XAO---Im about to change into my SHORTS

[Aussiejeff]

Re: XAO---Im about to change into my SHORTS.

DTM ...

Amazing the change in sentiment a few hours makes. US markets now positive after upbeat economic news overnight.

So today UP instead of DOWN?

;o)

Cheers,

AJ

 

[DTM]

Re: XAO---Im about to change into my SHORTS.

DTM ...

Amazing the change in sentiment a few hours makes. US markets now positive after upbeat economic news overnight.

So today UP instead of DOWN?

;o)

Cheers,

AJ

Still very bearish myself. Greenspan's comments twice saved the US market from falling, but the upwards movmement were very weak. I'm still expecting it to fall because the pressure has been building up to go down. Tonight could be the start...

And then there's oil going up which has the effect of lowering the US markets.

Just a short matter of time I think...

Not advice, just my views.

 

[Aussiejeff]

Re: XAO---Im about to change into my SHORTS.

DTM,

You thoughts are welcome anytime. It is logical that for every couple of bulls there HAS to be a bear to keep the lid on the boiling pot... otherwise we would have runaway rampant optimism all the time and where would THAT get us, eh? hehe...

Cheers and happy trading whether you are in your SHORTS or LONG johns,

AJ

 

[DTM]

Re: XAO---Im about to change into my SHORTS.

DTM,

You thoughts are welcome anytime. It is logical that for every couple of bulls there HAS to be a bear to keep the lid on the boiling pot... otherwise we would have runaway rampant optimism all the time and where would THAT get us, eh? hehe...

Cheers and happy trading whether you are in your SHORTS or LONG johns,

AJ

Yes, am in shorts at the moment and feeling left out in the cold (actually feeling the heat). Will change quickly to my Long Johns though if things don't change...., don't want to miss out on the party.

 

[Smurf1976]

Re: XAO---Im about to change into my SHORTS.

Well here we are, back at the all time high. The XAO is just below it whilst the XJO has reached a new intraday high.

But where to next?

Bull case - we just made a new all time intraday high and all seems fine. What do you mean the market's going to do anything other than keep going up? The decline from March to early May was just a correction. There's an argument for a rising stock market based on superannuation changes etc and media reports of declining returns from real estate discouraging that investment alternative.

Bear case - The US continues to pump up interest rates, oil prices are back up despite the USD rally (so they're at record highs in some currencies), majority of the public seems to be bullish, Various indicators seem to be ready to peak (not that I'm an expert on indicators). Even on generally bearish economic forums most seem to view a major stock market downturn as unlikely (but they view all sorts of oil, real estate, currency crashes as far more likely which to me suggests outright complacency towards stocks).

What does everyone think?

I'm out of the market as of today waiting to see what happens. Personally I don't really know and can see the logic in both views. If forced to choose I wouldn't like to but the bear case does seem a little more convincing to me over the medium term. But that says nothing about tomorrow or next week...

Thoughts? Opinions?

 

[DTM]

Re: XAO---Im about to change into my SHORTS.

I sold out of most of my puts with CBA, ANZ and MBL. I've gone bullish on the banking sector and bought calls because it looks like a natural retracement for the banks. I've left some of my puts in place as insurance in case the market really drops but feel that we will still be heading up. My thoughts are based on the fact that we didn't lose ground from the opening level. I will also make an assumption (more like a guess) that the smart money (in the banks) got out today as shown by the high volume within the first 30 minutes of trading. Now this leaves the silly money ready to jump in (like me for example) ready to drive the market up again.

Resource stocks like BHP and RIO have broken out and will be interesting to see if they retrace.

 

[TjamesX]

Re: XAO---Im about to change into my SHORTS.

The shorts are definitly out in the cold at the moment.....

Looking at the chart of the XAO it almost looks like a vertical line from 3900 to todays highs. I'm sceptical because of the fact that we have moved so quickly to the highs without really taking a breather, and IMO the breather will come soon.

