dont panic , page-3

Hold tight, stocks in for a shocker

John Durie
From:The Australian
August 05, 20119:08A


STOCK prices will fall sharply today but it's not the time to sell shares.

Market pundits are tipping at least a 150-point fall at the opening, or just more than 3 per cent, but warned it could fall as much as 200 pints to 4076 points.

Australian stock prices have already fallen 14 per cent from the April high, so the local market is officially in correction territory which is signaled by a 10 per cent or more fall.

When stock prices are down 20 per cent, then it is bear market territory.

All eyes on Wall Street are on tonight?s employment data, with market consensus tipping a gain of 85,000 jobs. Anything less will be met by another sharp fall for stocks.

But local investors should be careful because part of last night?s fall was driven by hedge fund liquidations after the Bank of Japan intervened to lift the value of the yen.

Markets in panic as shares plummet The Daily Telegraph, 23 minutes ago
Wall St in biggest plunge since GFC The Australian, 3 hours ago
Wall St snaps losing streak The Australian, 1 day ago
Gold 'saving grace' as market bleeds Perth Now, 1 day ago
No hope for the stock shockers The Australian, 16 Jun 2011


This destroyed the carry trade where investors borrow cheaply in yen and invest in the US. So once that is hit it triggers mass sales everywhere.

This said sentiment is obviously very negative, with growing fears Europe faces more disasters and the US is going nowhere.

Hold tight, but don?t sell now unless you need to because the market will bounce sometime soon.