Tricom Today ASX Stock Market Report 23-2-09

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The market is down 46 after being down 90 earlier poor performance today underperforming the 3 point rise predicted by the SFE Futures this morning. Property down 2.3% – all the big names down Westfield Group down 3.6% at midday. They have results this week. Caltex down 6.1% on broker downgrades this morning after results down 95% on Friday. All other energy stocks down on the lower oil price Friday. Gold stocks all up on the gold price breaking through the $1000 barrier Friday. Small miners mostly down on lower metal prices. Industrials down 4.6% – Fairfax down, Virgin Blue down, and Transfield Services down on results. Cochlear down nearly 4.4% at midday having gone ex dividend 80c. Macquarie Infrastructure down 7% and Macquarie Airports down 5.3% on suggestions that the Macquarie stable is being shorted whilst Macquarie Group remains protected by the shorting ban on financials  which comes off on Friday week. MQG still fell 14% last week. Financials down 1.3% following a turbulent session in the sector in the US Friday where financials were down 9% at one stage on concerns over the need for Citigroup and the Bank of America to be nationalised. Our Banks all down 1-2% around midday. ANZ down 2.5%.

Tricom Today ASX Market Report 20-02-09

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The market is down 65 underperforming the 13 point fall predicted by the SFE Futures this morning. Industrials down 3.8%. Financials down 2.7% – banks all down following the grim lead in US financials. US Banks hit 17 year low. The NAB’s Ahmed Fahour will quit the board as director. NAB down 3.0%. Gold stocks well down as the gold price falls $1.70 but US gold stocks fall around5%. Newcrest down 6.4% and Lihir down 2.6%. We are still waiting for St Barbara
Limited to come out of its trading halt having done an institutional placement. Fairfax is falling over still, down 2c to 97c. They have results on Monday. This is an all time low. Property down another 1.3% – Goodman Group up 9.7% early on 1H operating income after tax of $215m.Coal stocks doing well with some corporate action between Whitehaven (WHC) and Gloucester Coal (GCL) who are planning a merger to create a $900m coal miner. 1 GCL share for every 2.45 WHC shares.

Tricom Today ASX Market Report 19-02-09

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The market is up 47 outperforming the 19 point fall predicted by the SFE Futures this morning. All sectors up. Strong performance given the lacklustre response to Obama’s mortgage recovery plan overnight and the abominable economic news globally.Financials up 1.4% – banks up despite a weak US financial sector (14 year low). WBCs
positive trading update yesterday helps. City Pacific up 32% on confirming an extension of finance facilities. Bank of Queensland up 7% on announcing normalized NPAT for 1H09 up 25% in a trading update.Property up 2.3% after yesterday’s falls Stockland up 4.6% just before midday on no news. The stock is close to a 16 year low. Westfield up 2.0%. Lion Nathan (LNN) up a touch on a reasonable trading update which confirms
earnings guidance.Fortescue Metals up another 24c to 323c (7%) as they confirm talks about a strategic investment thought to be worth $500m initially and backed by The China Investment Corp. St Barbara Mines (SBM) are conducting a private placement to sophisticated investors raising $70-75m the placement is specifically directed at paying off a convertible(reducing financing costs). The stock is in a trading halt whilst they do the placemen(probably come back on on Monday).

Breakouts From Trading Ranges: Making the Identification

In this post, we’ll take a look at Tuesday’s market and the breakout moves that represent transitions between range and trending modes.

During a trading range, bullish and bearish traders position themselves for directional market moves. As a rule, the longer the trading range, the more supply and demand is committed in this directional manner. When the market legitimately breaks out of the trading range, two things happen: traders and investors jump aboard the move to ride the emerging trend and those positioned counter to the breakout bail out of their positions.

The combination of traders jumping aboard the breakout and those frantically exiting their positions creates enhanced volume on the breakout move. This volume is the market’s way of telling us that large traders are accepting a new definition of value: one that is above or below the average price that prevailed during the recent trading range.

In the 30-minute chart of the Emini S&P futures above, we can see the bottom of the trading range defined by the horizontal blue line. Notice that, when we broke that support, volume picked up dramatically (blue arrow). Indeed, if you look at the expected, median volume for the 10:00 AM CT bar, as outlined in my Monday indicator post, you’ll see that volume on the breakout ran 3-1/2 times its recent norm. Because this was not a small range–it extended over a several day period–many traders had to exit their longs, even as traders jumped aboard short positions. It is that acceptance of lower value–fueled by traders leaning the wrong way, as well as those piling into the move–that ensures that the downside breakout becomes a downward trend.

That last sentence is important, because it suggests that you don’t have to predict the breakout move in order to benefit from it. If a genuine breakout move from an extended range represents a transition to a trending market, then the first pullback after the break represents a worthwhile entry in the direction of the new market direction. Many traders lament “missing the break”, when they could have made money simply by following it. They don’t make the identification that genuine breakouts from extended ranges become trends.

