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Tuesday, June 1, 2010
Tuesday, May 18, 2010
Latest Dow Jones Chart
Last nights movement has seen the Dow Jones bounced off the 50% retracement level during the last session.The resistance level that has become support over the last couple of weeks came in on high volume and we have now the 3rd day down. The next couple of days will be crucial for the future direction of the indexes as a whole. If we get a move to the long side over the course of the next couple of days then we would expect this market to continue this current bull market to continue.
Will update over the course of the next couple of days as too future direction of the markets.
Monday, May 17, 2010
What happened to cause 1000 point drop in the Dow?
What caused the Dow Jones Industrial average to fall 1010 points or close to 10% during last Thursday’s session?
Like most instances it appears that it wasn’t caused by one single factor rather a combination that culminated in a wild roller coaster ride that for 20 minutes caused the fastest and largest percentage drop since the 1987 stock market crash.
Global markets have been transfixed with the situation with Greece’s sovereign debt issue and the worry that this will flow into other areas of Europe and consequently the global. This uncertainty has driven the markets down for the last couple of weeks but with all this uncertainty and fear in the markets the Dow Jones was down just on 4% from its highs prior to last Thursday.
At 11am the Dow Jones Industrial Index was down 60 points with the selling volume being heavier than normal. The number of stocks that fell without first moving up was at its highest level since the terror attacks of September 11.
It is now 2pm and the Dow Jones is down just over 200 points and all financial markets where feeling the strain. European equity markets were down solidly from the spillover from the Greek Debt Crisis. The Euro and Yen were both down solidly against the US Dollar and the bond markets were solidly sold off.
Shortly after 2.15pm in Santa Monica, California, hedge fund Universa Investments that manages close to $4 Billion USD, placed a trade for 50,000 S&P500 Put Contracts worth approximately $7.5 Million. Normally such an order wouldn’t put a ripple into the market, but on the Chicago Board of Exchange on this particular day, this was the straw that broke the camels back.
The traders who had taken the other side of the order went to hedge there position in the market by selling futures contracts into the market. Other traders went on to hedge their bought futures contracts by selling physical stock on the New York Stock Exchange and NASDAQ Exchange.
The hedging that takes place is all done via computers and at super-fast speeds. Computer trading was stopped after the 1987 Crash and deemed illegal by the exchanges. Computer trading now accounts by some estimates for more than 2/3rds of the volume of the New York Stock Exchange and the theory is that it provides much needed volume and conversely liquidity for the market.
The sheer volume of the orders generated by the program trading clogged the Arca Electronic Exchange and orders that normally take 1/300th of a second to execute were now taking 2 minutes to be actioned.
With the huge volume of orders going through the market, the people that control the some of the super-fast trading hedge funds, that provide much of liquidity for the exchanges, pulled out of the market altogether in an effort to find out what had happened with the market. The computers were moving faster than the human brain could comprehend.
These computers that normally supply volume to the market and allow traders to execute their trades in a timely and fare manner, disappeared. When this happened, there was literally no-one to buy any shares. I one extreme case Procter and Gamble went from $63.00 a share to $0.01 in under 20 minutes. The exchange later corrected the trades.
By 2.40pm in the afternoon the overload had taken it toll on the NYSE’s Arca electronic trading system. Other exchanges including NASDAQ and the Philadelphia Stock Exchange detected questionable information in the data and stopped routing orders through to the Arca System, effectively “pulling the plug”.
3pm and the selling pressure had stopped due to all the automated computer links being reset and the market climbed quickly. One factor behind the swift recovering was the same computer programs that forced the fall in the first place, now detected good value in the market and bought stocks up across the board cheaply.
This rollercoaster of a ride is yet another symptom of a financial system that is still has to be corrected from all the lax regulation over the last 10 years.
The global financial crisis was caused by the inability to value mortgage backed securities. The laws that were in place from 1932 to stop the collapse of the financial system by banks becoming to large were repealed in 1999.
The “up-tick” rule only allows “short selling” once a stock has moved up in price became part of the market rules in 1932, it was removed to allow increased volume from computer trading in the mid 1980’s and then reinstated after the 1987 stock market crash. Over the last 10 years it was then removed again and then in 2008 was reinstated.
