Black September/October coming?

There is a factor in the financial markets that has not been present in previous cycles...............

.................actually there are two. One however was present, but a long time ago.

1/ Bubblevision (Bloomberg et al)

2/ Credit expansion.

I leave the ramifications of these to y'all as self evident.

Looking at global and local fundamentals, I don't think we are heading for an '87 style crash any time soon.

Below is the weekly XJO chart. I think we will just continue to track sideways, but with a negative bias though imo, for the next 2-3 months within the current trading range from last June.

With a basically even balance between potentially good and bad global economic scenarios I just don't see any reason for our market to break out of the current trading range until something "unusual" happens, +ve or -ve.

wayneL said:

At a PE of 10, there really isn't adequate risk premium... in fact the risk has been discounted IMO. As China implodes, people will learn this lesson.

Click to expand...

WayneL,

Dont want to steer too far off course here but am just wandering why this opinion on China?

I'm on the bulls side. The commodity boom is not ready to end yet.

Bears always predict something happening sooner than reality.

Knobby22 said:

I'm on the bulls side. The commodity boom is not ready to end yet.

Bears always predict something happening sooner than reality.

Click to expand...

My apologies for the late reply @Knobby22.

I'm no genius on markets but the NYSE is what guides me in September and October and it is not looking good overnight.

My pockets are zipped tight shut and I will await a lead from Wall St.

Our Quarry which is keeping the country afloat while the baristas starve in our cities is headed for further low commodity prices.

Save for Gold imo. Then I like Gold so ignore that.

gg

bought in May and went astray?

= Just my thoughts.

On the local front, surely a correction is in play, long overdue me thinks as from around 25 Oct 2020 our market has been climbing plus there seems to be a few too many head winds going forward (trade, climate change, commodity prices, pandemic et al) and from the chart, since Oct 2020 there doesn't seem to be anywhere near a 10% correction.



Globally, as we mostly take our lead from Wall St, not looking good there either, no major correction since around the same time, 25 Oct 2020. Anyways, what do I know, the Fed will continue to print fiat paper, so all's good and full steam ahead right? (insert cynic smillie here)



I'm with GG, am keeping the powder dry for some bottom feeding to come. The questions are when, how long will it take and at what level will a perceived bottom be found or worse, will there be a protracted bear market coming?

Problem with that is, without the clarity of a crystal ball and the ability to time travel into the future, who knows huh? ?

Warren Buffet II said:

Hi guys,

I am starting to think that after all this reporting season we are going to have another correction in what is called the Black October.

1) Thinking about it, October has been mostly a bad month for investing in the sharemarket and large funds will start doing some clean up towards the mid-September, preparing for that month.

2) Interest rates are looming again and probably going up again befoer the end of the year.

3) Resource shares losing their shine even with the best results ever. Look at RIO best results ever and is lacking there, ZFX stuck, OSH plunch, CBH stuck and I want to see what happens with BHP next week with the biggest Australian result ever (probably the price will go up 1%)

So here we are, no going up no going down at the moment but seems the direction is down in my opinion.

Any thoughts?

WBII

Click to expand...

Like "go away in May" I think some of these theories about certain times of the year being particularly bad are overstated.

I just had a quick look at the last 5 years and here is what it showed

2018 was a standout bad year when prices fell for 4 months in a row starting with September. Every year (apart from 2018) if September was down then October was up. Probably more data required to definitively say September/October is a time to crawl into one's cave.

Speaking in terms of Wall St, one thing that often isn't mentioned is the fact that the USA has a Jan/Dec financial year as opposed to our Jul/Jun financial year. From my understanding there's "triple witching" at the end of every quarter so end of Sep could impact adversely on Oct and the remaining quarter of the year.
Again, just my

Yes, well a very red day today.
I suppose the highly geared will have to get out and exacerbate this.

Anyone who was on this forum 15 years ago (holy sh¹t) no set I was a mega bear and the time and that the GFC was really no surprise whatsoever... Although it did come some years after I thought it would.

But I never accounted for the interference of Central banks in the business cycle.