The key, then, is recognizing when a breakout is a genuine one and when it is false. Markets can move out of their ranges, only to fail to attract volume/participation and fall back toward their volume-weighted averages (i.e., their previous estimates of value). The ES contract, for instance, made a marginal day-over-day high on Monday, but many stocks did not participate in this move; the advance-decline figures were tepid. Knowing the characteristics of genuine breakouts is essential to traders at all time frames.

Other than the expansion of volume on the move, we should see several other features of range breakouts:

1) Sectors that have been leading the market (in the recent market, the financial shares) should lead the market in the direction of the break;

2) The vast majority of sectors should participate in the break, expanding the plurality of advancing or declining stocks;

3) The market should stay below its volume-weighted average price (green moving average line in the chart above), as it searches for new, lower levels of value;

4) Because the break represents a revaluation process, we should see similar revaluations among related asset classes, such as Treasury instruments, commodities, and currencies, as investors and traders either seek greater risk or seek to avoid it.

Notice that prior levels of support or resistance often become important reference points for breakout moves. Once the market broke 850, the uptrend was violated. Indeed, the entire downtrending move during the day on Tuesday represented a move back into a longer term range that extends from the 870-area tops from late January and Monday to the lower 800 area. That larger time frame picture is important in framing price targets for the trending move that emerges from the breakout.

Tricom Today 6-2-09

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The market is up 28 slightly underperforming the 56 point rise predicted by the SFE Futures this morning. All sectors up. Property leading the way up 3.2% with Stockland Group up 5.8% after recent savage falls. Banks all up between 1-2% responding to a solid rise in the US banks overnight. NAB gave a trading update with no disasters. News Corp down 5% as they slash their earnings guidance and report a shabby set of interim results. Resources up over 1% as BHP and FMG keep rising on the theme of higher shipping rates and iron ore volumes and prices. Iron ore stocks having a moment in the sun. Small resources stocks up despite the fall in metals overnight Kagara Limited up nearly 11% early on. Nickel stocks strong on the China theme.Gold doing well on the higher gold price. Newcrest and Lihir up 3.5% on the open. Oil stocks mostly up on the slightly higher oil price.

Tricom Today 5-2-09

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The market is down 14, dropping off as the morning progresses – underperforming the 14 point rise predicted by the SFE Futures this morning. Resources up 4.6% – most other sectors down. BHP and RIO up 5.2% and 7.6% early on. Fortescue Metals up 9% on the open. Most the miners up on the strong base metal prices and research from one broker suggesting the iron ore market is improving with BHP saying Chinese dstocking of iron ore had run its course. Gold stocks strong on the higher gold price. Industrials down 4.1% . Lend Lease has placed $302m of shares overnight at 605c and fallen 17.2% to 560c putting the placees over $20m underwater. Qantas. capital raising went through near the bottom end of the placement range at 185c and the price is down 17% to 190c this morning. Placees are just above water. Leighton Holdings up 2.7% on the back of winning a $475m contract in Abu-Dhabi. Banks down between 2-4%. UK banks had a bad night and there are concerns over Obama.s plans for financial resurrection.

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Tricom Today 4-2-09

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The market is down 19 bit disappointingconsidering the 26 point rise predicted by the SFE Futures this morning. All sectors down.Property falling heavily again on the back of the Westfield $2.9bn capital raising yesterday 276.2m new shares WDC down 13% earlyon and already back to the 1050c placement price – sector down another 9.9% after a 6.3% fall yesterday. BHP is up 1.8% after posting interim results at the bottom end of the expected range but with a confident statement.Fortescue up 5% early on restructuring some shipping contracts with Bocimar. RIO down
1.4%….the BHP results took the shine off itdespite an 8% rise in ADR form. Base metal stocks mixed. Industrials down 1.1%. Banks all down 1-2% except for Westpac Bank which is up 1.2%.

Tricom Today 3-2-09

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The market is up 52 well ahead of the 7 point rise predicted by the SFE Futures this morning. Financials are up 3.7% – all the banks flying on a CBA guidance upgrade . CBA up 9% and pulling the whole sector up. Westpac up 7.1%. Resources up 0.2% – BHP and RIO up 1.5% and 33%. Gold stocks down on the lower gold price. Newcrest
down 4.5% after completing their $750m institutional placement. Property tanking . down 4.7%. Stockland Group, CFS Retail Group, Dexus, GPT and Goodman Group all big fallers . all down 9-13%. Lend Lease (LLC) up 4.5% on being selected as the preferred partner to build GBP1.2bn in Birmingham schools. Incitec Pivot had a profits warning and fell 30%.

Tricom Today 2-2-09

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The market is down 20 compared to the 64 point fall predicted by the SFE Futures this morning. Property down the most. Westfield down 6% in early trading having gone ex-dividend toady, now down 4%. Financials mixed. Resources down 0.5% with the fall in metals overnight and on the back of poor US economic numbers. BHP down 1.3% and RIO up 6.8% as it confirms it’s been in talks with Chinalco about the sale of its minority stakes in some of its operations reducing the need for a $6bn rights issue if the deal happens. Fortescue up 13% – on the back of its strong 1st H profit result late Friday – in-line with expectations with a strong cash position and record production. Gold stocks mostly up on the higher gold price Newcrest looking to raise $500 million in a fully underwritten equity placement.

