here come the drums of a global slowdown..

[s_t]

Not much really, IMO. Basically there are a point where the market has previously stopped and bounced around for a while.
They are usually defined at an exact price, often a round number, which IMO the market often breaks just for fun.
The thing with support lines etc. is that you can draw so many of them on a chart, that many will invariably be correct at some time for a little while. Our psychological tendancies then means that many people then accept them as an accurate forecasting tool.
As time goes on I less and less place any credence in them, and if I do I consider a 'range' of support (eg. between 4800 and 5000), not one precise figure.

I often hear about these suppport levels? What are they supposed to indicate?

Stock indices have often pushed below these levels, especially recently. Its also implied and presented as soon as you go lower, the bottom is supposed to fall out of the market.

 

[Aaron Sice]

yes! a range of support - not an exact figure.

i said the All Ords was going to 4900 - and it has dropped to 49xx. still, it's in the 4900 so now is a half decent time to be accumulating - waiting for 50 pts isn't going to make you any richer or poorer.

 

[GreatPig]

I've also seen people-of-some-experience mention 4200 and 3800 as other reasonable possibilities. 4800 has been mentioned by lots of people for quite some time, so it's not surprising that there's buyer support around this level.

From my XAO chart, the longer term trend back to about 1988 is currently around 4500, with the very base line of that trend being around 3800.

Longer back than that I don't have any data for, so can't be sure.

GP

 

[nonrecourse]

The bottom

I have seen a prediction that says the ASX will bottom out at 3500 and property values will fall 50% from its high in late 2007 for melbourne

 

[LynnH]

Whoever came up with that 'prediction' needs to trade in their crystal ball, methinks!! No-one knows - it's as simple as that!

Cheers
LynnH

 

[s_t]

I have seen a prediction that says the ASX will bottom out at 3500 and property values will fall 50% from its high in late 2007 for melbourne

Is that all? There would be people predicting much worse than that. Probably even on this site.....
You could find predictions from everything going to 0, to everything going to the moon if you wanted too!

 

[Aaron Sice]

3500 - while there is great support there - i think is a little pessimistic.

i think it will have to be a hot day in hell for the ASX to break below 4000 - that's a B-I-G psychological barrier.

 

[GreatPig]

Whoever came up with that 'prediction' needs to trade in their crystal ball, methinks!! No-one knows - it's as simple as that!

Quite. That's why it's called a "prediction".

GP

 

[Ausprop]

sentiment rules the day, fundamentals are out the window. when sanity returns we will be left scratching our heads

 

[boomtown]

I burst out laughing yesterday morning when I read in the Weekend Australian that St George's latest debt offering is backed by car loans instead of home loans.

Obviously the message they are sending is that a car will retain more of its value after 3 years than a house.

However, since the U.S. subprime mortgage crisis hit global markets almost a year ago, mortgages have become unpopular for many credit institutions worldwide, opening the door to other asset classes such as auto-backed loans

http://economictimes.indiatimes.com...auto_ABS_to_17_buyers/articleshow/3248067.cms

 

[buzzlightyear]

Is that all? There would be people predicting much worse than that. Probably even on this site.....
You could find predictions from everything going to 0, to everything going to the moon if you wanted too!

Maybe a GSPC forum is required....

 

[trendsta]

Hi guys,

was away for a while.. always good to have a break and view things with a fresh mind..

To me its now clear that US is already in a recession. Last qtr when adjusted for 'real' inflation was close to, or was infact negative ... while this qtr i think will also be negative.. two consecutive negative qtrs .. a recession is never announced by government before it happens, always once it has happened based on the historical - but more accurate data.

Back in Jan 08, i posted the above, and suggested Q4 2007 should be close to negative, and similarly Q1 for 2008.. Last night US govt released GDP numbers.. they revised 2007 Q4 GDP number from about 1% to -0.2% ... hahaha ..nice one..

Recession in Aus 09 ... in my mind not much doubt about it. the signs are there... can either be realistic about it or be in denial phase ... i choose to be realistic.

impact on property.. hmm .. last recession migration dropped from
150k to 30k... if we see a similar drop in next few years then ....

