x 0

I had been posting almost everyday the below writeup from OCBC Investment Research:

Midas's firm order book of 1.4 billion yuan (S$296 million), more anticipated contract wins in Sept - Nov 2009... will serve to under-gird valuations"

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From "Lim & Tan securities":

We remain positive on Midas given its robust
growth prospects, underpinned by its robust order
books of RMB1.4bln as well as the robust prospects
of its 32.5% owned subsidiary company, also
underpinned by solid order books of RMB4.5bln.

And this in turn reflects the government’s active
efforts to support the railcar industry in China to
reduce transportation bottlenecks as well as reduce
transportation costs. Rail transportation is much
cheaper than air travel and is much safer and causes
much less pollution than automotive transportation.

The company will be increasing their production
capacity by 200% in the next 2 years to cope with
the strong order flows. Its PE of 20x remains
undemanding compared to its expected growth rate
of 40-50%.

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From OCBC Investment Research:

Midas Holdings:

Evaluating listing in HK.

Maintain BUY.

Midas Holdings (Midas) announced today that it is planning a secondary listing of its shares on the Main Board of the Stock Exchange of HongKong.

Midas has appointed Credit Suisse (Hong Kong) to assist the group in evaluating and preparing for this listing.

Mr Patrick Chew, CEO, says that Midas "is now ready to take Midas towards the next development phase and is optimistic that a listing on both the Singapore and HongKong bourses will allow Midas to tap into a wider investor base, increase liquidity and enhance the stock value".

Hong Kong valuations tend to be richer and this could bode well for dual-listed Singapore stocks.

Maintain BUY, fair value of S$1.05.

(Kelly Chia)

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x 1

Midas does not just depend on trains, read extract from below:

Life after trains:

Over the longer term, management will look into other feasible, promising industries such as aviation to continue its growth.

I had been posting almost everyday the below writeup from Kim Eng:

Midas – Company update (James KOH 64321431)

Previous day closing price: $0.865

Recommendation: Buy (maintained)

Target price: $1.15 (Previously $0.985)

Still packing the theatre

We recently hosted a roadshow for Midas in the US, which was very well-received by funds.

The exciting growth prospects within the China rail infrastructure space continue to capture the
imagination, with the main discussion points being the competition within this space, the sustainability of growth for Midas and the progression on expansion.

A smaller share of the bigger pie

While Midas still holds a clear lead in terms of certification and track record,
management expects competition to intensify, with listed peers such as Shandong Nanshan (Shanghai) and Zhongwang (HK) stating their intentions to break into this market.

Going forward, they believe achieving a lower 50-60% market share of this growing pie would be a more reasonable target, which will still ensure strong growth.

Life after trains

Improving the rail infrastructure network is an important government initiative, with current directives providing clear visibility over the next 2-3 years. Even subsequent to the stimulus package, we expect this program to continue.

Over the longer term, management will look into other feasible, promising industries such as aviation to continue its growth.

Progress on the installation of 4th and 5th extrusion lines

We now expect the 4th and 5th extrusion lines to come on stream by 2Q09 and 4Q09, earlier than our earlier estimates.

Our model factors in Midas winning a 50%-60% market share of the upcoming round of orders, which is twice the size of the first round. This will already keep all its five extrusion lines busy at about 75% utilisation.

Much more tracks to run

We adjust our earnings to take into account higher effective capacity in FY10 and higher tax rates in FY11.

We now peg our target price to 20X FY10E.

We believe the Chinese rail industry is still at its early-mid cycle.

With the Ministry of Railway due to announce the 2nd round of high-speed train orders, we expect orders to flow down to Midas within 3-4 months

risktaker ( Date: 07-Oct-2009 10:04) Posted:

Whats next after stimulus ? Will be the question people asking. With the increased capacity can Midas keep it up its utilization of its available resources ?

Investors buy for potential huge growth in 5-10 years. Can we see Midas achieving it after China stimulus ? People have doubts. Within 2 -3 years I will expect Midas earning reached its peak and its trading share price will be around SGD $2-3 based on its Earnings X.