CNBC Report by Bill McLaren

First let’s look at a few charts that are quite interesting.

THE FIRST CHART IS MONTHLY FOR THE DOW 1929 THROUGH 1942

The vertical lines are 1/8 and 1/3 divisions of 90 and you can see the 1937 high was 90 months. The next bull market didn’t start until 1942 or 150 months from the 1929 high.

NOW LET’S LOOK AT THE CURRENT NASDAQ CHART FROM 2000 THROUGH 2014

So far this trend has been exactly the same not close but exactly. The 2007 high was also 90 months from the 2000 high. We can expect this bear trend to last out to 2012/2013 with a 270 calendar day to one year bull trend between then and now. If it matched the 1929 through 1942 period or 150 months that works out to September 2012.

NOW LET’S LOOK AT THE S&P 500 FUTURES DAILY CHART

My forecast called for either a three or four day rally ending with an exhaustion of some sort followed by a new low. If the rally could exceed four days then a test of the January high at 950 would occur, followed by a new low that could end the bear trend. There was a big gap up and a gap down the past two days indicating an exhaustion of some sort within the time window. There now needs to be “follow through” to the downside to confirm the counter trend completion. One of the troubling aspects about the new low forecast is it has become consensus so there should be a surprise. If there is a new low it will only be for a few days and pop back up.

Deflation is nothing more than a huge contraction of credit caused by a massive decline in the value of balance sheets. It will take a 5 year cycle from the high in 2007 to re-capitalize the consumer, banks and business balance sheets providing the government doesn’t do something to delay the process as was done in Japan.

One solution that must be attended to is bankers running banks and banks only function must be to lend not underwrite. Combining banks with brokerage and investment banking is one of the major problems that brought on this crisis. Those operations need to be separated again.

Bill McLaren
McLaren Report

Tricom Today 30-1-09

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The market is down 26 outperforming the 96 point fall predicted by the SFE Futures this morning. Financials down 1.5% – banks down 1-2%. Resources down 1.1% on the lower oil and metal prices. Energy stocks up 0.9%. BHP and RIO down 1.8% and 3.3%. Base metal stocks mixed. Gold stocks doing well on the higher gold price overnight with the flight to precious metals continuing. Newcrest up 2.9% and Lihir up 4.4%. Property stocks doing the worst  down 3.4%. Westfield down another 4.5% and Stockland down 3.6%.

Tricom Today 29-1-09

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The market is up 29 underperforming the 63 point rise predicted by the SFE Futures this morning. Resources leading the way up 1.8% – BHP up 4.6% and RIO down 1.3%. Lots of RIO research this morning discussing the options for a capital raising after the announcement yesterday that a rights issue was a possibility. Financials up 1.0% – banks all up 1% or 2% – NAB outperforming up 3.0%. Industrials lagging – down 1.1% – Wesfarmers down 3.3% announcing a retail entitlement offer.

Tricom Today 27-1-09

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Our market is up 93 and well ahead of the 16 point gain predicted by the SFE Futures this morning. Resources pumping up 5.0% led by both BHP Billiton and Rio Tinto after a strong night on the London Metals Exchange. Oil closed up 3% – Woodside up 3.6%. The FOMC decides on interest rates this week with US rates basically at zero, all we can look forward to is the statement, which is realistically unlikely to offer any optimism at all.Our market is up 93 and well ahead of the 16 point gain predicted by the SFE Futures this morning. Resources pumping up 5.0% led by both BHP Billiton and Rio Tinto after a strongnight on the London Metals Exchange. Oil closed up 3% – Woodside up 3.6%. The FOMC decides on interest rates this week with US rates basically at zero, all we can look forward to is the statement, which is realistically unlikely to offer any optimism at all.

Tricom Today 22-1-09

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Our market is up 9 up 49 at best – a little disappointing considering Wall Street had a positive session overnight and the SFE Futures suggested a 46 point rise. Resources have managed to slip into negative territory but most of the other sectors are above water. The big news today is the extension of the shorting ban on financials by 6 weeks bringing relief to that sector and Wesfarmers going into a trading halt after announcing they will be raising $2.8bn in a 3 for 7 rights issue at 1350c.

Tricom Today 20-1-09

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Disappointing day for our market down 128 underperforming the 14 point fall the SFE Futures suggested. The big drop comes on the back of the UKs financial sector collapse overnight. US Markets were closed in recognition of Martin Luther King holiday. Financials are struggling down 3.9% overall, big four banks the worst performers all down over 4.3%. Resources also underperforming led by BHP and RIO, both down over 5%.

Tricom Today 19-1-09

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The market is up 24 outperforming the 10 point rise predicted by the SFE Futures this morning. The major miners are mostly up with RIO leading the way. Banks mixed and Property Trusts are in the red after Citi put out a piece of negative research on industry leader Westfield (down 1.2%).