This is a News letter from the desk of Nigel Hawkes founder of Hawkeye Traders, Home of Volume Spread Analysis, http://www.HawkeyeTraders.com . If you are a trader on Stocks, Commodities, Futures, Forex please read this article carefully. The text below arrived in my in box today from money week (www.moneyweek.com) which sums up where we are and a dire warning for the British economy. "Some 8,000 hedge funds with more than $1.7 trillion in assets are "being caught in a vicious cycle". The problem lies in the mix of plunging markets and massive de- leveraging, i.e. paying down debt, across the financial system. Over the three months to September, another $179 billion was wiped off the value of hedge fund assets by falling asset prices, according to Hedge Fund Research. Spooked by the market falls, and keen to have ready cash at hand, investors have been pulling their money out at a rapid rate, with almost $31 billion being withdrawn over the quarter – which means hedgies need to sell more assets to repay clients. On top of this, as markets fall, lenders are also cutting credit lines to their hedge fund customers or are making 'margin calls', i.e. demanding that those funds come up with extra cash to back up their borrowings. And as if that wasn't enough, the Lehman Brothers bankruptcy is still tying up tens of billions of dollars-worth of hedge fund assets. Lots of money managers had "parked" cash and other securities at the investment bank's prime brokerage operation. But these accounts are now frozen. But it's about to get even worse... That's more than enough bad news for any industry to cope with. But it's about to get even worse. As many as 30% of hedge funds will be shutting up shop "in a Darwinian process", says Emmanuel Roman at GLF Partners, and the US authorities will force-feed regulation onto the rest: "there need to be scapegoats, and they are going to go hunt people". That will make business even harder, and lead to even more forced selling. In London, out of 450 hedge funds, more than 100 could be at risk, says Miles Costello in The Times. New York Professor Nouriel Roubini, who has been spot on about how bad things were going to get, agrees that hundreds of hedge funds will fail. "We've reached a situation of sheer panic. Yet I fear the worst is ahead of us. Don't be surprised if policy makers need to close down markets for a week or two in coming days". This is pretty apocalyptic stuff. But the cavalry isn't about to appear over the horizon. US Treasury Secretary Henry Paulson confirmed to Bloomberg yesterday that unregulated firms like hedge funds won't initially get government aid as "we're focused on regulated financial institutions." So "you can argue that it could be worse than Wall Street because no one is coming in to save the hedge funds", says Hank Higdon at Higdon Partners. Why you shouldn't go bargain hunting just yet? What does this mean for the ordinary investor? Well, because of the hedgie effect, share prices could easily fall some way further than anyone expects. "The market's going to overshoot on the downside", says Peter Boockvar at Miller Tabak, who sees the Dow tumbling to 5,000 next year, more than 40% below today. "When that occurs, I'll be a raging bull". So it's a brave man, or woman, however contrarian, who's prepared to dip more than a very small toe in the market with the hedge funds in forced sale mode for some time to come. We certainly wouldn't be buying any tracker funds Britain's going bust - AGAIN! In 1976 our leaders' mismanagement of the economy slashed the wealth of every Briton in this country. Inflation soared... taxes skyrocketed... sterling nosedived... It forced us to go cap-in-hand to the International Monetary Fund for a £2.3 billion "bailout" loan... OR GO BANKRUPT. Never since has Britain been so close to going bust – UNTIL NOW". For all users who have attended a Hawkeye seminar or trade following the Hawkeye method, you can clearly see that you could not have bought stocks since June 20, 2007, when the trend came out of congestion to the down side. Daily chart for all traders who trade "Road-Kill" another great call down on the daily on 4 September 2008. Even if you missed the weekly the monthly has been short since February 2008. So where to now? Well! There can be no bottom buying if you follow Hawkeye. Preservation of capital is paramount and being a trend following system, we will have to wait till the Weekly HeatMap goes dark green and the Daily HeatMap goes bright green before we consider going long. That will take some time and there will be wild moves both up and down but until the market becomes efficient and volatility subsides. Stand aside -- go trading in other markets, i.e. Forex and Commodities.
Scalpers please unless you are an experienced trader and also well capitalized stand aside! If you are undercapitalized you could be wiped out with these huge intra bar moves. VOLUME It is common for violent down moves to end with a selling climax (wide bar heavy volume with the close of that bar in the top third of the range ) followed by bars of above average volume on a narrow range bar. This shows accumulation. However, with such a violent move down as we have now there will be, I suspect, many whipsaw days until volume establishes price. The present move is orderly regarding volume. You will see, when a bottom arrives, there will be very large volume for several days on narrow range bars -- indicating accumulation taking place. Please be patient there will be many opportunities. http://www.HawkeyeTraders.com --~--~---------~--~----~------------~-------~--~----~ You received this message because you are subscribed to the Google Groups "Investors Club Dubai" group. To post to this group, send email to investors-club-dubai@googlegroups.com To unsubscribe from this group, send email to [EMAIL PROTECTED] For more options, visit this group at http://groups.google.com/group/investors-club-dubai?hl=en -~----------~----~----~----~------~----~------~--~---
