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Will the ASX200 hit 5000?

Discussion in 'Shares' started by Simon Hampel, 13th Jun, 2008.

  1. Simon Hampel

    Simon Hampel Co-founder Staff Member

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    I note that the ASX200 has just passed below 5300.

    With the recent high back in mid-May over 5900 and the previous low in March at just under 5100, we're back down to the lower part of that range and solidly into a short term downtrend.

    What do our resident chartists have to say about the direction of the market? Do you think we will see lower lows than we had in March? Below 5000 perhaps ?

    ... or will it bounce?
     
  2. Tropo

    Tropo Well-Known Member

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    Sim,

    It seems to me that you became a chartist. Good news! :D:D

    We are in the down trend since the end of Dec 2007.
    Temporary rebound from 5039 to 5980 (XJO) was nothing else but a typical bull trap.
    XJO hit second retracement level around 5950 and straight away pulled back down - see 'Houston3’.
    It seems that market is developing a second leg down.
    DOW is on the way down to 11250/200.
    I would not be surprised if XJO breaks down 5000 level (I am still waiting for 4950).
    There is always possibility for bounce back from previous lows (possibly another bull trap).
    As I said before XJO under 6000 is in the bull trap ‘range’ (IMHO).
    Nothing changed....We are still in the bear market, and nothing may/will change for a quite some time.
    Good news is .... Current volatility is a heaven for short sellers.;)
    Enjoy !! :p
     
  3. dmesh87

    dmesh87 Member

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    I'm not very familiar with chart analysis and support levels and how stocks are analysed in this way.

    How much difference do you believe momentum and other factors that have nothing to do with the market reacting purely to company announcements or macroeconomic factors has on a stock or index like the ASX200?
     
  4. Tropo

    Tropo Well-Known Member

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    Basically, people make and move market, not balance sheets or other factors.
    I’ve seen a lot of stocks going up on bearish news and down on bullish news.
    It is the psychology of individual players that dictates where the market goes (up, down or sideways).
    Another word – what drives share price is the way investors think about them.:cool:
     
  5. Simon Hampel

    Simon Hampel Co-founder Staff Member

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    ASX200 currently at 4990 down over 2% in opening trade.

    4950 you reckon Tropo? Think it will get that low today - or will it bounce around a bit first?

    What do you think will happen if the ASX falls below 4950?
     
  6. austing

    austing Well-Known Member

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    You beauty,

    Hope it keeps going down, down, down. 4000 here we come:D

    So many great opportunities for the long term investor around now and maybe even more so in the next 6 months or so. I've overtaken my wife as the serial shopper in the household:eek:

    It would great if the market continues on like this for at least another year as more funds come our way.

    Cheers - Gordon
    PS: Tropo should also be very happy as there as so many Shorting opportunities around also.
     
  7. Billv

    Billv Getting there

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    Me too, it's now at 4977
     
  8. Simon Hampel

    Simon Hampel Co-founder Staff Member

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    ASX200 closed below 5,000 ... last time it was this low was Sept 2006.
     
  9. austing

    austing Well-Known Member

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    Oh my god, what's happened. LPTs and Financials were today's best performers (if you could call it that):D This is no good, I want them to keep falling. Not sure what to do now - where's my crystal ball?

    Gordon
     
  10. Tropo

    Tropo Well-Known Member

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    Hi Sim,

    I can not comment, because I do not have an access to the charts (currently I am in Melbourne having fun in local pubs :D:D).
    Today’s close under 5000 (as you said) indicates growing weakness in the market (IMHO). Hmmmmm I would like to know how low (intraday) XJO was today.
    If DOW is down tomorrow, OZ market may follow. If XJO closes below 4950 it may keep going down.:eek:

    There is always a possibility that both DOW and XJO will rebound up for a while, but I would not be surprised if XJO hits 4757 (50% retracement level) in the near future.

