Where are the markets heading?

[KIWIKARLOS]

I would like to hear some opinions on the current downturn.

We have had consecutive drops across most markets will htis continue, get worse or recover.

Current Market Pros:
earnings season would expect some good company profits.
Still strong demand for commodities
Lots of money around the world to be invested

Cons:
Dodgy loans are hitting risky investment funds: will this only effect high risk funds which prob won't roll over to less risky investments. From what i understand hedge funds are legally set up so the company has no liability so the private investor stands to loose most?
Interest rate worries: US don't look like raising rates soon, Aussie either however japan and europe, china more likely:
China introducing new measure to control market: What could these be interest rate hike, other macro controls ?

My opinion is there is a downturn happening but current market is a bit panicing and that we could see a mild recovery in the next couple weeks followed by further fluctuations for next 12-18 months.
Big worry is the US building market, if that goes then i can see problems spreading hard and fast but can't see this happening untill middle - end of US housing market season (end of summer).

I only ask one thing could we not get stuck on severe market correction talk, I would like some balanced views

 

[nizar]

Ok my opinion.
This correction maybe last another 3-4 weeks, support at 6200 for XAO will be broken, and the lows should touch to 5900 or close to the 200dma.

That would set us up nicely for the next run to 7000 which will peak in October.

 

[nioka]

The end of the financial year, along with the changes to super are confusing the situation this week. Some funds are also selling to lock in profits so that their position looks good. Some buyers a selling poor performers to get the tax loss advantage. Super funds will have a lot of new money to find a home for next week. Inventories are let run down for stocktaking. The end of next week will start to show a trend and the market will react better when the June quarter accounts are presented.
It may be a bumpy ride but i suggest things will be rosy for some time yet.

 

[dj_420]

hmmmm well im down around 6% today, got hit hard.

i suppose my portfolio has run over 10% in last two weeks so it is ok, just annoying to see such a drop before june 30, when i was going to sell some of my positions, or reduce them anyway.

 

[powerkoala]

with dow jones lost 3 days in the row and market are waiting for bernanke's speech end of this week i think we will go south until end of financial year, then start to go north again. profit seller or stop loss for taxation purposes drive today's selling off. 120 point down. not bad for first correction. i think 6000 will be the support for xao. let see what happen in next 2 days.

 

[UPKA]

its reall a bit mix of everything today, end of financial year and bit of correction lead by the US, and also the weaker commodity prices. i guess im more optimistic about these kinda of gradual correction over a period of few days than a big drop in 1 day like wat we saw in China. I think its a bit bloomy in the US housing market, untill we see some stability there we might see this retreat to last a bit longer. as for our market, it's important to see the Chinese n Japanese to keep their demand up, and keep the commodity price stable, then 90% of us here will walk around with smile on our faces

 

[prawn_86]

im no market guru, but from a personal point of veiw i would much rather see the market 'ease' like it has over the last few days rather than a sudden drop and a lot of panick selling. especially since all my capital is tied up at the moment

 

[juiceman]

Ok my opinion.
This correction maybe last another 3-4 weeks, support at 6200 for XAO will be broken, and the lows should touch to 5900 or close to the 200dma.

That would set us up nicely for the next run to 7000 which will peak in October.

I agree with Nizar
+Two double tops on the Dow and S&p 500 don't help much
The realestate thing, the hedge fund thing,which way is the wind thing blowing.
The Americans love any excuse to move and shake the markets thats how they make money

 

[>Apocalypto<]

I would like to hear some opinions on the current downturn.

We have had consecutive drops across most markets will htis continue, get worse or recover.

Current Market Pros:
earnings season would expect some good company profits.
Still strong demand for commodities
Lots of money around the world to be invested

Cons:
Dodgy loans are hitting risky investment funds: will this only effect high risk funds which prob won't roll over to less risky investments. From what i understand hedge funds are legally set up so the company has no liability so the private investor stands to loose most?
Interest rate worries: US don't look like raising rates soon, Aussie either however japan and europe, china more likely:
China introducing new measure to control market: What could these be interest rate hike, other macro controls ?

My opinion is there is a downturn happening but current market is a bit panicing and that we could see a mild recovery in the next couple weeks followed by further fluctuations for next 12-18 months.
Big worry is the US building market, if that goes then i can see problems spreading hard and fast but can't see this happening untill middle - end of US housing market season (end of summer).

I only ask one thing could we not get stuck on severe market correction talk, I would like some balanced views

Short term south.

Next areas of support 6150 - 6000 enjoy the ride.

 

[Ken]

Those looking for some bargains, I would hope the market weakens some more....

I have a margin loan to fill out.

 

[wayneL]

A leading indicator to keep a close eye on is US treasuries. Lower treasuries mean higher longer term interest rates. Longer term interest rates will mean reduced profits for many companies and a re-evaluation of what risk premium means.

The latest run down in these bonds (and implication for further damage in the housing/mortgage market) is what has precipitated the current negativity. It's currently in a retracement, so further dumpage could put the cat amongst the pigeons.

