Guildford Coal Limited (GUF) – Listing Today

Guildford Coal Limited (GUF) is due to list today (22-July) at 11:00am.

Company Overview

Guildford has established a portfolio of coal exploration tenement areas in Queensland, Australia. Guildford’s tenements cover an estimated area of in excess of 21,000 square kilometres and are defined within project areas as follows:

• Hughenden Project (Galilee/Eromanga Basins);
• Sierra Project (Bowen Basin);
• Comet Project (Bowen Basin);
• Sunrise Project (Surat/Bowen Basin);
• Monto Project (Nagoorin Graben); and
• Maryborough Project (Maryborough Basin).

For more information, please visit http://www.guildfordcoal.com.au/

Global investor confidence rises but North Americans remain pessimistic

Global investor confidence has risen by 1.3 points in June to 89.7. European (up 5.4 points) and Asian (up 1.7 points) confidence rose in June, according to the State Street Investor Confidence Index.

North Americans continued to be pessimistic, with confidence levels falling by 6.3 points to 92.2 compared with May’s 98.5

Question marks over the state of the US job market and overall US aggregate demand may have slowed the pace of economic recovery, according to Harvard University professor Ken Froot who together with Paul O’Connell from State Street Associates created the index.

There is “some evidence of stabilisation in risk appetite outside North America,” added O’Connell.

“A look at the underlying data confirms the strongest regional flows are into emerging markets, with the exception of emerging Eastern Europe,” he noted.

Globally, investor confidence has been slowly rising October 2008, after it hit its all time low after the collapse Lehman. Following a slight decrease in April and May 2010, the global increases give an optimistic tinge to the overall sentiment.

The State Street Investor Confidence Index measures investor confidence on a quantitative basis by analysing the actual buying and selling patterns of institutional investors. The index gives a precise meaning to changes in investor risk appetite, the greater the percentage allocation to equities, the high the risk appetite or confidence.

The Index shows the sentiment of institutional investors as it is based on actual trades rather than survey data.

Source: http://www.hedgefundsreview.com/hedge-funds-review/news/1720034/global-investor-confidence-rises-north-americans-remain-pessimistic

The great Berkshire Hathaway index run-up

Now that Berkshire’s Class B shares have joined the Russell 1000, portfolio managers who paid a pretty penny can breathe easy again.

The runup this year in Berkshire Hathaway’s Class B stock (BRKB) is a good reminder of the power of an old kind of index arbitrage: buy high and sell higher, when the index-fund managers get in.

Usually, when fund managers engage in index arbitrage, they’re weighing the value of an index’s different stocks against each other, choosing the leaders and the laggards. But this year, there has been an easier strategy: cleverer hedge-fund managers or short-term investors just lie in wait until the announcement that a big stock will be added to an index; after the announcement, they buy up tons of the stock, driving up the price for the poor index-fund portfolio managers who are required to hold all the stocks in the index – so they pay exorbitant prices to own the shares.

Exhibit A: Berkshire Hathaway’s Class B stock has been zooming up for the past few days, most recently with a nearly 4% jump on Friday to close at $81.90. The reason: As of this morning’s open, Berkshire Hathaway has been added to the Russell 1000 Index. Berkshire is a giant, so it immediately ranked among the top 10 companies on the index, by size. Berkshire’s Class B stock alone will make up 1.1% of the Russell 1000 index. According to Goldman Sachs analyst David Kostin, 17.6% of the Russell 1000 holdings are now in financials, a full percentage point higher than they were before Berkshire joined.

The big jump in Berkshire’s Class B might cause some Russell 1000-following index managers to groan, but it’s probably a big relief to one group of investors: the portfolio managers who bought Berkshire’s class B stock at pretty rich prices after February 12, when it was added to the S&P 500 index. For those investors, who paid roughly $76 a share and up, things looked dark for a while in early June, when the stock dropped to $70 a share. Then, like Christmas in June, there was the announcement mid-month that Berkshire would join the Russell 1000, and all of a sudden the S&P 500 index-followers could breathe easy that the stock was worth something again. Overall, it’s hardly been a bad play: Over the course of seven months, Berkshire’s Class B stock jumped from around $65 a share in late January, around the time the stock took a 50-to-1 stock split, to $81.90 as of Friday’s close.

