The Dow Jones does its normal 600 point range

October 24th, 2008  by Lou Muddaris

Closing Data

	current	change	%
Dow Jones	8691.25	172.04	2.0%
NASDAQ	1603.91	-11.84	-0.7%
S P 500	908.11	11.33	1.3%
FTSE 100	4087.83	46.94	1.2%
Nikkei 225	8460.98	-213.71	-2.5%
SPI Futures	3970	-63	-1.6%
All Ords	3939.32	-180.8	-4.4%
Oil	67.17	0.25	0.4%
Gold	721.9	1.4	0.2%
Silver	9.69	0.06	0.6%
Aluminium	1910.5	-71.5	-3.6%
Copper	3986	-300	-7.0%
Lead	1150.5	-89.5	-7.2%
Nickel	9105	-1305	-12.5%
Tin	11580	-420	-3.5%
Zinc	1062	-63	-5.6%

No matter how much the fundamentalists or "talking heads" try and explain these manic price gyrations it simply isn't worth listening to them. There is no logic; period! They can try and explain in hindsight citing oil prices, economic data, company reports, etc but the fact is traders aren't listening. Intra day we go down when we "should" be going up and then we go up when we "should" be going down. It's all about psychology, greed and fear; something that is quite unquantifiable. As one Hedge Fund manager said, "suddenly everything is getting slammed on forced selling to meet redemptions, whether it makes sense or not is irrelevant". Also, as my 14 yr old tells me "Dad, the market is going up today by 300 points, then down by 400 points"…and to be perfectly honest her guess is as good as anybody's!

OPEC

Their emergency meeting in Vienna today will be crucial with guaranteed production cuts. However, these guys are already split. The Iranians are demanding a reduction of 2mln barrels per day ;( nothing anti-west there!) The Venezuelan's wanting a more conservative 1 mln cut back and the Saudi's only commenting that they have to be aware of the damage rising oil prices could cause. It is worth remembering that back in 1998 when we had the Asian financial crisis oil was under $10 a barrel….me thinks they have good memories! Shame.

BHP/RIO

This morning the South African regulators approved the $69 bln take over on condition BHP sells its Aluminum Coegan smelting project. No big deal. The big deal is this. According to "inside sources" quoted in today's Financial Review, The European commission, meeting on Jan 16 2009 have issued a "statement of objections to BHP that outline its anti-trust objections". Now this story broke overnight yet RIO shares collapsed yesterday by 15%.

BNB

Another interesting little gem! The share price has been defying the market falls consistently rising for the past week. Again, some one knows something, indeed yesterday BNB finally admitted that they "are in strategic talks with other parties". We did highlight previously that Deutsche Bank were the courting partner…$2.50 share offer?

Watch this space.

I'm not intro Astrology but...

November and December have consistently proven to be great months for the stock markets. As Antony Ganzitti highlighted in an earlier Fox Report, Gann theory focuses on Astrological influences causing these rallies. Now whether that is due to Jupiter touching Neptune which is heading for Uranus I really do not know nor care! Let's just hope it works again.

Trade Recommendation - Buy OZL

I have been advising to sell this stock from $1.80 as metal prices collapse due to recessionary pressures. Now is the time to buy. The share price at 96 cents represents remarkable value. Firstly, the company has over $1 billion in cash reserves. Secondly it pays a dividend of 5 cents (a 10% yield). Thirdly it is Australia's 3rd biggest miner and should the BHP/RIO take over fail then they could be a target. Finally, it looks extremely oversold, even allowing for falling zinc and copper prices.

I realize many of you are already long OZL at horrible levels but at 96 cents this is a great opportunity to "average down".

Quote of the day: Lady Attersley to Winston Churchill "Sir, you are drunk". Churchill replies "and lady you are ugly but I will be sober in the morning" 

Contact your Freeman Fox Stockbroker on 07 3031 9960 or 1800 003 369 Ext 7.

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