The Dow Jones has a quiet session…Only a 250 point range
October 2nd, 2008 by Lou Muddaris
Closing Data
| Current | Change | % | |
|---|---|---|---|
| Dow Jones | 10831.07 | -19.59 | -0.1805 |
| NASDAQ | 2069.4 | -22.48 | -1.0746 |
| S & P 500 | 1161.06 | -5.3 | -0.4544 |
| FTSE 100 | 4959.6 | +57.1 | +1.1647 |
| All Ords | 4,814.5 | +183.2 | +3.96 |
| SPI Futures | 4864 | +17 | +0.3507 |
| Nikkei | 11368.26 | +108.4 | +0.9627 |
| Oil | 98.26 | -2.44 | -2.423 |
| Gold | 887.3 | +6.5 | +0.738 |
| Silver | 12.77 | +0.495 | +4.0326 |
| Copper | 278.95 | -8.95 | -3.1087 |
| Lead | 1718 | -92 | -5.0829 |
| Zinc | 1648 | -5.5 | -0.3326 |
| Aluminum | 2367.75 | -8.75 | -0.3682 |
| Nickel | 15710 | +110 | +0.7051 |
| Tin | 17610 | +338 | +1.9569 |
The Dow Jones has a quiet session…Only a 250 point range
There are 2 questions I am asked hundreds of times every day and one is easier to answer than the other:
- "Dad can I have some more money please?"…NO!
- "Is now the time to start buying shares"….YES!
There are many reasons to believe we have seen the recent lows; the S+P 200 hitting and bouncing off the 4,530 twice; we don't have the same sub prime problems as the rest of the world; the property market is still strong; economic fundamentals are strong; the RBA is in "big time" easing mode and has plenty of ammunition to reduce rates…etc, etc,ad nauseum. But the biggest and most compelling argument is something called "Capitulation Theory" .
As our more avid readers may recall I have mentioned this a few times in trying to decide when to start buying. I won't go into the details now; instead I'll just leave it for tomorrows report as it is a detailed and fascinating theory which needs to be covered more comprehensively; suffice to say it has occurred!
"That package"
The U.S Senate is currently voting on a revamped version to sweeten the Republican dissenters (gotta love the irony) by including tax breaks to small businesses. This saga WILL be resolved, we just await the details and hopefully soon, as there is one thing markets hate most and that is uncertainty.
Overnight news
1/ Warren Buffet (aka God) bought $3bln worth of preference shares in General Electric yielding 10% with GE also announcing a sale of its own stock to raise $12 bln of much needed capital….these figures are sounding something out of an Austin Powers movie! The bottom line is the stock rallied, as when Warren buys you listen and act!
2/ The ISM (Institute of Supply Management Manufacturing Index) fell to 43.2 its lowest reading since the recession of 2001. This is a very closely watched indicator and made some analysts declare the U.S is/has been in a recession…remember stock markets are forward thinking, they do go up in recessions!
3/ The European Central Banks have announced a "meeting to discuss the banking sector" (read crisis!) for October 4th. This is getting like another bail out with France saying they have to rescue some banks and the Germans saying "Nein"…no love lost there! According to Reuters they are talking of a rescue package of $422 BILLION! A slight concern is NAB has substantial holdings in the U.K (Clydesdale Bank, Yorkshire bank et al). Having said that, all banks will suffer if this European crisis isn't resolved.
"When Irish eyes are smiling"
Now with this news I don't know wether to laugh or cry!
Currently in the U.K there are many people thinking the "unthinkable" of withdrawing their cash from the banks…I had to reassure my Pommie sister not to be so foolish!
The problem is Bradford and Binghley (massive lender) was nationalized and now the Lloyds/HBOS takeover looks like falling over as Lloyd's shareholders feel the 1.80 pound offer is way over priced. The U.K Prime Minister (who just about still has a job) is basically pleading for it to be resolved…the consequences just aren't worth contemplating! SO, ENTER THE IRISH BANKS!
They have stated that if Joe Public transfers his account to an Irish Bank then they will guarantee their savings! The U.K Government has publicly slammed them for the obvious reasons…..only the Irish could come up with this! The net result was the switchboards of the main Irish banks went into overload and hundreds started queuing at their U.K branches. Anglo/Irish relationships have never been good but this is Financial War!
BHP/RIO
The ACCC cleared the take-over. Next stop is the European Monopolies Commission on Jan 16th with Asian and European miners no doubt trying to stop it. Also remember the Chinese hold over 11% of BHP…they need to be courted. If the take over finally goes through then it will make BHP the 3rd biggest company in the world! Another reason to buy them!
Reminder: This Sunday the clocks move forward 1 hour meaning Queenslanders will see the market open at 9.am and close at 3.pm. Happy days!
Stay tuned and have a great day.
Quote of the day: "No matter how far you go down one of life's wrong roads you must always turn back". An old Turkish proverb.
Contact your Freeman Fox Stockbroker on 07 3031 9960 or 1800 003 369 Ext 7.
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