After everything that has happened during the last couple of years and with the damage that it has caused to the global economy is seems amazing to me that the rules that were put in place after the worst bear market in history to prevent it ever happening again, have been so easily cast aside by the authorities.
For those of you that follow my work will know that I am a big believer in cycles both in and out of the financial markets, and that unfortunately in some cases history repeats itself time and time again.
There will be an analysis of what has happened over the course of the last couple of years in the financial markets and in the economy and “new” laws and regulation will be put in place to “protect” investors and the cycle will start again.
Maybe the people that we should be protected from are the Government officials who think its OK to tinker with financial market regulations.
Like most instances it appears that it wasn’t caused by one single factor rather a combination that culminated in a wild roller coaster ride that for 20 minutes caused the fastest and largest percentage drop since the 1987 stock market crash.
Global markets have been transfixed with the situation with Greece’s sovereign debt issue and the worry that this will flow into other areas of Europe and consequently the global. This uncertainty has driven the markets down for the last couple of weeks but with all this uncertainty and fear in the markets the Dow Jones was down just on 4% from its highs prior to last Thursday.
At 11am the Dow Jones Industrial Index was down 60 points with the selling volume being heavier than normal. The number of stocks that fell without first moving up was at its highest level since the terror attacks of September 11.
It is now 2pm and the Dow Jones is down just over 200 points and all financial markets where feeling the strain. European equity markets were down solidly from the spillover from the Greek Debt Crisis. The Euro and Yen were both down solidly against the US Dollar and the bond markets were solidly sold off.
Shortly after 2.15pm in Santa Monica, California, hedge fund Universa Investments that manages close to $4 Billion USD, placed a trade for 50,000 S&P500 Put Contracts worth approximately $7.5 Million. Normally such an order wouldn’t put a ripple into the market, but on the Chicago Board of Exchange on this particular day, this was the straw that broke the camels back.
The traders who had taken the other side of the order went to hedge there position in the market by selling futures contracts into the market. Other traders went on to hedge their bought futures contracts by selling physical stock on the New York Stock Exchange and NASDAQ Exchange.
The hedging that takes place is all done via computers and at super-fast speeds. Computer trading was stopped after the 1987 Crash and deemed illegal by the exchanges. Computer trading now accounts by some estimates for more than 2/3rds of the volume of the New York Stock Exchange and the theory is that it provides much needed volume and conversely liquidity for the market.
The sheer volume of the orders generated by the program trading clogged the Arca Electronic Exchange and orders that normally take 1/300th of a second to execute were now taking 2 minutes to be actioned.
With the huge volume of orders going through the market, the people that control the some of the super-fast trading hedge funds, that provide much of liquidity for the exchanges, pulled out of the market altogether in an effort to find out what had happened with the market. The computers were moving faster than the human brain could comprehend.
These computers that normally supply volume to the market and allow traders to execute their trades in a timely and fare manner, disappeared. When this happened, there was literally no-one to buy any shares. I one extreme case Procter and Gamble went from $63.00 a share to $0.01 in under 20 minutes. The exchange later corrected the trades.
By 2.40pm in the afternoon the overload had taken it toll on the NYSE’s Arca electronic trading system. Other exchanges including NASDAQ and the Philadelphia Stock Exchange detected questionable information in the data and stopped routing orders through to the Arca System, effectively “pulling the plug”.
3pm and the selling pressure had stopped due to all the automated computer links being reset and the market climbed quickly. One factor behind the swift recovering was the same computer programs that forced the fall in the first place, now detected good value in the market and bought stocks up across the board cheaply.
This rollercoaster of a ride is yet another symptom of a financial system that is still has to be corrected from all the lax regulation over the last 10 years.
The global financial crisis was caused by the inability to value mortgage backed securities. The laws that were in place from 1932 to stop the collapse of the financial system by banks becoming to large were repealed in 1999.
