So is the 'correction' over?

[LPA]

Well, logged onto kitco this morning and see that Gold is back up to a nice level around 660 and copper has risen over 12%!

So does this mean that the carnage of the past two weeks is coming to an end? Or is this just a deep breath in before the final exhale?

[kennas]

I am still cautious as will be many others. Will only take a little bit of bad news for the route to continue for a few more %.

The more bullish will have another opinions of course.

0922 [Dow Jones] Downdraft for Australian gold, base metal miners looks to be
over for now, after copper rallies 13.5% overnight, while zinc, nickel also post
solid rises, and spot gold extends move higher, last US$665.70/oz, up US$8.00
from this time yesterday, helped by a bounce in crude oil prices. All this seems
to add up to a green light for resource stocks to move higher though buyers will temper any excitement with memories of falls over past week. Among miners, BHP Billiton (BHP), Rio Tinto (RIO.AU) sure to rally, as will Lihir (LHG.AU), Newcrest (NCM.AU). Posse of nickel miners likely to gallop higher. (RCB)

[powerkoala]

Finger Cross everybody....
Here comes the next BIG bull :D

[professor_frink]

I think we've still got another leg down to go. Some consolidation first, then another leg down. But then again, I'm also an idiot.

[noirua]

It may depend on whether there are a lot more speculators in highly leveraged positions out there or not, who may be waiting for an opportunity to unload. Perhaps one point made by Doctor Doom, that it is best to have 50% to 60% in cash at the moment, is right.

[kennas]

Bounce!!

For now. Expect a taper off this afternoon I reckon.

Too early to jump back in, imho.

[LPA]

I think that the point to jump back in was two days ago....I just wish I had some expendable cash to have bought some more OXR at $2.56 - it's now over $2.90 on today's news...that's the way it goes I guess :o

[GreatPig]

To me, the XAO is currently in the middle of nowhere, between two support levels, which makes me feel there could well be more down to come.

A nice day for the resources today, and I did get some more BHP, but I'm not jumping back on too much else yet.

Cheers,
GP

[kennas]

This could be the dead cat bounce we haven't really seen yet.

We are at the mercy of data out of the US right now. Let's hope for the news comming out the next 2 days to be perceived well.

[saichuen]

the correction is over so fast?!?!? time to jump back in for a ride up?!??? :confused:

probably not. even in a dip, there will be short term uptrends. this is pretty much like in a peak, there will be short term pullbacks. :D

happy trading!

[powerkoala]

uhm.. is it the bull lost power or just taking a break ???
seems this will be going down again...
oh crap :swear:

[LPA]

It looks like the market has given up some of it's earlier gains, but as long as it doesn't go lower than yesterday than I am happy :o Basically, from my entirely uneducated view, it seems to me like the market really really wants to be bullish but is just waiting for some confidence boosting results before the buyers come back in force....that's why it's going up fast and then floundering. As long as we see a few days of small gains, or at the least stability, then I think the confidence will come back and we can begin the next leg :) But I feel that that won't happen for at least one or two more weeks as we wait for US interest rate news and what their market does.

[powerkoala]

give up a bit in aussie market is acceptable....
give up to red color in nikkei ???
and future dow jones index also red again ???
what if this just dead cat bounce ???
hmmmm..... idea anybody ??? :confused:

[yogi-in-oz]

:)

Hi folks,

XJO ..... will likely be positive for a day or two,
but will be looking for another downleg, around
26-29052006 ..... ???

..... and yet another XJO negative period, may be
coming our way on 07 June 2006 ..... will also be
watching for a big world event, at that time. This
event may not be directly to the Bali Bombings
in October 2002, but this time cycle has been
projected ahead, from that period.

Figure the lows for 2006 may well come 180 days
from the highs on 10 May 2006, targeting
07 November 2006 for the lows, this year.

happy days

yogi

:)

[michael_selway]

:)

Hi folks,

XJO ..... will likely be positive for a day or two,
but will be looking for another downleg, around
26-29052006 ..... ???

..... and yet another XJO negative period, may be
coming our way on 07 June 2006 ..... will also be
watching for a big world event, at that time. This
event may not be directly to the Bali Bombings
in October 2002, but this time cycle has been
projected ahead, from that period.

