Antofagasta Share Discussion Threads

[diku] 09/11/2009 21:24

tb3...I had similar target of around 932p...it could well gap up tomorrow morning to your target of 910p-920p..

RSI looks overbought and getting close to 100...even the chart only goes up to 100!!...

[thebull3] 09/11/2009 20:31

when this corrects, I reckon it might be messy, by the rate of the rise this is going to spike nicley around 920ish I reckon

[chillwill] 09/11/2009 19:33

omalaha - with you on the 60min chart, mostly what i based my decision on actually (and the longer-term trend), will come off sooner or later.

Since around this time 5 trading sessions ago on monday 2nd... Dow Jones is up over 500 points, very spiky!

[omalaha] 09/11/2009 17:08

I don't generally watch the volumes (maybe I should) - think that taking all the highest highs from this years rally gives a trend line with a bit of headroom left in it so will watch carefully tomorrow and possibly pull short and wait for re-entry.

edit:60min techs well overbought.

[diku] 09/11/2009 17:02

On a up day volume tends to be low..but when it does fall the volume tends to be double and much higher...any of you guys have comments on that?... today was a continuous upward path all day...none of those intraday dips...a bit controlled for my liking...

[omalaha] 09/11/2009 16:10

Hhmmmm....

[chillwill] 09/11/2009 15:27

i've just joined in @ 889.6, would have thought the index would have retraced before making another move... maybe not enough new buyers to sustain another rally and that means potential of double topping / h&s patterns are likely

[omalaha] 09/11/2009 13:20

agree - short from 886 - 2007 high.

[diku] 09/11/2009 10:11

short at 883p...

getting a bit crazy..

[chillwill] 05/11/2009 21:33

They can talk all they want, but Anto copper output down and copper failing to stay above $3 (at the moment anyway) should have more effect than what they say.

Also note todays 200pt rally on the DJI but the dollar wasn't sold off like it usually is on a rally... any weakness could see the dollar have a minor relief rally (and I say minor as I think the dollars troubles have barely even begun).

Not short but I've just gone short on the DOW at 10,008 - retraced to the 78.6%, with MACD divergence v.high and overbought... a break of around 10025 where the 78.6% is and I will close my position. Made a cheeky 20pts on the ftse earlier so just using the profit on that to make it a free trade :p
This does look a lot like a bargain hunters rally though; there isn't the momentum of commodities (apart from gold) that the last run up to 10k had, so will most likely be people buying in things that they missed out on.

[diku] 05/11/2009 16:16

Now I know why the strength here last few days apart from tracking sector strength...Goldman is talking up the stock once again...may have to revise my position...

[diku] 05/11/2009 13:50

short at 834.5p...

[diku] 04/11/2009 21:33

CW..I echo your sentiment...was very tempted to short around 830p but held back...with such movement it no doubt shakes out Longs and Shorts..

[chillwill] 04/11/2009 18:48

I'm not sure it'll match its highs from October, this may be a bounce after being sold down fairly quickly.
It's certainly a risky time to long, but as you've pointed out, the reward is there.

[diku] 04/11/2009 15:29

Yesterday low point at 760p...today so far 830p...that's some movement...

[thebull3] 04/11/2009 12:01

where to now then 850p? 900p? 950p

[diku] 03/11/2009 15:00

tb3...it was yesterday's intraday chart...half moon curvature..

[thebull3] 02/11/2009 17:03

Hi diku, whats an Island formation mean? good or bad? never heard it before now

[diku] 02/11/2009 14:24

If it finishes unchanged it will make a perfect island formation!..

[diku] 30/10/2009 16:44

Financials started to come off the boil..now the Miners getting hit...what we need is an Index correction...which takes FTSE to below 5000...prices will get hit with a double whamy...

[diku] 28/10/2009 23:40

missed all today's action...

[elssworth] 28/10/2009 23:13

Thanx Chil...i'll buy some Imperial Leather from Aldi tomorrow!

GET READY GENUINE ONES...do these symptoms ring a bell!!

The point I should really like to emphasize is that rally phases after a serious break frequently lead to a false sense of security and confidence among the investment community 'that the worst is over' because stocks are rebounding strongly. Moreover, because business conditions do not deteriorate very badly during the first phase of a bear market, economists and well-known market observers remain optimistic about the future.

The Prof.........they know i know ,you know they i know.

========================

I would be extremely careful in concluding that rising stock prices after a terrific decline, such as we had in the NASDAQ since March 2000, do signal improving business conditions. For a market, which has become very over-sold, it is only natural to rebound, but frequently these rebounds are merely bear market rallies, which are subsequently followed by vicious declines.

Probably the most famous bear market rally in history is the rise, which took place following the October crash of 1929. Stocks began to recover strongly following the November 13th 1929 low amidst wildly bullish comments and confident statements by a very large number of respected Wall Street personalities.

In fact, for a while the bulls were right. From a low at 199 on November 13 - down from the September 4, peak at 381- the Dow Jones Industrial rallied to a high of 294 in April 1930 (up 48%). This famous and well-documented bear market rally took place for a number of reasons. After the October 29 crash, the market had become very oversold - incidentally far more oversold than the US stock market's position on September 21, 2000. Thus, a technical rally was natural.