Of course, none of this could have happened until Berkshire’s leader, Warren Buffett, chose to compromise on his opposition to short-term investing. Buffett always liked to keep his company’s stock an exclusive playground for long-term holders — witness the Class A shares (BRKA) trading at $122,300 each these days — but the 50-to-1 stock split in Class B stock was reportedly spurred by Buffett’s need to find a wider universe of investors to help finance Berkshire Hathaway’s acquisition of the Burlington Northern Santa Fe railroad. The stock split dropped the price of Class B shares from $3,275 each to more like $65 each.

The enormous growth in the trading volume of Berkshire’s Class B shares shows the success of Buffett’s populist move. Before the S&P 500 move, Berkshire’s Class B traded at around 5.5 million shares a day; now, it’s more like 10.18 million shares a day.

These boosts are temporary, of course; as of Monday morning, Berkshire’s Class B already started to pull back, dropping 1% in early morning trading to around $81 a share. Of course, if any of those Russell 1000 index managers find that the Berkshire Class B stock loses even bigger chunks of its pop after the index-buying games are over, they might just have to swallow their hard luck: there aren’t that many more indexes that the stock can list on.

By Heidi N. Moore, contributor – Source: http://wallstreet.blogs.fortune.cnn.com/2010/06/28/the-great-berkshire-hathaway-index-run-up/

Guildford Coal Limited (GUF) Share Offer

To access this offer and for a copy of the prospectus including the application form, please contact Eden Hage at eden.hage@stonebridgegroup.com.au or on 07 5504 2141.

INDICATIVE KEY DATES
Prospectus lodged with ASIC 27 May 2010
Opening Date 10 June 2010
Closing Date 11 June 2010
Expected date for allocation of shares 18 June 2010
Expected date for despatch of holding statements 21 June 2010
Expected date for the quotation of the Company’s securities on ASX 24 June 2010

Company Overview

Guildford has established a portfolio of coal exploration tenement areas in Queensland, Australia. Guildford’s tenements cover an estimated area in excess of 21,000 square kilometres and are defined within project areas as follows:

• Hughenden Project (Galilee/Eromanga Basins)
• Sierra Project (Bowen Basin);
• Comet Project (Bowen Basin);
• Springsure Project (Bowen Basin) (acquisition to be completed on the date of successful close of the Offer);
• Sunrise Project (Surat/Bowen Basin);
• Monto Project (Nagoorin Graben); and
• Maryborough Project (Maryborough Basin).

According to the Independent Technical Expert:

“The projects represent a diversified portfolio of genuine coal exploration targets located in the premium coal basins of Queensland with potential for a variety of coals including export thermal, PCI and hard coking qualities. The projects are mostly located close to existing rail infrastructure and present the opportunity to access multiple port facilities. Guildford has proposed a two year program of exploration on each of the areas held by the Company. The program is designed to define the coal resources to at least Inferred status by year one, although in several cases it should be possible that resources may be defined to Indicated and Measured status by year two.”

How to Profit by Swing Trading

It’s not exactly breaking news. A buy and hold strategy hasn’t worked for the last decade. You probably know as much if you’ve opened your retirement account statement lately. The Dow, S&P 500, and NASDAQ are all flat or down over the last 10 years.

It’s time to face facts, the old-time buy a few large-cap blue chips and hold them forever strategy has gone the way of the Dodo bird.

So, what’s the answer for this particular market?

Personally I swing. Swing trade that is.

I like swing trading for this market because it takes advantage of momentum… or trading in and out of stocks and sectors that are seeing a temporary boost. There’s no ‘buy and hope’ strategy at play here.

Let’s take a look at how swing trading works.

In a nutshell swing trading is… buying the lows and selling the highs. Ok, I know what you’re thinking… how do I consistently buy the lows and sell the highs? It seems like it is easier said than done.

