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Stocks Correction Mid September to Early October
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richtan
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02-Oct-2009 10:55
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Oct. 1, 2009, 12:01 a.m. EDT · Recommend · No reason to be spooked by October this yearCommentary: But markets should be wary of IranBy Robert Maltbie LOS ANGELES (MarketWatch) -- While some might get spooked by an often-volatile October, signs are that the markets are in strong shape.
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 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.
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.
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. |
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risktaker
Supreme |
02-Oct-2009 10:53
Yells: "Sometimes you think you know, but in fact you dont" |
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Down all the way :) SHORT TO HUAT AH | ||||||||||||||||||||||||||||||||
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richtan
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02-Oct-2009 10:53
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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 choiceBy 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.
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 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 opportunityStill, 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 gainsIt'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
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richtan
Supreme |
02-Oct-2009 10:51
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Oct. 1, 2009, 12:01 a.m. EDT · Recommend · What about the China effect?Commentary: Nation's influence on U.S. earnings may feed the bullBy Zachary Karabell NEW YORK (MarketWatch) -- October memories may be inspiring for baseball, but more often than not, they're haunting for Wall Street.
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 In fact, many, many companies have shown surprising profitability because of their ability to trim costs and cut labor. Take Starbucks Corp. /quotes/comstock/15*!sbux/quotes/nls/sbux (SBUX 20.01, +0.04, +0.20%) , which has been ruthless -- effectively ruthless, but still -- in eliminating stores in order to bolster crumbling margins.
China feeding world economyYet, one trend seems clear: global growth outside of the United States and outside of Europe. More to the point, global growth driven by China has been central to economic activity worldwide and has been a magnet for countries such as Australia and Brazil and for companies that supply Chinese demand. This has been evident in industrial names, ranging from Honeywell International Inc. /quotes/comstock/13*!hon/quotes/nls/hon (HON 37.15, +0.75, +2.06%) to Caterpillar Inc. /quotes/comstock/13*!cat/quotes/nls/cat (CAT 49.25, -0.20, -0.40%) , for base metal companies that supply the inputs such as Freeport-McMoran Copper & Gold Inc. /quotes/comstock/13*!fcx/quotes/nls/fcx (FCX 65.30, -0.10, -0.15%) and Vale SA /quotes/comstock/13*!vale/quotes/nls/vale (VALE 22.36, +0.06, +0.27%) , and for high-tech companies such as Intel Corp. /quotes/comstock/15*!intc/quotes/nls/intc (INTC 18.88, -0.02, -0.11%) and Cisco Systems Inc. /quotes/comstock/15*!csco/quotes/nls/csco (CSCO 23.14, +0.05, +0.22%) The same is true for consumer companies operating in China and service Chinese consumers, including such American stalwarts such as Yum Brands Inc. /quotes/comstock/13*!yum/quotes/nls/yum (YUM 33.13, -0.63, -1.87%) , the owner of Kentucky Fried Chicken, as well as Avon Products Inc. /quotes/comstock/13*!avp/quotes/nls/avp (AVP 32.62, -1.34, -3.95%) , and Nike Inc. /quotes/comstock/13*!nke/quotes/nls/nke (NKE 62.64, +0.14, +0.22%)
Too many investors, however, continue to view the China growth story as a growth story happening in China. They then look for Chinese companies in which to invest. Given how well some of those have done in the past six months, it's hard to call that a mistake. Just look at the performance of the FXI iShares FTSE/Xinhua China 25 /quotes/comstock/13*!fxi/quotes/nls/fxi (FXI 39.65, -.00, -0.01%) , the largest China-focused exchange traded fund. Only part of equationBut Chinese companies are only part of the equation, and unless the China effect is integrated into mainstream investing, investors are likely to miss a vital driver in the earnings story of the S&P 500 in the year ahead. At the beginning of the decade, foreign business accounted for about 30% of the revenue of the S&P 500; this year, foreign business will make up 50%, give or take. And that understates the importance, since there still are a considerable number of companies that derive almost all their business from the United States -- especially utilities, some financials and banks, and many health-care corporations. On the other end are tech giants ranging from Intel to Microsoft Corp. /quotes/comstock/15*!msft/quotes/nls/msft (MSFT 24.80, -0.08, -0.32%) , industrials companies galore, material and oil companies, many of which generate 60% or 70% of their business overseas.