Accordingly all day I was still notionally bearish even after GFC, I learnt that Central Banks could kit the can down the road a hell of a lot longer than I thought, and probably would do so for some time to come.

Since then, let's just say I have been a bullish bear.

But I am now coming around to the opinion that the ultimate Reckoning is coming. It might not, is probably not imminent. But it is getting closer.

Hence, I really do think it is @ss covering time now.

FWIW

Waaay too early to say we're there yet, but question is "when to say when" to start buying again once a clear move down is evident. Say we're down 15%, is that too early? You don't wanna be waiting for 50% correction, only to see it reverse back up at a rate of knots after hitting 49% (or awaiting 20% and it turns around at 19% etc). Obviously this is an unanswerable question and is different according to every big downturn in history.

Those who hold off buying till close to the bottom, and then buy like a maniac, are either very lucky or very intelligent/skilled. Some would contend only very lucky lol. If one was THAT good they'd maybe be shorting all the way down. The latter kind of posts tend not to age very well.

Craton said:

Speaking in terms of Wall St, one thing that often isn't mentioned is the fact that the USA has a Jan/Dec financial year as opposed to our Jul/Jun financial year. From my understanding there's "triple witching" at the end of every quarter so end of Sep could impact adversely on Oct and the remaining quarter of the year.
Again, just my

Click to expand...

next friday 17th last hour of trade on that day (US time)

StockyGuy said:

Waaay too early to say we're there yet, but question is "when to say when" to start buying again once a clear move down is evident. Say we're down 15%, is that too early? You don't wanna be waiting for 50% correction, only to see it reverse back up at a rate of knots after hitting 49% (or awaiting 20% and it turns around at 19% etc). Obviously this is an unanswerable question and is different according to every big downturn in history.

Those who hold off buying till close to the bottom, and then buy like a maniac, are either very lucky or very intelligent/skilled. Some would contend only very lucky lol. If one was THAT good they'd maybe be shorting all the way down. The latter kind of posts tend not to age very well.

Click to expand...

I've been selling AXJO 8,500, 8,200, and 7,800 (Oct/Nov/Dec) puts since mid August.
...... but I got busted with the massive fall in BHP due to the London news a couple of weeks ago.
Gunnerguy.

This should probably go in the David Hunter thread, but equally apt here IMO

There’s are a risk inflation might be persistently high instead of transitory like the US Fed is insisting to calm the markets. If the US Fed loses control of inflation towards the end the year, it will force central banks to raise interest rate much quicker. If interest rates rise to high it could bankrupt the US govt.

US national debt is currently 23 trillion dollars, it was 6.3 trillion in 2008. You had double digit interest rates and inflation in the 1970’s, great for Gold prices, but not great for the Stockmarket.

DannyB0000 said:

There’s are a risk inflation might be persistently high instead of transitory like the US Fed is insisting to calm the markets. If the US Fed loses control of inflation towards the end the year, it will force central banks to raise interest rate much quicker. If interest rates rise to high it could bankrupt the US govt.

US national debt is currently 23 trillion dollars, it was 6.3 trillion in 2008. You had double digit interest rates and inflation in the 1970’s, great for Gold prices, but not great for the Stockmarket.

Click to expand...

Just remember that if markets crash, gold will also initially crash..
So either you buy gold now and keep hanging..i have been heavy gold and silver.. physical... Or you try to time to buy at the lows

*** Like "go away in May" I think some of these theories about certain times of the year being particularly bad are overstated. **

i believe the REST of the quote is ' come back St. Leger Day ' St.Leger Day relates to a major horse race ( held in several nations ) but from memory is held mid-September ( very convenient for those that like a nice Northern Hemisphere Summer holiday )

Sooo considering there is a slide in the appropriate time ( you wouldn't want to be buying in at the absolute top of the market , when you return for vacation , would you ?? ) i would be watching September contracts and options expiry dates for a signal on what could happen

now while we are in truly 'uncharted territory ' should we completely ignore history history MIGHT rhyme since it is unlikely to be an exact repeat .