Although there’s a lot of different ways to approach it, my favourite is looking for technically-based short-term trends. And taking a position to profit from the trend.

Here’s something you might not know; swing traders don’t care why a stock is trending. If the technical’s show there’s a trend, it’s not your job to figure out why. You just want to profit from it.

But here’s the catch… the stock market isn’t just flat over the last 10 years. It’s flat over the last few months too. Lots of volatility but no real trends.

You may be happy to see a flat market – especially after last year. But for swing traders like me a flat market is worse.

So how do you overcome a flat US market?

By not limiting yourself to just the stock market.

Here’s why. You won’t always find a trend in the US stock market. So I’ll trade foreign markets, bonds, commodities and even currencies. Until recently, access to these markets was difficult and often required separate trading accounts.

In the past, many individual investors found it hard to trade these markets. This helped give rise to the notion that a buy and hold strategy is the best way to invest.

Now, there’s an easy way to trade ASX stocks, foreign stocks, bonds, commodities, and currencies using momentum. It’s quick, cheap, painless and you can do it all from one trading account.

Want to know what it is?

That’s right, ETFs (Exchange Traded Funds). These are the one investment that can give you exposure to all of these markets. Today’s ETFs are revolutionizing the ability to trade currencies, commodities, and foreign markets. You can now really drill down and focus on specific subsectors of all these markets.

As I said… follow the trend. If you can’t find it in the US stock market, you now have easy access to an entire array of markets with ETFs.

I believe that the big money over the next few months and years will be found in the ’specialty’ ETFs that are popping up. The value of these ETFs can be derived from commodities like gold, currency pairs, corporate bonds, and any specific subsector you can think of. The list goes on and on.

And now you can go long or short with two or even three times leverage. Talk about spicing things up!

And remember as a swing trader you don’t care why the ETF is trending. The patterns and trends you use as a swing trader hold up regardless of the asset being traded. So you can apply the same technical analysis principles that you use with stocks.

Combining technical analysis, momentum trading, and specialty ETFs isn’t a bad way to trade this market right now. And it sure beats the heck out of buying a few blue chips and holding on for dear life!

Stock Trading Psychology

Many of todays highly successful traders will tell you that the general key to success in trading is to be able to comfortably take a loss. It is general knowledge among experts in the trading psychology field and among traders that the market is not predictable and it is safe to say that it never will be. In the world of trading, it is expected to take a loss; even those who are highly skilled traders know that it is inevitable. With that said, let us have a look at things you as a trader should be aware of, how you can take a loss effectively and use it towards the greater good of your trading world.

Trading psychology tells us that when a trader loses he begins to become somewhat of a perfectionist in his dealing. Many traders think that in trading, a good day will always be one that is profitable. Trading psychology experts tells us this is not true.-

A trader should define a good day as one where they have extensively researched and planned with discipline and focus, and have followed through to the entire extent of the plan. Yes, when a trader has mastered the art of accepting losses and working through them with a well thought out plan then good days will become profitable in time.

Because the art of trading in an unpredictable market fluctuates so greatly from one day to the next, experts in trading psychology believe that it is important that you concentrate on what you can control, instead of things that are beyond your control. Looking into the short-term you cannot expect to be able to control the profits of your trading. With that said, look at what you do you have ability to control.

You do have the ability to control the difference between good and bad days. You are able to control this factor by extensively researching the strategies you implement within your trading experiences. By learning to research your chosen strategies, thus controlling the amount of good and bad trading days you experience, you will, in the long-term begin to generate profits, which is the ultimate goal of every trader.

Trading psychology experts tell us that it is important to become realistic in trading instead of becoming a perfectionist. Perfectionist traders, relate a loss with failure, and will become obsessed with the failure, focusing only upon it. Realistic traders understand the unpredictability of the market and taking a loss is simply part of the art.

The main key you must remember in trading psychology to be able to effectively limit your losses, instead of becoming obsessed with them. A common thing seen within the trading psychology world is that traders who are obsessed with their losses often have a hard time bouncing back from them, thus losing in the end.

