Where is the Dow & others heading in 2005?

[macbonzo]

Rational markets are a myth. Don't forget, the mean expectation (among banks) for the year end Dow value is 11500. Is this likely? I don't think so.

Once the average US consumer sees that the value of his property is falling and that the cost of gas is playing an increasingly large part in his weekly budget, the wealth effect will dictate his spending decisions. This is also assuming that there are no more exogeneous shocks - hurricanes, earthquakes, terrorism.

 

[Racer]

Has that stopped the FTSE from going higher? Oil is now at record here with increased taxes on it with VAT on total amount, so oil is a boom to the government,, housing been going down, consumer cutting down a lot, water, electricity council tax going up way above 'inflation'...

Companies taking over each other with all the cash they have,, you can't short them in case you get hit by a rumour!

 

[mickandpete]

Did that mean average year end Dow value take into account $70 Oil??????

 

[Racer]

'Over a week after making landfall, the broad economic fallout from Hurricane Katrina continues to unfold. Economists are downgrading their third quarter growth forecasts for the U.S. economy and not all think that rebuilding in the wake of the storm will bring things back in the fourth quarter. Markets have stabilized however, taking their cue from the price of oil and other refined energy products, which have been hit by a major international effort to release emergency energy reserves in an attempt to alleviate a supply crunch. Estimates of the economic loss from the hurricane exceed $100 billion, with the Senate's top Democrat putting it closer to $150 billion. '

 

[macbonzo]

Has that stopped the FTSE from going higher? Oil is now at record here with increased taxes on it with VAT on total amount, so oil is a boom to the government,, housing been going down, consumer cutting down a lot, water, electricity council tax going up way above 'inflation'...

Companies taking over each other with all the cash they have,, you can't short them in case you get hit by a rumour!

With BP and SHELL accounting for 25% of the FTSE weighting (by market cap), a high oil price has a disproportionately beneficial consequence on the FTSE. XOM, is nowhere near so influential on the Dow (although by market cap it is nearly as big as GE). If you stripped out BP and SHELL and were left with Banks, Miners and Pharmas you would have a different picture.

What will become increasingly interesting, is the costs associated with oil extraction. These costs are going up significantly. To hire a drilling rig for a day costs $400,000 (in 1990 it was $100,000). Drilling one foot on a rig on cost $284 against $80, ten years ago. Steel has more than doubled in price. Thus the cost of extracting that extra barrel of crude is going up all the time. Even after maximising economies of scale, BP, SHELL and XOM are finding it pretty tough to keep their margins up.

As far as Private Equity bids and takeover stories, I agree with you. That is why I don't trade individual stocks any more.

 

[macbonzo]

Did that mean average year end Dow value take into account $70 Oil??????

No, it was the mean predictions of investment banks at the beginning of the year.

 

[Racer]

With BP and SHELL accounting for 25% of the FTSE weighting (by market cap), a high oil price has a disproportionately beneficial consequence on the FTSE. XOM, is nowhere near so influential on the Dow (although by market cap it is nearly as big as GE). If you stripped out BP and SHELL and were left with Banks, Miners and Pharmas you would have a different picture.

What will become increasingly interesting, is the costs associated with oil extraction. These costs are going up significantly. To hire a drilling rig for a day costs $400,000 (in 1990 it was $100,000). Drilling one foot on a rig on cost $284 against $80, ten years ago. Steel has more than doubled in price. Thus the cost of extracting that extra barrel of crude is going up all the time. Even after maximising economies of scale, BP, SHELL and XOM are finding it pretty tough to keep their margins up.

As far as Private Equity bids and takeover stories, I agree with you. That is why I don't trade individual stocks any more.

Yes I agree about FTSE 100 and oils but that doesn't explain the fact that the FTSE 250 is at an all time high....

 

[mickandpete]

and their prediction for year end oil price ?????????
Unfortunately there are a lot of highly paid economists who may be looking for alternative employment at year end
Definition of an "economist"
A dealer without balls

 

[john5000]

looking at a dow daily chart,im thinking we,re at the beginning of another wave higher towards 10800ish completing a typically bearish upward sloping channel,then the big sell off.thats my guess for the medium term.this market has rode out everything including the kitchen sink being thrown at it.there has to be some more upside here first.

Yes I agree Houdini. I think that from a price action point of view 800 - 850 would be my expectation towards mid October. Thats just looking @ "where" though rather than "why"! If I was to stop & think about the "why" I'd have to say that this market from a fundamental perspective is quite the opposite to what I would expect. I suppose it's a real lesson in crowd pschology...

 

[Racer]

An interesting contrast
Won't need the diggers but need lots of wood.... I would have thought they it should be same for both


Merrill Lynch downgraded Caterpillar stock from "buy" to "neutral." The brokerage said that investors were too optimistic about the Katrina impact and that the company's shares were overvalued

Home Depot (HD) and Lowe's (LOW) will be the biggest beneficiaries of replacement demand, with lumber and panel prices likely to rise in the short term, he says. (DJH)

 

[macbonzo]

and their prediction for year end oil price ?????????
Unfortunately there are a lot of highly paid economists who may be looking for alternative employment at year end
Definition of an "economist"
A dealer without balls

A little harsh on economists. I used to be one.

Did you ever hear the one about the surgeon, architect and economist arguing about which of their professions was the oldest?

Doctor: "Well God took Adam's rib and made woman, so surgery is the oldest profession"

Architect: "Hang on a minute, God took chaos and created order, so architecture must be the oldest profession."

Economist: "Ahhh, but you are forgetting, who created chaos.................?"

 

[mickandpete]

AHHHH
PPT 6523
I see
Mmmmmm

 

[mickandpete]

I seem to recall that we had several governments who tried PPT on Sterling

 

[karmit]

Almost hilariuos DOW action today... needless to say - added to shorts - with pleasure!

 

[macbonzo]

Going back to my oil post earlier, I have just found out that, during the week ended Sept 2, the energy industry saw the greatest net insider selling in the S&P. Insiders sold $55, 855, 662 worth of stock and bought no stock.

Putting their money where their mouths are.

 

[leovirgo]

Almost hilariuos DOW action today... needless to say - added to shorts - with pleasure!

You mean shorting DOW? Is it just for tomorrow opening adjustment?
Here people are saying that the last bear should give up!

 

[twiggytwo]

Dow Bull Signals

Almost hilariuos DOW action today... needless to say - added to shorts - with pleasure!

Take care all my indicators ( Tech & Funda ) are showing a Dow BUY up to 10,633 then consolidation
regards

 

[karmit]

You mean shorting DOW? Is it just for tomorrow opening adjustment?
Here people are saying that the last bear should give up!

yes.. a special short for tomorrows open... and another one for keeps - longer term!

and yes... people might be right in saying that! - but who knows?... only time will tell!

 

[twiggytwo]

Phillip Green words /retailing

yes.. a special short for tomorrows open... and another one for keeps - longer term!

and yes... people might be right in saying that! - but who knows?... only time will tell!

Hi Karmit, remember P.G.s words People need to get in the real world !
Regards

 

[karmit]

Hi Karmit, remember P.G.s words People need to get in the real world !
Regards

Sorry?! you lost me there... who's PG?