Market Perspective. [Archive] - Sharetrader Forum

Phaedrus

30-08-2007, 12:56 PM

My take on the situation.
There has been a lot of discussion about the current market situation. People are talking about the "crash", "blood on the floor", "carnage" etc.
A 6% drop is a "meltdown", and a rise of similar size becomes "the biggest rally since 1974". Small wonder that some newer posters see this normal volatility as a white-knuckle roller-coaster ride! It would appear that many of you here have no contingency plan in place to manage this level of volatility - let alone a genuine market reversal!

What, then, is the reality of the situation? Firstly, the market is still in a long-term uptrend. There has been a 10% retracement from the recent highs. Over the 5 year course of the current uptrend, there have been several retracements of this magnitude. While a retracement of 10% is quite "normal", it is nevertheless significant, and should not be ignored. To "ride out" such a drop would see you taking meaningful losses.

http://h1.ripway.com/Phaedrus/NZ50830.gif

So, what to do? Here is a simplified chart of the NZSX50 Index. You can see that the 10% Trailing Stop is unbroken, and that, while the market is rising, we are still in a "Caution" zone. To me, this generally means "tighten up all stops and no buying". You can see from the chart that this system has you buying back at a lower level (green dot) than that at which the restriction was imposed (red dot). Keep in mind that this is the Index, an average. Individual stocks will have moved up/down by a lot more, making it relatively easy to buy back in at a lower price than you exited at. (Examples attached). Most importantly, you have insulated yourself from the possibility of on-going losses should the market continue to fall. If further drops do not eventuate, this "insurance policy" will have cost you nothing and in fact you have made money out of a fall in the market.

What buying opportunities should you look for ?
You want a fundamentally sound stock that is in a "long-term" uptrend. You want it to have been in a "medium-term" downtrend of reasonable magnitude. You want that downtrend to have clearly ended. Here are 16 possible/potential examples of such stocks. This selection is not meant to be definitive. There are many suitable stocks that are not shown. Some of the stocks shown may not meet your fundamental criteria. Some stocks are not there because they have not fallen enough (FBU, FRE). Others are not there because they are in long-term downtrends (TEL, RBD etc).
http://h1.ripway.com/Phaedrus/Comp830.gif

All of these stocks were in clear uptrends, that ended. Any trend-following system would have got you out before you gave too much of your gains back to the market. Some of these stocks have fallen over 30% since then. Many are still falling. This composite chart shows that there is no need to panic over getting back in and that there are plenty of good buying opportunities coming up. Wait for evidence of a reversal before jumping in. There is no hurry and a few cents will make no difference in the long run. If in doubt, wait.

Arbitrage

30-08-2007, 01:29 PM

Do you have any comment on the use of the NZX50 index for plots to determine the market direction when a stock like Telecom, which is on a downtrend, has such a significant weighting?

ratkin

30-08-2007, 01:37 PM

Your areas of caution provide great buying opportunities. Those of us who were buying during the panic have been well rewarded.

Didnt they teach you about buy in gloom and sell in boom at your school?

foodee

30-08-2007, 01:39 PM

Phaedrus
Ta for a 'fact of the matter' post.
As stated elsewhere I am still 80% cash (call me timid if it pleases).
Of the 16 cos illustrated, I only have EBO(in trading halt) - and that has been sold down to free carry for sometime.
Reporting times have been positive but with the economic climate changing will they be as good in 12 months time?

Looking forward to your 'out of caution mode' chart.

cheers

ps Also hold NZO

Reihana

30-08-2007, 01:43 PM

Thanks for putting in the effort there Phaedrus, much appreciated.

Placebo

30-08-2007, 02:26 PM

To me, this generally means "tighten up all stops and no buying". **

**unless the stock is FPH ;)

(how do you insert quotes in this new layout??)

ratkin

30-08-2007, 05:41 PM

On a serious note , i dont really understand why you feel the need for this caution period, after all the momentum indicator is really only telling us what we already know , ie that the market is going up or down.

If your overall system is good, which im sure it is then why not act on any buy signals given during this cautionary period? I would of thought that any stock which moved into an uptrend and gave off your buy signals would of been an especially strong beast to be doing this when the market was in panic mode.

After all its not as if the market is going to be miraculously safer once your little momentum indicator rises back to your safety zone. In a few days no doubt your cautionary zone will finish but the market will be just as dangerous a place, perhaps even more so as prices will be higher than at the height of the panic

By using this cautionary zone you may think you are protecting yourself from losing your money like you did in 1987 but your overall system should do that anyway, meanwhile you would be able to benefit from the panic rather than be sitting on the sidelines waiting.

Footsie

30-08-2007, 09:14 PM

Hi Phaedrus

Thanks for the post
Are you able to complete a similar one for the ASX200.

Of interest. One stock i follow got sold down from 1.55 to 1.17 in 5 days.
Now 14 days later it is trading 1.70.
Thats a rally of 45% from its low...... so whilst caution should be observed.... at those extreme times it often worth wading in

Phaedrus

02-09-2007, 08:53 PM

i dont really understand why you feel the need for this caution period.
The aim is to minimise risk. Take a look at the chart again. Every time the Index has dropped more than 5% , it has carried on falling until it was down about 10%. So long as the current longterm uptrend continues we "expect" it to stop falling at this level, but one of these days it WILL drop further and those caught buying too soon into early weakness will go with it.

"............the momentum indicator is really only telling us what we already know , ie that the market is going up or down."
It's telling us rather more than that. In its purest form, momentum is positive (bullish) when a centered oscillator like this is trading above its center line and negative (bearish) when the oscillator is trading below its center line. What's more, you can see that it has been surprisingly accurate and useful over the years.

"If your overall system is good, which im sure it is then why not act on any buy signals given during this cautionary period?"
The whole idea is to do all you can to maximise the odds of any given trade being profitable. Buy signals triggered when the market is falling are much less reliable than those triggered when the market is rising. There will always be exceptions, but as a general rule it pays to stand aside when the market is falling.

"I would of thought that any stock which moved into an uptrend and gave off your buy signals would of been an especially strong beast to be doing this when the market was in panic mode".
FPH did exactly that, but it too has been affected by overall market sentiment. The market is bigger and stronger than any individual stock.

"After all its not as if the market is going to be miraculously safer once your little momentum indicator rises back to your safety zone".
Quite wrong! A market with positive momentum is MUCH more likely to go up than one with negative momentum. The proof of this is right there on the chart. Rest assured Ratkin, when (not if) this Bull market ends, the reversal WILL be preceded by negative momentum. If you buy-up large every time market momentum falls, you guarantee your full participation in any major retracement or crash.

"By using this cautionary zone you may think you are protecting yourself from losing your money like you did in 1987....."
Such a system will largely protect me from a major crash. That's what it is for. My 1987 losses were directly caused by my snapping up what appeared to be "bargains" presented by the falling market. I developed this system to stop premature re-entry of that type.

".......but your overall system should do that anyway".
I have explained many times how my trend-following systems worked superbly with the individual stocks that I was holding, getting me out of each and every one of them as their uptrends weakened and ended. The mistake that I and many others made was to then "reinvest" in the very first "sucker rally" that came along.

"...meanwhile you would be able to benefit from the panic rather than be sitting on the sidelines waiting."
But Ratkin, that's exactly how you benefit from corrections like this one. You sit on the sidelines waiting while good stocks get beaten down because of the negative overall market sentiment. Sooner or later the market will turn and these stocks will begin to rise again. That's the time to buy. I even gave you 16 potential examples of such stocks. Most of these are still in downtrends, yet you speak of those still holding cash as having missed out on the "rally of a lifetime"!!!

There are quite a number of knowledgable, experienced and competent investors that post here on ST, Ratkin. They include the likes of Halebop, Winner69, KW, Warthog and many others. You can learn a lot from such people. Many of these saw fit to take a significant proportion of their money off the table when the markets weakened. You describe such prudent action as that of "nervous ninnys".

The joke here is that you too are deliberately holding cash, stating quite clearly "Am not going to buy anything if the market recovers for fear it just a bounce", yet you feel free to belittle the same approach when it is taken by more experienced, more prudent operators!

Phaedrus

02-09-2007, 09:23 PM

Do you have any comment on the use of the NZX50 index for plots to determine the market direction when a stock like Telecom, which is on a downtrend, has such a significant weighting?
I guess I would prefer to use an Index with a lower TEL weighting, but you have to work with what is available. At a practical level, it doesn't seem to matter much. For example, had I used the "NZSX All" Index, the plot is very similar and the two Momentum oscillators are indistinguishable. I have had similar discussions with people over the use of the Dow30 vs the S&P500 for the US market. There is surprisingly little difference for most systems.

duncan macgregor

03-09-2007, 07:15 AM

PHAEDRUS, It is quite easy using charts of one sort or another to predict the short term price direction of a share. I shall give you an example in advance of the event in todays market on the ASX. Most nickel miners will rise about 2% today. AGM, SMY,MCR, AUZ.
Lets see if that lot do as i predict for today. The companies mentioned follow the price chart for nickel very closely which makes it very simple to know when to buy and sell.
Nickel doubled in price this year, then dropped right back, now its taking off again. I raise my stop loss right up if the nickel chart starts to drop, and lower it when it rises. Nickel was up over 9% last week trending back up, the DOW finished on a high. Other than a major event interupting the normal market movements, its money in the bank today with that lot. Macdunk

uberspec

03-09-2007, 09:38 AM

well said Phaedrus!!!

