A sea of red greets traders today with Asia kicking us off. Had a couple of overnight shorts in place on both the Hang Seng and Nikkei which I've cashed out... Still reckon there is more downside to this leg but nobody ever went broke taking a profit.
The only thing I've got open now is a short on the Dow with a downward trend back in place as the rally fizzles out after the World Bank came out yesterday with some negative comments about future growth potential... which was in contrast to comments attributed to George Soros who said "The worst was behind us"
I am by no means a perma-bear and I think there are some nice value opportunities in the market at the moment - particularly in the South African market - but we need to appreciate how skittish investors are.
The bid by Xstrata for Anglo American gave the local market a bit of a boost but having chatted to a few people I get the sense that the bid is not going to get the support needed and if the "transaction premium" gets yanked out from Anglo then the JSE Top40 could take a smack.
Commodity futures are down as well. I thought there might be a bit more support for gold at 920 and oil at US$68 (particularly after its recent strength) but I guess next areas of interest for me are gold at around US$910 and oil at US$65.
(On that - I noticed an interesting story on Bloomberg about Japanese banks threatening to pull some funding from Venezuelan oil assets in response to non-payment and nationalisation threats... could this be a short term catalyst?)
Down still seems to be the only direction.
Showing posts with label Anglo American. Show all posts
Showing posts with label Anglo American. Show all posts
Monday, June 22, 2009
Friday, February 20, 2009
It's a slaughterhouse...
Thursday and Friday were just a sea of red on the JSE... Before I get into the reasons and try and pick my way through the carnage, I thought I should post the following picture to try and put some sense of humour into the story:
I think that's the closest I could come to Mr Market giving you the middle finger if you were tempted to go long.
Friday saw our markets rocked by some shocking news from Anglo American as they announced another 9000 job cuts and declined to pay a dividend. Ferronews.com has more info. The miner was down over 15% and some serious questions are going to be asked about the amount of debt the company is carrying... Don't be surprised if this isn't the last bad news to come into the market from this company.
On the financials side, Old Mutual got caned again and between Thursday and Friday they came down over 16%. The company managed to recover a couple of percent late in the day but it was really one way traffic. I remember calling Old Mutual as a R5 company and sure enough we got down to the R5.60 level so I think I'll take that one....
Basically this is how the indexes played out on Friday:
ALL SHARE 19403 -3.28 %
TOP 40 17464 -3.41 %
INDUSTRIAL 14800 -3.31 %
FINANCIAL 4826 -5.15 %
GOLD 2906 1.59 %
The US didn't get any better and gold spent a lot of US time above the $1000 an ounce levels. Remember I'm looking at levels of around 6500 - 6800 on the Dow in the next few months before I expect selling pressure to abate.
The Dow closed 100 points down at 7365 but had been down around the 7230 level...
Warning
Rumour mongering isn't really my thing but I think that there are some investors out there who will try and take some high risk positions simply because "Things can't go any lower..."
We are in a really bad economic situation at the moment - don't take unnecessary high risk positions that you don't need to take.
Two companies in particular I'd warn to steer clear of.
IFCA - I noticed the company traded down from 10c to 1c before somebody came into the market and bought 100 shares at 1c to boost it back to a 10c share.... steer clear
Super Group - I've been hearing some very bad things about this business beyond what is in the press and I believe an asset sale is on the cards. Basically their financial wellbeing sits with a banker deciding whether or not to process a high risk loan and we know what the lending environment is like at the moment.
I think that's the closest I could come to Mr Market giving you the middle finger if you were tempted to go long.Friday saw our markets rocked by some shocking news from Anglo American as they announced another 9000 job cuts and declined to pay a dividend. Ferronews.com has more info. The miner was down over 15% and some serious questions are going to be asked about the amount of debt the company is carrying... Don't be surprised if this isn't the last bad news to come into the market from this company.
On the financials side, Old Mutual got caned again and between Thursday and Friday they came down over 16%. The company managed to recover a couple of percent late in the day but it was really one way traffic. I remember calling Old Mutual as a R5 company and sure enough we got down to the R5.60 level so I think I'll take that one....