Experts in trading psychology have organized three basic strategies you can use to effectively stop losses. These strategies are:

Price Based

Time Based

Indicator Based

Stops that are priced based are generally used when the other two have not functioned. To make this work you will need to make hypothesiss about the trade and identify a low point in that particular market. Then you will set your trade entries near your points, thus making sure that losses will not be overly excessive if the hypothesis fails.

Time Based stops constitutes making use of your time. Designate a holding period you allow to capture a certain number of points. If you have no achieved your desired profit within that time limit, you should stop the trade. If effectively used you should stop even if the price stop limit has not been achieved.

The Indicator based stop makes use of market indicators. As a trader, you should be aware of these indicators and utilize them extensively within your trading experiences. Look at indicators such as, volume, advances, declines, and new highs and lows.

Experts in trading psychology say that setting stops and rehearsing them mentally is a good psychological tool to use and will help ensure that you follow through.

Top Books on Investment Bubbles and Stock Distributions

Below is my list of the top books that chat about stock distributions and rare events.  I also included some market history and bubbles lists too for comparison.  

Stock Distributions

• Why Stock Markets Crash: Critical Events in Complex Financial Systems - Didier Sornette
  
• The Misbehavior of Markets by Benoit Mandelbrot
• Fooled by Randomness and The Black Swan: The Impact of the Highly Improbable by Nassim Nicholas Taleb
• Finding Alpha – by Eric Falkenstein
• Market Volatility – Robert Shiller
• Optimal Portfolio Modeling – Philip McDonnell
• Fractal Market Analysis - Edgar Peters
• More Than You Know: Finding Financial Wisdom in Unconventional Places - Michael Mauboussin
• The Failure of Risk Management: Why It’s Broken and How to Fix It – Douglas Hubbard

—————————————————————————————————————————————————————————–

Market Bubbles

• Manias, Panics, and Crashes by Charles Kindleberger
• Extraordinary Popular Delusions and the Madness of Crowds by Charles MacKay
• The Prize: The Epic Quest for Oil, Money, & Power by Daniel Yergin
• The First Tycoon: The Epic Life of Cornelius Vanderbilt by TJ Stiles
• Irrational Exuberance – by Robert Shiller

—————————————————————————————————————————————————————————–

History of Markets

• Triumph of the Optimists: 101 Years of Global Investment Returns by Elroy Dimson, Paul Marsh, and Mike Staunton
• Stocks for the Long Run by Jeremy Siegel
• Reminiscences of a Stock Operator by Edwin LeFèvre
• When Genius Failed by Roger Lowenstein
• Capital Ideas, Capital Ideas Evolving, and Against the Gods by Peter Bernstein
• Ibbotson Yearbook by Ibbotson Associates
• The CRB Commodity Yearbook by Commodity Research Bureau
• The Essays of Warren Buffett by Warren E. Buffett and Lawrence A. Cunningham
• Fortune’s Formula by William Poundstone
• The Myth of the Rational Market - Justin Fox

Stocks/CFDs on Total Trader

Investors are increasingly looking to Contracts for Difference

CFD Trading

(CFDs) as a more flexible method of trading stocks online.

CFD trading is carried out on live prices on Total Trader’s online
trading platforms, without the delays of normal stock trading,
such as waiting for fills from the stock exchange.

CFDs are more flexible method of trading stocks online and investors are increasingly looking to it.

Investors are increasingly looking to Contracts for Difference (CFDs) as a more flexible method of trading stocks online.

Stock/CFD Exchanges Available

Americas
US  – American Stock Exchange, NASDAQ Capital Market, NASDAQ Global Markets, New York Stock Exchange, Other OTC on NASDAQ (Pink Sheets)
Canada – Toronto Stock Exchange

Asia Pacific
Australia – Australian Stock Exchange Ltd.
Hong Kong -Hong Kong Stock Exchange
Japan - Tokyo Stock Exchange

Europe
UK – London Stock Exchange
Switzerland – Swiss Exchange, Virt-X
Germany – Frankfurt /Xetra Stock Exchange
Italy – Milano Stock Exchange
Denmark – OMX Copenhagen
Plus more than 10 other European exchanges

Index CFDs

Trade over 15 Index-tracking CFDs across over 20 exchanges worldwide with a single click. Additionally index-tracking CFDs trade on live prices without needing to subscribe to live pricing.