Warren buffet wont enter Midas on few reasons which i will not reveal. But if your smart you can make a guess :)

keepnosecrets ( Date: 07-Oct-2009 09:51) Posted:

I think no strict rules on free float of shares. What is more important is the value of the shares. I think most big guns look at least at the future growth of the company. They already have so much money, the immediate has no impact on the finances, so the future growth is more important. I heard they made their weath from investing in relatively unknown stocks that eventually showed big potentials and growth, multiplying the value of their shareholdings not in terms of quantity but in worth (quality). If you invested in just 2000 shares in Google when it was below US$30 per share, many many years back, you would have reaped more than US$1.8 million when the shares peaked around US$900 or more with splits, dividends and bonuses. There are also many examples of unknown shares risen thousands of times their original value so that is why we have so many super duper rich people in US who made it from Wall St.

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I too fully agree with u.

I have this "2 days" rule based on closing price, not intraday high nor low to avoid fakes.

Bintang ( Date: 07-Oct-2009 10:01) Posted:

If the support at 81 cents did not penetrate for two days in a row , it is known as invalid break down , so the chances to go up is more than that to come down .

richtan ( Date: 07-Oct-2009 09:53) Posted:

From OCBC Investment Research:

Market Pulse

Midas and Tat Hong look interesting at current levels.

Stocks offering exposure to infrastructural play in the region will continue to outperform as we have seen
still healthy investments into building up infrastructures in the region.

We believe that present market weakness will be an opportune time to accumulate these stocks.

In this space, we continue to like Midas [BUY, fair value estimate of S$1.05 versus current price of $0.81]
and Tat Hong [BUY, fair value of S$1.15 and current price of $0.99].

Midas has taken a big hit, down 14.7% from the recent high of S$0.905 when it announced a possible listing
in Hong Kong to a recent low of S$0.785. At current levels, and with a large backlog, we continue to re-iterate
our BUY rating for the stock.

Tat Hong is also poised to be another beneficiary of the infrastructural spending in China and India.
We expect the company to see better earnings ahead, supported by contributions from both countries. Refer
to our Tat Hong full report today for more details. The stock has also fallen 13.5% from recent high of $1.11
to a recent low of 96 cents. At current level, we are upgrading the stock to a BUY.

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NOTICE OF ANNUAL GENERAL MEETING

NOTICE IS HEREBY GIVEN that the annual general meeting of AusGroup Limited (the “Company”) will be held at Anson Rooms 3 & 4, Level 2, M Hotel Singapore, 81 Anson Road, Singapore 079908 on Tuesday, 13 October 2009 at 3.00 p.m.

NOTICE OF BOOKS CLOSURE AND DIVIDEND PAYMENT DATES

NOTICE IS HEREBY GIVEN that the share transfer books and register of members of AusGroupLimited (the “Company”) will be closed on 24 October 2009 for the purpose of determining members’ entitlements to the final one-tier tax exempt dividend of 0.64 Singapore cents per ordinary share for the year ended 30 June 2009.

Members whose securities accounts with The Central Depository (Pte) Limited are credited with shares at 5.00 p.m. on 23 October 2009 will be entitled to the dividend.

The dividend, if approved by members at the Company’s annual general meeting to be held on 13 October 2009, will be paid on 6 November 2009.

http://info.sgx.com/webcoranncatth.nsf/VwAttachments/Att_B48A2FE4D2D9D2534825763A0005E914/$file/AusGroup.Notice.Of.AGM.pdf?openelement

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The below report from CIMB on 30/9/2009 Wednesday

Expected to secure A$125m orders from Gorgon in the next six months.

Over the next 18 months, management plans to submit A$1bn of bids for the Gorgon
project.

Some A$60m has already been submitted and another A$420m will be
submitted by end-2009.

The bids are for fabrication work for the upstream phase (preassembled
pipe racks, modules, subsea manifolds and spools).

We expect the group to secure A$125m of contracts from the project by 1Q10.