Figure the lows for 2006 may well come 180 days
from the highs on 10 May 2006, targeting
07 November 2006 for the lows, this year.

happy days

yogi

:)

Does that contrast to the below? or is the above only Minor Negative cycles? or the below is the exception which will go agaisnt the downtrend?


:)

..... and on ZFX ..... so, you think it's high now???

Come back in December 2006 for another look,
but more importantly will be the run up into
December 2007 ..... should be HUGE !~!

If we get time on this end, this could be a good
project ..... "tag-the-zinc-stock" ..... lol

have a great weekend all

yogi

:)

thx

MS

[nizar]

This could just be a dead cat bounce, as they call it

I would like to lose a 100-200pts for a good solid correction before the next leg up.. but this time please make it the banks that get hit!

But i think today was positive in that it indicates that general market sentiment is still very bullish, not like in the US, where a 60pt early rally was used as an opportunity to dump and DOW closed in the red...

[wayneL]

This could just be a dead cat bounce, as they call it

I would like to lose a 100-200pts for a good solid correction before the next leg up.. but this time please make it the banks that get hit!

But i think today was positive in that it indicates that general market sentiment is still very bullish, not like in the US, where a 60pt early rally was used as an opportunity to dump and DOW closed in the red...

Corrections tend to be 3 waves, so one would expect a bounce before a further down leg.

Then it becomes interesting. That corrective 3 wave pattern could become wave A of a larger 3 wave corrective and so on. :eek:

Enjoy

[chromatic]

Corrections tend to be 3 waves, so one would expect a bounce before a further down leg.

Then it becomes interesting. That corrective 3 wave pattern could become wave A of a larger 3 wave corrective and so on.

Enjoy

Hmm, not sure but by my count, we're on wave A where wave 5 was 5400 on May 10. I'm no fancy EW theorist but don't we need to retrace to somewhere around wave 3 peak (Feb 02, 4980ish) before wave A is over?

For XJO, my spidey senses tells me resistance at 5170 where he had previous early April support. Does that sound right to anyone?

[tech/a]

Well it could be.

[wavepicker]

All I can see is a market that appears to be falling impulsively, with no evidence to suggest that the current trend has ended

[powerkoala]

Another red in europe and dow jones
it is true.. this is dead cat bounce...
gold down to 650 now... crude lost another 1 dolar
all metals back to south....
another red day for us tomorrow...
what a pity.... :banghead:

[andrewkmz]

Bear is back! Metals and gold all down tonight so far. All Ords will have another dive tomorrow.

[brerwallabi]

Corrections tend to be 3 waves, so one would expect a bounce before a further down leg.


Are you always a bear?
But I tend to agree with you.

[yogi-in-oz]

Does that contrast to the below? or is the above only Minor Negative cycles? or the below is the exception which will go agaisnt the downtrend?



thx

MS

:)

Hi Michael,

Analyzing two different animals ..... speed and direction
of XJO has NO affect on the analysis of the individual stock,
ZFX ..... so, essentially we treat them as totally divorced
entities, when we analyze them.

In contrast, movements in ZFX will have some small affect
on the outcome of XJO on the same day.

happy days

yogi

:)

[Stop_the_clock]

After yesterdays rise on the ASX, I reckon the correction is over. A healthy 6% fall is all we need just to keep things on track

[nick9]

Hey Tech/a

Shouldn't you calculate your Fibonnaci numbers from March 2003.....when the current bull run started. By picking and choosing segments of the market to apply your numbers to, aren't you overlooking the bull run as a whole entity?

[tech/a]

Hi Nick.

Your right.

Fib can be calculated from any significant high and significant low.
It then is dependant on significant significance.

Ofcourse it then becomes timeframe dependant.
In the longer timeframe for both Fib and Trendline analysis this is mearly a correction and still holds the index very bullish.

Short term seems to be everyones issue currently.

[mit]

Take the resource stocks out of the market and the market was still down yesterday. I think a real measure of the end of the correction is where the recovery is more broadbased.

A key will be today as the resources were down again overnight the spi is predicting a 20 point drop today.

