Author Topic: general economic outlook  (Read 5881 times)

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Offline Barry Patel

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general economic outlook
« on: 24/03/2008, 11:57:14 AM »
:wave: This is just a forum to get people thinking.
So far our biggest economic problem has been the credit crunch , arising from banks not wanting to lend to each other (the inter bank interest rate is at least 2-3% higher then the Reserve bank rate .... which is a very rare event ) . The NASDAQ is down by 24% as is the ASX , But the DJ index is down by 16%.
My thoughts are that the smaller drop of the DJ is due to the big company profits not being affected yet . As the reporting season starts in july-Nov we may find the DJ  is the main one affected. This is the type of pattern it may have followed in the past .
The other point I have to make is that Till now the commodities market ( excluding food ) have had a disconnect with the rest of the markets .... until last week when we saw some of the commodities fall along with the rest of the market .
This may well have something to do with the Chinese trying to  take some control of their spot market
Any discussion ?
I guess the reason I broach this subject is I am trying to work out a timeframe in  my mind as to how long it will take for market sentiment to turnaround. For this one has to know as to what sort of economic conditions has a general effct on market sentiment .
Last year the first correction in the market in May was indicated , as gary pointed out in his EUGM , by the divergence.
The second Big drop was indicated by the number of sell signals coming through. Perhaps looking at the general economic outlook affecting the market might be an extra indicator
« Last Edit: 26/03/2008, 08:54:34 PM by Barry Patel »

Offline Dave Moran

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Re: general economic outlook
« Reply #1 on: 24/03/2008, 12:26:13 PM »
Hi Barry,

Congratulations on your first posting on this Forum. I just happened to be around when I spotted that you'd made it. Not that I have anything to add or respond to by way of discussion on the points you've made. The reaction to your observations that I've had is, "And therefore . . . . . . . . . . ????"
So I'm afraid no real contribution to "any discussion" from this little duck. Only a reply to let you know that.

Cheers  -  Dave

Offline James Oliver

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Re: general economic outlook
« Reply #2 on: 24/03/2008, 09:13:47 PM »
Hi Barry,

You have done well taking the first step on the forum.  What the future holds is uncertain, however, that most assuredly doesn't stop us from trading effectively.  Perhaps backing up your comments, all of the markets that you have referred to are in a high risk status and this means that appropriate strategies should be in place to reduce exposure to the market (as per your trading plan).  There are a number of different risk profiles within the SPA methodology that cater for circumstances such as the present.  Therefore, as trading opportunities are presented they can be taken with confidence based on the risk management and money management processes that are already established.

Even though we do not know when the markets will return to a low risk status, we need to continue to consistently execute each trade as per our trading plan (and SPA methodology).  In applying these processes our drawdown will be limited and our trading capital will be sufficiently protected to ensure that we can continue to trade into the future.

In the current market (and all markets) my definition of an effective trade, is one in which I have followed all of the rules within my trading plan to the letter ... enter when the opportunity presents, set a position size in accordance with my money management rules and exit when the exit signal occurs!!  These are the things that I control.

Regards
James.