To date, the Gorgon project has awarded A$2bn worth of projects to sub-contractors for infrastructure and logistics work and is expected to award another A$10bn in the coming three months.

We anticipate further order wins from the Gorgon project for AusGroup from 2H10
when contracts for subsea/LNG plant work are announced.

On the lookout for acquisitions.

With a strong cash position, we expect management to announce acquisitions in the near term. Potential acquisitions would be similar to MAS: providing similar businesses, enhancing AusGroup’s footprint in East Australia/South-East Asia and achieving the required rate of returns

x 1

From OCBC Investment Research:

Market Pulse

Midas and Tat Hong look interesting at current levels.

Stocks offering exposure to infrastructural play in the region will continue to outperform as we have seen
still healthy investments into building up infrastructures in the region.

We believe that present market weakness will be an opportune time to accumulate these stocks.

In this space, we continue to like Midas [BUY, fair value estimate of S$1.05 versus current price of $0.81]
and Tat Hong [BUY, fair value of S$1.15 and current price of $0.99].

Midas has taken a big hit, down 14.7% from the recent high of S$0.905 when it announced a possible listing
in Hong Kong to a recent low of S$0.785. At current levels, and with a large backlog, we continue to re-iterate
our BUY rating for the stock.

Tat Hong is also poised to be another beneficiary of the infrastructural spending in China and India.
We expect the company to see better earnings ahead, supported by contributions from both countries. Refer
to our Tat Hong full report today for more details. The stock has also fallen 13.5% from recent high of $1.11
to a recent low of 96 cents. At current level, we are upgrading the stock to a BUY.

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Below is my chart analysis for sharing and exchange pointers.

My TA chart is posted to share n exchange pointers with those TA practitioner whom believes in TA.

If u are a TA detractor, plse just ignore n refrain from peeping at my chart posting n start making unconstructive comments and plse do not be so childish or lunatic as to abuse the rating system by intentionally rating it as "bad post", this is not cursing but Buddhism beliefs tat intentional bad deeds will accumulate for yourself and possibly your next generation, "bad" karma for your "bad" deeds.

If u think it is a bad post, then be constructive and kindly post your TA for sharing. This is only my view n I may be right or wrong, so dyodd and SOBAYOR.

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Read this posting in CNA forum, copy n paste here just for sharing:

sessam

Joined: 31 Aug 2006
Posts: 3042

Posted: Tue Oct 06, 2009 5:34 pm Post subject:

Midas do not respond to good or bad news like others. It is a long term big fund stock not for short term trading. Go to her past movements she may go down after anouncements of contracts, but also note Midas has a characteristic of being depressed under accumulations and suddenly running up 5% to10% unexpectedly. This is a growth counter not for the gambling, see it as serious investment. If you had dared to buy Midas in Mar 09 you would have more than doubled even at the depressed price now. If Midas is now $2 with a bigger float she will attract the like of Warren Buffett.

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Fidelity’s Bolton Predicts ‘Multi-Year’ Bull Market (Update1)

Share | Email | Print | A A A

By Bernard Lo and Michael Patterson

Oct. 6 (Bloomberg) -- Sustainable economic growth and low interest rates worldwide will spur a “multi-year” bull market in equities, led by developing nations, said Fidelity International’s Anthony Bolton.

“Low growth means low interest rates, and actually that’s one of the best environments for stock-market investing,” Bolton, president of investments at Fidelity International, which oversees about $141 billion, said in an interview on Bloomberg Television in Hong Kong. “Anything that can show growth in this low-growth environment is going to be bid up by investors. It’s very pro the emerging-market world versus the developed world.”

Policy makers in the U.S. and Europe will keep interest rates low for another year even as Australia’s central bank unexpectedly raised rates today, Bolton said. He’s “particularly optimistic” on Chinese stocks because the government will foster sustained economic growth without fueling inflation.

Bolton’s view contrasts with New York University Professor Nouriel Roubini and Elliott Wave International Inc.’s Robert Prechter, who have said shares are poised to retreat. Pacific Investment Management Co.’s Bill Gross predicted low economic growth will restrict annual stock returns to 5 percent, while Nobel Prize-winning economist Joseph Stiglitz said investors have been “irrationally exuberant” about an economic recovery.