MIT

[GreatPig]

I was looking at the XAO data from 1984 (as provided by Yahoo) and doing some calculations on the average rate of gain over different time periods. While many of you may know this already, I found it quite interesting.

From the start of the current bull run in 2003 till now, the average rate of gain has been around 19% pa.

From where it returned back to just above 1200 in late 1990 up to the 3000 mark just before the current bull run, the average rate of gain was about 7.7% pa.

And during the period from 1985 to the Oct 1987 crash, the average rate of gain was about 51% pa!

So while the current bull run has had high annual gains, they're nothing like the run up to the '87 crash.

I also find a close-up of the actual crash chart interesting. The big down day is 25%, the three down days just after that around 6.5% to 7% each. What's really amazing though is that spike back up two days after the big down day. I wonder how many lost in the big fall, then bought back in near the high two days later only to lose another heap by the end of that day!

Interesting as an observer, but as they kinda say, a nice time to visit but I wouldn't want to have lived there :D.

Cheers,
GP

[clowboy]

Great post Greatpig,

Always good to look at things that have been pushed aside in our minds, especially with a fresh view.

Thanx

[kennas]

Where do you get your charts GP?

[coyotte]

Would not be supprised to see a 50% (short term) recovery in resourse stocks

Specs would be all out now --- bottom feeders move in ---- those still holding from the highs , bailing out as they break even ---- then DOWN again

[LPA]

Well the correction is certainly not over yet! Still holding during this roller coaster ride :)

[GreatPig]

Where do you get your charts GP?
From the AmiBroker software I use.

Cheers,
GP

[GreatPig]

One figure I omitted was the average rate of gain from the start of 1985 till now, which is about 9.4%.

GP

[Ageo]

One figure I omitted was the average rate of gain from the start of 1985 till now, which is about 9.4%.

GP

compared to the 50% gain leading upto the 87 crash its not that big, i still think with the 100 million US baby boomers having alot of there funds with mutal funds, super etc.. and wont be retiring until 2010 i think we will still see the bull continue along with short term corrections. But nearing that time i think we will see past history.

[specman]

Crucial economic data will be released in the US in about 2 hours.The core PCE index which the Fed considers more accurate than the core CPI for measuring inflation will be watched closely by the market.

Considering that it was the higher than expected core CPI that triggered the current correction,this data is going to be crucial in determining which direction we will be headed in the short term.

[IGO4IT]

FTSE is up again tonight already 25 points even that metals look a bit stable (copper is slightly down) & didn't recover all what's lost.

Gold is also looking promising on $653 to make it consistent 2 days rise.

I don't know how to define "correction is over" but I think regardless of metals prices, market will still watch from side lines for few days before attempting to trust the current uptrend again. Personally I'm half out waiting for a disaster ...... & the other half that is in is just waiting for first half to be proven wrong! :)

cheers,

[specman]

Just released in the US.The core PCE deflator rose 0.2%,not the 0.3% that many feared and is considered indicative of contained inflation.Some positive news for the markets.

[chromatic]

From Yahoo/Reuters:

"Traders noted that the precise PCE price index was almost high enough to be rounded up to 0.3 percent, which would have been a more troubling inflation reading."

http://biz.yahoo.com/rb/060526/markets_stocks.html?.v=4

The U. of Michigan consumer confidence data is also due to be released soon.

[rederob]

Continued volatility in base metals, precious metals and oil are tell tale signs that the "correction" is far from over.
Another major dip would shake out the speculators and return value to these sectors.
It used to take many months for copper to add $500 per tonne to its price, but at the moment it can trade in a wider daily range and the market barely blinks.
Silver and gold can move 2-3%, both ways, within a few hours and nobody is saying the sky is falling.
The FTSE and Nikkei are yoyoing a few percent day to day and things remain so-so "because the correction is over".
Complacency is the biggest danger right now and vigilance the only defence.

[GreatPig]

I have to say that despite still thinking the XAO could continue to fall to around the 4850 area, a lot of the individual stocks I monitor are starting to show signs of forming bottoms.

I've swept the cobwebs off my buy button and given it a grease and oil change, but I'll be watching closely next week to see how it goes, possibly buying into a few of the more stable stocks if the signs look good.