Dr_Who

03-09-2007, 10:45 AM

Great graphs. I may buy he index next time. :)

03-09-2007, 01:28 PM

Yup, one only needs to have a look at the NZX share contest to see how badly I'd be doing if I hadnt sold up earlier in the year :-)

Although I am considering re-entering RYM.

ratkin

03-09-2007, 01:53 PM

Placebo

03-09-2007, 02:06 PM

Having your arguments dismembered in public can be painful, eh Rattie :confused:

duncan macgregor

03-09-2007, 02:11 PM

As usual Mr P you reply to one of my posts in a "i know everything , you know nothing manner"

Might i suggest you reign in your ego a little, im sure im not the only one who finds your attitude rather irritating. COM-ON RATKIN dont get ratty. PHAEDRUS gives us his opinion which most people appreciate. I bet you would like to be as good chartwise as he is. Dont pick on the messenger have a go at the message. Where do you think he is wrong and you are right?. I am an ego driven got to win at everything myself person, look at the predictions i make you would think i was Jesus Christ reincarnated the way i risk getting egg all over my face. Whats your beef man is PHAEDRUS wrong or dont you like being told you are. Come out and tell us why you are so ratty. Macdunk

Shrewd Crude

03-09-2007, 02:21 PM

Phaedrus,
You do an awesome job posting on these threads... I appreciate what you do..... you have a skill that everyone wants, thats for sure...
...
Ive known how important charting is, Ive just been to lazy to do anything about it... I'm taking on Mackdadunks advice and im going to expand on my "condensed thinking"....
big ups to you Phaedrus...
:cool:
.^sc

QOH

03-09-2007, 03:59 PM

I appreciate your charts too.

mibo

03-09-2007, 04:03 PM

I appreciate your charts too.

Me too. I appreciate your detailed analysis and have learn't a lot from it.:D

JackSprat

03-09-2007, 04:34 PM

But then from a rats point of view if you can see the cheese without going through the maze then what the hell -

In my case I hesitated from grabbing some cheese today despite McDunk's prediction after reading Phaedreus deductions and now have to re-think it all again.

Glendoonie

03-09-2007, 05:25 PM

Me too. I appreciate your detailed analysis and have learn't a lot from it.:D
I SO like your style, Phaedrus. Your TA appeals very much to my non-FA nature. I read your posts with great interest. Thank you for sharing your TA inspired predictions.

Year of the Tiger

03-09-2007, 05:41 PM

As usual Mr P you reply to one of my posts in a "i know everything , you know nothing manner"

Might i suggest you reign in your ego a little, im sure im not the only one who finds your attitude rather irritating.

Actually, I quite like it when someone is prepared to stand up and be strong in supporting their beliefs and are not afraid of criticism. It makes a nice change... :)

IMO, there are too many wafflers who will change sides of a debate when the going gets a bit sticky. :rolleyes:

Good onya Phaedrus. You have obviously put in mountains of time to learn all you know about TA, charting etc and I am ones of those who appreciate your sharing of this knowledge with the likes of me (and many others) who doesn't have the time (or the brains) to do the hard yards myself.

So a big THANK YOU from me.

Cheers
YOTT

tsb

03-09-2007, 05:59 PM

yes - thanks Phaedrus - us dart thowers need all the help we can get

dumbass

03-09-2007, 06:05 PM

hi phaedrus , i would like to cordially invite you to the forex site , we tend to be a more respectful bunch and from what i have seen not a flat earther in sight. if you do trade currencies , i guarantee your charts would be appreciated and you can be as righteous and condescending as you want.

macduffy

03-09-2007, 06:23 PM

Phaedrus, go forexing if you must but please also stay with NZX/ASX charts!!!

upside_umop

03-09-2007, 06:57 PM

yeah thanks phaedrus, very useful, and prompted me to start looking at charts a bit more.
yes, i was the 'new' poster, posting about 'market meltdown?' and i wasnt the only one thinking about it. as seen from your chart, and a longer chart, it was the steepest loss in a long time. you can see the rebound - when the fed announced the discount rate, and since then momentum has shot back up?
can you update us with a new chart to see if its back out of the 'caution level.'
also, what are your other favourite indicators you use?
cheers.

JackSprat

03-09-2007, 07:41 PM

Phaedrus, thanks for your charts. So that I am reading them right and going on the nzx50 chart you supplied the re-entry point in the cautionary area is approaching and would be around the 4200 index mark? And the most likely listings in your example EBO, CPG, and PPG would be the companies out of those shown to follow as they all seem to be having an uptrend after some steepish falls compared to the other examples that are still falling or remaining flat.

PS: Just trying to figure if I'm reading things right?

Cheers :confused:

777

03-09-2007, 08:34 PM

Jack I think you will do better with GPG rather than CPG. No one has listed that yet.

MoSteph

03-09-2007, 08:52 PM

It seems you have been elevated to a celestial level. As we know it's all about timing, and now is the opportune moment to get Tom Cruise on side and start Phaedrology.

Phaedrus

04-09-2007, 10:50 AM

Thanks for the supportive comments people, but let's keep this thing in perspective.
(1) The approach that I have posted here is not new.
(2) It is not original.
(3) It is commonly used by many others, here and everywhere else.
(4) It claims no predictive powers.
The whole thing is based on the idea of modulating your buy/hold/sell decisions by reference to something bigger and perhaps less volatile than price action of the stock itself. Here I have used the NZSX50 Index. Duncan is using the same principle when he bases some of his decisions on the nickel chart, rather than an individual stock. KW's nicely timed exit from the market was based solely on Index movements.

I get requests for "the same thing as this but for the Aus market" and have occasionally posted an equivalent chart using the Aus All Ords Index. To my mind, however, there are better measures available for this purpose. With a relatively big and very diversified market like the ASX, the overall average might show nothing of any great import, but within that, one sector might be booming, but weakness in another sector might offset this and mask it. The NZ market is too small for us to have useful sector indices, but there are plenty of ASX sector indices freely available. For example, Duncan could well find that his needs are better met by using the XMJ materials index or the XMM metals and mining index rather than nickel. Certainly that would be my choice. Take a look at a 6 month chart of either of these indices and it is very obvious when it paid to be in such stocks and when it paid you to stand aside. The trends are much simpler, clearer and generally lack the premature "sucker rallies" that are found much more often in individual stocks.There is no need to add other indicators, trendlines, etc but if you did, these could be used to set-up "caution" zones in exactly the same way as I have done here with the NZSX50. Zones in which it paid you to ignore buy signals triggered by individual stock price movement.
For these purposes, an appropriate specific index will beat a general, non-specific index every time. You still need the "big" indices though, to keep an eye on the big picture.

Signals generated from indices can also be applied directly to stock trades. You can profitably trade stocks such as CBA by using signals derived solely from the banking Index, rather than the stock itself, for example. Certainly you wouldn't want to buy/hold/sell any banking stock without being aware of what the XFJ was doing.

Placebo

04-09-2007, 10:55 AM

duncan macgregor

04-09-2007, 11:16 AM

Please change the title of this thread, it is no longer relevant. Perhaps something like "The Phaedrus and TA Love-in" ;)

Anyone seen Ratty lately? Or is that him featuring in the new Pixar movie?? :) PLACEBO, C-MON mate you are bigger than that. Surely we can all have an objective look at investment methods without reverting to school yard bickering. Phaedrus says it as he sees it, he also has given people ideas over the years to come up with improving their investing risk. If you dont agree say what parts you dont agree with, and leave it at that.
If you are a FA investor then no worries the TA people cant live in the market without you.
I have had good goes at SNOOPY and PHAEDRUS over the years but i feel sure none of it ever was personal we only attacked the message not the messenger. Macdunk

04-09-2007, 01:37 PM

The relationship between FA and TA is symbiotic. FA traders create the original momentum for a trend to reverse as they decide a company has become undervalued and begin to buy. That momentum shift is picked up by TA traders who come in and carry the stock along on its uptrend. Then FA traders decide the stock is now overvalued and begin selling, thus putting the trend in reverse. Again TA traders see the shift and begin to sell, sending the stock into a downtrend.

So, FA are in early, and out early. TA traders are in later, and out later. Its the suckers who dont follow either that get their fingers burnt by being in last, and out last.

Personally, I use FA to identify undervalued stocks (and industry sectors) with good prospects, and overvalued stocks with declining prospects. And then I apply TA to decide whether I should buy (stock beginning to uptrend) or sell them (stock entering a downtrend and breaching stop loss positions).

My current portfolio is now mainly based on stocks with P/Es around 10-15 and average div yields of about 4%. My old portfolio (that I sold) in comparison had P/Es of 20-30 (some in the 40's and 90's) and div yields of 1.5%.

Yahoo Finance does good charts for the ASX industry sectors - its under ASX indices section.

ratkin

06-09-2007, 01:33 PM

Ratkin.......... "After all its not as if the market is going to be miraculously safer once your little momentum indicator rises back to your safety zone".

Mr P ..........Quite wrong! A market with positive momentum is MUCH more likely to go up than one with negative momentum. The proof of this is right there on the chart. Rest assured Ratkin, when (not if) this Bull market ends, the reversal WILL be preceded by negative momentum. If you buy-up large every time market momentum falls, you guarantee your full participation in any major retracement or crash.

I still dont see why the market is safer now than it was a few days ago.
It clearly isnt despite what your squiggly little momentum indicator tells you.
All the pontificating in the world isnt going to alter the fact that markets are in just as much danger as they were last week.

Phaedrus

06-09-2007, 02:48 PM

duncan macgregor

06-09-2007, 03:20 PM

RATKIN, Sorry to keep picking on you mate, but i went fishing this morning at 7am. The reason i went fishing was i knew in advance that your shares, my shares, and PHAEDRUSES shares, were all going to drop in value today. Being a trader i thought i will lose today as much as it will cost me to sell and buy back tomorrow. I go by what happened in overseas markets and commodoty prices over night, and come up with almost 100% correct prediction of my sp levels. I know you have never tried this by your posts, but being such good mates give it a go. Charts are only yesterdays share prices without the numbers, dont get mad at numbers, find out what creates the numbers.
I will give you a real life TA against FA that i did and broadcast in advance to all and sundry in advance of the event for a comparison. AGM nickel miner ASX. investor account Bought in jan2007 at 59c sold half at $1-05 left half in and stuck them under the bed at virtually no cost. Todays price is 63.5c. Trading account pays tax gets brokers fees deducted etc etc you know what i mean. Bought AGM at 59c sold at $1-05 bought at 70c sold at 80c bought at 70c bought at 65c bought at 59c with an average of todays price. Ratkin if i was a buy and hold i know best investor, my investment account would be at the level of me bleating on about dividends, [which they were none].
Trading requires skills that PHAEDRUS demonstrates in his charts. I suspect he is not as good looking as you or me, but dont knock it until you try it. Macdunk

ratkin

06-09-2007, 03:52 PM

duncan macgregor

06-09-2007, 04:13 PM

I despair also , because you cannot or will not acknowledge that the markets are just as risky today as they were last week when in your caution zone.

