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Crash Crash Crash

Is a sharp BEAR market rally around the corner? Surely it must be…it certainly smells like capitulation.

I thought the global markets were about to decouple from the US ;p .

Fun times.

Update: Long STW. Long BHP. All @ open prices. Buying some crash :).

Update: Online broker server crashes. Fuck. Hope my stops are not hit.

Update: I’m an idiot.  I really need to start listening to the Fly.  All stopped out, including my remaining IPL stocks (@102~) .  My gains for the year are melting away.

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.

My only holding IPL will probably get hammered big time as Ag stocks in the US get punished.

This certainly isn’t a pretty market. The anticipated bounce on Monday/Tuesday occurred, but it was only an intraday rally. So far it appears that the XAO can only go in one direction: straight down. The US is pretty much in a confirmed bear market according to Colin Twiggs at incrediblecharts.com, but the All Ordinaries will not be in a confirmed bear market until the August lows are convincingly broken. Nonetheless, with the market trading below its 200ema, it is clearly in bearish territory at the moment. I think the Aussie market is still in the process of forming a major trading range like the one which occurred from 1999 to 2001 – but that could all change. With a horrendous open on Friday, could we be in the process of a washout that can trigger a more sustainable bounce in the Aussie bourse?

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Sorry for the lack of updates, as I have been busy. I’ll try to get some charts up on the weekend.

Update: BHP suffers a huge gap down. Smells like panic. Dipping my toe in here at 34.5 in anticipation of a bounce later on. I’ve got plenty of cash to waste here. Also bought some STW (SP200 etf) to capitalise on a potential bounce……

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Update @ close: Market rallies off morning lows. The position in BHP established this morning is up, as is my newly established position in STW. Let’s hope the market has a little more legs to stand on for this rally. I already sold half of BHP for a quick 2% in case this rally flops on Monday. I’m holding STW for the coming days though. Too scared to buy anything else as I’m not sure what will participate in the bounce and what will be left out. IPL is also falling a lot less than I expected, which is a good thing I guess – I expected a test of 102-104 today.  Sidenote, I’m up for the year so far in my equity account, in part due to my IPL holding and my vast reserves of cash raised last year.  Unfortunately, I have done nothing with my fx account.  If I put on my goggles of hindsight, I would have made tons of imaginary money by shorting GBP/JPY.

All Ordinaries

There’s no need to tell you that the market is ‘oversold’ on the daily timeframe. One noteworthy point is that the XAO is approaching the 62% retracement from the August low to the November high, which is around the 6020 area. I guess we might see some sort of rally starting Monday or Tuesday (from market open), probably after a washout move – whether it turns out to be sustainable is another matter. Note also that the heavily weighted BHP is approaching the 200day EMA, which ‘may’ provide some support to the overall market.

The SP 500

Thought I’d post some charts.

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And don’t forget to check out Will Rahal’s ‘economic series’. It’s always interesting to see a pro’s macroeconomic analysis. Check out his latest post here.

Incitec Pivot is really kicking some arse despite the lackluster performance from all other sectors. There’s no doubt that the agricultural chemicals (and gold and energy) are kicking it.

Despite my cheering for IPL, I think it is running way too hard at the moment (not that I’m complaining 🙂 ), so I’ve decided to sell down a third of my holdings purchased near $93 for $127.

I’m holding the rest until I’m either stopped out – or it reaches my target.  There’s two points of potential resistance for IPL at the current point in time.  One is $126, the other is $150.  Both are based on technicals and not some arbitrary number.  Although I think IPL will continue to soar in the first quarter or maybe even first half of 2008, I think it’ll take a huge dive in the second half – probably after the latter target is reached.

Aside from IPL, I’m looking for an entry point into JET. The entry price I’m looking at is 3.3-3.4, depending on the circumstances of course.  NUF also looks fairly interesting.

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The outperformers in the first quarter or first half will probably end up being oil, precious metals and agricultural stuff.   They’ll probably underperform in the later periods of the year as the laggards (financials et al) start to pick up pace.  Thus I’ll be looking to bottom pick some financial stocks showing slight relative strength as that time approaches.  The only name I can come up with right now is Babcock and Brown.  I would not be buying any financials stocks at this point in time though. :/

So what is my overall tip for 2008? Do your own research.