Stocke Market Pullback

Dow at 9200, ASX at 4200?

Might not be that bad...thoughts??

Tim

 

I think a lot of people felt that there was always going to be a correction of sorts, equity markets around the world have been charging ahead for quite awhile now. So I'm not really surprised, and interestingly I don't think there has been a large amount of bad news coming out that could really prompted the downturn.

That said I still harbour quite a few reservations about just how successful this "recovery" will be going forward once the monetary and fiscal stimulus effects are starting to fade.

So whilst I don't think there is much in this current downturn, I think there is every chance that there will be a much more persistent and significant downturn within the next 6 - 12months.

 

Chris,

when you say you think there will be a significant downturn in the 6-12 months, do you mean in the share market or in the economy (or both).

If in the sharemarket, are you suggesting that this downturn will be repeated but on a larger scale again in 6-12 months?

Thanks

Tim

 

this is the start of the pull back we had to have. The market ran too hot too quickly. The market in the short term my bounce back but it has to consilidate soon.

Will we see new lows? in my view no.

March was the low and if it gets that low again I'll mortgage my granny and put everything into the market!

My guestimate is that the market will at some stage consolidate back to a level of say 4,000 then start to post modest gains from there.

Great opportunities will present themselves again, its a traders market.

 

Tend to agree, I think the market will pull back to the 4200-4400 range, then hit 550 sometime next year.

Tim

 

Firstly I'd just like to say my opinion are just that - opinion. Increasingly I'm reading less and less about the world's economy as I am focusing more and more on day to day business. So my opinion isn't very "informed" anymore.

I generally talk about the economy, the market is so much harder to predict IMHO, and I really don't like talking about things in the short run because I'd honestly be the worst trader on these forums and I look at most things with a long term perspective.

Whilst I feel at this stage the slide is just the market getting a little nervous about the dizzying heights we've reach and is just consolidating a little, but if it continues to slide past 4300, maybe even past 4000 and back into a bear market it might be saying a lot more about the future economy for the middle and back half of 2010, because at this stage I this think there are a lot of people out there that are doubting whether this global recovery really has any legs when you take away the fiscal and monetary stimulus.

At least in the US's case it seems that their recovery is a lot weaker than anything that would suggest that good solid growth is coming back anytime soon. Now I don't know what ramifications that will have on us here in Australia, but you'd have to think when countries like the US and UK are struggling as much as they are that it won't be good for us either no matter how close to China we are, and of course if our economy turns bad it's a pretty safe bet that our stock market will go with it.

In all honesty, my gut says we probably won't go any lower than we did back in March, and like I mentioned above I think a lot of it has to do with other countries and the security of the world financial system.

For me the only way we will retest the March lows will be if we have another financial crisis, and Australian banks start to look vulnerable. I'm not saying it's an impossibility (I'd say it's still very possible) but it would seem unlikely at this stage.

See for me if we got that low again, I'd be very nervous about if we were going to "recover". From my perspective, like I said above, for us to hit those lows our financial system will need to be in trouble again and if the second time around people begin to doubt whether governments has any ability to support the system begins to emerge then the world will be in a very precarious position. So if we get back down to the 3700 mark I'd begin to be betting that we could be trending into the low 2000's.

From my position things are just way too crazy to estimate where anything is going to be in 3, 6, 12 months from now given that in speculating in this market it's not just a case of guessing whether or GDP will grow but there are also currency issues that are fluctuating wildly and I think there is a lot of uncertainty starting to creep in around the USD and the pound (but they were teh safe havens during the crash) which make speculating on where to put your money in this environment that little bit more difficult.

 

Hard to say, I think it depends on what the chinese do with their trillion $ of US securities.

Will they slowly convert it to equities and buy Rio, Walmarts etc with it or will they take a more agressive stand and dump them in the open market?

IMO the chinese will convert their US securities to equities and there are plenty of investments they can get into while these are still cheap.

This strategy will at least support the dow, asx etc and strenghten our economies but we might end up with a few chinese ceo's and boards of directors in the process.....

For the US it's a tough decision, let the chinese buy American airlines, a piece of microsoft or 50% of new york yankees etc or face foreclosure?

I think they'll let them buy whatever they want so the markets won't fall but they could be going sideways for a long while

IMHO

 

I think they will follow India's lead to purchase large amounts of gold from the IMF when it becomes avalaible...

 

Why would they do that?
They can dig up their own gold if they wanted
I think they'll go for blue chip companies and will also get into key operations such as shipping facilities, airports etc

 

Why would they do that?
They can build up their own companies if they wanted



I'm sure they will spend their money on a diverse range of things - I actually imagine that going forward more than anything they will look to starting spending a lot more money locally to try and start growing their own middle class. This is probably the best investment they can make.