Australian (ASX) Stock Market Forum

Amazing watching the past 2 weeks, the XAO now moves with the Shanghai Index. And so does the Hang Seng and Dow Jones, then it all starts at 11:30am the next day.

XAO and Hang Seng just made a sharp 1% rally in about 30 minutes on the back of Shanghai Index doing the same.
 
I know a few TA and FA who have the 4600-4700 zone as a potential support for a further lows.

I've worked out based on similar gradient from April to August, we'd be looking at about mid-late October.
 
I hope this guy is wrong, 18 months to 3yrs, imagine it! My bolds under.

David Dredge of global hedge fund Fortress:
http://www.brisbanetimes.com.au/bus...-the-works-20150901-gjcoge.html#ixzz3kZT0YwMt

...Singapore-based Dredge says the current volatility in financial markets is in the early stage as markets react to a correction of global imbalances that will last from 18 months to three years....

...Interest rate volatility is low and, while foreign currency volatility may have risen, it is below many of the peaks reached over the past five years. Corporate credit spreads, too, are around post-financial crisis lows despite a fair-sized correction in corresponding equities.

"This is indicative that we're just at the very beginning of this," Dredge says....
 
I hope this guy is wrong, 18 months to 3yrs, imagine it! My bolds under.

It's interesting that more and more analyst's are getting very bearish all of a sudden. Just remember that major crashes almost always occur when everybody is extremely bullish and confident that all is well. We are nowhere near those extremes in my view. A decent correction for U.S indices would be healthy and set up the next major leg higher.
 
Amazing watching the past 2 weeks, the XAO now moves with the Shanghai Index. And so does the Hang Seng and Dow Jones, then it all starts at 11:30am the next day.

XAO and Hang Seng just made a sharp 1% rally in about 30 minutes on the back of Shanghai Index doing the same.

Good point. We are yet to see if that is a good thing or bad thing though. Maybe it will be China that drags the world down with it. Makes sense as we are all so interdependent.:pcorn:…………………………...


"Just remember that major crashes almost always occur when everybody is extremely bullish and confident that all is well."

Like China a few months ago.
 
It's interesting that more and more analyst's are getting very bearish all of a sudden. Just remember that major crashes almost always occur when everybody is extremely bullish and confident that all is well. We are nowhere near those extremes in my view.

Sentiment is important, you're correct there. Also spot on that overbullish sentiment is where trouble often lies.

But we were already there. Overvalued, overbought, overbullish. Last year, earlier this year.

I don't really think the current sentiment counts as overbearish.

What you should be looking for is a meaningful shift in investor risk preferences (as proxied by breadth, credit spreads, industrial commodities, etc) towards positive. If that's coupled with a significantly overbearish sentiment, so much the better for you. Just as in the same way that investor risk preferences started shifting negative in mid 2014 while sentiment was significantly overbullish.

Right now, all the proxies for investor risk preferences that I track are signalling continuation of the current regime. What this means for the AU indices is not crystal clear, but if I had to make a forecast it would be: expect volatility.

A decent correction for U.S indices would be healthy and set up the next major leg higher.

The problem for the US indices is that by every valuation measure which has had a good track record of predicting long term returns, there is significant overvaluation there, with mean reversion in these measures implying 50% declines just to get to "fair value". To get to the valuations that correspond with 10% per annum long term future returns we would have to go a lot lower than 50%!
Coupled with this, corporate profit margins are running near all time highs (nowhere to go but down) and forecasts for long term growth in the global economy do not look great.

In that sense, I agree that a correction would be healthy to clear some of those syndromes up. But realistically, a new move higher unbacked by meaningful economic expansion is just going to return us to the same overvalued and overbought regime we were in not so long ago.
My :2twocents is that short of hyperinflation (actually an outcome I assign a higher probability to than most), the price in 10y from now of the S&P500 will be pretty much the same as it is today, so new highs made in the short term are unlikely to be sustained.
 
I have seen those forecast returns based on Shiller PE, Market/GDP Ratio and a few others.

They definately aren't pretty.

Consider the possibility we're in a 15-20 year secular bear, it would only take for this leg to fall over.
 
Shanghai Market doesn't open again until Monday, so there's some clear air for the ASX / Hang Seng (2 days) and Europe / Dow Jones (3 nights).

If you're bullish, you'd want to see 2% to 3% made over this period, because if not then, when?
 
Shanghai Market doesn't open again until Monday, so there's some clear air for the ASX / Hang Seng (2 days) and Europe / Dow Jones (3 nights).

If you're bullish, you'd want to see 2% to 3% made over this period, because if not then, when?


Maybe markets will be a bit scared. Whats china gunna do? Whats china gunna do? Pull back the next couple of days then china opens up (green) on monday and we get a relief rally???
 
When the trade deficit sinks in we're in for it, and Hockey says "no recession" so it's already here.

Hope I'm wrong.
 
Intraday chart for the ASX looks pretty sickly, especially compared to timezone peers. Smells like trouble ahead.

EDIT:

oops sorry forgot the chart. I read it as markdown, followed by a consolidation, with the higher probability being towards continuation than reversal:
Screenshot.png
 
Yeah, nice big rotation back...5000 gets tested before the close?
 
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