China demand acts as a catalyst and a source of cash flow for companies worldwide, and that factors intimately into the earnings picture of many businesses that are otherwise thought of as American. That includes companies like Avon and Caterpillar, Archer Daniels Midland Co. /quotes/comstock/13*!adm/quotes/nls/adm (ADM 28.86, -0.36, -1.23%) and Dell Inc. /quotes/comstock/15*!dell/quotes/nls/dell (DELL 15.26, +0.12, +0.79%) Others on that long and growing list are mainstays Procter & Gamble /quotes/comstock/13*!pg/quotes/nls/pg (PG 57.92, +1.30, +2.30%) , IBM Corp. /quotes/comstock/13*!ibm/quotes/nls/ibm (IBM 117.94, +0.04, +0.03%) , McDonald's Corp. /quotes/comstock/13*!mcd/quotes/nls/mcd (MCD 56.61, -0.13, -0.23%) and Coca-Cola Co. /quotes/comstock/13*!ko/quotes/nls/ko (KO 53.05, -0.07, -0.13%) U.S. economy can lagThe China effect means the earnings picture for company after company may be much brighter than any analysis of the domestic American economy would suggest. In short, stocks can rally in the face of a chronically weak U.S. economy and not become overly expensive. Corporations can generate very healthy profit, because of a still-underestimated strength in foreign and especially China-driven earnings. China-driven includes companies that directly benefit from Chinese demand. But it also includes companies and countries not normally associated with that nation, such as Brazil, Australia and export businesses in Japan and Korea that are blossoming in part because of China. In essence, global equities can be propelled by the China effect. That means the United States' momentum-driven market may prove to be justified by earnings next year that are considerably in excess of the expected $60 to $70 for the S&P 500 because of the China effect. As the connection between the domestic American economy and U.S.-listed companies continues to weaken -- a trend well established before the financial meltdown and accelerated because of it -- it's quite possible we will see stocks become ever-more detached from traditional tethers such as domestic GDP growth, industrial production and retail sales. The summer rally is a harbinger. Yes, momentum has been fueling these rallies, and yes, there is a rising risk of a significant stall or pullback. But there is also an earnings picture driven by the world outside the U.S. and by China that should prove to be much stronger in the comings months and years. If that is true, companies geared to that -- and there are more every day -- are bargains at current prices. Zachary Karabell is president of River Twice www.rivertwice.com and the author of "Superfusion: How China and America Became One Economy and Why the World's Prosperity Depends On It," out shortly from Simon & Schuster. |
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richtan
Supreme |
02-Oct-2009 10:49
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Oct. 1, 2009, 12:01 a.m. EDT · Recommend (1) · Is October correction inevitable?Commentary: Not if you study patterns of crash yearsBy Ethan Anderson GRAND RAPIDS, Mich. (MarketWatch) -- Most investors seem braced for a big correction, but in my experience the majority is usually wrong.
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 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%)
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. |
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kellychang
Master |
02-Oct-2009 10:42
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thanks u wow... now seem like a lot people praise me for having a good thought...hahahahaha well...i will buy when sti 2400, then buy a bit.. then if up then good... if not, 2300 then buy a bit.... will believe blood stop at 2200-2300 ( if very serious type) then cheong up to 2800-2900....
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tedlim_me
Senior |
02-Oct-2009 10:40
Yells: "there is no equity in the equity markets" |
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under blogger's corner:
DJIA update
haha, and right on the dot of October, Wall Street opens with carnage. Markets really do not defy the trend.
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senecus
Veteran |
02-Oct-2009 10:35
Yells: "Market Fortune Telling - Senior MFT" |
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Healthy correction...go down some more... | ||||||||||||||||||||||||||||||||
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smartrade
Member |
02-Oct-2009 10:33
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3 possible good news to jumpstart dow after this correction.... 1) Securing 2016 Olympic 2) 3Q Earning report 3) Economic Data (So far this few wks data pointing south again, expect the unexpected) |
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iPunter
Supreme |
02-Oct-2009 10:30
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Believe or not is one thing... But Kelly is thinking the good thoughts... hehehe... |
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bennykusman
Veteran |
02-Oct-2009 10:28
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hard to believe ler... it's a rumor right ? how to know what price STI will drop and cheong to ? it's seems difficult for me to believe that.. but if u say that STI will drop again, i believe you.. but dunno until what point..
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kellychang
Master |
02-Oct-2009 10:25
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i just heard my fren said....sti will drop till 2500-2400 region... then cheong up to 2900 :) believe or not....up to u...ahhaa |
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bennykusman
Veteran |
02-Oct-2009 10:24
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ur one week will ends when ? 12 oct ?
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risktaker
Supreme |
02-Oct-2009 10:19
Yells: "Sometimes you think you know, but in fact you dont" |
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CNBC crap how they can know correction when to start or end. No one can guarantee you what will happen after this week. Things happen and changes as we speak. I say 1 week because of the things I see will very unlikely to change and the sentiments will remain intact.... i am just waiting for a sign "catalyst of another wave of Bull" till then Bear is in the run.
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kellychang
Master |
02-Oct-2009 10:18
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if break 2600... then very fast....we can see 2500.... |
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bennykusman
Veteran |
02-Oct-2009 10:16
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so, when the shanghai market opens, it shud be ending ? i heard in cnbc that the correction will ends in the beginning month of november...
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risktaker
Supreme |
02-Oct-2009 10:05
Yells: "Sometimes you think you know, but in fact you dont" |
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At least 1 week :)
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bennykusman
Veteran |
02-Oct-2009 10:04
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anyone can guess how long this correction will take place ? |
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tanzq83
Member |
02-Oct-2009 09:24
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i feel investors a bit over-reacted to the news yesterday leh. data shows that consumers are opening up their wallets (at least that's what was shown), instead chose to focus on the unemployment numbers. anyway..watch out for Dows at 9400~9450 region...any breach below that level, i think likely to be bear market le.. otherwise now still appear to be in consolidation stage.. 2-cent worth :) |
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risktaker
Supreme |
02-Oct-2009 08:55
Yells: "Sometimes you think you know, but in fact you dont" |
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爱SHORT才会赢 |
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