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No6

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Everything posted by No6

  1. For those of a long term buy and hold disposition I don't think you can go wrong with Tesco. It has been in a downtrend since hitting around 440, but even if we do have a double dip people still have to eat and they will shop at Tesco's. Sainsbury's are looking cheap as well. I also wonder if Morrison's has bottomed out at around 280p? May post some charts over the weekend.
  2. Interesting comments from the Naked Trader, Robbie Burns.
  3. Below is a list of all the FTSE100 companies that have fallen by 20%+ in the last 30 days. The ones that I think are pretty good companies are in bold. Heavy hit on the commodity and energy sector again as the fear in the market believes that resources will not be in demand if the world economy falters. Questions is, when is the time to buy and tuck them away? Will they fall 60-90% as happened to many of these in 2008? Many of these now look cheap, but market fear could make them a lot cheaper yet. Vedanta Resources 1,294.00p -32.25% Royal Bank of Scotland Group 24.29p -32.00% Lloyds Banking Group 30.84p -31.22% Inmarsat 389.70p -30.97% Kazakhmys 918.00p -30.51% Essar Energy 262.10p -30.35% Barclays 163.70p -30.03% Xstrata 1,000.00p -26.79% Cairn Energy 293.90p -26.47% Glencore International 363.00p -25.99% Man Group 187.20p -25.68% 3i Group 212.60p -25.53% Wolseley 1,473.00p -25.38% Hargreaves Lansdown 454.50p -25.37% International Consolidated Airlines Group SA 177.30p -25.25% Tullow Oil 974.00p -25.02% IMI 808.00p -24.84% GKN 178.50p -24.11% Anglo American 2,314.00p -23.88% Eurasian Natural Resources Corp. 585.50p -23.66% BHP Billiton 1,866.00p -23.43% Rio Tinto 3,416.50p -23.22% Petrofac Ltd. 1,141.00p -23.16% Carnival 1,792.00p -23.02% Investec 387.50p -22.89% Old Mutual 103.20p -22.70% Smith & Nephew 521.00p -22.59% ARM Holdings 488.70p -22.12% Aviva 328.40p -21.64% Legal & General Group 93.70p -21.26% InterContinental Hotels Group 1,011.00p -21.20% Amec 870.00p -21.05% Smiths Group 945.50p -20.75% Prudential 567.00p -20.20%
  4. The sellers may be dealing in smaller amounts, but there are more individual sellers? In markets like these that may be typical as the smaller investors are shaken out. It's an old tactic that when prices are falling much of it is a shake out, the pros want to get the shares at a cheaper price, what better way of doing it than scaring the smaller investors to sell up. This way you still may have more sellers than buyers, but it is the smart money that is buying. That is my guess as when markets panic we are always told after the fact that was the best time to buy when everyone else was selling. I see no reason as to why it would be different this time accept that as usual it is almost impossible to pick the market bottom and that may still be a way off yet. To some degree I think what we are seeing is a mass shakeout, much more difficult to deal with, but excessive fearmongering and marking down by the market makers that will ultimately result in the smart money buying up good companies on the cheap.
  5. The FTSE 100/250 stocks are more liquid so I would expect them to correct quicker if and when the market decides that the selling has reached a silly stage and things look too cheap. AIM, smaller company stocks, which I don't really follow, tend to have less market makers and may be less liquid. However, I suspect the good ones would move quicker once the market realises they are undervalued. Likewise on the downside they can move quicker too. I've never been a big fan of buy and hold accept when market conditions are really in your favour. By that I mean when stocks are woefully oversold and everyone is predicting the end of the world, the blood on the streets scenario, that is when you should buy and tuck them away. Back in 2007/8 miners and commodity companies took a battering and looking at these markets now, it is amazing to reflect that some FTSE100 companies reached incredible lows and yet had more justification to bounce back than others. Fresnillo, the gold and silver miner was less than 100p, yesterday, even after the latest falls it stood at 1845p! We all could have made a pile from that, but who had the bottle to go in when it was less than a 100p and falling like a knife? Blood on the streets. It works, that is when you should fill your boots and hope it isn't the end of the world or the market system. That is when buy and hold really pays off, but the opportunities only come along very rarely. We may be witnessing that now. Having said all that, some sectors should be avoided like the plague. I wouldn't touch banking (other than to trade), building, companies heavily exposed to Govt spending (although to be fair some of these like Capita and Carillion seem to be good at what they do and tend to pick up long term contracts replacing the Govt hired depts/worker)and non-food retailers. When any rebound comes the miners and oil companies will be at the front of any advance if recent history is anything to go by. Doubt they will reach the low valuations of 2007/8 though, they were just silly.
  6. US downgraded fromm AAA to AA+. Does this mean they won't get their university place now? Cheap, good companies getting cheaper.
  7. Commodity, energy and oil companies have been hit quite hard in these falls, but that tends to be normal at times like this as the market begins to think that recession means cheaper commodity prices and commodity surplus. Usually that means there are bargains to be had.
