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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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I could not be more wrong about this week being an up week. I thought we would get a decent rally before more downside, but the bears just kept pouncing. The SPX is now heading for the March lows. The initial 5800 target for the All Ords has been reached earlier than I expected. The materials sector took a huge hit to the face for the first time during this correction, and I expect more to come. Key sectors holding up include healthcare (due to CSL), staples (WOW) arguably the major retail banks (perhaps because they have fallen so much ‘pre-correction’).

I didn’t buy anything entering this week despite saying that I will be looking to add i-banks and stuff. If I did, I might as well just burn my money. I’m gonna continue sitting on 100% cash until the dust settles. I haven’t traded currencies or futures either because of other business.

I’m starting to sound like a broken record here, but I still think a short term bottom is due here at 5800. However, the only problem with this is BHP. It broke its trendline from the Janurary lows only yesterday and it was on high volume (with a wide ranging daily bar). This stock is heavily weighted, and my currently bearish slant on this stock, suggests that any rallies back to the underbelly of its trendline should be sold.

bhp.png

I’m also going to make the first trade in the last couple days by looking to go long the SP eminis (sep) somewhere in between 1400-1410. If it fails to bounce here, then the market will get down to 1386 before going to 1360.

Also, although I said ‘consider’ buying QBE, because of the technical damage it has sustained, I would not touch it until the picture becomes clearer, or at least when the report comes out. Tropical Storm Dean won’t be helping much with QBE either.

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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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Come next week, I’m going 100% cash from 80% cash. My exposure to the financial sector is the thing that is hurting me.

I’m sitting on a sizable 10% drop on my investments, and that amounts to 2% drop in my portfolio, which triggers a cut and run action.

I need to take losses like man here rather than wait for that bounce. All I can say is it will hurt. So far this financial year (starting July 07), my investment account is “NEGATIVE” 2% (versus -7% on the All Ords), while my trading account is in moderately positive territory. To me, this has been one of my worst starts to the financial year.

For my investment account, I haven’t found a reason yet to deploy cash since most stocks I look at look like shit. Note that I only buy stocks in the ASX 300. I’ve also noticed how most financial commentators in Australia are still bullish as heck on this correction and are suggesting retail investors to buy this dip. I say fuck off. I wanna see the dust settle before I plough money back in. My gut feel is that the ASX will have a rough 6 months ahead. My investment strategy for my ‘investment account’ will be to range trade the megacaps buying only at long term horizontal support and selling at interim resistance for mediocre profits. Given the shoddy market conditions, I don’t have any faith in breakouts as many breakout patterns will fail.

Capital protection is key in this environment.

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It appears the rally is stopping short. Bears are gaining momentum it appears and they have everything going for them. Looks like the interim bottom turned out to be only a short term bottom.

Of note is the All Ord’s pathetic excuse of a rally. Might as well call the Aussie market dead for the coming months.

The bulls are gonna have a rough time. Sidelines or day trading is the best way to go for now.

By the way, the Fed Reserve needs to cut rates or the US economy is going to go down the gurgler. It needs to cut before it’s too late.

Update: It sucks to be long right now. In the short term, the chart looks like we’ll get a swing up by Monday or Tuesday, if the market gaps down slightly and flushes out the weak hands.  I’m getting positive divergences on the hourly, but if we bounce, I’d be looking to probably short if ESU7 fails to get above 1470s. It could get ugly. SPX has reached what I deem as strong support at 1428-1437, and it is at 1433. There should be some sort of a reaction. If there is none, we are then going straight for the sub 1400 region, perhaps 1360.

Reminder people: Bears are fucktards.

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This is merely some commentary I’m offering to those mum and dad investors who are holding MBL (which I’m glad I’m not).  For what it’s worth, I’ll be blunt and harsh and I won’t be apologetic since the market was clearly not apologetic to MBL shareholders over the last few weeks.

For those people that have held onto this stinking piece of shit since its $87 share issue, I say you deserve today’s shit whacking.  When those that head the ‘millionaire’ factory start issuing shares when the stock is trading at all time highs, would you be buying?  Moreover, the charts were ugly as, and volume was getting quite heavy on the selling prior to the recent selloff.

Looking at the chart, the stock ‘should’ find solid support near 71.5 area, maybe a few cents lower and bounce to 78 or 83 region.  But personally, I feel the only real safe area to add this to one’s long term portfolio is near the $67 region, which coincides with a 38% retracement of its entire bull run.  Personally, I believe $67 would most likely mark the bottom of a massive trading range for this stock.  If sentiment really turns sour, then we could see it retrace 50% to the $58 region (very unlikely, but it is possible).  I might try and catch this near 71.5 (if it can get there this week or the next) for a good bounce (and no more), but I’ve got a feeling that I might shoot myself in the foot by trying this.

From another perspective, we could look at the monthly pivot points.  As you can see, we bounced a few days ago near S2, and only a day later, we’re sitting at July’s S3 of 73.73.  But since this is August, we can see the monthly PP is at 84.74, which is too far away to even think about for now.  We’re below August S1 76.61, and just above S2 at 70.71.  That again makes me believe that we’ll see a bounce from this stock beginning from the 70.70 to 71.5 region.

Long term, I’m neutral to slightly bearish on this stock because the 200EMA has turned down today.  That said, it appears to be a bit too late to sell now, so I’d take to unloading on rallies to the 78-83 region.

 mbl.pngmbl-pp.pngmbl-fib.png

As for Babcock and Brown (BNB), it’ll probably follow in Macquarie’s (MBL) footsteps.

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Like I predicted a couple of days ago, we got a vicious bear attack before Friday. However, the crash scenario is back open.

The All Ords is absolutely getting demolished as I speak.  For my equity holdings, I’m 20% long, and even with the small holding, I’m getting butchered because of my exposure to the financials.  Ay.  That’s what I get for not having stops on my ‘investments’.  Macquarie Bank is grenading itself (down 10%) due to its subprime losses.  Babcock and Brown, Australia’s 2nd biggest investment bank, is flooding the market with blood and shit, taking a 10% hit as well.  I don’t have exposure to either of these stocks, but their shitty performances are affecting my holdings.  Fuck you sellers.

Babcock and Brown is something I always wanted to add to my portfolio, and given my large cash position, I’m very tempted to nibble a bit on it considering the stock has panic written all over it.  However, I don’t want my face blown up, so I’ll wait a day or two before forking out the cash to mother market.  It is dirt cheap at $25.3 considering it fell from $32 a week ago.  That said, dirt cheap can get cheaper.

I’ll be lightening up on a bounce if it materialises in the coming days on the all ords.  FWIW, the technicals of all ords looks a lot uglier than that of the US, so I’m maintaining my outlook on the SPX, but I’m gonna be a bit more wary of catching a bottom on the All Ords…it could have more room to fall.

Most yen crosses are pulling back to where they were a few days ago.  I think I’ll step aside for now.  If the low breaks significantly, we’re all doomed for a huge cascade of selling.

Just a reminder people, permabears are fucktards.

Update: I’m lowering my downside target to the February lows for the SPX.  Looks like the bears have more fight in them, so yeah.  Bulls will have to choke on their own vomit for the time being.  In other words, we’re all fucked even though we’re due for a good bounce.  I’d like to say that we’re close to a short term bottom, but I wouldn’t know…

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