Stock Rally

The MSCI Emerging Markets Index has climbed 62 percent this year on expectations that developing nations will lead a rebound in the global economy from its worst recession since World War II. Emerging-market economies may grow 6 percent next year, compared with 1.8 percent growth in advanced nations, according to HSBC Holdings Plc.

The MSCI emerging markets gauge climbed 1.5 percent as of 12:23 p.m. in London as higher commodity prices boosted earnings prospects for producers and HSBC said its purchasing managers’ index for developing economies posted its biggest gain in more than a year. The MSCI World Index of developed nations, up 21 percent this year, gained 0.9 percent today.

Bolton, Fidelity’s first fund manager in Europe, said on March 11 that the U.K. equity market was at or near its lowest point. The nation’s benchmark FTSE 100 Index, which tumbled 31 percent in 2008, bottomed on March 3 and has since rallied 45 percent. Bolton dumped his holdings of telecommunications stocks in the first quarter of 2000 at the height of the industry’s bull market.

Bolton’s Special Situations Fund beat the FTSE All-Share Index on an annual basis by 6 percentage points from 1979 through 2007, according to Fidelity. Fidelity International is the London-based affiliate of Fidelity Investments, the world’s largest mutual-fund company.

To contact the reporter on this story: Bernard Lo in Hong Kong at blo2@bloomberg.net; Michael Patterson in London at mpatterson10@bloomberg.net.

Last Updated: October 6, 2009 07:58 EDT

Sporeguy ( Date: 06-Oct-2009 23:51) Posted:

Bottom to bottom usually takes 5.5 yrs. So Mar 2009 +5.5 years would make 2014 Sept a serious bottom. Generally the long term uptrend is less steep than the down trend. thus it takes more than half of 5.5 yrs to reach the peak, i.e about 3 years from Mar 2009 i.e around Mar 2012.

In between from bottom to peak there are 5 waves. Also in between there are the 3 possibilities in the other thread.

lookcc ( Date: 06-Oct-2009 21:52) Posted:

mkt crash, shud it occur, wud b feb nxt yr.

x 0

Relax, this is just some correction, not mkt crash nor end of the world yet.

For your reading n info:

Oct. 1, 2009, 12:01 a.m. EDT · Recommend (1) · Post:

Is October correction inevitable?

Commentary: Not if you study patterns of crash years

By Ethan Anderson

GRAND RAPIDS, Mich. (MarketWatch) -- Most investors seem braced for a big correction, but in my experience the majority is usually wrong.

In order to predict the future, one must consider the past and research similar market cycles to come up with a probable forecast for the future. After studying comparable periods to the one we are experiencing today, investors will realize that an October correction is not likely.

Consider the following:

We have not yet recovered fully from 2008. The market rebound after the crash of 1987 did not see a correction of 10% until 1990, which is more than two years later. Moreover, that correction was after "only" a 35% drop from top to bottom. At present, we are only six months removed from a 55% drop in the market.

TRADING STRATEGIES: OCTOBER
Will the bull survive?
October is best known for spectacular market crashes. At the very least, the month's volatility can spook many investors. But many of our experts say there's good reason to remain in the market, despite whatever jitters you may have.

• Karabell: What about the China effect?
• Is October correction inevitable?
• Time to take a stand on rally
• Eliades: March lows may come back

• Hennessey: Not as bad as everyone thinks

/conga/story/2009/10/trading-strategies.html 31978

October may be a negative month, but it's usually more in the range of 3% to 5%. The Octobers of 2008 and 1987 were the two biggest October sell-offs of the last 30 years, but each was preceded by a negative September. This year, September was positive.

During past October sell-offs, the month didn't represent the first wave of the attack. May and June often paved the way. October then stepped up to wipe out the survivors who believed the worst was over. Again, we did not see major selloffs in May or in June. In fact, this past June marked the fourth consecutive month of gains.