  8. How the Dow performs after big declines Here’s a look at how the Dow performed after it’s ten worst point drops based on data compiled from FactSet Research. Point fall Date Next day Next week -777.68 9/29/2008 4.68% -3.95% -733.08 10/15/2008 4.68% -0.68% -684.81 9/17/2001 -0.19% -3.55% -679.95 12/01/2008 3.31% 9.63% -678.91 10/09/2008 -1.49% 4.66% -617.78 4/14/2000 2.69% 5.22% -554.26 10/27/1997 4.71% 7.17% -514.45 10/22/2008 2.02% 5.54% -512.76 8/04/2011 ? ? -512.61 8/31/1998 3.82% 1.34% 2.69% 2.82% Reads better at; http://blogs.marketwatch.com/thetell/2011/08/05/how-the-dow-performs-after-big-declines/
  9. US Job numbers look better than expected.
  10. I'm reluctant to do anything before that jobs report, market just too nervous ahead of it. Even a slightly lower figure than estimates could send this market tumbling. It would be irrational, but the markets are in that kind of mood.
  11. These markets can move too fast so trading, especially against the general market trend can be very risky. I work on strategies to only trade with the trend or stay out if it is too volatile. For example, in the last two days I've mainly "paper traded" on demo platforms, every trade has been short, everyone a winner! Going £10 a point (spread betting platform) I have had 9 in a row so far trading 3 min charts using basic stochastics and parabolic sar indicator, demo profit, £615.50. Sounds good, except that quite a few of these trades were 10+ points down at various stages because of the volatility. Each ultimately went my way and the short trend looked clear, but it could have easily been an expensive reverse. As for individual stocks, there are many looking good right now, an example are the insurers Aviva and Legal and General both produced really good results but are down around 5-10%. For longer term investors there occasionally comes a time when good companies are offered cheap and ultimately if you are interested in equities you have to go for it. Right now I would avoid the most obviously bad sectors like banking, building and non-food retailers, but look for well run companies making money elsewhere.
  12. At times like these when markets are in freefall people need to make their own decisions as to whether things look cheap or not and decisions on the right time to buy or totally avoid. If you are of the doom and gloom type then you will be avoiding like the plague and expecting more of the same, but historically it is always the case that times like these give people the greatest opportunities, markets always come back, even if it is the start of a new bear downleg at some stage it will bounce because markets always do. They do not fall in a straight line and just keep going, and right now the market is in irrational mode, loads of companies reporting great numbers and falling 10-15%, you have to know that doesn't make sense. 5500 breached on the FTSE, but much of it may well have been automated selling as technical numbers were breached. Same in the US. Bad job numbers in the US today and we could hit 5000-5100 on the FTSE and 11000 on the Dow. Good or not so bad numbers and markets could end the day 2-3% higher. Go figure. So, who is a real contrarian when moments like this happen? Everyone selling and wanting to get out of equities, could there not be a better buy signal? However, the responsible approach is to not try and catch the falling knife, but wait for evidence of a turn, that is the risk you have to take at times like this - most won't. If this is a new bear leg down the low may not happen for some time, but in the meantime there will be rallies, it will be interesting to see how strong they are.
  13. So, unless you are in the end of the world camp, here's a contrarian view. Bad US jobs number tomorrow and the cheap good companies will be even cheaper.
  14. Time to start putting together the "blood on the streets" good companies to buy list.
  15. Chinese and Indian tourists are helping the UK's recovery.
  16. I've mentioned previously that 5500/5600 is a key area of support and still think that is the case. If we go lower than that the bears may well finally be getting their next sustained move down, but by how much? However, I still think the FTSE is likely to follow the US, so unless there is a bad 3rd qt to come, or the markets get really spooked by a US downgrade regardless of the vote tonight, I still expect the markets to go higher by the end of the year. The traditional good months Sep-Dec are just around the corner as well. My only concern is that some of the longer term charts, weekly and monthly are suggesting weakness as are the moving averages, so we are entering an important period as to whether the markets go higher or not. It is still probably more of a trader's market, in which case regardless of whether it is going up or down providing you are good on the short as well as the long side it doesn't really matter what the direction is as long as you are trading with it.
  17. Don't think there has been a real rally yet and the market is well oversold. The sell off happened because of worse than expected manufacturing numbers. I think we are having a goldilocks recession, neither too hot or cold, but a bit lumpy. I like it when there is all this gloom, it suggests the market will do the opposite, the only question is when.
  18. Tea Partiers don't like public spending accept it would seem when it is going to defense contractors and it is big money.
  19. Not sure that it is wise right now for Washington to upset China.
  20. I'm wondering if in the end it is Obama who will give way and then put the blame for any negative reaction re where the cuts hit firmly on the shoulders of the Republicans and the Tea Party? If the politicians don't get an agreement a stock market sell off is most likely if only to remind Washington that taking on the markets is a risky strategy. Not sure if the Tea Party understand this yet, being the most ideological in Congress. Trouble is, the markets want to see both an extension of the debt limit and a coherent plan to solve the debt issue over the long term. I doubt they will get that by August 2nd even if there is a deal. Not just Sweden. Germany is doing ok as well. Although, in keeping with the market preference for doom and gloom at the moment.
  21. So, they are going to take it right to the end and if there is no agreement on the debt ceiling by August 2nd? How about 600 off the Dow? Then 400 the next day? May take something like this to wake up Washington. In the meantime, stocks are cheap by historical standards, past experience suggests that any sell off would be a buying opportunity. Another contrarian indicator.
  22. Debt deadline getting closer. If it doesn't get done and the markets fall as is likely, it must be time for bargain hunting.
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