The “up-tick” rule only allows “short selling” once a stock has moved up in price became part of the market rules in 1932, it was removed to allow increased volume from computer trading in the mid 1980’s and then reinstated after the 1987 stock market crash. Over the last 10 years it was then removed again and then in 2008 was reinstated.
After everything that has happened during the last couple of years and with the damage that it has caused to the global economy is seems amazing to me that the rules that were put in place after the worst bear market in history to prevent it ever happening again, have been so easily cast aside by the authorities.
For those of you that follow my work will know that I am a big believer in cycles both in and out of the financial markets, and that unfortunately in some cases history repeats itself time and time again.
There will be an analysis of what has happened over the course of the last couple of years in the financial markets and in the economy and “new” laws and regulation will be put in place to “protect” investors and the cycle will start again.
Maybe the people that we should be protected from are the Government officials who think its OK to tinker with financial market regulations.
Tuesday, April 6, 2010
Got it wrong I did
Ohh well the RBA does what it says it needs to do. Up 0.25% or 25 basis points just a minute ago.
This should well and truly cool the housing market now.
Rates up today?????
Time will tell but those of us here are split on whether the RBA will or will not raise rates today. Personally I am hoping that the cooling we are seeing in housing will be enough to put the brake on the RBA for this month at least.
After all the RBA Gov said that if they had known the pullback had occurred in housing before the last rise they would probably have held off.
So who knows maybe this time they will heed their own advice!
Tuesday, March 30, 2010
One of those days
Just one of those days today ASX opened up then looks like spending the rest of the day going back to its starting point.
Up 8 points as I type and flat as a tack. looks like we have started Easter early here
The Oracle
Thursday, March 25, 2010
XJO on the edge
Ok my trader sense (bit like spidey sense but different) is twitching and telling me that the island reversal we are getting today is a sign of things to come.
the Oracle
Wednesday, March 24, 2010
ASX 200 up for lunch
The ASX 200 is up for the day and at lunch 31 points with everything going along just fine. Our MQG and PPT shares are up well .
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Things looking good for the ASX today
The DOW was up 102 points S&P500 8.36 It has got to be looking good for a great day for us.
Tuesday, March 23, 2010
MQG on target for a great trade
MQG is doing great for us
We got in early and it looks like breaking the resistance level
Returns will be great
the Oracle
Looking at the ASX200
The XJO still looks like it has some steam left in the present push forward. The Fibonacci levels are still in play from the last retracement.
Look for a little pullback then we go again.
National Australia Bank Update
National Australia Bank appears to have broken the trading range that has been in play for a while now.
Good target for the flag pattern !
Looking at the ASX200
The XJO still looks like it has some steam left in the present push forward. The Fibonacci levels are still in play from the last retracement.
Look for a little pullback then we go again.
Thoughts for the day
ASX looking to go a bit further South while the Yanks digest the Obama health reform
Thursday, March 18, 2010
Macquarie Bank and National Australia Bank
Two very interesting charts have come up in the last couple of days. Both Macquarie Bank and National Australia Bank are in solid flag patterns.
We could be seeing some very interesting moves in both stocks coming up in the coming days.
Wednesday, March 17, 2010
Newcrest Mining and Gold
Newcrest is presently in a flag pattern and based on the movements in Gold overnight, Newcrest Mining has the potential to break that flag pattern.The target out of the flag pattern is $37.00 which is also the fibonnaci extension target as well.
Certainly something to keep an eye on.
Good Hunting
Tuesday, March 16, 2010
Toll Holdings
Toll Holdings has bounced nicely from the 50% fibonnaci level and appears ready to make a decent retracement back up the long Candle that happened after the recent results.
The potential target out of the present pattern would be somewhere in the $7.70 region. A break in the trendline on the RSI and a move above $7.20 would confirm this bullish move.
Good Hunting
Monday, February 22, 2010
Euro Update
The accumulation that I flagged last week in the Index Report in the currency still appears to be going on. The present pattern that we have seen over the last week is one of exhaustion and the failure to reach down to the 1.3300 level during the last week is another indication that the Euro is oversold in the short term. With the performance and movement of Cable over the last week we could be seeing a switching out of being short the Euro into being short Cable. I would be cautious about being short at the moment.
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