Forget your crayons and colouring books and just look at the overall picture, nothing much in the world has changed since last week that will make it safe or unsafer to invest.

I also did not say the markets are in danger as such , i am merely pointing out that the level of danger has not changed since your momentum indicator said it was now safe to invest.

I dont agree with you that your caution technique is necesarily worthwhile, may suit you , but for you to say it is the best is foolish , you are a trader / investor like everybody else and although your disciples may have given you godlike status i for one dont accept everything you say as gospel RATKIN , Well said we all make mistakes even your good self no doubt. The idea is to broaden your vision to see mistakes in the making. By looking over past mistakes in hindesight might prevent future mistakes in foresight.
I know you will agree with that, as what happened in the past is very likely to happen in the future. I went fishing as stated nothing at all to do wqith companies or FA proceedures i just knew 100pc certain that it is a bad day on the market. I lay odds that most of whatever shares you have lost money today as i predicted to myself before the market opened. I DID IT WITH STUPID CHARTS RATKIN ASK ME TOMORROW AND I WILL TELL YOU AGAIN WHAT WILL HAPPEN BEFORE IT OPENS. Macdunk

Oiler

06-09-2007, 05:24 PM

RATKIN , Well said we all make mistakes even your good self no doubt. The idea is to broaden your vision to see mistakes in the making. By looking over past mistakes in hindesight might prevent future mistakes in foresight.
I know you will agree with that, as what happened in the past is very likely to happen in the future. I went fishing as stated nothing at all to do wqith companies or FA proceedures i just knew 100pc certain that it is a bad day on the market. I lay odds that most of whatever shares you have lost money today as i predicted to myself before the market opened. I DID IT WITH STUPID CHARTS RATKIN ASK ME TOMORROW AND I WILL TELL YOU AGAIN WHAT WILL HAPPEN BEFORE IT OPENS. Macdunk

Come on me ole mate...... are you getting ratty with Ratkin ? :D

The sun will come up tomorrow and the market will do its thing and life goes on. If the moon is right Macdunk will go fishing "again"

You may even get a sneak preview of what the market will do tomorrow before you go bed tonight...:rolleyes:

ratkin

06-09-2007, 06:21 PM

RATKIN , Well said we all make mistakes even your good self no doubt. The idea is to broaden your vision to see mistakes in the making. By looking over past mistakes in hindesight might prevent future mistakes in foresight.

Ahh that wonderful gift of hindsight, the gift that enables Mr P to draw such perfect charts.
Here are a couple of quotes that are very relelvent to charts which are drawn a week or so after they have given signals

"Hindsight is of little value in the decision-making process. It distorts our memory for events that occurred at the time of the decision so that the actual consequence seems to have been a "foregone conclusion." Thus, it may be difficult to learn from our mistakes."

"Hindsight is not necessarily the best guide to understanding what really happened. The past is often as distorted by hindsight as it is clarified by it."

AMOS ELON

macduffy

06-09-2007, 06:25 PM

Ahh that wonderful gift of hindsight, the gift that enables Mr P to draw such perfect charts.
Here are a couple of quotes that are very relelvent to charts which are drawn a week or so after they have given signals

"Hindsight is of little value in the decision-making process. It distorts our memory for events that occurred at the time of the decision so that the actual consequence seems to have been a "foregone conclusion." Thus, it may be difficult to learn from our mistakes."

"Hindsight is not necessarily the best guide to understanding what really happened. The past is often as distorted by hindsight as it is clarified by it."

AMOS ELON

I never believed anything Amos Elon said.

duncan macgregor

06-09-2007, 06:30 PM

ratkin

06-09-2007, 06:33 PM

duncan macgregor

06-09-2007, 06:44 PM

here is another one

" Reality looks much more obvious in hindsight than in foresight. People who experience hindsight bias misapply current hindsight to past foresight. They perceive events that occurred to have been more predictable before the fact than was actually the case."

HERSH SHEFRIN, Finance and the Psychology of Investing

This is the reason i sometimes get a little peeved when Mr P turns up on a thread , draws a nice chart which clearly shows why everybody should of sold one week previously.
Its insulting to the investors who were having to make decisions in real time.
In the crayon and colouring book recreation room , it makes perfect sense but the real world is rarely as simple Ratkin it is simpler than simple, you are competing against mr market who happens to be a hysterical lunatic. If you cant outthink a hysterical lunatic that makes irrational decisions based on hype and despair, then you should be out of this game. Learn to read his next move coming up it really is simple. Macdunk

warthog

06-09-2007, 07:14 PM

here is another one

" Reality looks much more obvious in hindsight than in foresight. People who experience hindsight bias misapply current hindsight to past foresight. They perceive events that occurred to have been more predictable before the fact than was actually the case."

HERSH SHEFRIN, Finance and the Psychology of Investing

This is the reason i sometimes get a little peeved when Mr P turns up on a thread , draws a nice chart which clearly shows why everybody should of sold one week previously.
Its insulting to the investors who were having to make decisions in real time.
In the crayon and colouring book recreation room , it makes perfect sense but the real world is rarely as simple

With respect old Rat, "Mr P" - or so the hog suspects - seems to have a goal in his posting, and that (amongst other things) is people thinking for themselves.

If you look at his postings in this light, then you may reconsider his perspectives and motivations.

Just a thought from the hog, old Ratty ...

Phaedrus

06-09-2007, 07:41 PM

....you cannot or will not acknowledge that the markets are just as risky today as they were last week when in your caution zone.
Look at the chart Ratkin. Any fool can see that market momentum was Negative last week and remains Negative.

.... i am merely pointing out that the level of danger has not changed since your momentum indicator said it was now safe to invest.
"My" Momentum indicator last "said it was now safe to invest" on 26/9/2006 and in fact the market rose strongly from that point. Your claim that the level of danger has not changed since then is simply ludicrous.

.... for you to say (your caution technique) is the best is foolish....
Ratkin, I have NEVER EVER claimed that. Very few systems are posted on ShareTrader and I posted mine because I thought some people might be interested.

Yet again you persist in dragging out the hoary old "hindsight" chestnut. These charts are as up-to-date as I am able to provide. Please try to stay "on topic" and keep your criticisms pertinent to the thread under discussion.

Oiler

06-09-2007, 08:29 PM

OILER 2, I would not ever get ratty with the rat. Only trying to enlighten him that some of us lesser motrals can work it out before it happens. Last years financial figures are not required for this magic effort. Anyone that thinks not, give me any company or companies and i will tell you each morning before the market opens using my limited TA skills the likely trend for today. I find i am right nine times out of ten with my lot so i dont mind doing my mates rats lot, any time any where, to enlighten him on the value of reading chicken entrails. Macdunk

Dunc.... you have such a way with words you ole charmer you! :D next you will be reading the tea leaves ??

I have to agree with you on this one....... and Phaedrus keep up the great work. You have a lot of people listening to what you say and learning heaps.

Rat.... calm down buddy !!

shasta

06-09-2007, 11:12 PM

Dunc.... you have such a way with words you ole charmer you! :D next you will be reading the tea leaves ??

I have to agree with you on this one....... and Phaedrus keep up the great work. You have a lot of people listening to what you say and learning heaps.

Rat.... calm down buddy !!

Oiler

Macdunk, was FA & now TA & seemingly chicken entails too, just be extremely wary if the canny scot ends up gazing at the stars (with Yogi?) :rolleyes:

I think everyone can learn something from Phaedrus who kindly posts charts regularly, keep it up, it is appreciated on here...

Even if it's just questioning your own system, in a new light!

Hoop

07-09-2007, 09:36 AM

Although the debate still in progress..

I will have an attempt to the conclusion of this debate is that TAers + FAers + personal systems + chicken entailers + star gazers + crystal ball readers + psychics + tea cup readers and lets not to forget yogi :cool: and Yoda (Let the force be with you) :cool:, are all in the agreement that the latest correction is done and dusted :p

Well done!! :D:D:D ...everyone was right :D:D ..............now where was I ? :rolleyes:

hiawatha

07-09-2007, 10:19 AM

I wonder if Nostradamus had anything to say about it.
hiawatha

Placebo

07-09-2007, 10:33 AM

PLACEBO, C-MON mate you are bigger than that. Surely we can all have an objective look at investment methods without reverting to school yard bickering. Phaedrus says it as he sees it, he also has given people ideas over the years to come up with improving their investing risk. If you dont agree say what parts you dont agree with, and leave it at that.
If you are a FA investor then no worries the TA people cant live in the market without you.
I have had good goes at SNOOPY and PHAEDRUS over the years but i feel sure none of it ever was personal we only attacked the message not the messenger. Macdunk

Duncan, well there has been a bit of banter all round over the years and I regret if my joking comment has been taken seriously. Wasn't intended as a poke at Phaedrus.

I have seen some of your stoushes/discussions with the likes of Snoopy, Phaedrus in the past. I haven't put the level of personal analysis into my own investing strategies to be able to go at it at that level, but good luck to you.