Keep an eye on it here: http://new.quote.com/futures/adv_ch...tUi.bardensity=HIGH&chartUi.overlay=&x=59&y=5

 

[TheRage]

From a fundamentalist perspective it will probably take a few weeks for the Super money to find it's way to the market with clearing, investment decisions etc. This proabbly lines up with most of the charts you guys are forecasting. I expect a fair bit of selling tommorrow. I think everyone is underestimating the amount of money that is currently flowing into Super. We have taken in about 20 Million this week alone that has come from the sale of Farms, property etc. I haven't seen too much money coming from the sale of shares being put into Super. This doesn't mean that there isn't any but I have seen whole lot more from the sale of businesses and property. In my mind this will create more demand for australian securities by funds managers in the coming weeks once the dust settles.

 

[wavepicker]

Noticed something very interesting on ASF in the last 15 months.

On 2 seperate occasions now, when the amount of users on ASF has broken into a new record, this has preceded a correction in the market.

In early May of last year, a new record was set at over 500 users online. One day later, the largest correction since the whole bull advance started commenced.

Just last friday another new record with 767 users online, and this week the market is down hard. Just a coincidence, or is this an example of extreme optimism??


Another example, I read in the Herald Sun on the weekend that property prices are "EXPECTED TO GO THROUGH THE ROOF" in the next ten years. The writer of of this article was projecting the past trend into the future, which once again is an example of extreme optimism. Will be interesting to see what in fact does transpire but with such optimism I think prices have very little chance of going through the roof, as they have already done so for the last
10 years!!

This doesn't seem to happen with only extreme optimism, last year on this site I noticed the extreme pessimism regarding TLS, so much negativity with most saying this would not make a good trade and was a dud. When polled 95% of moms and dads agreed this was a dud. This is important information, because in my opinion, the more that disagree with you, the greater your chance of success are. What seems logical in the market usually is what does not happen. So what did TLS do after the mums and dads said it was a dud?? It rallied 47% in 6 months.

Now I am seeing extreme pessimism in the US Dollar, one again the financial press is calling the USD the next Mexican PESO, and down with the dollar, this is even greater than at the last low of DEC 2004 even though price has not made a new low. IMO this is a very significant divergence which might bring the commodities boom to it's knees in the next couple of years, thereafter, well who knows.

Interesting times indeed

Cheers



Cheers

 

[CanOz]

Some great points there Waves.

I noticed that ASF record too, only yesterday and was thinking "hmmm, i wonder what the heck is going to happen next?"

Now, wheres those shorts?

Cheers,

 

[wayneL]

From the financial times

http://www.ft.com/cms/s/2b7e102a-24...621.html&_i_referer=http://www.ft.com/home/uk

Market insight: Liquidity under threat

By Charles Dumas

Published: June 26 2007 17:47 | Last updated: June 26 2007 17:47

The bright, liquidity-driven prospects for the stock market, versus the hard landing for the US economy, have been a puzzle all year. Prolonged weakness in the economy without some stock market weakness would be odd. Yet the implication of a hard landing, lower interest rates, has even boosted stock prices, given the predominance of debt-driven private buy-outs in setting prices.

The Bear Stearns hedge fund fiasco removes the paradox. Banks’ capital is about to be slashed, and with it excess liquidity in the global system. Look at mortgage-backed collateralised debt obligations -– pools of debt assets, in which investors take stakes with different levels of risk. Suppose the CDOs held by banks were valued at “market” rather than “model” levels (a fancy new euphemism for illusionary historic book values). Their capital would turn out to be lower. Preservation of capital ratios against loans would require fewer loans: liquidity would have imploded.

The rest of this article is for FT.com subscribers only

 

[CanOz]

A leading indicator to keep a close eye on is US treasuries. Lower treasuries mean higher longer term interest rates. Longer term interest rates will mean reduced profits for many companies and a re-evaluation of what risk premium means.

The latest run down in these bonds (and implication for further damage in the housing/mortgage market) is what has precipitated the current negativity. It's currently in a retracement, so further dumpage could put the cat amongst the pigeons.

Keep an eye on it here: http://new.quote.com/futures/adv_ch...tUi.bardensity=HIGH&chartUi.overlay=&x=59&y=5

Whats also interesting is that if this is the completion of the retracement, and the H&S target comes to fruition, it could be a long way down yet.

 

[Sean K]

Whats also interesting is that if this is the completion of the retracement, and the H&S target comes to fruition, it could be a long way down yet.

Hasn't the H&S hit it's approximate target there Can, and coinciding with support, wouldn't you expect a halt as it has at 104 ish?

 

[CanOz]

Hasn't the H&S hit it's approximate target there Can, and coinciding with support, wouldn't you expect a halt as it has at 104 ish?

I've got it as 102.73, 100% retracement from the high, or 50% from the neckline, am i missing something?

Cheers,

 

[wayneL]

Expect TY to be in the high 90's within eighteen months.

 

[stoxclimber]

Ahh, familiar faces since the last correction...cant teach an old bear new tricks

Being facitious aside, since everyone is predicting the market to go down tomorrow I'll predict it to go up.