As my portfolio sits, I have cashed in some profits over the last week and are currently 35% cash 65% shares (after being 5-10% cash a week ago). The shares I'm holding are mainly resources (BHP) and resource related as well as a couple of LIC's, I'm happy to hold these through any market slips in the medium term. After the last breather/correction and seeing what can happen I think its prudent to lock in some profits, and if your happy with your returns - don't get too cute

The market isn't getting silly - looking around, most companies that have been touched by profit downgrades have been suitably punished (property, consumer discretionary), these haven't recovered, there's just been a movement of capital to different stocks.

I'm still bearish towards the Aus economy in general over the medium to long term and so have shares allocated in the sectors that will hopefully be least affected. I'm looking to sell my LIC's over the next few months.

The cash I now have will be waiting for some good opportunities with any market breathers that occur - anyone for XAO 4500 before the end of the year?

The X factor of the US market is still the overarching factor that will drive sentiment in the AUS market and determine how far we can go before the real downturn. IMO I think this has been put to bed for a while as the US is currently experiencing a huge real estate boom, its a shot in the arm to all debt ridden consumers. Note that we have the benefit of our cycle actually leading the US with regards to house prices - consensus was that the peek for us was around end of 2003 start of 2004, and only now have are we starting to see the profdit downgrades from retail and consumer related companies as consumers tighten their belts.

I reckon pain to come in the longer term....
gain to come in the shorter term....

which really means we're all playing with knives!

Dow 11000 before 2006??

Cheers
TJ

 

[TjamesX]

Re: XAO---Im about to change into my SHORTS.

Just to illustrate the correlation between real estate booms and economic downturns I have attached the following graph (courtesy of a link from WayneL from a different forum!)

Blue line is house price growth % pa
Red line is unemployment rate %
Yellow bars are times of recession

Have a look at the (inverse)correlation between blue and red lines

 

[wayneL]

Re: XAO---Im about to change into my SHORTS.

Speaking of unemployment, there is anecdotal evidence of increasing unemployment coming out of the UK. :-O

 

[tech/a]

Re: XAO---Im about to change into my SHORTS.

Have a look at the (inverse)correlation between blue and red lines

Makes perfect sence to me.
The Building Sector employes more than any other sector.
As realestate increases in price (Even just before they do) Building approvals soar.
So do renovations.
Unemployment becomes less of an issue infact finding people to do your work is!!
With the downturn----which in SA is negligable un employment will slowly increase.If prices flatten so will the increase in un employment.
Ill bet the government instigated incentive packages around the times of recession to kick start the building industry---like the $15K first home owners grant.

 

[Smurf1976]

Re: XAO---Im about to change into my SHORTS.

Speaking of unemployment, there is anecdotal evidence of increasing unemployment coming out of the UK. :-O

Something might be up in Australia too.

I had a good look at the Commonwealth Bank house price data for all of the capital cities. I looked at houses only and used the monthly data rather than the Bank's averaging.

To the extent that there has been a slowdown it has been most pronounced in Hobart followed by Sydney. Elesewhere is either still rising or is essentially going sideways.

I'm not too sure about NSW but Tasmania's unemployment is up 0.1% in each of the past 4 months. Not huge but it's starting to look like a trend. There is still a lot of house construction going on in Hobart so I hate to think what will happen to unemployment when/if it stops.

Back to the ASX... On another forum they are "discussing" the idea that todday's surge was a sign of exhaustion and it's all down hill from here. The term "exhaustion candle" seems to have popped up. I don't usually take anything on that forum too seriously but just sometimes someone there is right.

 

[TjamesX]

Re: XAO---Im about to change into my SHORTS.

Back to the ASX... On another forum they are "discussing" the idea that todday's surge was a sign of exhaustion and it's all down hill from here. The term "exhaustion candle" seems to have popped up. I don't usually take anything on that forum too seriously but just sometimes someone there is right.

I'm assuming this is a TA term?

A pullback is probably on the cards, but I reckon a call that we have seen a top in this cycle may be a bit premature - ofcourse everyone is entitled to their own opinion

But from where I sit, the stength of the move off 3900 has surprised everyone. That wasn't retail money moving the market......