Also, the Federal Reserve Bank cut the discount rate immediately following the crash from 6% to 5% on November 1, 1929, to 4.5% on November 15, and to 4% on January 30, 1930. Subsequently the discount rate was repeatedly cut to 2.5% in June 1930, to 2% in December 1930, and 1.5% in mid 1931.

The interest rate cuts after April 1930 did, however, no longer support the stock market, which began to sell off once more. And by the end of the year 1930, the Dow Jones Industrial had broken below the November 1929 low and fell to 158 (from there it fell 41 in July 1932). Another reason for the 1929/1930 rally was that the economy held up following the October crash, which led a number of leading business and stock market personalities to make positive comments and to buy equities.

During the first six months of 1930, the business curve of the Harvard Barometer was almost horizontal and, therefore, did not signal a recession. Thus, the October 1929 stock market crash was widely regarded as a financial accident - a direct consequence of excessive speculation, but not as the beginning of an economic crisis that was to jolt the social and economic structure of the entire world.

No one anticipated a recession, let alone a depression. Charles Mitchell who headed the National City Bank, announced soon after the crash that the trouble was 'purely technical' and that 'the fundamentals remained unimpaired'. While President Hoover assured the American people that 'the fundamental business of the country, that is production and distribution of commodities, is on a sound and prosperous basis.'

US Secretary of the Treasury, Andrew Mellon also remained confident about the economy: On December 31, 1929, he stated: 'I see nothing in the present situation that is either menacing or warrants pessimism... I have every confidence that there will be a revival of activity in the spring, and that during this coming year the country will make steady progress' and in February 1930, he added, 'there is nothing in the situation to be disturbed about'.

Economists were not unduly alarmed either. Keynes said that the crash might be beneficial, as money, which had previously been used to speculate on stocks could now be diverted to more productive enterprise. Irving Fisher stated that the 'factors leading to the crash of the American stock market were not factors of depression but of prosperity, unexampled prosperity' and thought that stocks were 'ridiculously low' (subsequently they fell another 80%).

To some extend, Fisher had a point. At its November low, the Dow Jones sold for only 10-times earnings after having peaked at 15-times earnings in early 1929. This was inexpensive when compared to interest rates of less than 4% on long-term government bonds - not to mention the current S&P 500 P/E of over 35!

In fact, these seemingly low stock valuations and sound economic fundamentals led several well-known investors to accumulate shares. Jesse Livermore, who in the summer of 1929 had sold short, publicly stated in November of that year that the decline had run its course and that he expected the market to recoup from its October setback.

Livermore subsequently lost all his money in the 1930-1932 decline and eventually committed suicide. John D Rockefeller who had not spoken publicly for several years, issued a statement in which he said: 'these are the days when many are discouraged...In the ninety years of my life, depressions have come and gone. Prosperity has always returned, and will come again...Believing that the fundamental conditions of the country are sound, my son and I have been purchasing sound common stocks for some days.'

Even Bernard Baruch, who had correctly anticipated the stock market collapse, later confessed: 'I never imagined, in these last months of 1929, that the collapse of stock prices was the prelude to the great depression. Anyone who knew the potentialities of the American economic system, as I had come to know them, could not help but believe that the market break would just inevitably be followed by an even greater prosperity.'

The point I should really like to emphasize is that rally phases after a serious break frequently lead to a false sense of security and confidence among the investment community 'that the worst is over' because stocks are rebounding strongly. Moreover, because business conditions do not deteriorate very badly during the first phase of a bear market, economists and well-known market observers remain optimistic about the future.

We simply don't know how the world will look in a year's time. But it is clear that aggressive interest rate cuts, which led to the furious housing refinancing boom, and zero interest rate car loans have borrowed from future consumption, which will be curtailed once interest rates no longer decline.

Don't forget that following each recession over the last 100 years, in the initial recovery economic phase, interest rates continued to decline boosting stock prices and profits. Judged by the recent bond market action, interest rates will, however, go up even before this recession comes to an end.

Thus, given the S&P's still lofty valuation, I remain of the view that US equities have at present very best little upside potential and at worst, still significant downside risk. In fact, I lean toward the view - based on technical factors - that we may very well already have seen the recovery highs for the market or will see them in the next few days and that from here on the down trend will resume.

[chillwill] 28/10/2009 13:13

That's better info Els... now we just have to get you to wash your mouth out with soap and water and you may start getting credibility.

Managed a few more shorts over yesterday and this morning but am out for now - can't be around all day and the timing with anto is pretty important to catch as it's a spikey one!

[elssworth] 28/10/2009 12:05

How Long Bear-Market Rallies Last

The debate rages on: Is this a new bull market or just another sucker's rally?
Last week, we observed that, when it comes to answering this question, the recent 30% move was irrelevant: Sharp 30% rallies are a hallmark of bear markets.
Here's more evidence, from Chart of the Day, via Prieur de Plessis' Investment Postcards.

The chart below plots the five bear market rallies of the Great Crash, from 1929 to 1932. The vertical axis is magnitude. The horizontal axis is time. The average of these rallies (red circle) lasted about 70 days and rose 30%. The current rally, through May 1, had lasted about 50 days and risen about 25%.




Importantly, 1929-1932 was just one of many bear markets. The average rally in others is likely different. We think the circumstances of the current collapse (extreme over-valuation at the start, way too much debt, deleveraging) are more similar to 1929-1932 than other bear markets.