ASX newbie

This was contributed by “DRUSS” a professional trader who is also one of the popular contributors to “Topstocks.”

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Now to this informative article.

Thought I would Revisit this Thread. Plus add a few more things along the way. I believe once you harness your emotions in this game the rest is easy.

1. Taking Profits. Believe it or not, of all the skills one needs to learn to be a consistently successful Trader, learning to take profits is probably the most difficult to master. A multitude of personal, often Very complicated psychological factors, as well as the effectiveness of one’s market analysis, enter into the equation.

Unfortunately, sorting out this complex matrix of issues goes way beyond the scope of this article. I point this out so that those of you who might be inclined to beat yourselves up for leaving money on the table can relax and give yourselves a break.

Even after you’ve acquired all the other skills, it might take a very long time before you get this one down pat. Don’t despair. There is a way to set up a profit-taking regime that at least fulfills the objective of the fifth principle of consistency (”I pay myself as the market makes money available to me” .

If you’re going to establish a belief in yourself that you’re a consistent winner, then you will have to create experiences that correspond with that belief. Because the object of the belief is winning consistently, how you take profits in a winning trade is of paramount importance.

This is the only part of the exercise in which you will have some degree of discretion about what you do. The underlying premise is that, in a winning trade, you never know how far the market is going to go in your direction.

Continue reading ‘Harness Your Emotions When You Trade.’

The market liked the modest improvement in earnings for Adelaide-based Hills Industries with the shares up 3.9% (slightly better than the overall rise in the market) or 13 cents to $3.46.

Earnings edged up 1.8% to $48.04 million, from $47.17 million in the 2007 year.

The company says it expects a satisfactory result this year, despite the spectre of high interest rates and fuel costs.

Chairman, Jennifer Hill-Ling said that the result was in line with the guidance given at the half year and represented “an excellent achievement in continuing the long term track record of profitable growth in difficult economic times.”

“The second half EBIT result was an improvement of 9.8% on the same period in the previous year and a 5.7% increase on the first half.

“NotwithstaNnding this, profits have been adversely affected in the period due to higher cost, particularly freight and distribution.

“We are particularly pleased to have been able to maintain our dividend on the increased capital resulting from our Share Purchase Plan earlier in the year.

“These results are a testament to the strength of our businesses and confirmation that our strategy of diversification provides long term benefits to shareholders, she said in a statement to the ASX.

Looking to 2009, the chairman said in the statement:

“There has been much publicity regarding the uncertain macro-economic settings, including higher interest rates, higher fuel costs and the uncertainty surrounding capital markets.

Continue reading ‘Hills’ Final Profit Liked.’

The market is up 8. An unremarkable day. Financials down 0.7% after a dull performance overnight in the US. Resources up 0.2% after a strong lead from BHP, RIO and energy stocks in the US. Metal prices up. The SFE Futures were up 15 this morning.

Dow up 40. Up 69 at best. Down 95 at worst. Main Point: Financials down 1% on Freddie Mac and AIG’s ugly results and Morgan Stanley freezing home-loans.

Energy and resources outperformed on good results. 6 out of 10 sectors up – indexes at 6-week highs. Dow encouragingly turned around a 0.7% loss to make a 0.3% gain holding onto the 331 or 3% gain yesterday.

Large cap techs offset bad news in the financials. Nasdaq up 1.2% on better-than-expected results from Cisco. Oil price down 5.4% for the week already. Resources up 1% with BHP and RIO up strongly – up 4.36% and 4.72%.

Energy outperformed – up 1.9% on better-than-expected results from Devon Energy. Refiners up with Tesoro and Valero up 12% and 7%. Sunoco up 3.3%. Freeport-McMoRan up 11%.

Morgan Stanley froze the home-equity lines of credit for thousands of clients while their homes dropped in value.

Telecoms down 1.4% - underperformed – Sprint Nextel and Qwest both reported a lost subscribers. USD climbed to 8-week high against the euro and 7-month highs against the yen – the global slowdown and less fears of inflation are helping the USD to rise.

