The market is up 66.  The SFE Futures were up 72 this morning.

The Dow closed up 141 points overnight, higher for a third straight day. It was down 112 points in the morning before steadily rising be up 281, before falling back in the final hour of trade to close up 141. Still very volatile. The leaders of Germany, France and Greece held talks to discuss the eurozone debt crisis. Greece agreed to meet its deficit reduction targets in order to receive its bailout funds and it was emphasized by all that Greece is an integral part of the eurozone and they stressed the importance of keeping it in the euro. The oil price fell $1.30 to $88.91 and Gold fell $3.60 to $1826.50. The Aussie dollar fell to 102.61c from 103.15c.

Today’s main stories…

  • Myer Holdings (MYR) — Myer have shaded expectations and tell us to expect flat sales and a 10% fall in net profit in FY12 with $48m in additional costs. They described the retail environment as “extremely challenging”. They reported net profit fell to of $162.7m in the year to July 30, down from $168.7m year earlier. They announced a fully-franked final dividend of 11.5 cents. MYR up 5c to 211c.
  • Foster’s Group (FGL) CEO John Pollaers says that the company’s recent poor sales are due to increased selling prices rather than any long-term sales worries. FGL up 1.5c to 489c.
  • Qantas (QAN) will trial Apple iPads starting in October as the airline takes steps towards introducing wireless technology for in-flight entertainment. QAN up 3% to 154c.
  • Two leading economists have made submissions to the ACCC criticising key parts of the $11 billion deal between Telstra (TLS) and NBN Co saying it is “massively anti-competitive” and could have damaging effects on consumers for the next 20 years. TLS up 4c to 306c.
  • Pick n Pay, the owner of Franklins, will tell the Federal Court that Franklins may not survive unless Metcash’s (MTS) $215m offer is allowed to proceed, says the Australian Financial Review. Pick n Pay, Franklins and Metcash all are attempting to prevent the Federal Court from issuing an interim injunction that would stall the deal until an appeal is heard. MTS down 5c to 409c.
  • Downer EDI (DOW) and Clough (CLO) have won a $600m contract to build a pipeline and compression facilities for the Santos GLNG project. DOW unchanged at 319c and CLO up 1c to 74.5c.
  • Rio Tinto (RIO) said they would invest a further US$833m in major power and fuel supply projects in WA’s Pilbara region. RIO up 1.6% to 6944c.
  • Notable stocks going ex-dividend today include: Brambles (BXB – 13c), REA Group (REA – 16c), Transfield Services (TSE – 9c) and Carsales.com (CRZ – 10.5c).

STUPID QUESTION: With your system of Stop Losses (or any system) how can the stop loss be effective in a crisis when the market can drop huge amounts in a few seconds?  i.e. the ’87 crash. Hope this is not one of the ‘stupid’ questions.

REPLY: No question is stupid … you’re right … if there is a Crash, or a “Gap” in the market all the stop losses are useless, because they are set on a “best endeavours” rather than a guaranteed basis. So if prices Crash … and you wake up to a price 10% lower and below your stop loss, you’ve missed it and you have to decide what to do now. Take a free trial at Marcus Today to read about the 1987 Crash, how stop losses perform in a Crash and whether the conditions are there for a Crash in our market.

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