The market is up 54. The SFE Futures were up 72 this morning.

The Dow Jones closed up 423 overnight for the fourth straight day of 400+ point swings (it’s been -635 +430 -519 +423). Claims for unemployment benefits were lower than expected. Cisco Systems reported better than expected results. Commodities were higher – copper up 3.3%, nickel up 3.0%. The oil price was up 3.4% to $85.72, while gold fell from its record high to $1749.90. The A$ is buying 103.09c up from 101.40c yesterday.

In the news today…

  • BlueScope Steel (BSL) said its full year profit will be hit by a $900m writedown in the value of some of its assets due to economic challenges including a strong Australian dollar, high raw materials costs and low product prices. BSL down 3.6%.
  • Westfield Group (WDC) announced an agreement to acquire a 50% interest in a major development site in Milan, Italy. WDC up 1c to 757c.
  • Peabody Energy says it’s obtained FIRB approval for its $15.50 per share bid for Macarthur Coal (MCC). Macarthur has advised shareholders to take no action and that they are talking to other interested parties about possible bids. MCC up 1.7%.
  • SABMiller is believed to be assembling a bank group for a multi-billion-dollar syndicated loan to back a slightly higher bid for Foster’s Group (FGL) than its $4.90 per share bid in June. FGL up 3c to 491c.
  • Sedgman (SDM) has been awarded a $22.5m contract for improvements at the Coal Handling and Preparation Plant at the Bowen Basin’s Middlemount Coal Mine. SDM up 6.5%.
  • Pharmaxis (PXS) has reported a loss of $45.758m in the year to June 30, down from -$46.345m the prior year as it reduced operating expenses. Revenue fell 17% to $4.458m. The company will pay no final dividend. PXS down 2.7%.
  • Duet Group (DUE) has received final regulatory approval for its Duquense sale which is expected to be completed in September. The company will use the proceeds to pay down debt. DUE up 1c to 157c.
  • The Australian Financial Review has reported that Chi-X may be forced to delay its Australian launch beyond the planned November start date, as ASX Ltd (ASX) plans to move its share market data operations to a new location around the same time.  ASX up 2%.
  • Commonwealth Bank (CBA) — is ex dividend 188c (fully franked) on Monday so today is the last day you can buy it before it goes ex dividend. CBA up 47c to 4901c. Telstra ex dividend 14c on 22 August.

Comment from a subscriber: “So I followed the example of Marcus Today and on 4th, 5th and 8th August I sold all my portfolio. Yes, I felt sort of cleansed, and perhaps safe(er). But I now find myself cursing (quietly) when there is a bounce and cheering (inside) when everything crashes again.” I imagine there are a few people thinking the same. So here’s the reply in bullet points:

  • The view we have taken is that there is no bull market.
  • Until there is a good excuse for a bull market we are going to be left trading individual stocks when we have an idea — but we are not “all in”.
  • We are protecting ourselves from the higher odds outcome — a fall.
  • That view comes from an assessment of the US (broke), Europe (potential for another blow up every night), the global economic recovery (stalling) and what that would do to China (take the froth off the story).
  • The market is currently a casino, the volatility is unprecedented. When it goes up no-one knows why so on what basis are you going to agonise over missing out.
  • The only people that could find a basis to buy now are the value people….but even they will tell you they profess no timing skills and rely on ‘faith’ in their numbers (which may be flawed) and hope that the sentiment doesn’t dominate their value calculation for long (which it can).
  • The stock market is now a low quality place to put your future and there is more risk on the downside than upside. There are a lot of things that need sorting out before we can regain confidence.
  • If you are going to anguish over the next and last 24 hours … you are missing the point. The point is that being in the market now is putting yourself at risk for a completely unknown and unguaranteed return.
  • If there was a sound analysable basis for the market going up … you can get fidgety, agonise and judge. But whilst there isn’t it’s luck and you have no more reason to agonise, even watch, than you have to watch a roulette table. If people win, good on them, but don’t mistake it for good judgement, they took the bet and we should be happy and wave as they go past in their Ferrari … just as we’d have no sympathy for them when they lose. Same as the people coming out of the casino.
  • The equity market is offering a random return and my assessment is not so much that we won’t make money, but that we run a serious risk of seeing a long term bear market which may only just have started. There is every reason to believe that and no reason not to.

For a free 5 day obligation FREE TRIAL of the MARCUS TODAY newsletter Click Here. You will receive our renowned and popular Daily email about the stockmarket with all the stuff you need to know ahead of the trading day including:

  • Overnight developments, news, comments, rumours, broker recommendations and ideas from Marcus and his Team.
  • Our Recommended Portfolio which is actively managed on behalf of subscribers …no “set & forget”. Everything you need to effortlessly managed your own long term investment portfolio. It includes Income Portfolio recommendations.
  • Daily Technical Trading ideas and data, including daily scans of the ASX 300 for stocks changing trend.
  • Stock Database – all the numbers with comments on the top 300 stocks and more.
  • Educational section – Marcus’s Educational and Entertaining articles.

We also offer a FREE END OF DAY EMAIL — Click here — A free summary of the day in the market.

Subscribe to MARCUS TODAY — Click Here. We are sure you will enjoy and profit from what we offer…we have one of the highest re-subscription rates in the financial newsletter industry