yes i believe the market will CRASH , eventually ( assuming it didn't actually implode in September 2019 , and we have all been living in a sideshow , and that IS possible , as well )

so we are led to believe the global economy is being kept up by extraordinary gymnastics

i have a loose strategy for a big down ( correction or full-blown crash ) but also intend to keep some skin in the game , just in case the market keeps climbing up to Xmas ( via a few bumps )

** Just remember that if markets crash, gold will also initially crash..
So either you buy gold now and keep hanging..i have been heavy gold and silver.. physical... Or you try to time to buy at the lows **

my tweak on this is nibbling away at gold and iron producers , but watching for BIG drops

but yes history implies when a dip is obviously serious , there is a rush to cash ( with a preference for US dollars ) which i take as a signal SOME folks are deleveraging positions ( in an 'easy credit' world )

some would already declare the US bankrupt BUT it is still officially the world benchmark currency ( despite Chinese efforts to move away from a Petrodollar centric world )

so if the benchmark currency has no underlying trust in it where do we go , some would say bitcoin ( or similar non-government crypto ) some are pushing for issued digital currency ( an investors nightmare , think of policy moves without the burden of changing bank-notes and coins , you could wake up tomorrow to find two or three zeros wiped off your savings by a decision made during the night and some keystrokes at the Central bank

DYOR

I saw the thread title and thought a particular individual, who seems to want the market to crash, had revived the thread.
But no. It's the honourable gold bug.? Mr GG.

I see that the gold price dropped because of the Fed news that there not really tapering yet, interest rates on hold.
My take is the market decided it was risk on again, despite punching new seemingly gravity defying highs lately, after all, gold is seen as a safe haven.

A sell down also in cryptos might confirm that, or may have just been coincidental, my take is confirmation.

Japan's all smiles. ?
The China boat is a bit of a worry, but is anticipated to give a reprieve on commodity and PM's highs.
Bigger AUS companies generally overall have better bottom lines than they have had, probably thanks to stimulus. Record levels of divvys flowing back, again, I see that as stimulus finally making it back to the "patient" investors.

So, I expect a reprieve from the market anticipated taper tantrums.
Aus market today was due for a decent down day as there's a lot of skittish dumb money in the market at the moment, 9/11 remembrances today etc, and the skittish dumb money will inherently follow the lead it's given by the market.

Some money flows have gone back to banks and oil and what else I haven't worked out, staples I think?

I'd like to think that my thoughts of late of Aus market potentially disconnecting from the US might come into play soon enough, but really, markets are so intertwined these days, I think that's a long shot, but not impossible.

Just my musings, and I'm not sure how long it is before next major meetings regarding tapering and QE etc, which the market will no doubt prepare for again in its usual timely fashion.

Cheers.

From a charting perspective there is no argument (well not in my mind anyway) that (a) we are due for a correction and (b) said correction will surely come as day follows night. But when is the unknown.
If we look at the XJO for the past 12 years it shows price has respected a large price channel and since the March 2020 Covid crunch try price has been respecting a tighter steeper channel as prices head back to where they might have been without the Covid anomaly (charting doesn't provide for anomalies - so this is a tag of my own).

If we look at the recent price action in more detail it shows we have hit the ceiling and while a small overshoot is not impossible, the most likely scenarios from here are that price will seesaw sideways along the top channel of that larger price channel until something comes along to push the market into a correction or a bear market. At the moment a fall to 6900 (XJO) would see a 9% fall from the recent highs which is close to the technical 10% correction.

The red dashed line is a line of support that price has held above since February and yesterday price bounced ever so slightly off that support. I expect price will recover today but any recovery is being squeezed between said red support line and the top boundary of the large price channel - so I'd see a significant recovery unlikely.
In short I see the start of lower prices has probably started. As always there will be the odd stock that goes against the flow and the occasional pattern break that results in short sharp gains for some stocks that are not near their highs. But when the market as a whole moves down those speculative rises are usually more restrained because they are swimming against the current.
Once we have a correction then there will be a period of recovery and new trading opportunities - before we do it all again!