I regard myself as a fundamentalist first and foremost but have seen over the years that what the TA folk have to say is very enlightening and instructive. Even you have some good ideas sometimes (though I am not about to go with MacDunk's Timeline Theory just yet!) ;)

duncan macgregor

07-09-2007, 11:30 AM

PLACEBO, Good on you have another go at him lets see what you are made of. You can use big words like chickenentrails and cant get past the crayon and coloured book stage etc. If you want to really upset him tell him how to average down or throw caution to the wind as the market plummets. Look for his weak spots he hates stupidity, attack him with a bit of that. To really get his wick up, ask him about FPH that was a weak spot, only proves he is one of us, makes the odd clanger just like you and me. Macdunk

STRAT

07-09-2007, 11:56 AM

, are all in the agreement that the latest correction is done and dusted :p
As a resident lurker on this thread I would like to thank Phaedrus for his tutorials on TA and reply to Hoop re the above by throwing a spanner in the works with " not done and dusted yet" :eek:

Hoop

07-09-2007, 08:33 PM

As a resident lurker on this thread I would like to thank Phaedrus for his tutorials on TA and reply to Hoop re the above by throwing a spanner in the works with " not done and dusted yet" :eek:

Oh !! ...... and there I am with my boogie board paddling around the market. :eek::eek:

07-09-2007, 09:41 PM

Can we get back on to Market Perspectives!!!

k1w1

08-09-2007, 09:44 PM

Can I throw in my perspective which is that Phaedrus is a real asset to this site. I have learnt a lot from his approach to sharetrading and the methodology behind the approach. There is a refreshing absence of personal abuse and mockery in his posts which distinguishes them from those of his detractors.

brother coy

09-09-2007, 10:18 AM

duncan macgregor

09-09-2007, 11:29 AM

mc dunka ims veries interested tos sees yours tells us in advance days to days prices action for da shares ya musts bes a verys good day trader a ands if yours dat good yous must surelies be trading cfds , futures as yours returns woulda be so much more hahahahhaaaaa i wills starts a thread for ya predictionds a whats ya say your time has comes to claim da throne of sharetrader hahahaaaa Nice to see you still in the hunt BRO. No big secret BRO its only common sense which sometimes is not to common on these forums. I will start the ball rolling for you, risk the egg on the face just to let you know that old macdunk can still pick the market direction on a daily basis.
1, dow down on friday 1.8%. FYSE 100 down 1.93%. NIKKEI down .83% HANG SENG down .28%. DAX30 down2.43%. CAC 40 down 2.63%. All the markets that closed after the NZX and ASX were down on friday, plus nickel and copper down for the day.
Monday morning is when to sell, if you are selling our markets follow those markets overseas trends. Monday is not going to be a good day, i expect our market to fall in sympathy. You and i both know that when nickel doubled in price the shares followed suit, when nickel dropped in price the shares followed, monday wont be a good day for nickel miners.
Macdunk

brother coy

09-09-2007, 11:55 AM

Hoop

09-09-2007, 12:55 PM

Oh !! ...... and there I am with my boogie board paddling around the market. :eek::eek:

Welcome VR

My post may seem humorous to some and petty and flippant to others but it was a serious post to me.
I went from 98% in market to 55% before the last correction. With 45% cash I am looking to reinvest half of it and have re-entered and have overhang buy orders in at present.

It seems Strat is correct. After reading his post I looked again and thought I may have been a little premature. (I bought in a week ago previous, which was then premature anyway) :D.

Fridays close with the Dow S&P500 and Footsie has made me nervous again. The ASX and NZS have various signals saying the correction has ended and there is accumulation, so it is difficult to accept that it is a false breakout. but I have reservations.
Monday it seems is going to be a down day no matter what, but the rest of the week may prove enlightening.

What I have doing lately.
I mainly invest on the NZX.
Since Jan2007 most of my long term stocks have broken their long term trend lines and I have exited, unfortunately leaving me playing in the medium/short end term shares, however there are some shares looking promising again (long term)
After selling Long term AMP (+30%) :D in June, recently re-entered and accumulating (long term objective) will lower my buy order back from 12.77 to $12.50 on Monday.
Sold down DPC too late:o:mad: and now re-entering DPC :o
Accumulated more of FPH :) and RAK :(
Sold all of my long term MFT :cool::cool:
KID takeover :D
Sold all AIA :D
Sold down GPG :) unfortunately a little late :( and now re-entered (long term objective)
Accumulating NZO :) (long term)
PRC :(:( (dabbling with a view to accumulate) long term objective
FBU is the anchor stock in my portfolio :cool::cool:
CASH 33%

Watchlist
DFH ( ex favourite)
SAN
EBO
RYM (ex favourite)
PPG ( another ex )
MFT (too good to ignore this ex)
CAV
many others

Main worry
Possible end to the Bull market ??, This will change my objectives completely and would cash up with trendline breaks.
Also the next doors neighbours' house and land for sale ...hmmmm.

duncan macgregor

09-09-2007, 02:14 PM

ah mc duck yes mondays is an easy pick for directions now , buts on fridays at says 4.pm nz times did ya know mondays was goings to bes like this ?

yous say sell mondays mornings but dat is tos late with mosta stocks gapping down on da open.

Whats you needs to tells us is at mondays afternoon nz time whats going tos happen on tuesday on da nz and aus markets hahhahaa and whicha ways somes shares wills go

whys i say this is thats then wes can buys or sells ready for tuesday on mondays hahaa ya knows beat da suckerrs BRO, I am not a day trader i look a little further down the line than that. I know that when the market goes into a sudden price correction it happens when our market is closed so therefore first out is best dressed. March correction saw me right out first day, with AGM, MCR, SMY, SMM, which was my total trading account. All were on very steep uptrends with no sell signal. I then saw that the correction was just that, and placed the whole lot on SMM a couple of days later with the whole lot at a much lower level. SMM went up 46% in six weeks when i sold the lot all over again. I was the very first one out when SMM told the shareholders to accept the PDN offer on a friday night. The point i make is it always happens when our market is closed, the unpredictable that must be acted on the moment trading resumes. I do it all the time, the more market corrections the better i like it. Sometimes you might make a small loss to get out, but look at the bargains to be had a few days later buying at basement prices. Macdunk

SectorSurfa

09-09-2007, 02:29 PM

OILER 2, I would not ever get ratty with the rat. Only trying to enlighten him that some of us lesser motrals can work it out before it happens. Last years financial figures are not required for this magic effort. Anyone that thinks not, give me any company or companies and i will tell you each morning before the market opens using my limited TA skills the likely trend for today. I find i am right nine times out of ten with my lot so i dont mind doing my mates rats lot, any time any where, to enlighten him on the value of reading chicken entrails. Macdunk

9 times out of ten

geez, you are full of it MacD

even P doesnt claim over 6 out of 10.

ok, Monday

one of my recent spec buys DRX
enlighten me

Phaedrus

09-09-2007, 05:44 PM

Some people look at the Momentum Indicator and see only a useless, meaningless "squiggly little line". In attempt to shine some light into every dark corner, I have been trying to make interpreting this very useful indicator even simpler. Firstly, I tried to make it less squiggly by smoothing the basic 45 day indicator with an overlaid 4 day simple moving average. So far so good, but it is still squiggly and as such, aesthetically unacceptable to some. I have now set up a "Momentum ribbon" along the bottom of the chart. This is coloured green when market momentum is positive and goes amber when market momentum is negative. Just like traffic lights. The equivalent of a red traffic light would occur when the Index dropped below the red 10% trailing stop. Green = Go, Amber = Caution, Red = Stop. How simple is that? It is, of course, up to each individual to decide what actions they would take (if any!) at each level.

We can get some indication as to the accuracy or usefulness of the Momentum Indicator by looking at its historical performance. You can see that every time momentum turned negative, the market fell a significant amount. Conclusion? This is NOT a good time to buy. (It is surprising how fast this indicator can kick in - when it triggered back in August, the market was only a few points off its all-time high!) Look now at where Momentum turned positive again. See how, without exception, the market rose strongly from that point. Conclusion? This is a GOOD time to buy.

There is, of course, a price to be paid when you simplify things a lot like this. If you only used the ribbon rather than the indicator, you could not see which way market momentum was heading, how close it was to reversing., and each new signal would come as a complete surprise.

Why bother with all this? Primarily to reduce risk. Significant market retracements and crashes do not come out of thin air. If you monitor the market carefully there is plenty of warning and plenty of time for you to position yourself to minimise the losses and maximise the gains that can be made at such times.
http://h1.ripway.com/Phaedrus/NZ5099.gif

STRAT

09-09-2007, 05:59 PM

Mick100

09-09-2007, 07:02 PM

Quote, phaedrus "This is coloured green when market momentum is positive and goes amber when market momentum is negative. Just like traffic lights." end quote

Thanks for that phaedrus

One thing you don't want to do is hesitate when the light turns yellow

I usually hit the accelerator. :D
,

Phaedrus

09-09-2007, 07:04 PM

Having no need for online charts myself Strat, I'm not really the one to ask about that. Direct Broking do supply basic 3 year charts for all the NZ and Aus indices - including sector indices. (Not on their Supercharts, though)

Phaedrus

09-09-2007, 07:11 PM

Lots of people live dangerously doing things like that Mick! You can get away with it for years on end, but sooner or later you will get caught out.

Mick100

09-09-2007, 07:34 PM

Lots of people live dangerously doing things like that Mick! You can get away with it for years on end, but sooner or later you will get caught out.

The day will come when I will take my money off the table phaedrus - but not yet. I have every confidence in Mr bernanky and Mr Bush - they will reflate and keep this party going for at least another couple of yrs, IMO

I have got some cash put aside for bargains which may come my way.
Have even prepared a list of shares that I want to buy at a 50% discount to today's prices - if I get them, good - If I don't get them, that's OK too.

I do appreciate your charts - espesially the one's of the indexes but they are of limited use to me as I have a longer term outlook than you and 99% of others on this forum.
.

