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Archive for the ‘bhp’ Category

I’m having to work off my crappy laptop, so I’ll keep this short. I dumped all my BHP and STW for a loss near the close as it appears that the washout decline that I hoped happened on Friday was in fact not a washout. Perhaps today was the washout/capitulation move that was required, but I don’t want to hang around to find out considering how close we are trading to major support. Still holding on to my IPL though.

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As shown by the apparent collapse of Centro Property Group, leverage is a double edged sword. Centro was one of the best (if not the best) performing property stock leading up to May or so of this year because of its aggressive growth ambitions. Now that obscene amount of gearing on apparently safe retail property assets has come back to nip it in the butt. No doubt, this has become the worst performing property group. Other property stocks understandably took a big dive as well, culminating in the greatest one day plunge in the Australian Listed Property Index of a whopping 11%. Given the state of Centro, I would not be surprised to see Westfield make a bid for its assets given that it is now being sold off at fire sale prices.

Looking at the index now (click on chart below), the property index would either continue to fall precipitously below the down sloping blue line or make an attempt to bounce here. The listed property market is now probably in a bear market.

property-index.png

The Small Ordinaries are also acting substantially weaker relative to the All Ordinaries, which is analogous to the situation in the US where the Small Caps are substantially underperforming the Large Caps. Given the horrible internals in the Aussie market as mentioned in this post, we might have a rough few months ahead on the All Ords especially with narrowing leadership depending on a few toppy and overextended stocks like WOW, CBA, WBC, CSL and RIO. BHP looks like it has topped ever (at least for now) since I started harping on about its top in October in this post and in this post. *Pat myself on the back :p *

Sidenote: I hate the phrase ‘top up’ when used in the context of buying shares. To those that use this annoying phrase and perpetuate its common usage, I hope every stock you buy goes to zero. (End rant).

18/12: The market wide sell off is looking way over done on the All Ordinaries. I think we’re going to get a decent bounce soon:

too-much-too-soon-bounce-time.png

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At 31.05 and 41.1 respectively. Closed ES at 1441.

Update: USD/JPY is hanging by a thread. AUD/JPY ain’t looking so hot either. Best to stay on the sidelines for now until things sort themselves out.

Update: ES looks like its made that elusive intermediate bottom.  EUR/JPY is looking good for a long trade at 161.3 at the moment.

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Added at 30.40 and then at 30.60.  I think short term this thing has bottomed.

Also bought BHP near at 39.89, although it could still fall to 39.4.

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Just when you think the Rio Tinto/Alcan deal was big, BHP comes out and declares it wants to swallow both. I think it says a lot about what the big guys think about the commodity cycle, which I presume aligns with Jim Roger’s bullish stance.

I’d be all for the creation of BHP RIO Billiton assuming the management can integrate the business well. The last thing the world needs is AOL Time Warner part deuce.

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Market Thoughts: BHP

As I’ve been saying, I think BHP is due for an intermediate top. It has been unable to sustain strength above $45. At $46, I seriously considered shorting the bugger, but didn’t. I’ve got better things to do than short stuff at all time highs. 🙂

That doesn’t negate the fact that I want to stick a big fat sell label on this sucker. Downside for the coming move is limited to 41.5 for now. Thus, I’m readying myself to buy at 40.5 or so depending on the upcoming selling reaction. If BHP can’t hold 41.5, then watch out below.

Long term, still bullish on BHP. Intermediate term, neutral/bearish.

bhp32423.png

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Thursday ended in eurphoria. But what do the charts say? (Click on all charts to enlarge)

For the sake of it, I’ll repost the last All Ords chart from the previous post in case some of you missed it:

xao234214.png

Here’s RIO Tinto:

Looks toppy (intermediate term) and unlikely to breach the blue trendline although I can’t rule out another marginal new high next week.

rio.png

Same with BHP here:

bhp23124143.png
Here’s the strongest retail bank WBC:

Still has some upside left, but seems limited to ~$29 tops. (Unless it goes crazy and breaks to the upside which would suggest a target of $32+ (and I highly doubt that would occur).

wbc.png

CBA still has some upside left, targeting $58.5. It should touch that. But if it doesn’t even attempt to make a run at it, I’ll stamp this as bearish.

cba.png

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I won’t post the charts of ANZ and NAB. They are by far the weakest banks and thus have the most upside potential in my mind. However, I believe that they will need another retest of their lows for any rally to occur.

As for Aussie tearaway stocks (ie. the Apple’s, RIMM’s, Baidu’s and Amazon’s of Australia), which include CSL, WOR, JBH, IPL, FMG, LEI (BHP deserves a mention), they will need to take a pullback, but I see no stopping them in the long run for now.

In summary, I see an intermediate term correction extending around 5% on the All Ords going into mid October. When or where it starts from I’m not sure. The market may trade sideways for 2 weeks before taking it on the chin though. Upside is now limited to 6650 and downside limited to 6200. That’s my 2 cents.

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