However, my trading system won't start issuing buy signals for probably a week or so yet even if the market does pick up well, as it includes an EMA cross-over of the XAO which will likely take at least that long to happen. If that XAO mask wasn't there though, quite a few of the stocks are already showing buy signals.

Cheers,
GP

[kennas]

GP, can you post that crossing of EMA of the XAO here when it happens? Cheers.

I agree there is a lot of value appearing for long term investors. Still, a lot of volitility too though. I think that needs to slow down a bit before I can buy with total confidence again.

[Porper]

I have to say that despite still thinking the XAO could continue to fall to around the 4850 area, a lot of the individual stocks I monitor are starting to show signs of forming bottoms.

I've swept the cobwebs off my buy button and given it a grease and oil change, but I'll be watching closely next week to see how it goes, possibly buying into a few of the more stable stocks if the signs look good.

However, my trading system won't start issuing buy signals for probably a week or so yet even if the market does pick up well, as it includes an EMA cross-over of the XAO which will likely take at least that long to happen. If that XAO mask wasn't there though, quite a few of the stocks are already showing buy signals.

Cheers,
GP

I am totally out at the moment.Cash locked firmly in the bank.

The general consensus amongst experts semms to be that the XJO would need to trade below 4700 before we enter a bear market, so still a long way to go.However having said that all markets are volatile at the moment so for short termers like me, too much chance of getting stopped out so I will watch from the sidelines, apart from the odd 1 or 2 day trade as I did with a stock midweek, just to keep my hand in. :)

[GreatPig]

can you post that crossing of EMA of the XAO here when it happens
There's nothing generally special about my EMA crossover. It's just a couple of numbers that some backtesting indicated gave better results, and would only apply to my particular trading system. It just uses the crossover of 2 day and 19 day EMAs (the 2 day one could just be the close, but my backtesting was only trying EMAs).

Porper: I'm mostly out right now too, just holding a couple of stocks in my investment portfolio. If I do start buying again next week, it will mainly be a few investment stocks and perhaps a few trading ones for hopefully short-term gains. I certainly won't be jumping straight back in with both feet :D.

Cheers,
GP

[Captain G]

How do people see things at the moment ?? Is it relatively safe to go back into the water, so to speak ?? Or should one wait for a few months for US inflation to be tamed & interest rates to settle ??
Cheers, Capt.

[lewstherin]

US Fed meeting is late next week. I'm considering some short positions in the lead up to that, since I would expect the markets will pull back a bit to absorb the impact. The last round of selling that happened shows that there is still fear in the market, and the past few days worth of rallies have done much to regain the losses.
I guess the question will be, has the US market overbought where it needs to be for the rates rise?

At this point I'm hardly watching the local market as far as resources go. Its all about the Fed for now.

[GreatPig]

GP, can you post that crossing of EMA of the XAO here when it happens?
It's happened today.

But please note that there is nothing special about my crossover, which is for 2 day and 19 day EMAs. They are just figures that seemed to work best with the rest of my system.

It is interesting though how the current bottom is mostly sitting right on the 180 day EMA.

Cheers,
GP

[Granny]

What correction?

[wayneL]

What correction?

LOL

It was just a small matter of about 10% reduction in the entire value of the market, just a blip......







......compared to what comes later :batman:

[Granny]

LOL

It was just a small matter of about 10% reduction in the entire value of the market, just a blip......


......compared to what comes later :batman:

Really sonny? Should I get those gold bars out from under the bed?

[wayneL]

sonny

LOL

[stockmaster]

I believe the correction has ended and the market shall react with a postive movement.

1) Gold price has resisted with a low of $540 and currently back near $600, i strongly believe US will increase its increase to stop its economic growth and also due to other world influence, gold price shall increase which will influence other commodities.

2) Dow Jones has surpassed the 11000 point which i believe is a turning point for the next wave. There is evidence a strong postive movement for the All Ord for the next 3 months.

[brerwallabi]

Except those discretionary spend retail stocks who will continue to struggle as the impact of increased petrol prices persists. Look at Repco (RCL) $1.60 to $1.25 after annoucing a downgrade of profit are there a few more companies out there who will disappoint?
Methinks there is.