If we do sink lower in October, the catalyst can easily be the lack of top-line growth in earnings reports. However, if top-line growth is present, it can be another factor driving the market up in October.

To play devil's advocate, I must point out that six months after the market bottomed in 1987, the market was 21% higher. After the 2002 bottom, it was 24% higher. Today, we are 58% higher than we were in March. This is a significant jump.

To prepare investments for October, consider diversifying with a prudent amount of truly non-correlated asset classes like Treasury Inflation-Protected Securities (TIPS), commodities such as precious metals, managed futures and inverse funds.

If you have already pulled significant assets out of the market and are sitting on the sidelines, get back in but not all at once. Dollar-cost-average back into a diversified portfolio in order to avoid buying in on the worst day of the year, and consider tactical asset allocation programs for a small percentage of your portfolio.

On the fixed income side, TIPS is a good way to get some income and inflation protection. The Fidelity Floating Rate Bond Fund /quotes/comstock/10r!ffrhx (FFRHX 9.32, -0.01, -0.11%) still looks attractive. Blackrock Global Allocation /quotes/comstock/10r!mdlox (MDLOX 17.30, -0.25, -1.43%) is a wonderful fund with multiple asset classes.

For equities, Tom Soviero and some of the rest of the folks over at Fidelity Leveraged Company Stock Fund /quotes/comstock/10r!flvix (FLVIX 25.65, -1.12, -4.18%) are some of the best in the business, as is the team running the Kinetics Paradigm Fund. /quotes/comstock/10r!wwnpx (WWNPX 19.19, -0.57, -2.89%)

In conclusion, it is inevitable that a correction will occur in the market at some point, but research shows that an October correction is unlikely. A 3% to 5% pullback is conceivable for October, but do not prepare investments for a major selloff. You will regret it.

Ethan Anderson is a senior portfolio manager with Rehmann , one of the largest accounting, financial services and consulting firms in the Midwest. Anderson sits on Rehmann Financial's Investment Research Committee and has been recognized as a "5 star" portfolio manager by Morningstar Inc

freeme ( Date: 06-Oct-2009 17:55) Posted:

Many ppl are con by the mkt again in the 1st few days of Oct..

Mkt seems to rally up strongly now..

x 0

Oct. 1, 2009, 12:01 a.m. EDT · Recommend ·

Are you in the rally, or out of it?

Commentary: It's time to make a choice

By Tom Lydon

NEWPORT BEACH, Calif. (MarketWatch) -- These days, no matter what the markets do, there are still those naysayers who are sticking to their guns with admirable tenacity.

Heard any of these before?

"This rally is overheated."

"Any day now, the bear is going to be back."

"There's no way this is going to last. I'm staying out of it."

Despite a rally off the market's March 9 low that has continued with just a few pauses and hiccups, the skeptics are still out in force. How history repeats itself.

TRADING STRATEGIES: OCTOBER
Will the bull survive?
October is best known for spectacular market crashes. At the very least, the month's volatility can spook many investors. But many of our experts say there's good reason to remain in the market, despite whatever jitters you may have.

• Karabell: What about the China effect?
• Is October correction inevitable?
• Time to take a stand on rally
• Eliades: March lows may come back

• Hennessey: Not as bad as everyone thinks

/conga/story/2009/10/trading-strategies.html 31978

Following the bear market of 2000-2002, investors had a similar tone. Everyone said the 2003 rally couldn't continue and that, sooner or later, the markets would go "splat" once again. But that scenario never materialized. Instead, major markets recovered nicely in the last three quarters of 2003 and made those looking for an September/October correction look silly.

Will this time be different? Is this rally for suckers?

When this recession hit, investors began a mass exodus from the market that ultimately sank the major indexes to their lowest levels in nearly a decade. By 2008, they were practically trampling each other in a race to the exits as Bear Stearns and Lehman Brothers collapsed and the government stepped in with a massive bailout package designed to prop up what was clearly a critically ill economy.

