into their equity at astonishing rates as they continue to buy buy buy!

I wonder what will break first?

cheers,

 

[SmallStocks]

What happened in the Market over the last week? This review was conducted on Thursday

What caused it all? A good question that deserves some comment.

To begin with, the US stocks ended significantly lower last night, with the Dow Jones and the S&P 500 Index hitting their lowest periods for the last 3 months. Concern about inflation, slower general economic growth rates and the talked up chat regarding interest rate hikes in the US were all felt in other markets. The dampening of the DJ Index and S&P softened a more positive reaction to the news regarding the easing of the crude-oil prices - now that the effects of Hurricane Rita have realistically moved on.

What was the trigger? Well on Tuesday in the in the States three bank presidents of the federal reserve suggested that the US Fed would most likely raise short-term interest rates to keep inflation reduced within the US Economy. This led to general negative market sentiment, which impacted the US Equities market whereby sellers took control of the buyers on both the NYSE and the NASDAQ with more than 1.91 Billion and 1.95 Billion shares being exchanged by traders respectively.

Another point to mention is the over zealous reaction that Hurricanes Katrina and Rita have caused and the consequent after effects felt by them. Crude Oil closed slightly under $63 a barrel, caused by a drop in US heating-oil and gasoline demand.

How has this affected the world markets? As previously mentioned, the rest of the world reacted negatively to the latest US losses and the Asian markets were no exception. The Tokyo Nikkei closed at 13,359.51 today which was followed by Hong Kongs Hang Seng, which fell a further 2.1%. Furthermore, there is now more speculation that Great Britain may not be able to ride out this downturn as easily as it did the 1999 financial disaster that hit the US and Europe. While its unemployment and growth are at "recordly" positive levels for the Poms, the majority of Britain’s trade is derived from Europe and Europes current slump has set many global analysts to switch on their cautious buttons.

So when you tie all this back into the Aussie market, you can see why the market has fallen so rapidly in such a short period. Construction group Rinker led the decline because of its strong construction affiliation with the US Growth market - ironic as many investors assumed it would increase in the wake of Hurricane Katrina. Of the other main market movers we see that BHP, Comm. Bank and Woodside were all negatively impacted.

So what does this mean for Small Stocks? Well the Small Ord’s fell 69.9 points or 2.7% which is expected on such negative market sentiment throughout the rest of the world. While this may trigger a cause for concern, it is generally accepted that the "everything that goes up, must come down". The key is not to fret! The recent booms in the Australian market have consequently meant that some sort of downturn was imminent - batten down the hatches, keep an eye on your portfolios and weather the storm for this seasonally weak period.

 

[krisbarry]

Australian market could ease

By Jeff Turnbull

09oct05

THE Australian share market, bruised and battered after last week's $40 billion rout, could slip a little farther over the next few days but remains well supported, according to analysts.

In a stampede of profit taking, the losses are now being described as "the correction we had to have" and not the beginnings of a bear market.

CommSec chief equities economist Craig James said the companies that suffered the most last week were the same ones that rode the market to the top.

"These companies are the key casualties of recent profit-taking but fundamentally the sharemarket is well supported," Mr James said.

He said domestic and global economies continue to expand while the main risk to profits is rising costs.

"Consumers have become more conservative about spending and borrowing decisions in response to higher petrol prices and the flattening in house prices," Mr James said.

"But consumers are well supported by a strong job market, rising wages and tax cuts."

He said the sharemarket correction was prompted by fears of higher inflation and interest rates in the US.

"But the jitters over the inflation in the US have just proved to be a good excuse for domestic investors to engage on some healthy profit-taking."

AMP Capital chief economist Dr Shane Oliver said although the correction had a little steam left in it he still expected the market to hit record heights by the end of the year.

"The recent slump in Australian shares should be seen as a correction rather than the start of an extended fall," Dr Oliver said.

"Although the correction may still have a little further to run, we expect the market to be making new highs by the end of the year and into next years and, as such, should be seen as a good buying opportunity."

In the week ahead, the market will be paying close attention to a speech to be given by Reserve Bank of Australia deputy governor Glenn Stevens in Hobart on Tuesday.

"While Glenn Stevens might express some concern about inflation, our assessment is that with housing still slowing and households under pressure from high petrol prices the message will be one of rates remaining on hold for now," Dr Oliver said.

The S&P/ASX200 index will open tomorrow at 4440.6 after slipping 6.7 points last Friday and the all ordinaries commences trading at 4400.1 after firming 1.72 points at last week's close.

The market will take some encouragement from the upward direction in the US where the Dow Jones industrial average added 5.1 points to 10,292.31 last Friday and the Standard & Poor's 500 Index improved 4.41 points to 1195.90.

The Nasdaq Composite Index advanced 6.27 points to 2090.35.

Source:

http://www.theadvertiser.news.com.au/common/story_page/0,5936,16867304%5E1702,00.html

 

[TjamesX]

All you TA guys are gonna love this - new signal to add to your systems

The Hindenburg Omen

http://safehaven.com/article-3880.htm

All the biggies over the past 21 years were identified by this signal (as defined with our five conditions). It was present and accounted for a few weeks before the stock market crash of 1987, was there three trading days before the mini crash panic of October 1989, showed up at the start of the 1990 recession, warned about trouble a few weeks prior to the L.T.C.M and Asian crises of 1998, announced that all was not right with the world after Y2K, telling us early 2000 was going to see a precipitous decline. The Hindenburg Omen gave us a three month heads-up on 9/11, and told us we would see panic selling into an October 2002 low. And now we have another confirmed Hindenburg Omen signal, here in the autumn of 2005.

TJ