TJ

 

[Smurf1976]

Re: XAO---Im about to change into my SHORTS.

I have had a look at the charts of 100 of the XJO stocks. This was done in alphabetical order - I was going to do all 200 but a clear trend was emerging and it's nearly midnight... I started at the beginning (letter A) and stopped at JST.

Method: 6 month OHLC chart. Relative to the price movement over the past 6 months, is the price now (1) at or near a new high (2) at or near previous highs or (3) considerably below the highest prices over the past 6 months. In the case of those at or near highs, I noticed a significant number closed today at or near their low for the day and this was also recorded. Note that I was simply looking at the chart to determine the recent trend and did not do any T/A looking for reversals etc. Nor did I apply strict mathematical criteria - if it's near the top of the chart then that's near a high and vice versa.

Results (100 stocks):

47 are well below (as viewed on the 6 month chart) their highs.

27 are near but not significantly above previous highs of the past 6 months. Of these, 5 have shown a declining trend recently whilst another 8 experienced a reasonable price range today (as viewed on the chart) and closed at or very near the low for the day.

26 stocks are above previous highs for the past 6 months. However, 10 of these experienced significant price movement today (as viewed on OHLC chart) and closed at or very near their lows for the day.

Now, I am no expert at this but this rally doesn't seem overly convincing to me. Only 16% of the stocks I checked have recently made new highs for the year (but not necessarily all time highs) and didn't close near their lows for the day.

If you applied a mathematical or TA criteria these results might vary a bit - I was simply looking at the charts and noting the recent trends. Not all of the closings near the daily lows would indicate a reversal but the large number (18% of the total) closing near the day's lows on a day that the market reached new all time highs did catch my attention. Those with some more T/A knowledge might be able to say if this is significant or not.

 

[tech/a]

Re: XAO---Im about to change into my SHORTS.

Smurf.

If ever you want stats like those youve done manually here I can do them in minutes searching for criteria using metastock formulas.

Just let me know what you or anyone else here would like to find out and Ill code it up and find out for you.

Often the results are suprising.

tech

 

[tech/a]

Re: XAO---Im about to change into my SHORTS.

Re Exhaustive bar discussion

 

[RichKid]

Re: XAO---Im about to change into my SHORTS.

Well, we may have to kill this thread if this keeps up and start looking for some long johns. Ahem...anyway, I haven't seen volume for today yet but I'm guessing that's one big impulse bar, what scares me is the steepness of the rise. Let's see how the next week plays out, a double top, a pullback, a reversal or consolidation or....

 

[markrmau]

Re: XAO---Im about to change into my SHORTS.

No way I'd short this sucker, but from gap analysis, sometimes you have breakway/midway/exhaustion gaps.....

This is the day spi contract.

 

[DTM]

Re: XAO---Im about to change into my SHORTS.

Looking through the optionable stocks, it looks like we are headed for a big fall. XJO the last few days have been struggling to get up but has'nt basically moved much and looks like it will start heading downhill next week. Banking sector looks very weak to me and coud be headed for a big fall. Resource stocks a bit stronger but heading for a fall too.

Thoughts anyone?

 

[markrmau]

Re: XAO---Im about to change into my SHORTS.

I'm not convinced that things will go down from here.

We had a bad start to the day because of the us markets last night (they were hoping the fed were coming to the end of the rate increases), and metals got hit on the lme (same hopes, and this affects the hedge fund carry trade).

However I think the US markets will bounce back tonight because everyone new the latest interest rate was coming, and the us economy figures coming out are looking slightly better than expected.

I remember this time last year a survey was done about where the stockmarket was headed. The retail investors thought that the bull run would continue. The analysts and pro's thought that we were at the peak of the sharemarket bull run.

The mum and dad investors were correct.

 

[tech/a]

Re: XAO---Im about to change into my SHORTS.

The mum and dad investors were correct.

You mean us!!