    At this stage of the game I’ll leave predictions/speculations to the more experienced members in this field.:p
    PS:
    I am off to another pub....:D
    Have fun :D stay :cool: and .... enjoy the bear market.:p
     
  11. Insight

    Insight Brisbane Buyers Agent

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    4772 or so will be a 50% retracement in the XJO since the start of the bull run in early 03, that's a cracker of a retracement potentially. Though have a look at the Chindian charts for some consolation.

    ** Just noticed Tropo pointed out the 50% retracement level.

    Interesting times!
     
  12. Chris C

    Chris C Well-Known Member

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    Did anyone late Lateline's business section earlier this week which had to share market analyst speculating that the market may even drop below 4000 sometime next year...

    :eek:
     
  13. Simon Hampel

    Simon Hampel Co-founder Staff Member

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    Ouch ... ASX200 closed at 4932
     
  14. rosewaterwrx

    rosewaterwrx Member

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    So as advice to a very inexperienced investor.

    Is now a good time to start looking at investing in the ASX 200?? The theory being to invest when there is 'blood in the streets'.

    It seems to my inexperienced eyes that the global economy has 3 or 4 major major shifts to cope with in the next few years, mostly to do with either lending practices or future sources of energy.

    Is now a good time to get in on the ground floor and hold for 10 years on the assumption that we are nearing ground floor and whilst the next year or 2 may be flat, there will be an inevitable new growth phase??

    I understand this is a pretty broad question, but I am very inexperienced and am considering investing in shares.
     
  15. Insight

    Insight Brisbane Buyers Agent

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    My 2c says yes. Absolutely.

    Anybody who disagrees would need to be able to quantify what value add their market timing consistently can give.

    Not investing advice by any means as I'm an addicted timer myself, one day I hope to reform myself though.
     
  16. Simon Hampel

    Simon Hampel Co-founder Staff Member

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    If you aren't borrowing to invest and are looking at 10+ years, I say go for it. If in doubt, average your entry over a couple of weeks or months.

    However, if you are borrowing and think there will be a flat market for the next couple of years, then you really need to look at your costs - if you aren't returning at least your cost of capital, then you are going backwards.
     
  17. Nigel Ward

    Nigel Ward Team InvestEd

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    That has to be right provided it's on an after tax basis. Anyone care to model various scenarios and marginal tax rates?;)
     
  18. rosewaterwrx

    rosewaterwrx Member

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    Well thats the million dollar question.

    I would be borrowing to invest....but how long will the market be flat. My theory is that Id be fine losing a small amount initially and still have invested on the ground floor......paying off the loan via dividends....then the share market kicks off again.

    Also this would help taxwise...though obviously making a loss for tax purposes isnt a good reason to invest...its a small bonus in taking the risk though.

    Is risking losing, initially on return from gaining a loan for shares worth the risk, in exchange for purchasing when the share market is at a historically very low point??

    At this point I dont know.

    I would need to gain advice.
    For instance if I borrowed $50,000 against an investment property at the current interest rates.....then with likely expected dividends(?? i dont know what to expect with that one).....negative gearing etc....if the market was to remain dead flat for that year.

    Just how far down would I be?? and is it worth that loss for having gotten in early before a major resurgence??
     
  19. Tropo

    Tropo Well-Known Member

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    Do not cry ... Argentina....:D
    See you down under...:p
     
  20. Billv

    Billv Getting there

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    Rosewaterwrx

    Can you afford a possible 20% drop in the next 6 to 12 months?
    What if it takes you an additional 12 months to get back to where you started?

    If you are buying blue chip stocks and keeping them for the long term then I guess it doesn't matter but why buy right now?
    Recovery is nowhere to be seen and IMHO the way things are going 4500 points is not unlikely.

    Anyway, despite my uneasy feel for the market it might not be a bad time to get in with money you don't care if you lose. I am actually planning to buy high risk stocks as some of them are oversold.
    Other than that the only stocks I buy is the ones I get through work
    and only because it's a buy 1 get 1 free scheme.

    Cheers