Index-tracking CFDs are the easiest way to gain exposure to global stock markets whether taking long or short positions. Index-tracking CFDs are linked to the performance of a stock index which allows investors to easily diversify investment risks. These index-tracking CFDs can be short sold, opening up the possibility of turning a profit in a falling market.

DMA CFD Trading – Direct Market Access

Designed to cater to the professional trader and investor, we offer CFD Exchange DMA on most global exchanges. CFD Exchange DMA gives Direct Market Access to the exchange order book on real-time CFD prices. This means a trader can combine the benefits of trading direct on an exchange with the leverage of margin-traded CFDs.

With DMA CFDs, traders get direct access to the exchange order book and can place trades directly around the live market depth. CFD Exchange DMA is a leveraged product, allowing for increased market exposure, while short selling is also a possibility.

Live Market Prices - Costs & Rebates

By default, clients have access to delayed market data on the equities and futures exchanges on which they are enabled to trade. To receive real-time market data for stock, CFD, CFD DMA or futures trading, clients will have to subscribe to the individual exchanges. Clients will incur a small monthly subscription fees for the data they elect to receive in real time. An Online Subscription Tool is available on the live trading platforms.

Data fee rebates for active equity trading clients.
For equities clients that subscribe to real-time market data, we have introduced a data fee rebate scheme where fees are rebated per exchange should clients trade the minimum number of times across both stocks and CFDs during each calendar month. Rebates are only applicable for non-professional equities clients subscribing to level-1 data. The definition of Non-Professional and Professional subscribers may vary by exchange.

The ABC’s of Stock Trading

A wise man chooses to do in the beginning what the fool is forced to do in the end.

Better to be wrong and rich than right and broke.

Create an atmosphere of confidence and you will never choke on the bone of contention.

Develop an edge and stick to it. If you are not living on the edge then you are falling off of one.

Enter the market prepared or you will exit impaired.

Forget the last trade or the market will steal your next one.

Giving in to emotional bias is akin to giving up.

He who chases three rabbits catches none.

If it sounds to easy to be true then it is neither easy or true.

Just say no when the market has said yes one too many times.

Keep what you have by not keeping what you never intended to have.

Losers justify and winners rectify.

Make time for self.

Noise is the mother of doubt.

Obvious trades can lead to blind faith.

Poor execution can result in a broken disposition.

Quitting is not a fork in the road but a dead end street.

Reason looks for support in the past while judgment considers the weight of the future.

Stocks move first and ask questions later.

Timing the market is like winding a clock that has no hands.

Understand yourself first and the market last.

Voice your opinion in mute mode.

Wishers become has beens when what has been becomes a wish.

Xtra time in the market could spell disaster in the home.

Your ability to win is based on your willingness to lose.

Zoos welcome bulls and bears but pigs…

Source: David Blair

Overnight Stock Markets 6-01-09

Index/Security Close Chg %Chg

Dow Jones (US) 9,600 +112.1 +1.2

S&P 500 1,040 +15.3 +1.5

NASDAQ 2,068 +20.0 +1.0

US stocks rose as data showed service industries returned to growth after 11 months of contraction.

Banks led the advance, with the Bank of America, JPMorgan and Wells Fargo up between 4% and 7%. The KBW Banking index added 3.2%.

Department store chain Nordstrom climbed 9.5% for the biggest advance in the S&P 500 after analysts upgraded the stock. Limited Brands, the owner of Victoria’s Secret lingerie chain, climbed 7.6% after analysts raised their earnings forecasts for the company.

The US services sector expanded in September at a faster pace than expected, with the ISM’s services index coming in at 50.9, compared to a forecast of 50.0.

