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Market low a November tradition

THE reality of weak economic growth and the realisation of weak earnings has cast a cloud over the US markets after recent weeks of market enthusiasm. All indices closed Tuesday sharply lower, with a focus on key data in the US this week, with third quarter GDP likely to fall, a drop in jobs and sharply higher unemployment all undermining confidence.

The Dow Jones closed down 275 points, or 2.9 per cent, as investors became pessimistic about the near future. Weak readings are also expected from the NAPM manufacturing survey for October on Thursday and the October payrolls report on Friday.

US markets had rallied strongly in recent weeks in defiance of weak economic readings and earnings reports. The trend now is fundamentally negative and a double bottom is still a distinct possibility.

On average, November has been the low in the market for the past 10 years. The Australian equities market has gone down in seven out of the past 10 Novembers and has gone up in eight out of the past 10 Decembers. This substantiates the belief it is a good bet that the market will correct this November, giving Australian investors a buyable correction to the strong advance we have had in recent weeks.

With an Australian 10-year bond yield of 5.4 per cent and September earnings estimated at fair value of the ASX 200 of about 3520 points, Australia has the highest economic growth in the OECD. This means that the earnings per share of Australian companies are continuing to grow in a healthy, but not spectacular, fashion. If current trends continue, fair value for the ASX 200 will be hundreds of points higher in six months’ time than it is now. On stock market fun-damental and seasonal grounds, November should prove a good month to buy.

Dolomatrix International Ltd

Dolomatrix International Ltd, is a waste treatment technology group that is providing unique solutions to industry with a cost-effective treatment of contaminated soils and other hazardous wastes. The core patented technology, Dolocrete is a cement-type product that soaks up hazardous waste, and the final, benign, product can be used as land fill or road base.

The company was formerly known as Phoenix Mining and relisted after a 20 cents capital raising in July. The company raised $3 million to private investors to finalise the investment in Dolomatrix International, and the shares have traded within a range of between 14 cents and 25 cents per share.

Dolomatrix announced on Monday a strategic alliance has been entered into with leading waste management company Cleanaway, a division of Brambles Industries, to treat hazardous wastes with the Dolocrete Encapsulation Technology in NSW. Under the terms of the agreement, both companies will promote the brand Cleanaway in association with Dolomatrix as a waste treatment system for inorganic non-liquid hazardous waste material. The agreement also gives the company a global outlook. The technology allows Dolomatrix to seek a 40 per cent margin on prospective profits, as the costs associated with treating the waste are not prohibitive. The profit margin is an attractive advantage for Dolomatrix, as is its aggressive contract marketing. The shares are currently trading at 24 cents, and more announcements are expected over the next two months.

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