Basically this is how the indexes played out on Friday:
ALL SHARE 19403 -3.28 %
TOP 40 17464 -3.41 %
INDUSTRIAL 14800 -3.31 %
FINANCIAL 4826 -5.15 %
GOLD 2906 1.59 %
The US didn't get any better and gold spent a lot of US time above the $1000 an ounce levels. Remember I'm looking at levels of around 6500 - 6800 on the Dow in the next few months before I expect selling pressure to abate.
The Dow closed 100 points down at 7365 but had been down around the 7230 level...
Warning
Rumour mongering isn't really my thing but I think that there are some investors out there who will try and take some high risk positions simply because "Things can't go any lower..."
We are in a really bad economic situation at the moment - don't take unnecessary high risk positions that you don't need to take.
Two companies in particular I'd warn to steer clear of.
IFCA - I noticed the company traded down from 10c to 1c before somebody came into the market and bought 100 shares at 1c to boost it back to a 10c share.... steer clear
Super Group - I've been hearing some very bad things about this business beyond what is in the press and I believe an asset sale is on the cards. Basically their financial wellbeing sits with a banker deciding whether or not to process a high risk loan and we know what the lending environment is like at the moment.
Wednesday, February 11, 2009
Unfrigginbelievable!
So NOW the bloody fundamentals come into play and the US drops like a friggin rock...?! I'm rapidly losing my sense of humour here...
I haven't quite been stopped out of my Sasol long position but certainly not enjoying the lack of trend in the market at the moment... Maybe that's a problem I need to look at more closely... Volatility is screwing up positions but the underlying question should be: WHAT THE $@CK IS THE TREND?!
Basically the US dropped when they realised they didn't feel all that confident that the bank bailout plan was going to be able to stave off problems in the US banking market. This set panic across global markets initially as all the tentative confidence in the markets evaporated.
SA markets have a bit of a "shock-absorber" as the Rand weakened a bit and after the initial Blitzkrieg on our markets. Stocks seemed to have bounced off their low now that Europe is in our markets.
A bit of a dog show on the markets at the moment as we try and shrug off what has happened in the US...
But anyway I digress.
My thoughts this morning turned to pair trading i.e. taking long and short positions simultaneously as a way of dealing with the intra-day / intra-week volatility we're experiencing at the moment. It is not a strategy I've previously employed but I guess it holds some appeal for me with such big movements.
My initial thoughts were to look at Long Sasol / Short All Share or Long All Share / Short SAP for example. Bounced it off the guys on the Page 88 forum and apparently clients at Cortex have had some success with the Platinum counters in recent months - Long AMS / Short IMP.
Other recommendations were:
(MTN / Telkom)
(Anglo American / Billiton)
(Gold Fields / Harmony)
I guess the trick would be to find weightings for these positions and taken an active role managing them... Obviously there is also a higher level of investment required for these kind of transactions.
And THAT my friends will be my Plan Of Action for the next few days...
I haven't quite been stopped out of my Sasol long position but certainly not enjoying the lack of trend in the market at the moment... Maybe that's a problem I need to look at more closely... Volatility is screwing up positions but the underlying question should be: WHAT THE $@CK IS THE TREND?!
Basically the US dropped when they realised they didn't feel all that confident that the bank bailout plan was going to be able to stave off problems in the US banking market. This set panic across global markets initially as all the tentative confidence in the markets evaporated.
SA markets have a bit of a "shock-absorber" as the Rand weakened a bit and after the initial Blitzkrieg on our markets. Stocks seemed to have bounced off their low now that Europe is in our markets.
A bit of a dog show on the markets at the moment as we try and shrug off what has happened in the US...
But anyway I digress.
My thoughts this morning turned to pair trading i.e. taking long and short positions simultaneously as a way of dealing with the intra-day / intra-week volatility we're experiencing at the moment. It is not a strategy I've previously employed but I guess it holds some appeal for me with such big movements.
My initial thoughts were to look at Long Sasol / Short All Share or Long All Share / Short SAP for example. Bounced it off the guys on the Page 88 forum and apparently clients at Cortex have had some success with the Platinum counters in recent months - Long AMS / Short IMP.
Other recommendations were:
(MTN / Telkom)
(Anglo American / Billiton)
(Gold Fields / Harmony)
I guess the trick would be to find weightings for these positions and taken an active role managing them... Obviously there is also a higher level of investment required for these kind of transactions.
And THAT my friends will be my Plan Of Action for the next few days...
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