* Both BHP and RIO up in ADR form overnight, 4.36% and 4.72% respectively. BHP down 6c to 3716c. RIO up 110c to 11550c.

* Metals mostly up overnight – Nickel up 1.17%, Zinc up 1.1% and Lead 2.53%. Aluminium up 0.21%. Oz Minerals up 2c to 176c.

* Oil price down 14c to $118.57 after the U.S. Energy Department’s EIA said crude inventories increased by 1.7m barrels to 296.9m for the week ended Aug. 1, slightly more than the 1.2m-barrel increase expected. Woodside up 77c to 5149c.

* Gold down $3 to $878.80. Newcrest down 40c to 2500c.

* US Bonds down with the 10 year yield up to 4.05% from 4.02%.

Continue reading ‘Midday Market Roundup.’

The ASX was a rash of gains yesterday. The entire market was up 3%. It was like an allergic reaction that makes you feel awesome. Bit by bit, it spread through the whole bourse. The only companies that escaped its wondrous infection were energy companies and gold firms.

We seem to be breaking out in something ourselves today. It’s not awesome. We’ve quarantined ourselves inside our bedroom.

But even from our vantage point, we can see that this is no ordinary market, reader. When people get emotional they act like a herd. And when the market is acting like a herd, everyone runs in the same direction. Check out the Wednesday stampede:

You can dice that salami any way you like. Almost everything moved in the same direction. Gold miners and energy firms got nice and cheaper, thanks to falls in the price of oil and gold.

That struck us, because we spent yesterday considering the contrasting nature of commodities. While shares in a market like this tend link arms and play follow the leader, commodities don’t. That makes our job in Diggers and Drillers a little easier. There’s a lot more variety in the resource market.

(Editor’s Note: If you’re after variety, by the way, now’s a good time to join D&D. Our publisher’s just about to send you a new offer. It’s cheap. Keep an eye on your inbox.)

Shares have definitely linked arms in the past month. But you can’t put all of yesterday’s gains down to blind greed. We haven’t forgotten the Three Es: Energy, the Economy, and Earnings season. All of them had some sort of effect yesterday.

Continue reading ‘The Entire Market Was Up 3%.’

- A list of companies to record an initial or increase in substantial shareholdings:

* Deutsche Bank AG increased its interest in Macquarie Capital
Alliance Group on July 31 from 29.8 million (12.1pc) to 32.6 million
stapled securities (13.2pc).

* Lazard Asset Management Pacific Co increased its interest in
Macquarie Communications Infrastructure Group on August 1 from 40.7
million (7.8pc) to 46.1 million stapled securities (8.8pc).

* Commonwealth Bank of Australia Ltd became a substantial holder
in Brisconnections Unit Trusts on July 31 with 19.6 million stapled
securities (5pc).

* United Biosource Holding LLC became a substantial holder in
Cogstate Ltd on July 28 with 7.8 million shares (13pc).

* UBS Nominees Pty Ltd became a substantial holder in Brockman
Resources Ltd on July 18 with 7.1 million shares (5.4pc).

* Hillgrove Resources Ltd increased its interest in Intermet
Resources Ltd on August 5 from 29.6 million (58.6pc) to 30.4 million
shares (60.1pc).

* Premier Investments Ltd increased its interest in Just Group
Ltd on August 5 from 52.2 million (25.9pc) to 54.5 million shares
(27.1pc).

* Orbis Investment Management (Australia) Pty Ltd became a
substantial holder in Tower Ltd on August 4 with 9.6 million shares
(5pc).

* Ivanhoe Mines Ltd Group became a substantial holder in Ivanhoe
Australia Ltd on August 4 with 250 million shares (80pc).

A tough day on the Australian stock market yesterday, which ended lower for a third day, as miners were sold off on falling commodity prices.

Banks had a bit of a respite and there was a rebound in the afternoon.

The ASX200 index fell 67.3 points, or 1.4%, to 4820.4 after earlier hitting a 31-month low of 4758.5 in the morning, while the All Ordinaries shed lost 75 points, or 1.52% to 4882 after it was off more than 2% in the morning as well.

