We are in a sense all modern day profits trying to predict the future. Some with success like the winners like getting onto rio at 46 recently (well done to you). There where others that got in at a higher level but all enjoyed the spoils of success if you sold at 60. The question is how much higher? This is reflected with many of the other shares like lightons, worley parsons, cba, anz, bhp, wes, nab, flx and kar. The problem is the goal post have been shifted as the market conditions are different compared to nov 2007. The all ords is at a critical point of 4250 - 4350. If it can bust this zone the bulls will be partying with joy screaming 'I told you so, I told you so'. When the all ords got to 4060 recently it couldn't stay above the 4000 zone for long.Lets see how long it can stay here this time.
Yes the USD has an impact, the emerging market such as china increasing its stockpiles of resources, but the key to the success of all ecomomy and the market is the availabilty of liquidity. It seems that everytime there is a rally it gets a little higher then falls back. There is no doubting that everytime it rises there are more liquidity moving in equities market. Think about all of the cash that is locked away with the bears stashing it in their caves till the time is right (If its anything like my dad we would have to wait till the all ords gets to 6000 - yep old school). Generally there are more bears than bulls. Negative and positive, yin and yang and so on. The polarity of the universe requires expansion and decrease. There will be a point were the bears will step in and say yep thats enough. When they decide that I'm gonna take my profit it creates a domino effect. And thats that and the holders are once again stuck with a hairy dog till their share moves higher later. Been there before too many times.
I love the glass half full types on this post that say the all ords will keep rising. There is no doubting that this rally is overheating. The last three major humps have increased about 250 - 300 points above the highest point of the last rally point. There is no doubting that there is more liquidity in the market at present, but not enough to reach the 5000 mark yet. 4280 - 4340 will be the range before the correction. It like a runner training for the big race. They need to train to a level, and then next week they increase the tempo, and so on till they are ready for the race. They also need to rest to recoperate. The market is the same it needs to rebalance with ups and downs. Its healthy as well because it teachs us lesson about our own ideas of risk and how greedy we can become.
If you push the edge, it might bite you. Ask a few of my friends when they had a 250k margin call in 2007. They are paying the price of their mistakes and greed. Ask the people when the bhp rio takeover deal fell through where rios share price drop $21 in one day. You undoubted would be getting a margin call that day if you were sitting at 65% on your margin loan. Its a nasty reality but its the risk and the thrill why we do it.
Thoughts: I would say to the bulls - be weary and reduce your risk, to the bears keep an open mind because this might go through to 5000. Wouldn't that be nice. I believe that the mother of all rallies will be in december. If we have a couple more smaller rallies it will get some good interest. Its like advertising? Down in Aug, up in sept to mid oct, down oct nov (traditionally trends to fall around this time in recent times), we get the xmas present from the money gods. I'm sorry but you will need to decide what shares you like because there will be no coming back after this rally. This is the year of opportunity. My choice will be bhp because it will be more than rio this time next year. Its is a sleeping gaint waiting to strike. Cahed up waiting to go on a shopping spree. No one will be safe including rio. I am not a financial planner so don't take my word as this is all opinion. It all could be a crock of poo. Just throwing my hat in the ring. The only financial to go through the roof is qbe. Its could be a late starter this week (early aug). Have a hunch. All the best this week. We have till 7 aug I predict when the correction begins. Hopefully I am wrong. Looking for some doubters out there. I be interested to hear your theories.
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