Alcoa is scheduled to release third-quarter results on 7 October, the first company in the Dow Jones index to report earnings. The company is expected to report a quarterly loss versus a year ago, reflecting a weak materials sector. Overall, S&P 500 profits for the third quarter are expected to have dropped almost 25% from a year-ago levels. Analysts expect companies to report earnings growth in the fourth quarter.

Among notable movers, Brocade Communications rallied 15% in unusually active trading on reports that it has put itself up for sale. Both Hewlett-Packard and Oracle were cited as potential buyers, according to media reports.

Since bottoming at a 12-year low on 9 March, the S&P 500 has gained 51.2% and the Dow has gained 45%. After hitting a six-year low, the NASDAQ has gained nearly 61%.

Overnight Stock Markets 5-10-09

US stocks fell on Friday as weak jobs data gave more evidence that the economic recovery would be less robust than expected.

Declining stocks outnumbered advancing ones on the NYSE by a ratio of about two to one. On the NASDAQ, about nine stocks fell for every five that rose.

US employers cut a deeper-than-expected 263,000 jobs in September, lifting the unemployment rate to 9.8%, according to a government report on Friday. The Labour Department said the unemployment rate was the highest since June 1983. Payrolls have now dropped for 21 consecutive months. Friday’s report also showed companies cut working hours, pushing weekly earnings lower. The average work week shrank to 33 hours in September, matching a record low, while average weekly earnings fell to US$616.11.

Industrial companies in the S&P 500 fell 1.5%, the biggest decline among the index’s 10 industry groups. A report from the Commerce Department showed orders placed with US factories fell 0.8%, more than estimated, after a revised 1.4% increased in July. Excluding transportation equipment, orders rose 0.4%.

Energy stocks tracked crude prices lower. Chevron and Exxon Mobil both declined 1%.

More downbeat news came from General Electric (GE), which slid 3.8% after the CEO said the company was holding discussion on partnerships or an IPO for its NBC Universal unit (NBCU). According to media reports, GE and Comcast were discussing a deal under which the US cable firm would take control of 51% of NBCU with GE keeping the rest.

Apple shares were among the bright spots, rising 2.2% on an analyst upgrade.

The S&P index of consumer staples, up 0.6%, was the only positive S&P 500 sector. The sector was buoyed by a 4.2% gain in PepsiCo, which advanced after analysts upgraded the stock.

Alcoa, the biggest US aluminium producer, is scheduled to release third-quarter results on 7 October, the first company on the Dow average to do so. Analysts expect third quarter profits for companies in the S&P 500 to be down 23% from a year ago. For the fourth quarter, analysts expect profits to be up 63%.

Investors Get Back $18.31 Trilion

Below we highlight the total market capitalization of stocks both globally and in the US.  At its peak in 2007, total world market cap was $62.57 trillion.  By the lows this March, world market cap had dropped to $25.6 trillion!  That’s a loss of $36.97 trillion in stocks globally.  Since the March lows, however, world market cap has risen $18.31 trillion back up to $43.9 trillion.

In the US, market cap has risen $4.88 trillion from its low of $8.09 trillion in March.  The peak in total US stock market value was $19.14 trillion in 2007, and the current value of all US stocks is $12.97 trillion.  The US accounts for 29.5% of total stock market value in the world.

Source: Bespoken Research

How to check Trading Conditions – eBridge Trader Video Tutorial

ASX Market Movers – 21 May 2009

ASX Market Movers – 20 May 2009

ASX Market Movers – 19 May 2009

Stock,CFD, Fx and Forex Options – Data and Trade Recs 18-5-09

Calendar

What’s going on?

• US CPI readings on Friday again confirmed the deflationary pressures, showing headline YoY (Apr) at -0.7%. Less Food & Energy YoY at +1.9%. We expect the latter to edge lower in the coming quarters.
• Stocks posted new lows with S&P500 closing below 883 and the Future now trading even lower. Commodities are showing a key turnaround with the CRB Index down 2.3%, led by oil (down by 4%). Gold and silver holding up well and other risk indicators are showing a bounce from rock-bottom lows a week ago.
• Our top/bottom indicator is again suggesting that the top is behind us and we believe that stocks will now drift lower in the next (couple of) month.

