The stock market is crashing....

[wayneL]

...in Saudi Arabia

http://www.zawya.com/equities/sa/

hmmmmmm.... what, if anything, is this telling us?

 

[YOUNG_TRADER]

War?

I don't know? ? ? ? ?

 

[nizar]

...in Saudi Arabia

LOL - nice one, u had me scared for a bit!

 

[michael_selway]

War?

I don't know? ? ? ? ?

yeah wayneL, any ideas why?

seems to be against the trend of other indices.

Btw wayneL u still a Bear?

thx

MS

 

[nizar]

War?

I don't know? ? ? ? ?

This was discussed on shares forum, by "Sam" around end of March, i post his thoughts below:

I'm working in Saudi Arabia at the moment, and the 'correction' has been long expected, the market has risen in excess of 600% since 2003. This increase has been based on pure speculation trading with total disregard being paid to balance sheets company announcements etc.

It seems the trigger for the collapse which started in late Feb was SAMA (Saudi Arabian Monetry Authority) announcement to limit the markets movement to gain/loss 5% daily, (previously 10%).

This upset many of the richer Arabs that invested heavily in the market and where making good returns and decided to pull all their money out as a show of protest to the government.

Efforts in the last few days from SAMA to stabilise the market have been to split shares and introduce trading for foreign expat residents..

However with the activities of the past month and the extremely heavy losses suffered by many it seems their is now caution in the air.

Prior to the 'correction' market capitalisation was around 54 Billion SR (%2.75 AUD Conversion) This figure dropped off at a rate of greater than 5 Fold in the days following.

So the thinking of opening the market to Expats was to inject a fresh revenue stream. I'm not sure of exact figure but Expat Remittances outside the Kingdom is an extremely large number, and the Kingdom is hoping that this money is pumped into the local market to stabilise it.

All sounds a bit odd ? I agree..

But interestingly the market has risen by 9.8 % over the past two days. with each individual stock on the Saudi Market growning at just under 5% a day.

See www.tadawul.com.sa (there should be an english link on the page)

Bottom line, from my observations the trend defies convention.

As for the ME economy you might need to look at this in two sections the GCC and other MEA, the GCC (Gulf Country Coperations, Saudi, Kuwait, UAE, etc) are showing solid growth with surplus results for FY05. This is mainly driven by the high oil prices that we have seen.

Other Middle East Areas I'm not to familiar with.

 

[wayneL]

Iceland is having a few palpitations too

 

[Smurf1976]

When the market gets out of touch with fundamentals then it's a question of whether the fundamentals catch the market or the market returns to the fundamentals. Either way ridiculously high valuations don't last forever. Not my original thought, just the lesson of history.

A decent p/e for stocks is regarded as being around 14 based on trailing (not forecast) earnings according to most analysts. 7 is cheap and 28 is bubble territory.

A decent rental yield for property is considered to be 7% according to many real estate agents and other experts. 10% is cheap and 5% is a bubble.

None of the above is my original thought, just repeating what many others have said on numerous occasions.

As for my own thoughts, "the market will crash once most are convinced that a crash has been avoided".

 

[kevo]

Liquidity might be drying up at the margins. The Japanese carry trade is ending. Many people are bearish on the States as well. No worries, a few new highs ahead. Gold is screaming crisis somewhere. Kev www.kontentkonsult.com

 

[wayneL]

The yanks certainly weren't bearish tonight. Everything... and I mean everything up. Stocks, Gold, Oil, silver, bonds, the whole flippin' shebang... except the US$ ... it's taking it where it hurts.

Oil and metals at highs WTF is going on. These are screaming bear omens.

But punters are buying stocks with their ears pinned back. I don't know!!!! It's all bad I tell you, blah blah blah. But, you just gotta take the signals when they come up, so I'm long everything ahahaha

 

[nizar]

The yanks certainly weren't bearish tonight. Everything... and I mean everything up. Stocks, Gold, Oil, silver, bonds, the whole flippin' shebang... except the US$ ... it's taking it where it hurts.

Oil and metals at highs WTF is going on. These are screaming bear omens.

But punters are buying stocks with their ears pinned back. I don't know!!!! It's all bad I tell you, blah blah blah. But, you just gotta take the signals when they come up, so I'm long everything ahahaha

Nice one.... good 2 c ur doing the right thing, its much easier to be a bull in a bullmarket

The trend is ur friend...

 

[tech/a]

I think its very normal for so much bear sentiment.

Its like having a LARGER Profit and succumbing to the temptation to take profit,only to see the stock move up another 400%.

