Was that finally the low?
November 14th, 2008 by Lou Muddaris
Closing Data
| current | change | % | |
|---|---|---|---|
| Dow Jones | 8835.25 | 552.59 | 6.7% |
| NASDAQ | 1596.7 | 97.49 | 6.5% |
| S P 500 | 911.29 | 58.99 | 6.9% |
| FTSE 100 | 4169.21 | -12.81 | -0.3% |
| Nikkei 225 | 8238.64 | -456.9 | -5.3% |
| SPI Futures | 3805 | 52 | 1.4% |
| All Ords | 3,672.00 | -211.2 | -5.4% |
| Oil | 58.31 | 2.33 | 4.2% |
| Gold | 705 | -13.3 | -1.9% |
| Silver | 8.8 | -0.68 | -7.2% |
| Aluminium | 1871.5 | 11.5 | 0.6% |
| Copper | 3591 | -1 | -0.0% |
| Lead | 1302 | 45 | 3.6% |
| Nickel | 10405 | -145 | -1.4% |
| Tin | 14150 | 25 | 0.2% |
| Zinc | 1146 | 50.5 | 4.6% |
Trying to analyse and logically explain these wild manic markets is near impossible. How can you explain the Dow Jones rallying 400 points in the last 30 minutes of trading. Sorry, "short covering" doesn't work nor does "bargain hunting" as that has been reoccurring for too many months now.
News of the day
CBA's AGM was dire with the company stating that they would have further write downs on top of the $440 million hit from ABC Learning; Lehman's $150 million, $170 million to Allco and undisclosed write downs to Centro. And just to top it off they warned investors to expect a big jump in bad debt without quantifying it.
Suncorp axed 340 jobs. British Telecom axed 10,000 jobs…the list is endless. Again, if you are feeling insecure about your employment then it's simple; work harder!
All of this news is already priced into the market.
German GDP Q3 contracted by 0.5% putting it officially in recession.
The Bank of Ireland cancelled its dividend payment. Japan's number 2 bank, Mizuho are raising $3.1 billion.
The OECD said the U.S., Japan, and Europe are now officially in recession.
George Soros, the world's most famous Hedge Fund manager said "A deep recession is now inevitable and a depression cannot be ruled out". Incidentally, George is still buying stocks citing cheap valuations.
The Good News
The top 20 Government leaders are meeting in Brazil to discuss the economic crisis. Although we can expect much lip service the market really wants to hear hard, concrete policies. The Japanese have already stated they will give the IMF $100 billion to help the emerging economies. If the other 19 can make similar positive moves then we should see a positive Monday.
So was that the low yesterday?
More than likely. We retested the old lows of 3724 from October 28th, which as we highlighted yesterday, happens 75% of the time within 44 days; we needed that to happen before any sustainable rally can occur.
The Dow Jones overnight hit the psychologically important 8000 and bounced dramatically, in effect rallying over 800 points. Technically this is important as it is a double bottom.
Several Hedge Funds managers said the recent forced selling to deleverage seen over the past 2 months seems to be ending; indeed many have already said they have already aggressively sold enough stock to meet redemptions. It was reported that they had sold 8% of AIG stock alone and were now finished.
JPMorgan's ASX20+ Series 3
We reiterate our call that the market has priced in all the bad news (and some). There will still be volatility but now is the time to put money to work. Please call your Adviser regarding ASX20+ Series 3 from JPMorgan, an ideal way to gain exposure to a basket of the top 20 stocks.
Have a great weekend.
Quote of the day:
"History will be kind to me for I intend to write it" Winston Churchill.
Contact your Freeman Fox Stockbroker on 07 3031 9960 or 1800 003 369 Ext 7.
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