FX

Equities

Futures

FX Options

ASX Stock and CFD Report 18-5-09

View Full Report

The SFE Futures suggested a 42 point fall in the market. BHP and RIO both down in ADR form Friday - 1.51% and 0.28% respectively. (BHP closed at the equivalent of 3295c, down 39c on Friday’s close.) Metals mixed Friday - Copper up 0.11%, Zinc down 0.27% and Aluminium down 0.65%. Nickel down 0.80%. Oil price down $2.06 to $56.52. Gold up $2.90 to $931.30. Bonds down with the 10 year yield up to 3.136%. A$/US$ down to 74.92c.

Financials down 2.5% – was the worst performing sector. Regional banks down 3% – Fitch put a few banks on Credit Watch Negative. Obama’s budget director said the worst of the economic crisis is over. Said the US economy seems to have bottomed out. The White House is revising its unemployment expectations up. Reinforced the need to restructure the US’s healthcare policies. Life and health insurers down 3.5% – there was news that the sector will need to access about $22bn of the government’s TARP funds - the negativity came when analysts said the government funds won’t necessarily mean their ratings get upgraded and that the sector faces tough headwinds.Energy stocks down 2.2% – oil was down 3.5%. Utility stocks continued their downward streak. Retailers down 0.7% – JC Penny and Nordstrom posted better than expected earnings. The tech stocks did the best and was the only sector up for most of the session – still finished just down 0.1%.

The market is down 39. The SFE futures suggested a 42 point fall in the market this morning. Resources down - BHP and RIO down 1.6% and 3.1%. Capital raisings continue with Graincorp raising $90m and Billabong raising $290m. Not helping retailers is a Billabong profit warning at the same time. HVN down 4.3%. Westpac Bank is ex dividend 56c today. Great Southern Plantations (GTP) has gone bust. Money doesn’t grow on trees after all.

Richard Russell (Dow Theory Letters): What fundamentals could trigger break of March lows?

“Russell, it’s all very interesting. What fundamentals do you think could cause the market to break the March lows?”Answer – You want guesses? Here are mine.
(1) A collapse of the dollar along with a collapse in the bond market.
(2) The US losing the reserve status of the dollar.
(3) US consumers going on a long and unexpected buying strike plus a consumer saving campaign that shocks the economists and the Fed.
(4) The Fed unable to halt asset deflation.
(5) Federal budget deficits growing completely out of control, the compounding interest on the federal debt paralyzing the country with the catastrophic result that nobody will lend money to the US.

“What to do? This is no longer a ‘buy and hold’ market. It’s a survival market. To survive, cash in case of deflation, physical gold in case of inflation or hyper-inflation, DIA ETFs in case of an important cyclical bull market.”

Source: Richard Russell,

Baltic Dry Index Up Eleven Days In a Row: Should You Care?

The Baltic Dry Index is currently riding an eleven day winning streak during which the index has gained 43%.  Year to date, the index is now up 228%.  Given that it is a measure of shipping rates, the increase in the Baltic Dry Index is regarded by many as an important indicator of an improving global economy.  How this translates to the stock market, however, is unclear. 

Over the long term (since 1985), the Baltic Dry Index and the S&P 500 have had a positive correlation of 0.5 (1 = perfect correlation, -1 = perfect inverse correlation).  Like everything else recently, though, that relationship has been turned completely upside down.  As shown in the chart below, the S&P 500 and the Baltic Dry Index have been moving in opposite directions for most of 2009.  As one has risen, the other has declined, and when one falls, the other seems to rise.  Looking at the correlation between the two shows that year to date, they have had a negative correlation of -0.4, which implies a significant inverse relationship between the two.  In fact, the only period this year where the Baltic Dry Index declined was during the initial month of this rally, which was one of the strongest one-month rallies the S&P 500 ever had!

Source: Bespoken Research