There is absolutely nothing I have seen that gives credible evidence to a pending crash.
I see much which gives credence to a boom that will and can continue due to excessive demand.

 

[professor_frink]

The yanks certainly weren't bearish tonight. Everything... and I mean everything up. Stocks, Gold, Oil, silver, bonds, the whole flippin' shebang... except the US$ ... it's taking it where it hurts.

Oil and metals at highs WTF is going on. These are screaming bear omens.

But punters are buying stocks with their ears pinned back. I don't know!!!! It's all bad I tell you, blah blah blah. But, you just gotta take the signals when they come up, so I'm long everything ahahaha

WTF indeed wayne, bit of an unusual evening! looks like it's gunna be a rip snorter of a day today

 

[tech/a]

But punters are buying stocks with their ears pinned back.

Wayne do you really think that this bull market is being underpinned by "punters".
Insto's do the volume and insto's are enjoying un precedented return on their products.Superfunds are booming and thats what they want to be able to take advantage of.

In 87 at 2700 points the pudints cried loudly,over priced over stretched over valued,today at a 500% increase the same cries are heard.
Fear of loss is a very compelling emotion.

 

[bullmarket]

I suppose a lot depends on how people differentiate a correction from a crash.

About 4 weeks ago I uploaded a spreadsheet that calculates the average PER for various market indexes. Back then the average prospective weighted PERs (by mkt cap) for the ASX50 to ASX300 indexes were all in the ~16-17 range. I haven't updated the spreadsheet with the latest prices but obviously the PERs would be a little higher now.

There used to be a ball park rule of thumb that said a fair PER was 20 minus the inflation rate. With inflation at ~3% then I see a fair market PER as ~17 atm.

Blind Freddy can see that overall our market is not cheap but I don't see it as grossly expensive either. Therefore I'm not expecting a 'crash' atm, especially based on company fundamentals. But having said that, looking at the weekly XJO chart I think it would only take a reasonably credible hint from somewhere that inflation was looming (due to high oil prices or whatever) and that will take a lot of steam out of the market.

Imo, a retrace back to the ~4800 (~9% drop) January support levels would be a 'healthy correction' and not a crash if looking at the overall long term scheme of things of the bull market that started after the '87 crash (now '87 was a crash )

A continued fall below 4800 then obviously all bets are off as that would be a pretty strong signal for me that we are starting a much more likely sustainable bear market.

Finally, all of the above should be taken in context depending on what time frames you invest/trade in.

Anyway, just food for thought

cheers

bullmarket

 

[tech/a]

now '87 was a crash

What then was the 3 yrs 2000 to 2003 same fall almost.

BOTH in my view are corrections in a continuing Bull run.
We now have another 3000,000,000 thats right 3 thousand million Consumers let loose on the worlds economies.
Un precedented demand and un precedented growth.
We are all going to live through the economic mother of booms never to be seen again.
Demand drives growth---everywhere.

 

[RichKid]

One way to maybe prepare for a crash, or any downturn, is to be overly cautious and look for corrective waves and only trade smooth trends, might mean joining an impulsive wave late once the correction is over but you would also be avoiding the choppiness that normally precedes a crash, although we say it just drops off a cliff face cautious traders or active investors might be able to protect the downside. It does mean giving back more profits though.

Not sure if my hindsight analysis will work!! I doubt it but worth a thought. I'm just going to diversify (commodities, retail, tech, utilities etc) and follow my stops. if I 'feel' uncomfortable it'll just mean lowering my overall exposure to stocks, might mean missing out on profits but I don't want to be greedy, the basic precept is to survive in this game.

 

[tech/a]

Why Rich? (diversify)

Resourses are booming.

Thats like being in a property boom and buying caravans???!!!

 

[bullmarket]

Hi tech/a

If you see '87 as a correction then that is fine by me - I don't have aproblem with that. If you look back at the first line of my previous post you will see I said a lot depends on how people differentiate a correction from a crash. ......imo it's simply a case of you saying tomayto and me saying tomahto

I just called it as I see it and to be honest, there are more important things going on atm than 'arguing' over whether a particular event(s) (which everyone can see on charts and judge for themselves) is technically a 'crash' or 'correction'

cheers

bullmarket

 

[brerwallabi]

Make the most of today it could be the best day of the year, I have 2 computers going and about 10 windows open on each, here we go, good trading to all.

 

[tech/a]

Bullmarket.

I was passing an opinion on the DJI not your post.

I dont give 2 hoots wether you or anyone else agrees with my opinion.
I also dont give a hoot if people agree with you and not with me.
Its not about you or your opinion its about the DJI and crashing.

By the way,Tomato.