It should be an ugly one today on the ASX. However you might think of it as a chance to buy gold companies on a correction. The local market will follow Friday’s awful day on the Down, when the index closed down over two percent. But gold shares are in vogue.
Something to watch for on the ASX/200 is how the index responds after today’s initial wave of selling. The chart above, courtesy of Yahoo, shows the index over the last two years. The red line is the 200-day moving average and as you can see, it’s mostly up.
The weak start to the year has caused the index to lose some momentum. And stepping away from the technical analysis for a moment, you have to wonder what can help it regain the positive momentum. It’s not likely to be news from America, where the weak job market sparked Friday’s nausea.
Recession. The word is on everyone’s lips now. But it’s becoming apparent that this latest American recession won’t be like a mild head cold. It could put a serious dent in consumer demand from the world’s largest consumer. At the very least, that would be commodity price bearish (base metals) and lead to a lower Rio and BHP.
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About the Author
Dan Denning is the author of 2005's best-selling The Bull Hunter (John Wiley & Sons). He began his financial publishing career in 1997 and has covered financial markets form Baltimore, Paris, London and, beginning in 2005 Melbourne. He’s the editor of The Daily Reckoning Australia and the Publisher of Port Phillip Publishing.
Comment by christina on 8 January 2008:
Hello everyone. All this reminds me of a bible passage that I read the other day and freaked out over. It's more like a blow by blow account of what's happening right now, rather than something that was written thousands of years ago.
But you know what it says in the bible "God sees the end from the beginning" Anyway, the bible passage I refer to is Psalms 9: (versus 15-20) which says:
"The heathen are sunk down in the pit that THEY made: in the net which they hid is their own foot taken (hint- dodgy lenders, greedy people, and certain greedy countries!)
"The wicked is snared in the work of his own hands" (hint- greedy people who took out too much credit and now it's coming back to bite them in the bum, greedy lendrs who tried to pass the risk on to innocent investors, but who's same money worries are coming back to bite them in the bum instead, certain greedy countries who made poor people work hard in sweatshops for low wages and long hours, and now those same people are richer than they are, and who are coming back and dumping the very same (soon to be useless money) back onto the bullies who gave it to them, in exchange for their very valuable real estate. Talk about all the bullies getting the unfortinate luck they tried to dish out the others coming back and biting them very hard in the bum)
"For the needy will not always be forgotten" (Hint- India and China)
"Put them in fear, O Lord: that the nations may know themselves to be BUT MEN" (Hint- for so long some people thought they were some kind of super heroes)