 

[feihong]

Back in Jan 08, i posted the above, and suggested Q4 2007 should be close to negative, and similarly Q1 for 2008.. Last night US govt released GDP numbers.. they revised 2007 Q4 GDP number from about 1% to -0.2% ... hahaha ..nice one..

Recession in Aus 09 ... in my mind not much doubt about it. the signs are there... can either be realistic about it or be in denial phase ... i choose to be realistic.

impact on property.. hmm .. last recession migration dropped from
150k to 30k... if we see a similar drop in next few years then ....

I must be a sick person.. I'm feeling more and more excited

 

[trendsta]

dont be mate ..

we live in a capitalist society, and rightly or wrongly, these are the rules..
i didnt make them, i just play by them..

im very excited too ...

 

[Piston Broke]

sentiment rules the day, fundamentals are out the window. when sanity returns we will be left scratching our heads

Yes, that's what caused the RE boom in the first place.
And all those unrealistic optimists to take no-doc loans, or loans they could'nt pay unless the boom continued and interest rates stayed stagnant.
There is no such thing as balance for more than short periods, markets generally go from one extreme to another. The typical boom/bust.

 

[trendsta]

atm major battle is commodities vs treasuries ..

round 1 goes to commodities..

round 2 goes to treasuries ... in the process the sudden "demand" for US treasuries surges the USD higher against other currencies.. commodities drop.

 

[pendo]

From Money Morning

US Debt Increases By 50%
Speaking of government bail outs (which we weren't, but anyway) the long anticipated move by the US government to fully finance and support Fannie Mae and Freddie Mac appears to have finally come to pass this morning.

The US government has in all but name nationalized both institutions. It effectively means that the US government owns nearly half of all outstanding mortgages in the United States and follows on the heels of news last week that the UK government was offering "free" mortgages to first home buyers.

As Moody's chief economist points out "the federal government has now become the nation's mortgage lender."

How much money are we talking about here? It is, wait for it, USD$5 trillion, that's USD$5,000,000,000,000 in home loans. That is one big exposure to the mortgage markets that the government is burdening its taxpayers with.

But sleep easily, because US Treasury Secretary Hank Paulson thinks that the government may only have to cough up a maximum of USD$200 billiion to cover any debt shortfalls. That's USD$200,000,000,000 - which still looks like a whopping big number to us.

Let's just put these numbers in perspective. Over the past few years you have all read about the massive debt hole that the US government is in, how it is unsustainable, how the country is living beyond its means. The current US national debt (although by the time you receive this email it will be higher) stands at USD$9,674,134,313,303 so in one fell swoop you could argue that the national debt has been increased by over 50% to just under USD$15 trillion.

 

[Aaron Sice]

interesting - SOLID 4800 support level with a possible drop down to the 4650 mark before either a rally or a further fall away on BOTH the XAO and XJO.

 

[Aaron Sice]

From Money Morning

US Debt Increases By 50%
Speaking of government bail outs (which we weren't, but anyway) the long anticipated move by the US government to fully finance and support Fannie Mae and Freddie Mac appears to have finally come to pass this morning.

The US government has in all but name nationalized both institutions. It effectively means that the US government owns nearly half of all outstanding mortgages in the United States and follows on the heels of news last week that the UK government was offering "free" mortgages to first home buyers.

As Moody's chief economist points out "the federal government has now become the nation's mortgage lender."

How much money are we talking about here? It is, wait for it, USD$5 trillion, that's USD$5,000,000,000,000 in home loans. That is one big exposure to the mortgage markets that the government is burdening its taxpayers with.

But sleep easily, because US Treasury Secretary Hank Paulson thinks that the government may only have to cough up a maximum of USD$200 billiion to cover any debt shortfalls. That's USD$200,000,000,000 - which still looks like a whopping big number to us.

Let's just put these numbers in perspective. Over the past few years you have all read about the massive debt hole that the US government is in, how it is unsustainable, how the country is living beyond its means. The current US national debt (although by the time you receive this email it will be higher) stands at USD$9,674,134,313,303 so in one fell swoop you could argue that the national debt has been increased by over 50% to just under USD$15 trillion.

these banks should just collapse.

the Fed "propping up" private institutions means they may retain a stake somewhere along the line.

it's socialist, not capitalist.

 

[pendo]

You got it in one BC

This is what Congressman Ron Paul has been railing against for the better part of two decades