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Sold QBE at open 27.92. Keeping ANZ.

Will be looking to buy back BNB (if it nears the 18.7 region only). Also may look to buy CPU. Although yesterday set up a great reversal, I don’t think that this has ended the correction completely, especially in regards to the Oz market. The All Ords should pullback to 5630 sometime later on, either today or over the next few weeks. There may be further downside in Oz or just a long sideways consolidation like last year.

The US on the other hand may very well have put in a good bottom.

There’ll still be plenty of opportunity to buy shares cheap. Just don’t rush in too soon. It’s better to be a little late versus a little early. (There’s just too many people trapped in positions right now that still want to get out on strong rallies).

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I could not be more wrong again about 5800 being ‘near’ the bottom. It dropped like a hot rock to 5600 and has pierced the trendline extending from the 2003 bottom.

It ‘looks’ like exhaustion selling, but I can’t find it in me to step in front of a freight train by buying. I’m scrapping my plan of buying the eminis as I suspect the US might go for a possible washout move as well.

Back on the sidelines with my cash. Preserve your capital at all costs for the next low risk trade.

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Update: Wow! Talk about selling exhaustion. I bought some panic (against my own advice) and put 20% of my cash to work, 5% on the QBE at 25.85, 5% on BNB at 18, and 10% on ANZ at 25.85. I’m wary of buying any more right now, but I can’t rule out another sharp retest. Maybe the short term bottom is in. Long term: it’s lookin bearish.

Hope I don’t regret my purchases.

Update2: Just to let you know, I sold BNB at the near close for 19.5 and half of ANZ at 26.85.  Small profits to make up for my losses when I sold MFS and CGF a week or so ago.  So I’m 5% QBE and 5% ANZ.  QBE reports early next week, so I’ll be dumping it by the end of Friday regardless of whether it goes up or down.  I know QBE tends to surprise to the upside rather than the downside, but given its precarious technical situation, I’ll be hopping off it.  Hope we get some follow through buying tomorrow.

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Carry trade Update:

AUD/JPY Carry trade is still intact despite its ugliness. See chart below. Channel support.

audjpy2321.gif

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Looks like I might be wrong about the ‘rally all week into next week’ scenario. Whether tonight’s action is a pullback (which I think it is) or something deeper back into the earlier lows remains to be seen. I’m of the view that the US markets have bottomed or are close to bottoming (intermediate term), but the Aussie markets are some ways from it.

I’ll be watching from the sidelines for now.

Here’s a ‘prediction’ for the Dow Jones. Just for fun, nothing more. 🙂

dowjones.gif

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It’s certainly trying to give that impression, and I’m starting to believe it too, although the base building is a bit on the light side given the huge damage….

As for Aussie shares, I’m flipping on my earlier call and will scour for more decimated i-bank stocks. I’ll add back MFS, but I’m not going to add back CGF. Still holding BNB. Still, the risk of getting one’s head chopped off by holding onto i-bank stocks is high.

By the way, the AUD/JPY long trade is coming along nicely.

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Update: I’ll congratulate anyone who had the balls to catch MBL at $70. But it’s not like I didn’t see the bounce at $70 coming. Now if it were me, I’d be unloading MBL at 80-83 level.

Personally, I like BNB more (for no particular reason) and will hold it enters the 27.5 – 28.5 range. There will be sharp pullbacks in these stocks to shakeout the remaining weak longs so tread with caution. That said, don’t listen to me because I’m a very bad trader 🙂 .

Update: We’re gonna be test the lows again sometime soon. If the rally is feeling like it’s getting away from you, don’t worry, it won’t go to the moon.

Update: Well my entire BNB position got stopped out near the very lows of the day at 25.38 (low 25.37).  I certainly didn’t see that coming. 😦 .  But it looks like there’s more US subprime issues coming out of europe right now, so I guess I can buy it back cheaper later right?

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I sort of expected to get stopped out of the ESU7 before I went to bed.

I lowered my stop on the EUR/JPY 😮 and luckily that didn’t get hit. So my half a position on the EUR/JPY was my only exposure to last night’s surge. Up 120 pips so far and I’m not willing to take profits just yet. Might even add some more.

We should rally for the rest of the entire week going into mid-Aug. I guess my capitulation on my MFS/CGF investment really helped get the market going 🙂 . But at least I loaded up on some BNB yesterday, and I’ll see how that goes in the coming days (I’m pulling up the bounce target to 26.5 for now).

I don’t think this is the major bottom.

Holy smokes: BNB is opening at 25.75!! I’m selling at open (bought at 23.85).

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For when the selling exhausts itself in the US markets, as that might signal a sustainable bounce or bottom in the global markets.

See it here.

That said, I’ve got a downside target on the All Ords at 5800ish (at least). 😦

As the guy says, the bottom will be a process, and there’ll be plenty of time to pick up cheap stocks so there’s no rush. Come next week, I’m expecting weakness early on followed by a good bounce going into Friday.

Update: I’m doing this update on a Uni computer so I’ll be brief.  My sell order for CGF and MFS went through at open.  So I’m 100% cash now, up from 80% cash.  These were big losses, around -15% a piece thus taking a 3% bite out of my portfolio.  😦  So I’ve capitulated, which is good for you CGF and MFS holders out there, as it might mean the market will bounce back strongly. 🙂

There’s another great post at Stockbee here.  This is a MUST READ.

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I’ve been caught out by this correction with investments in boutique financial firms/small investment banks, mainly Challenger Finance and MFS limited, which each take up 10% of my portfolio. They are encountering heavy selling, and I’m not one to sell into panic, but I’m obliged to due to my risk management rules. If the leveraged boom is over, then these guys will have just about taken their last breath in this cycle.

Now where to put my money? I think I need to build core positions in some of my old favourites which are boring, but stable.

QBE comes to mind. It is an extremely well run general insurer. Let me just show you the chart. Would you buy it?

qbe.png

It looks like it’s showing a rounding top, but it’s done this before and just continued it’s relentless upward ascent. It truly is an investor’s dream. I’m gonna wait for its report to come out before I test the waters on this one, but I reckon it’s a safer bet than what I’ve been putting my money into in recent weeks.

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