STRAT

09-09-2007, 10:14 PM

chippy52

10-09-2007, 08:11 AM

Hi Phaedrus. Not having any charting tools and with Direct Broking only supplying charts for individual stocks, is there a site you recommend where I can chart, compare and experiment with different Markets rather than only individual stocks?
Hi Strat. Have you tried this site http://finance.yahoo.com/q/bc?s=%5ENZ50. You have an option to compare with other indicies. See what you think. Chippy52

STRAT

10-09-2007, 09:46 AM

Thanks Chippy, I am aware of Yahoo. Im after one that also shows momentum indicators, relitive strength, Stochastic, MacD ( not short for Macdunk :D ) etc

chippy52

10-09-2007, 10:03 AM

Sorry Strat try this page. http://au.finance.yahoo.com/q/ta?s=%5ENZ50. Cheers chippy52

STRAT

10-09-2007, 10:14 AM

Sorry Strat try this page. http://au.finance.yahoo.com/q/ta?s=%5ENZ50. Cheers chippy52Excellent Cheers :D:D:D

duncan macgregor

10-09-2007, 11:09 AM

STRAT

10-09-2007, 11:21 AM

STRAT, Long term market charts are not much use for todays market looking forward.
You and i both know the NZX and the ASX will take a hit today, up to the point where the overseas markets give it direction. Tuesdays market depends on those markets overseas coming good on monday. If i thought those overseas markets would downtrend other than a small correction i would sell the lot on the ASX opening. I cant see that happening but if it does i am out tuesday morning. MacdunkHi Duncan. My perspective for the day is the same. I just wanted the charts for educational purposes. Im working on my TA skills, or lack of at the moment. ;) That said I think we are in for more ugly days this month. I sold my ADY last week in order to free up some cash. Hope Im right:D

MoSteph

10-09-2007, 02:32 PM

Ratkin, I despair. I don't think that you will ever understand this simple concept. Here is my final attempt. I am unable to make it any clearer than this :-http://h1.ripway.com/Phaedrus/NDXmom96.gif

See how market momentum is currently Bearish?
See how it was Bearish last week too?
It has been Bearish for about 6 weeks, so far.
You now talk of the market being in danger, but scoffed when I proposed caution weeks ago!

http://img.villagephotos.com/p/2007-1/1240468/momentumNZSE50.GIF
http://img.villagephotos.com/p/2007-1/1240468/compareNZSE502.GIF

Phaedrus,

I am interested in your use of the momentum indicator, and whether the “bearish” signals provided would be any actual benefit to current holders. For point, I am willing to assume that current buyers ought to wait until the signal becomes positive before entering the market, so we can ignore these people. Most, of course, like Ratkin, will be already invested.

Above is a graph of performance of the gross NZSE50. You will see that there are two other lines, one being raw momentum performance and the other being momentum with interest and brokerage included. CGT is not considered (which would decrease performance further).

The formulae assume the investor enters/exits the market when the momentum indicator crosses below/above the “0”. Brokerage of 0.04% on each trade is assumed, and a generous out of the market cash rate of 4.7% (net of tax) is accrued for the relevant periods. Momentum is set at 45 days, and I have posted my raw momentum table to verify that it looks like yours.

You will see that those who use the momentum system during the last 6 years would have incurred inferior performance to a buy and hold strategy, and that this is the case both for raw data and with the additions that reality requires. Hence, this begs the question of whether the system is beneficial at all.

I suppose you will respond by requiring that I use more indicators, that I look to period XYZ where you are “unable to make it any clearer” (of course transcending any hindsight bias), or that company-specific picks would increase performance beyond the market as a whole. However, if these graphs are right, you cannot deny that for most using momentum, over the long term it would promote underperformance.

mibo

10-09-2007, 03:18 PM

Such a quiet day so far, only $33m t/o. I wonder how many possums are out there staring into the headlights of an oncoming truck. Or maybe everyone has just gone fishing.

duncan macgregor

10-09-2007, 04:24 PM

9 times out of ten

geez, you are full of it MacD

even P doesnt claim over 6 out of 10.

ok, Monday

one of my recent spec buys DRX
enlighten me SS, nobody can predict penny dreadfulls when a few dollars can change the price in dramatic fashion. The whole market is down as expected DRX more so than others only because a few sellers did not like todays announcement. It is what happens tonight when you are all tucked up in bed that really matters. I will either be all out the market or sitting tight when we start trading tomorrow. Our market depends on that market learn to read the market first then worry about the company second. Your DRX can go anywhere most penny dreadfulls do on a small turnover, but it will follow the market trend most times, unless like today overshoot on the downside with five bob changing hands. Macdunk

Phaedrus

10-09-2007, 05:02 PM

MoSteph, this entire setup was designed as a "filter" based on the Index with the idea of clearly identifying whenever the market as a whole was showing signs of significant weakness. The basic aims were to provide early warning of any serious market slump, to inhibit buying on a falling market and to provide a measure of protection from any major crash.

What you have done is use part of it to trade the Index - something it was never meant for.

This system was specifically set up to monitor the Bull market that began in 2003, thus it is based primarily on trend indicators. These are, of course, quite unsuitable for the trendless market that preceded the current uptrend. At such times, trend indicators give a series of conflicting and unprofitable signals and should not be used. This explains how your "Buy and Hold comparison" having made zero profit in 2 years, nevertheless managed to begin 2003 with substantially more capital than the "opposition". This large initial difference was of course compounded from there on.

I must say I am surprised at the huge difference you show between "profits" made with and without brokerage. Just 4 "trades" at 0.04% brokerage per trade made all that difference?

The biggest single mistake you make here MoSteph, is to assume that the beginning of a "Caution" period means SELL. It doesn't. It only means "DON'T BUY".

duncan macgregor

10-09-2007, 05:25 PM

PHAEDRUS, I know what you are up against people who twist everything to suit their own religeon, {In this case share investing]. Most people can look past into the outer world of learning, with new experiance and move on. The entrenched few in both TA and fundumental view points where never the two agree, will carry the battle on into entrenched stupidity. That is human nature, where understanding that is the most important part of any investment strategy. Who is right who is wrong,? who gives a sh*t as long as you devise something with an open mind that beats the average investor with the least risk.
I had a go at teaching them a time line that a eight year old dunderhead would understand so what hope have you got?. Keep the charts coming. Macdunk

MoSteph

10-09-2007, 08:22 PM

The biggest single mistake you make here MoSteph, is to assume that the beginning of a "Caution" period means SELL. It doesn't. It only means "DON'T BUY".

Phaedrus, thanks for your comments as always. Here's the rejoinder - two points:

1.Keeping our "open minds" open, I argue that drawing any distinction here is otiose. Asset allocation, transaction costs and tax aside, HOLDING is tantamount to BUYING. You remain exposed to what you have inferred to be a "BEARISH" market. If we can enter and exit freely, which we can, and we are talking about the market as a whole, then, the question must be simply: IN CASH OR IN SHARES?

Omitting to sell is a still decision on the market's direction - arguably a riskier one than being in cash. If you accept that this indicator is meaningful and they are tantamount, it follows that when momentum is negative, it is rational to SELL. It, additionally, follows that the index presented does have merit for the point.

I will be impressed if you can form a good argument as to why, without employing asset allocation reasons, retaining ones shares is economically different to "DON'T BUY".

2. What I was also trying to point out is NOT the merits of trading the index. But to test the validity and VERACITY of the indicator you use to undermine Ratkin's position. What good is basing a decision on something that historically is proven to provide inferior results?

I don’t doubt you have fabulous performance. But could it not just be good luck? Likely you respond with "but, Mosteph, I have had many years of fabulous performance". Let's not forget, though, the law of large numbers will of course apply. Someone will have recurring good luck. Maybe the fact that others who equally diligently use TA, yet lose, evidences just this.

Just 4 "trades" at 0.04% brokerage per trade made all that difference?

I will look into this. It’s a big sheet, so it’s possible that this line is overstated.

This large initial difference was of course compounded from there on.

I will even-out the momentum line to when the market starts trending so to remove the compounding impact. Point 2, above, of course assumes that outcome is the same.

Regards,

SectorSurfa

10-09-2007, 09:44 PM

SS, nobody can predict penny dreadfulls when a few dollars can change the price in dramatic fashion. The whole market is down as expected DRX more so than others only because a few sellers did not like todays announcement. It is what happens tonight when you are all tucked up in bed that really matters. I will either be all out the market or sitting tight when we start trading tomorrow. Our market depends on that market learn to read the market first then worry about the company second. Your DRX can go anywhere most penny dreadfulls do on a small turnover, but it will follow the market trend most times, unless like today overshoot on the downside with five bob changing hands. Macdunk

did you get the "trading halt" by days end maca...:D.

pennydreadful? 37c yesterday, and you have stocks like MRX 12c, perhaps CUL?...how on earth do you follow that if your theory doesn't work on DRX.

all I can see is you took far to many words to say nothing..lol

Phaedrus

10-09-2007, 11:08 PM

HOLDING is tantamount to BUYING. An accountant would say so and totally miss the point that I am holding and/or buying for totally different reasons. I am holding stocks because they have not met my systems "Sell" criteria. I would be buying if a desired stock had triggered "Buy" signals and the market momentum was positive.

"You remain exposed to what you have inferred to be a "BEARISH" market".
Yes, but my exposure is limited to stocks that are still in uptrends and outperforming that market . If/as/when these stocks falter and trigger Sell signals, they would be sold, progressively reducing my market exposure - all the way to zero, if it came to that.

"If ........ we are talking about the market as a whole then the question must be simply: IN CASH OR IN SHARES?"
This system is designed to progressively shift me into cash as the market weakens.

"Omitting to sell is still a decision on the market's direction"
No, it is a decision based on the stocks direction.

"......arguably a riskier one than being in cash."
That depends entirely on the stock. I would certainly agree that as a very general principle, holding stocks when the whole market is sliding is riskier than being in cash.

".....it follows that when momentum is negative, it is rational to SELL."
No, it does not follow. You would be foolish sell a stock that was in a good uptrend simply because the market as a whole was sliding. If you were talking about the stock's momentum, I would agree with you - but you're not.

"I will be impressed if you can form a good argument as to why ........ retaining ones shares is economically different to "DON'T BUY".
The shares you are holding ARE outperforming the market. That is why they are being retained. Any new buys are stocks that you merely HOPE will outperform the market. Buys made when the market has positive momentum are much more likely to be profitable than buys made when the market has negative momentum. Hence the "don't buy" rider.

".....I was also trying to test the validity and VERACITY of the indicator you use......... What good is basing a decision on something that historically is proven to provide inferior results?"
Your "test" is totally irrelevant because the indicator was selected and set up solely to identify periods of significant market weakness - NOT to trade the Index. Historically, it has fulfilled its intended purpose very well indeed. If you wanted to actually trade the Index you would use an entirely different setup.

"I don’t doubt you have fabulous performance. But could it not just be good luck? Likely you respond with "but, Mosteph, I have had many years of fabulous performance".
I wouldn't call my performance fabulous. I do beat the Index, though - consistently. That puts me in the top 15% - right?