Since the market's low earlier this year, investors have been slowly but surely returning. Despite how many rally doubters remain, some of them already have thrown up the white flag of surrender and taken equity positions. Yet most investors don't believe this recovery is real.

Missed opportunity

Still, to sit out and pooh-pooh the rally is to miss a major opportunity for gains, as well as a missed opportunity to make up what was lost in their battered portfolios. Investors hiding in the safety of money market funds aren't making anything from those paltry yields.

The markets have been steadily improving for much of this year, and all signs say that while the recovery may be a long, slow one, it will still be a recovery.

Why? There's $4 trillion on the sidelines, and as that money trickles back in, the rally should continue. Earnings season is just around the corner, and while many corporate forecasts are on the cautious side, their actual numbers could be better than expected

Federal Reserve Chairman Ben Bernanke has said the recession is "very likely over," and the Fed also is keeping interest rates at record lows for now in order to continue the pace of the recovery.

While a full recovery in the United States could be months away, there are many areas that have been delivering handsome returns for months.

Big gains

It's important to pick your spots so you don't miss opportunities to participate in potential long-term uptrends. In this recovery, keep an eye on both those areas that are likely to perform well as countries begin to build up again, as well as those areas that were hardest-hit in the recession:

Emerging markets: iShares MSCI Emerging Markets /quotes/comstock/13*!eem/quotes/nls/eem (EEM 37.95, +0.10, +0.26%) is up 84.1% off the market low

Steel: Market Vectors Steel /quotes/comstock/13*!slx/quotes/nls/slx (SLX 50.31, -2.42, -4.59%) is up nearly 130% since the low

Basic materials: iShares Dow Jones U.S. Basic Materials /quotes/comstock/13*!iym/quotes/nls/iym (IYM 52.62, -2.18, -3.98%) is up nearly 90% since the low

Banks: Financial Select Sector SPDRs /quotes/comstock/13*!xlf/quotes/nls/xlf (XLF 14.29, +0.01, +0.07%) is up almost 140% since the low

Real estate: iShares Dow Jones U.S. Real Estate /quotes/comstock/13*!iyr/quotes/nls/iyr (IYR 40.91, +0.05, +0.12%) is up almost 90% from the low

There's no way to predict whether this rally really has legs longer than a supermodel's, or whether it's going to stop short tomorrow. If you make the decision to begin taking part in it today, look for those spots trading above their 200-day moving averages and protect yourself on the downside with a stop loss.

Otherwise, sit back and enjoy the ride.

Tom Lydon is the editor of ETF Trends and president of Global Trends Investments, an investment advisory firm. Website is at www.etftrends.com .

freeme ( Date: 06-Oct-2009 17:55) Posted:

Many ppl are con by the mkt again in the 1st few days of Oct..

Mkt seems to rally up strongly now..

x 0

Oct. 1, 2009, 12:01 a.m. EDT · Recommend · Post:

No reason to be spooked by October this year

Commentary: But markets should be wary of Iran

By Robert Maltbie

LOS ANGELES (MarketWatch) -- While some might get spooked by an often-volatile October, signs are that the markets are in strong shape.

Just the facts: My indicators are as bullish as they have been since March 2003, preceding a 26% upside surge in equity averages that year. Four out of five of our market indicators are bullish and one is neutral.

Let's start with the bear case:

The market is fully valued at 17 times earnings and it is too late to get in the market. But price-to-earnings is a backward-looking measure. If we use projected forward estimates, a different picture emerges. If we value the S&P 500 using 2010 estimates, which call for a 20% or greater increase in earnings, we find a more reasonable price-to-earnings ratio of 14, far below 19 where the market topped in 2007.

TRADING STRATEGIES: OCTOBER
Will the bull survive?
October is best known for spectacular market crashes. At the very least, the month's volatility can spook many investors. But many of our experts say there's good reason to remain in the market, despite whatever jitters you may have.