But the star of the day goes to Brisbane-based Laboratory services and chemicals company Campbell Brothers which saw its shares surge by more than $4 or more than 15% in a market that plumbed new 2 year lows at one stage.

It was a stand out performance and there was a very simple answer: a forecast at yesterday’s AGM for a 60% rise in first half earnings, and that a “similar percentage increase’ was expected for the 2008-09 financial year.

That set the shares alight after the chairman and CEO’s addresses were released after the meeting started in Brisbane at 11 am.

The shares jumped 18% or so to a high of $32.20, before easing back a touch to close up $4.13 at $31.23.

If that 60% rise is achieved, the company will add more than $43 million to net profit by the end of the financial year.

That wasn’t a high for Campbell, which makes much of its money from doing analysis for the mining industry here and around the world.

It touched an all time high of $36 early last December, before Centro Properties killed off our boom by falling victim to the credit crunch by not being able to rollover billions of dollars in debt.

Continue reading ‘Tough Day On Market But Campbell Bros Stars.’

Investors dropped everything and stampeded out of the resource sector yesterday, reader. We mean everything. There are kitchen sinks lying all over the place. According to the Australian Financial Review, Lynas (ASX:LYC) was the best-performed miner in the top 200 yesterday. It only lost 0.4%.

So today’s issue is an idea-fest. Among the wreckage there are good stocks. Really, unless you believe there isn’t a good miner in the country, that has to be true. They all went down.

But before we get to ideas…why did the miners cop such a drilling yesterday?

Falling commodity prices. Oil’s trading at US$116 this morning. It’s leading a lot of other hard assets down. If you’re a fan of the charts, stay tuned for tomorrow’s MM. Gabriel can tell you what this plunge means for technical traders and the market’s sentiment.

Today, we have two things to say about the commodity correction.

It’s only a correction. And it’s not an all-in, broad bear market like the one you’re seeing in financials shares.

On the first point…look at what commodities have done since 2004.

No market can keep that up forever. When you hear that metals are down, or that wheat is losing ground…it’s mainly because in the last 4 years their prices took enough ground to fill the Grand Canyon.

And it’s not a bear market. Why? Because in a bear market, everything falls. That simply isn’t the case with commodities. Take a look at a break-down of that chart above.

Those are the key sectors for Australia’s trade. They don’t move in tandem, contrary to what a lot of people believe. The financial drama ended in tragedy. That’s because no-one needed a reason to buy financial stocks anymore. They just did it.

Continue reading ‘Resource Stocks Selling Below Book Value.’

style=”font-size: 10pt; font-family: Verdana;”>The market is having a shocker - down 96 hitting a two year low. The SFE Futures suggested a 44 point fall. It looks like the Resources bubble is bursting today.

Resources pummeled after steep falls in energy and commodity prices overnight – down 6.1% - with BHP down 6.4% and RIO 5.6%.

Property Trusts also struggling – down 2.2%. Financials started down but now up 0.7%.

Dow Down 42. Up 56 at best. Down 105 at worst.2 stocks down for every 1 up. 6 of the 10 sectors now more than 20% off their highs.

Oil price and CRB commodities index fell – down 3% and 3.4%. Energy and resources down to 6-month lows – down 4.9% and 4.2% - speculation of a large hedge fund liquidating positions in these sectors. Freeport-McMoran down 12%. Tesoro and Valero – two biggest US refiners – fell 42% and 38%. Range resources – big gas producer – fell 43%. Exxon Mobil down 3.9%.

Transport down 0.8% despite the fall in oil prices. Only consumer discretionary, consumer staple and healthcare rose – up 0.5%, 1.2% and 1.3%.

Financials finished down 1.3% (was down 2.9% at worst). Oppenheimer’s Meredith Whitney told CNBC that the market turmoil is “far from over and that home prices will fall much further than people expect”. Citigroup reported its first loss since 2005 – biggest US credit card lender lost $176m in the 2Q on repackaged credit-card securities. Price fell 0.21%.