"Let's not forget, though, the law of large numbers will of course apply. Someone will have recurring good luck. Maybe the fact that others who equally diligently use TA, yet lose, evidences just this".
MoSteph, I could use exactly the same "argument" with regard to Buffett and FA!

shane_m

10-09-2007, 11:56 PM

looking at the Dow -247, Dunk will be surely out first thing tomorrow morning..... :)

duncan macgregor

11-09-2007, 07:17 AM

looking at the Dow -247, Dunk will be surely out first thing tomorrow morning..... :) SHANE tomorrow has arrived and the DOW is slightly up with an hour to go. Today is a no where day thats all with mixed messages . Macdunk

winner69

11-09-2007, 07:50 AM

I recall that during 2001 which wasn't a good time for stocks in the US that more stocks on the S&P500 went up over the year than went down ..... even though the market was down a fair bit

duncan macgregor

11-09-2007, 09:19 AM

did you get the "trading halt" by days end maca...:D.

pennydreadful? 37c yesterday, and you have stocks like MRX 12c, perhaps CUL?...how on earth do you follow that if your theory doesn't work on DRX.

all I can see is you took far to many words to say nothing..lol I did get the trading halt at the end of the day after the sp dropped by over 8%. Smart money moving out perhaps?. This all depends on the next announcement on thursday. MRX will go up slightly today after staying level on a falling market yesterday [copper is on the rise] along with the DOW. Our markets follow on like sheep chasing the DOW or havent you noticed?. Macdunk

Hoop

11-09-2007, 11:01 AM

I recall that during 2001 which wasn't a good time for stocks in the US that more stocks on the S&P500 went up over the year than went down ..... even though the market was down a fair bit

I remember that Winner. Same in NZX around 2000-2001 from memory, when telecom got tarred with the dot com bubble burst brush. As Telecom has a big weighting on the NZX index a lot of other NZ stocks were OK even though the index fell.

SectorSurfa

11-09-2007, 07:27 PM

I remember that Winner. Same in NZX around 2000-2001 from memory, when telecom got tarred with the dot com bubble burst brush. As Telecom has a big weighting on the NZX index a lot of other NZ stocks were OK even though the index fell.

thats because the dotcom crash was so narrowly defined to one sector.

massively inflated PEs amd market caps, sudden collapse.

as I mentioned before, low PEs stocks, in neglected sectors put on about 75%over the next 2 years after the crash.

Barrons did a great article on it, wish I could find it.

perhaps the next bubble to smash will be miners in about 2 years.

think I will play a little longer though

SectorSurfa

11-09-2007, 07:31 PM

I did get the trading halt at the end of the day after the sp dropped by over 8%. Smart money moving out perhaps?. This all depends on the next announcement on thursday. MRX will go up slightly today after staying level on a falling market yesterday [copper is on the rise] along with the DOW. Our markets follow on like sheep chasing the DOW or havent you noticed?. Macdunk

MRX, no change, $$ value $29k:D

two trys Maca = 0/10

you gotta get the next 18 right now to prove your powers:o

duncan macgregor

11-09-2007, 08:31 PM

MRX, no change, $$ value $29k:D

two trys Maca = 0/10

you gotta get the next 18 right now to prove your powers:o It did go up today then dropped back to square one mixed messages as i said. I think you are only mad at me because your DRX dropped over 8% then went into a trading halt. Definately not a good result for you is it?. macdunk

STRAT

11-09-2007, 08:58 PM

It did go up today then dropped back to square one mixed messages as i said. I think you are only mad at me because your DRX dropped over 8% then went into a trading halt. Definately not a good result for you is it?. macdunkYou predicted a trading halt down to the day Duncan??? That has has to be worth 3 of your 9 out of 10:cool:

SectorSurfa

11-09-2007, 09:37 PM

duncan macgregor

12-09-2007, 08:03 AM

Maca, you are without doubt quite a fool
...and I would be silly to be mad at such a fool:D:D

still, you are a good laugh...court jester style:p

looking forward to your next call
how about have a go at a non penny dreadful?

PS buyers lining up for DRX at 40c now. What do you think will happen Thursday Maca? go up? geez that would be a call wouldnt it I had a little look at your profile just to see if i have you worked out right.
You joined in august 2007
you started two new threads promoting companies
nobody answered you other than yourself.
all the companies that you mentioned have dropped in price
DRX dropped over 8% then is in a trading halt.
MEP dropped 4.8% yesterday.
Not bad for a month in the game dont you think?. I hope you learn from all this but suspect not, stick to surfing the waves my boy the market is for grown ups. Macdunk

SectorSurfa

12-09-2007, 08:33 AM

maca, boy you are good
very impressed by your powers of deduction

however, wrong.

whatda say maca, ASX up 60 points today
I say DRX will stay the same:D

duncan macgregor

12-09-2007, 08:48 AM

maca, boy you are good
very impressed by your powers of deduction

however, wrong.

whatda say maca, ASX up 60 points today
I say DRX will stay the same:DTomorrow is another day EH. Hope its good news for you tomorrow. Macdunk

bull....

12-09-2007, 10:23 AM

asx looks like a strong open today , 60pts - 70pts fair call for open surge then fade the open for temp pullback then should stay steady all day.
My prediction in advance lol and remember my opinion changes by the minute

SectorSurfa

12-09-2007, 12:17 PM

I had a little look at your profile just to see if i have you worked out right.
You joined in august 2007
you started two new threads promoting companies
nobody answered you other than yourself.
all the companies that you mentioned have dropped in price
DRX dropped over 8% then is in a trading halt.
MEP dropped 4.8% yesterday.
Not bad for a month in the game dont you think?. I hope you learn from all this but suspect not, stick to surfing the waves my boy the market is for grown ups. Macdunk

since you think in the most myopic time periods Maca

Bought DRX 31...went to 38, up over 23% in that week

on MEP, said buying at low 60s was undervalued, actually 61, during the correction was crazy, went to 73, and it drops back to 70...and you say I lose 4.8%:D

DOH

PS thought you bought MRX at 15.5?

anyways, better leave it to the "grown ups" LOL

bull....

12-09-2007, 12:19 PM

there we go 60 -70 pt cash open surge faded the futures sitting on a nice profit.

not bad for 30 mins work

SectorSurfa

12-09-2007, 12:27 PM

there we go 60 -70 pt cash open surge faded the futures sitting on a nice profit.

not bad for 30 mins work

right this time Bull, 63-65

have a good day

scamper

12-09-2007, 12:34 PM

how infuriating to find this thread diminished by a kid who likes to pick bones but contributes nothing.
secta -- grow up or go away.
dunc -- stop playing with fools.

Placebo

12-09-2007, 01:14 PM

dunc -- stop playing with fools.

That would make this a very lonely place for him, then, wouldn't it scamper :p. Macdunk clearly has a well-polished crystal ball which serves him well. Call him on his mistakes, he'll crow loud enough when he gets a few right :D Timelines, Tea Ladies... Wears his heart on his sleeve does our MacDunk.

duncan macgregor

12-09-2007, 03:34 PM

PLACEBO, SECTORSURFA has every right to have a go at me, or antyone else in the forum. I feel his cotribution will increase in time to the point where he might front up with new systems like time lines etc. The only way to learn this game is question everbody find the flaws in their strategies and shoot the bastards down in flames. The only thing i would suggest to him is keep personalities out of it stick to the subject of the matter otherwise it becomes to childish to be taken seriousely. macdunk

Placebo

12-09-2007, 04:08 PM

Great stuff MacDunk, Love your work :D. Soon you will achieve such heights as enable you to refer to yourself in the third person and quote your own posts.

Fight the good fight ;)

SectorSurfa

12-09-2007, 07:55 PM

geez Scamper, I am not here to please you, whoever you are

all I did was take up Maca on his own call

and I find it amusing you have contributed nothing yourself.

so if you dont like it, go pay for your research or start your own thread.

jdg

13-09-2007, 10:33 AM

jdg

13-09-2007, 10:37 AM

ps. any bets on the Aus market today? bull started so well with his prediction yesterday but the market made a liar of him late in the afternoon. i'm going with a 20 point up opening - and a slightly stronger finish. don't look for any science in that...

duncan macgregor

13-09-2007, 11:01 AM

STRAT

13-09-2007, 11:12 AM

Prediction for my mate SECTOR SURFA, Egg on the face time today mate hope i am wrong but lets have a go with your DRX.
DRX are in a trading halt after the sp dropped by just over 8% with five bob changing hands which can hardly be called smart money.
Today i presume we will know why the trading halt was called and with any luck trading will resume. I think the share price will trend down today. MacdunkHi Duncan, If the drop of 8% wasnt smart money getting out and the volume would suggest it wasnt. That alone is not suggesting bad news is coming so why do you think the share is going south :confused:

bull....

13-09-2007, 11:50 AM

jdg im thinking pretty flat today and not to much risk reward.

yesterday market certainly proved me wrong as far as saying it would be steady later in the day.
Thats the thing with short term predictions hence short term trading you must be flexible and change your tune as the market day unfolds.

good luck

duncan macgregor

13-09-2007, 11:52 AM

Placebo

13-09-2007, 02:35 PM

i'm sure i'm not alone in hoping this thread (forum) doesn't become one whereby personal attacks and sniping are common. sites where that does occur, quickly become tiresome. let's all try and be as cool (at least as cool as guys sitting around computers talking finance can be). often, the problem is not what's said, but how it is said. (curse the lack of non-verbal communication nuances available to impersonal communication)

-j

tell me the truth - did i blow being cool with the whole non-verbal communication spiel...?

No worries about that JDG, what of course is happening is the thread being hijacked by Macdunk to demonstrate his brilliance at picking winners.

So far, this one is nearly as good as his effort to prove he could win the investor comp by throwing darts at a list of penny dreadfuls.

KEEP EM COMING MACDUNK ME SIDES ARE FRICKIN SPLITTIN :D :D

duncan macgregor

13-09-2007, 03:46 PM

No worries about that JDG, what of course is happening is the thread being hijacked by Macdunk to demonstrate his brilliance at picking winners.