• Karabell: What about the China effect?
• Is October correction inevitable?
• Time to take a stand on rally
• Eliades: March lows may come back

• Hennessey: Not as bad as everyone thinks

/conga/story/2009/10/trading-strategies.html 31978

As for our neutral indicators, they are "sentiment" indicators showing that volatility and possibly fear have greatly diminished. This is evidenced by the CBOE volatility index /quotes/comstock/20m!i:vix (VIX 28.27, +2.66, +10.39%) which has retreated to 23 from a high of more than 80 a year ago when we were in free fall. Offsetting this is a bullish AAII pundit survey showing investment advisors are bearish, perhaps bracing for "seasonal harshness," by 39% bulls to 45% bears.

Our remaining indicators are all currently solidly bullish -- technical indicators, monetary data, liquidity measures and valuations. Our Ouiji board swigglies and charts show positive, lead by a strong breadth and upside volume that is recently supported by expanding new 52-week high-to-low ratio.

A final anchor of positive support is that the Dow, the S&P and Nasdaq all have broken decisively above 200-day moving averages and held their ground. These are characteristics of a market with healthy internals, good days are better and exceed bad days and more stocks are starting to participate.

Monetary Indicators: This is our most powerful market force, also called "Don't fight the Fed." Money stock is expanding at near 8% annual rate. The real rate is higher considered against the backdrop of a deflating economy which is what we have had for nearly two years now.

The yield curve is also very steep and positive in its slope. This is a powerful 1-2 punch for the market, the fed is pumping money into the markets and economy and rates are staying low. These two factors have been important catalysts of every major bull market since 1920.

Liquidity or the directionality of money flows is another bullish sign that is just getting started. After freezing up with the cataclysmic events hitting markets over the last year, corporate M&A is rebounding, stock buybacks are returning, and money is starting to flow back into equity funds, including exchange-traded and hedge funds.

Big-time mergers by Walt Disney Co. /quotes/comstock/13*!dis/quotes/nls/dis (DIS 27.46, +0.10, +0.37%) , Abbott Labs /quotes/comstock/13*!abt/quotes/nls/abt (ABT 49.47, +0.79, +1.62%) and Dell Inc. /quotes/comstock/15*!dell/quotes/nls/dell (DELL 15.26, +0.12, +0.79%) are starting up again, as these and buybacks have pulsed to nearly $50 billion in September. Meanwhile, money markets have experienced a $54 billion outflow lately.

These add up to more than $100 billion in possible additional demand for equities. Offsets of insider selling and IPO issuance although increasing, are still at non-threatening or neutral levels.

Last but not least, we must not forget valuations. This is also bullish both on absolute and relative levels. While we are at the onset of a new recovery in earnings, more stable indicators such as market capitalization-to-GDP and price-to-sales provide evidence of reasonably cheap valuations.

The market is at a 20% discount to GDP and relative parity to sales. In 2000, the market traded at 1.8 times GDP and the price-to-sales ratio was 2.3. It seems we've worked off a lot of excess over the last 10 years.

Our relative valuation measures are positive lead by an earnings yield to quality corporate bond yield ratio of 1.2, a spread last see in 1982. Stockowners are getting paid or reinvesting back in the company more than high-grade bond owners, and stockowners should see this earnings stream significantly grow over the course of he next two years or so.

Also, cash dividends on the S&P at a 2.1% tax-favored yield far exceed treasury yields out to 10 years. Cap this off with the fact that the Leading Economic Indicators index is now at 104 following four successive monthly increases.

With easy earnings comparisons and no inflation on the near term horizon we expect the Dow Industrials to break 10,000 in October -- barring geopolitical events.

Score Percent Current

MARKET SENTIMENT 50.00 0.10 5.00

TECHNICALS 71.88 0.20 14.38

LIQUIDITY 62.50 0.20 12.50

VALUATION 78.13 0.15 11.72

EARNINGS MOMENTUM 70.00 0.15 10.50

MONETARY POLICY 77.78 0.20 15.56

1.00 69.65

Robert Maltbie is a CFA and principal of Millennium Asset Management, a California-based registered investment advisor that provides investment management services to high net worth investors. He is also Managing Director of Singular Research, an alternative independent research provider focused on small cap stocks for institutional investors. See his Web site at www.stockjock.com.

freeme ( Date: 06-Oct-2009 17:55) Posted:

Many ppl are con by the mkt again in the 1st few days of Oct..