Bank of America down 2.13% and Wachovia down 9.9% as broker recommends selling their stock. Washington Mutual down 8.5%. London based HSBC posted 1H 08 profit down 29% due to losses on US subprime. Price fell 1%. June personal spending better than expected but higher than expected PCE price inflation offset any enthusiasm. Factory orders were more healthy than expected.

• Both BHP and RIO down in ADR form overnight, 3.74% and 5.69% respectively. BHP down 220c to 3614c. RIO down 603c to 11207c.
• Metals all down overnight – Both Copper and Zinc down 4.2%, Zinc down 1.84% and Nickel down 1.5%. Oz minerals down 18c to 170c.
• Oil pricedown $3.58 to $121.45 – a 3 month low – on the back of rising OPEC outlook. Oil traded below $120 for the first time since May. Woodside down 301c to 5099c.
• Gold down $8.90 to $900.10. Newcrest down 259c to 2714c.
• US Bonds down with the 10 year yield up to 3.97% from 3.94%

Continue reading ‘Midday Market Roundup.’

Melbourne based ports and rail owner, Asciano, was a star performer in the market last week with an unexplained 71 cent rise to close at $4.15 last Friday, and yesterday we got the reason why.

An unsolicited offer from an old private equity trawler through Australia, TPG, and a mate: an offer that was rejected by the target last night.

TPG Capital, the buyout arm of TPG Inc, and Global Infrastructure Partners offered $2.9 billion For Asciano, which was spun out of Toll Holdings last year around a year after Toll had acquired Patrick. Asciano contains many of the port and rail assets owned by Patrick.

Including debt, the offer is worth $7.64 billion bid (including $4.46 billion debt) for Asciano.

After the close of trade, Asciano refused TPG’s request to look at its books, arguing the bid “undervalues the business”.

TPG and GIP had required that due diligence be completed “satisfactorily” before any final and binding proposal could be made. So without a much higher price, the offer goes nowhere for the time being.

And, despite the lack of a information in the statement about Asciano’s advisers, they turn out to be Macquarie Bank.

That makes the bid less than hostile. Macquarie is close to Asciano: indeed the company used Macquarie nominees to hide its stalking of Brambles until it was outed by Brambles management in an aggressive use of Corporations law.

After being sprung by Brambles Asciano and forced to withdraw after the credit crunch sank the shares. The company was forced to sell its Brambles’ position at a loss.

And, Macquarie and TPG got close and personal during the abortive bid for Qantas where TPG had a 14.9% stake in the offer and Macquarie was the key driver and adviser.

So the TPG and Global Infrastructure bid of $4.40 a share in cash for the company will probably end up winning, unless institutional shareholders in Asciano object.

The offer was an “unsolicited non-binding indicative proposal,” the company said a statement to the ASX.”Security holders are recommended to take no action at this time.”

Continue reading ‘Asciano Finds A Friend.’

A year ago, the Bank for International Settlements startled the financial world by warning that we might soon face challenges last seen during the onset of the Great Depression. This has proved frighteningly accurate.

The venerable body, the ultimate bank of central bankers, said years of loose monetary policy had fuelled a dangerous credit bubble that would entail “much higher costs than is commonly supposed”.

In a pointed attack on the US Federal Reserve, it said central banks would not find it easy to “clean up” once property bubbles have burst.

If only we had all listened to the BIS a long time ago. Ensconced in its Swiss lair, it has fired off anathemas for years, struggling to uphold orthodoxy against the follies of modern central banking.

Bill White, the departing chief economist, has now penned his swansong, the BIS’s 78th Annual Report, released today. It is a disconcerting read for those who want to hope the global crisis is over.

“The current market turmoil is without precedent in the postwar period. With a significant risk of recession in the US, compounded by sharply rising inflation in many countries, fears are building that the global economy might be at some kind of tipping point,” it said.

“These fears are not groundless. The magnitude of the problems yet to be faced could be much greater than many now perceive,” it said. “It is not impossible that the unwinding of the credit bubble could, after a temporary period of higher inflation, culminate in a deflation that might be hard to manage, all the more so given the high debt levels.”

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Continue reading ‘BIS warns worse is far from over’