So far, this one is nearly as good as his effort to prove he could win the investor comp by throwing darts at a list of penny dreadfuls.

KEEP EM COMING MACDUNK ME SIDES ARE FRICKIN SPLITTIN :D :D PLACEBO i just finished looking up your entry in the share competition and decided to test the theory.
PLACEBO ENTERED rak,gpg, ppl,rym,smm.
PLACEBO HAD ONE THAT WENT UP IN PRICE AND FOUR DOWN for plus ,59%gain
C-MON MATE whats wrong with my theory still looking for that elusive monkey that can throw darts then you really are in the pooh. Macdunk

duncan macgregor

15-09-2007, 08:12 AM

STRAT, Their loss this year was bigger than last year, then they are selling off bits and pieces.
I think the shares dropped 8% on about a $3000 dollar trade just before the trading halt which can hardly be described as smart money. Its not a good sign i expect we will know soon whats going on, but hope for SURFAS sake i get this one wrong. Macdunk We now know the result which is not to good with the shares dropping a further $5. Sorry SS i wish i could have been wrong this time for your sake. Macdunk

STRAT

15-09-2007, 11:59 AM

We now know the result which is not to good with the shares dropping a further $5. Sorry SS i wish i could have been wrong this time for your sake. MacdunkEh? Not sure Im with you here Duncan. Resumed trading at 12:45 dropped 4.4% or 1.5c by the end of day on a turn over of only 119000 shares:confused:

Wilkins_Micawber

15-09-2007, 12:53 PM

Eh? Not sure Im with you here Duncan. Resumed trading at 12:45 dropped 4.4% or 1.5c by the end of day on a turn over of only 119000 shares:confused:

Could we please keep on subject i.e. market perspective, instead of discussing one individual stock between two or three people. If you want to discuss individual stocks please start a new topic. Thanks

STRAT

15-09-2007, 01:01 PM

Could we please keep on subject i.e. market perspective, instead of discussing one individual stock between two or three people. If you want to discuss individual stocks please start a new topic. ThanksNot always, These are disscussions, not tutorials. You could always buy some books.

duncan macgregor

15-09-2007, 09:14 PM

by discussing different outlooks and strategies on any individual company in advance of the event i would think would give new commers to the game, something to think about. DRX is a very small company, where the share price moves in dramatic fashion, with very little money changing hands, which makes it an ideal company for speculation. It dropped 8% the day befoe the trading halt then 4% on resumption of trading. We all give our view points nobody ever gets it right all the time but its good to look at it from another persons view point. Macdunk

Phaedrus

17-09-2007, 10:10 AM

When I began this thread my aims were to illustrate my use of a "caution" zone as an objective indicator of relative market strength and to identify some potential buying opportunities. Significant market retracements and crashes do not come out of thin air and if you monitor the market carefully there is plenty of warning and plenty of time for you to position yourself to minimise the losses and maximise the gains that can be made at such times.

Somehow the focus was lost and instead of cutting to the chase and concentrating on stock-picking and timing, some chose to criticise the concept, others the methodology. Somewhere along the line everyone lost sight of what this was all for. Buying stocks - selecting them and timing their purchase.

I see this as a process involving three separate sequential decisions :-

(A) Whether to buy. You don't want to be buying on a falling market - no-one knows how far it will go and your chances of individual success are much lower. I proposed one objective measure of market strength and would be interested to hear other suggestions. The aim is to assess overall market sentiment and locate it on the spectrum between very Bearish and very Bullish. We are all on this continuum somewhere - between Fear and Greed, between being 100% in cash and 100% invested. As a market follower, I align myself with the market, but it is of course quite possible to arrive at a different view by other means. My system identifies what I chose to call "Caution" zones - what you do with them is up to you. How you react will reflect your own placement on this continuum. Those at one extreme would see a "caution" zone as a signal to move immediately to 100% cash while those at the other extreme would see it as a signal to buy up large. Most of us are probably a bit nearer the middle.

(B) What to buy. This decision is most commonly based on Fundamental Analysis, Technical Analysis, or a combination of the two. I have suggested 16 possible candidates based primarily on TA and would be very interested to know which of these you consider offer the best value fundamentally. Alternatively, a short list of any stocks considered to be fundamentally strong would be of great interest. It seems to me that the hottest prospects would appear on both the TA and the FA lists.

(C) When to buy. In my opinion, this is best based on TA, using trend-following indicators.

Here is an update of the composite chart of 16 stocks. You can see that 4 of these have now reversed their downtrends.

http://h1.ripway.com/Phaedrus/Comps917.gif

Lizard

17-09-2007, 11:03 AM

Hi Phaedrus. CHP has now become IMP.

I don't follow many of those stocks particularly closely, but I do think NPX could provide a medium term play based on their 12 months outlook.

I like BGR as a safe investment and long term value, but don't see much chance of a re-rate in the next 6 months and probably longer. Also in the hard-hit retail sector is PPG. A hard company to like, but I did notice the clothes in store were a definite improvement over summer and there is plenty of room for them to move medium-term on a "value" basis if they produce a solid-good result. Being at the very low priced end, might not suffer so badly from a downturn.

bull....

17-09-2007, 11:30 AM

Fundamentally I dont think many of these stocks look very appealing.
while they may be traded from a short term view I dont see you doubling your money anytime soon.

17-09-2007, 01:39 PM

Just wondering how other trader perceive the short term future of this company. It seems to have been in a strong downtrend in recent times and appearing to be in a plateau phase. Half year results seem show a promising outlook for this company and it will be continuing payment of a a fully imputed interim dividend of 4.5 cents per share going ex-dividend on 28 September 2007.

Lizard

17-09-2007, 04:26 PM

RNS is interesting, but not sure on timing. They are clearly "cheap" in terms of eps and yield, but the market still believes (probably correctly) that there is more downside to come in relation to their distribution of Apple products. In addition, the dividend looks unsustainable.

Whether the market has already accurately assessed the amount of downside is the difficult part. Since directors have promised more detail on the business split to be provided in the 2007 Annual Report - this will be very helpful in assessing the underlying business potential.

Renaissance had a big opportunity to invest in diversification while cashflows were strong and they had excess cash on the balance sheet, but instead chose to give the money back to shareholders via dividends. They now appear to have woken up and be desperately searching for a new basis on which to go forward. While they are potentially cheap, there is plenty of execution risk and their record on execution has been somewhat patchy. And the wild card will be what Apple have in plan for NZ.

warthog

17-09-2007, 08:24 PM

What Apple have in store for NZ will follow the trend.

Glasgow - a city not that dissimilar to Auckland in terms of economy - recently saw an Apple store opening.

SectorSurfa

17-09-2007, 08:37 PM

We now know the result which is not to good with the shares dropping a further $5. Sorry SS i wish i could have been wrong this time for your sake. Macdunk

Maca, what are you on about, $5?
last post on here for DRX as off topic, and the "readers" are complaining

...but you are myopic in your "calls" and some kind of victory claim

just 3 weeks ago bought DRX at 31c, 38 tops today = 22.5%

today...
DRX up 15.38%
DRXO up 31.25%

more to come Maca, you really should have a proper look.

PS, your wish came true:D

SectorSurfa

17-09-2007, 08:55 PM

I had a little look at your profile just to see if i have you worked out right.
You joined in august 2007
you started two new threads promoting companies
nobody answered you other than yourself.
all the companies that you mentioned have dropped in price
DRX dropped over 8% then is in a trading halt.
MEP dropped 4.8% yesterday.
Not bad for a month in the game dont you think?. I hope you learn from all this but suspect not, stick to surfing the waves my boy the market is for grown ups. Macdunk

better get in while I can

MEP, which I did recommend is now up over 20% Maca, up 6.5% today

So for the record, so far as you say I have written about 2 stocks in the last month

MEP up 20% +
DRX up 22.5%

Is that acceptable for you Maca?

I have a new one for ya maca, been buying 60s Maca, GLE...very illiquid but very undervalued + excellent yeild.

duncan macgregor

17-09-2007, 09:03 PM

Sorry mate i just had an eye operation couldnt see the keys to well I think it was 4% was what i tried to type. See like an eagle now no further excuses,
Very low volume it would be a tough ask to bail out quick. Dont worry about people complaining i get it all the time they even have the wife doing it. We are all waiting on wednesday in america thursday here for direction we follow on very close to the american market. 15% on about 50k turnover is not a good trading share, high risk for a trader who would have to drip feed the market. Macdunk

SectorSurfa

17-09-2007, 09:09 PM

fair enough Maca, I dont think daily like that

GLE will not suit you then.

duncan macgregor

17-09-2007, 09:29 PM

fair enough Maca, I dont think daily like that

GLE will not suit you then. You have to think daily in this market we could be in for who knows what in thursdays market. We have already had a couple of market corrections this year we might have one on thursday keep your finger close to the button. Macdunk

jdg

18-09-2007, 08:24 AM

it'll be wednesday, dunk. fed moves tomorrow. hate you to be a day out, mate.

duncan macgregor

18-09-2007, 09:09 AM

it'll be wednesday, dunk. fed moves tomorrow. hate you to be a day out, mate. Sorry to pin prick but new york is 16 hours behind us which makes us both right. Thursday NZ is when the NZX follows the good or bad news. Macdunk

winner69

18-09-2007, 09:10 AM

Man on radio this morning said 6.15am tomorrow NZ time

jdg

18-09-2007, 10:47 AM

Sorry to pin prick but new york is 16 hours behind us which makes us both right. Thursday NZ is when the NZX follows the good or bad news. Macdunk

both right? c'mon dunk, you went to school when there was such a thing as right and wrong. fed decision is overnight tonight (tomorrow for them - about 2.30 eastern time). US markets have a couple of hours or so to digest the news. plenty of time to (over)react. it all happens here tomorrow, mate.

roddy

18-09-2007, 10:48 AM

HI Phaedrus

Great work on market perspective,just like to ask you to give us over on the fx side a chart
on the nz/usd if you have some time,would be really interested on how you would go about about trading it!as DB has already stated we all speak the same language over there

cheers
roddy

duncan macgregor

19-09-2007, 07:42 AM

Stranger_Danger

19-09-2007, 07:45 AM

I find it interesting that giving junkies free crack as rock bottom is in sight is greeted as good news?