Mkt seems to rally up strongly now..

x 0

Daryl Guppy: Alphabet soup out of character in China

Written by Daryl Guppy

Saturday, 26 September 2009 16:31

IS IT OVER for China? Is it time to sell China? These questions have dominated the newswires in the latter half of last week as the Shanghai Index moved to retest support in the 2,600 area. The answer is that one phase of the China market recovery is over, but a new one is beginning. The rest of the world is debating an alphabet soup of L-, W- and V-shaped recoveries as markets develop recovery patterns. Think of the China market as creating an inverted L-shaped trend pause. This is where the rapid uptrend pauses and consolidates. It is the end of momentum, but not the end of the uptrend.

Part of the reason for this is the focus on developing domestic economic strength. China’s State Council introduced a series of sweeping measures to boost small and medium-sized businesses. Small businesses create most of the jobs in China, and the government has a priority on the steady development of the sector.

As a result, tax cuts and relief are at the top of the list. The corporate income tax rate has been cut from 25% to 20% for small businesses whose annual taxable income is less than RMB30,000 ($6,220). Remember this amount is larger than the average annual income in China.

Beijing also announced new measures to encourage financing for small business. The government said it would cover a part of any bad loans that banks incurred from lending to small and medium-sized businesses. It is a move designed to encourage banks to boost their smallbusiness lending. Management-skills training will be offered to one million managers in small companies over the next three years.

The government is encouraging private capital to participate in the reform of rural cooperatives to give small businesses more financing options. A new scheme allows qualified small-sum loan companies to transfer into rural commercial companies and opens up a new source of financing for rural areas. This is economic infra structure building beyond the high-profile bridges and roads. It is not a sprint but a marathon, and the market correction should be seen in this context.

Market corrections have two behaviours: a correction in price and a correction using time. The Shanghai Index is developing both types. A correction in the market develops when the market index moves back to the underlying longterm trend. This is a correction in the long-term trend activity and not a change in the direction of the long-term trend. The long-term trend in the Shanghai Index can be defined with the long-term trend line. This trend line starts in December 2008. On Aug 19, 2009, the value of the long-term trend line is near 2,759.

The market quickly moved back to near the value of the long-term uptrend. In August, the market fell from the peak index value of 3,478 to 2,761, which is near the value of the longterm uptrend line. This 20% fall is a correction in price. The rapid fall reduced the Shanghai index value to near the value of the long-term uptrend line.

A correction using time does not involve a dramatic fall in price. Such a correction develops as a trading band or consolidation pattern. In this situation, the index moves sideways for several weeks or months until the index value is equal to the value of the longterm trend line. When the index value hits the trend line, then a trend rebound develops. The long-term trend line provides a support level and the index continues to rise, following the long-term uptrend line.

Usually, there is either a price correction or a time correction for the uptrend. The current Shanghai Index situation is different. The index first has a price correction and now it is developing an uptrend correction using time. The correction is developing in the area around the long-term uptrend line. When the time correction is completed, it will define the position of a new uptrend line.

The correction using time develops a sideways trading consolidation band. The upper edge of this trading band is near 3,000. The lower edge of the trading consolidation band is between 2,600 and 2,800. The index activity in the next several days will confirm the correct level for the lower edge of the trading consolidation band.

The signal for long-term uptrend continuation develops when the index breaks out above the upper level of the trading consolidation band near 3,000. The width of the consolidation band is used to calculate the first target for the breakout, which is 3,200 and 3,400. There is a higher probability that the market will continue with the long-term uptrend with a successful breakout above 3,000. The breakout from the trading consolidation band will also establish the correct position for the new long-term uptrend line.

The signal for the development of a downtrend is when the index moves below the lower edge of the trading band near 2,600. The width of the trading band suggests a downside target near 2,200.