The fed has got it wrong. Time will tell.

Toddy

19-09-2007, 08:44 AM

Nita

19-09-2007, 09:31 AM

OH DEAR THE CRASH HAS BEEN CANCELED, Macdunk had his dates wrong as usual, he always never gets it right at changing from summer to winter time either. Now that we dont have to worry about the market crashing short term, the only worry left is the American dollar tanking. The next time to worry about the big crash is after the olympics when China will pull the rug from under the yanks. Big recovery day to day guys buy early.
Macdunk
this day trading must be making you insane macdunk. you either make a quick buck or loose a quick buck.

in fact you remind me of the gambler who comes into the casino each week and spells out hes got a 100% proof new thoery on how to beat the house. some times it works for a few days then spits him out in bubbles. other times he gets spit out straight away.

you should also know macdunk that when you think you can get ahead of the pack by either jumping in or out at the opening bell then you are just like the rest of the herd who are trying to do the same on the back of good and bad news in the US.

sorry mate. your system is so flawed that time will erode any short or medium term profits that you might make.

Hoop

19-09-2007, 09:42 AM

I'm looking forward to a bull market for a few days/weeks.
Only concern, the NZ dollar. I dumped all of my FPHIZA's on Monday in anticipation of this move by the fed.
Bought back into IFTWB's/C's and RAK.

Wow...Dow up 2.5% on 0.5% fed interest rate cut.
I think it is now safe to say this time that the market correction is done and dusted. I maybe had been premature in saying so in my 7th Sept post in which Stat was not entirely sure and it was rightly so at the time.

Now with that correction threatening to end this Bull market (phase 3) has evaporated, the Bulls are out frolicking in their paddocks once again and like Toddy, I am looking forward to this new rosy trend for the next few days/weeks. My portfolio needs a bit of help this year.

duncan macgregor

19-09-2007, 03:14 PM

this day trading must be making you insane macdunk. you either make a quick buck or loose a quick buck.

in fact you remind me of the gambler who comes into the casino each week and spells out hes got a 100% proof new thoery on how to beat the house. some times it works for a few days then spits him out in bubbles. other times he gets spit out straight away.

you should also know macdunk that when you think you can get ahead of the pack by either jumping in or out at the opening bell then you are just like the rest of the herd who are trying to do the same on the back of good and bad news in the US.

sorry mate. your system is so flawed that time will erode any short or medium term profits that you might make. What a negative attitude you have NITA. My share holdings are common knowledge along with my systems of investing. It is amazing how lucky you can be timing the market if you really study it. I hope you are not one of those stupid people that like to knock winners all the time, i would like to think not, so cheer up for christ sake. Macdunk

peat

19-09-2007, 04:45 PM

I, like Stranger Danger, am finding it hard to believe that any downturn can simply be avoided by agressive lowering of interest rates.
Tho historically Greenspan seems to have made a career out of it, I cant help but think theres a price to pay, and that when there is enough fear you cant make an economy go by simply lowering the cost of money. ElliotWave.com call it like pushing on a piece of string.

STRAT

19-09-2007, 05:27 PM

Wow...Dow up 2.5% on 0.5% fed interest rate cut.
I think it is now safe to say this time that the market correction is done and dusted. I maybe had been premature in saying so in my 7th Sept post in which Stat was not entirely sure and it was rightly so at the time.

Now with that correction threatening to end this Bull market (phase 3) has evaporated, the Bulls are out frolicking in their paddocks once again and like Toddy, I am looking forward to this new rosy trend for the next few days/weeks. My portfolio needs a bit of help this year.So done and dusted for a few days/weeks???. Watch the DOW retrace some tonight and tomorrow we will play follow the leader. Dont think you can start talkin about done and dusted until you see at least a few months of stability.:eek:

STRAT

19-09-2007, 05:36 PM

Phaedrus's charts are a bit easier to read than yours Winner69 :D Looks like its been through my old fax machine sideways. and now its gone completely:eek:

winner69

19-09-2007, 05:47 PM

Phaedrus's charts are a bit easier to read than yours Winner69 :D Looks like its been through my old fax machine sideways. and now its gone completely:eek:

Uploading doesn't seem to work

WERE COPIED FROM HERE ..... 2 CHARTS NEAR THE BOTTOM

What happened to the S&P500 when Fed made 14 rate cuts
http://www.hussmanfunds.com:80/wmc/wmc070827.htm

STRAT

19-09-2007, 05:52 PM

http://www.hussmanfunds.com/wmc/wmc070827e.gif
Market

STRAT

19-09-2007, 05:54 PM

Copy & paste works:Dhttp://www.hussmanfunds.com/wmc/wmc070827d.gif

winner69

19-09-2007, 06:04 PM

Thanks STRAT.... pretty simple really .... shouldn't have tried the sophisticated way

STRAT

20-09-2007, 09:38 AM

Watch the DOW retrace some tonight and tomorrow we will play follow the leaderI got that wrong :o DOW up again :D Perhaps all the worlds problems can be solved with a simple 0.5% interest rate reduction :eek::rolleyes: I thought yesterdays DOW rally was somewhat of an over reaction ( as usual ) Anyone else thinking this yesterday?

jdg

20-09-2007, 09:53 AM

I got that wrong :o DOW up again :D Perhaps all the worlds problems can be solved with a simple 0.5% interest rate reduction :eek::rolleyes: I thought yesterdays DOW rally was somewhat of an over reaction ( as usual ) Anyone else thinking this yesterday?

according to the chief investment strategist at standard and poor's equity research services, 6 months after fed cuts, the market (on average) gains about 12 percent, with a further 7 percent within 12 months. given benign inflation figures in the last couple of days, he thinks the fed may have even further room to drop rates.

go to the link below and you will see a heading that gives you audio of the interview. he doesn't discount the subprime problems, but overall he thinks the market will respond positively to the fed.

http://www.marketwatch.com/markets/

-j

Mick100

21-09-2007, 02:41 PM

Hi phaedrus

Is the NZX/ASX past the caution area yet
The markets are beginning to look quite bullish again
,

Phaedrus

21-09-2007, 03:56 PM

Of the 6 indicators that I use to monitor the Index, 5 have signalled an end of my "Caution" period. The laggard is the Momentum Indicator, which you can see is still negative. The first indicator fired at the end of August, so this "indecisive" period has lasted for 3 weeks, so far. Those with a Bullish view of the market would have been quite happy to resume buying activity on the basis of just one indicator, while the more cautious might want to wait until all 6 have been triggered.
To me, it makes sense to re-enter the market incrementally as each indicator triggers, rather than abruptly go straight from "Stop" to "Full ahead".
http://h1.ripway.com/Phaedrus/NZ50ndx921.gif

Kropotkin

21-09-2007, 04:33 PM

I guess the trick is what to buy in NZ....

Though this really isn't the thread, GPG is looking like a tasty pickup (esp. if it pulls bak to around the 170c mark) - I'm hoping the SP gets punished a little more over this Coates debacle......

SectorSurfa

21-09-2007, 07:17 PM

The other 3 "caution" periods end very very close to the break of the 5% trailing stop loss

What has made this caution period different?

SectorSurfa

22-09-2007, 09:01 PM

What is the basis of all these forecasts......? The acting principle behind the tabulations is hope. Everybody desires that prosperity should continue and increase..... We are a childish people; we like to be told what we want to believe. But are these forecasts really as searching as they sound? After laboring over a number of them one curious thought emerges and perhaps only in one case is it recognized distinctly by the forecaster. This is that nobody takes a long view.

~ William Peter Hamilton: The Wall Street Journal, January 1929.

http://www.incrediblecharts.com/free/trading_diary_archives/2007-09-22.htm#asx

quoted quote from colin twiggs this week.

I like him.

kura

23-09-2007, 04:04 PM

Just out of curiosity Phaedrus, would you have been in "caution mode" prior to the 1987 crash ?

Phaedrus

23-09-2007, 04:59 PM

Mick100

23-09-2007, 05:49 PM

I'm still not convinced tha this correction is over despite the technical indicators all pointing in the right direction, bar momentum.

I still think the august lows will be tested, probably next month
Doesn't look like a proper bottom to me - the aug spike down
.

777

25-09-2007, 03:18 PM

Any thoughts on where the 1.11 billion being paid out by Telecom will end up? It could give a boost to the local market.

Billy Boy

25-09-2007, 05:16 PM

We have normaly seen a correction in October.
Maybe early this time.
BB

kura

25-09-2007, 07:37 PM

You betcha. Market weakness prior to the big drop would have moved me first into "Caution" mode and then into full "Red alert".

The whole system was in fact set up to afford me some level of protection from an '87 type crash. Once through something like that is quite enough!

The reason I asked, was that my vauge recollection, was that the 87 crash was a sudden event triggered by international market falls, and so was largely "without warning"

My memory is only vauge, as I had sold my shares beforehand to buy a new cave, yep, the good old days of paying 20% interest on a first mortgage (sure brings back memories)

hiawatha

25-09-2007, 09:26 PM

Any thoughts on where the 1.11 billion being paid out by Telecom will end up? It could give a boost to the local market.

Hiawatha's share of th 1.11 billion will be going straight into his bank account; and there, I imagine, it will remain for the foreseeable future. Hiawatha is feeling cautious, not because of some silly chart, but because he is not convinced that Wall Street's problems with sub-prime mortgages, dodgy CDO's etc. have run their course. Hiawatha thinks that the world may still be heading for one massive depression.
hiawatha

peat

25-09-2007, 09:43 PM

The reason I asked, was that my vauge recollection, was that the 87 crash was a sudden event triggered by international market falls, and so was largely "without warning"

My memory is only vauge, as I had sold my shares beforehand to buy a new cave, yep, the good old days of paying 20% interest on a first mortgage (sure brings back memories)
while it was sudden when it happened the NZ stockmarket actually did a massive double top first peaking in Dec 86 and then midway through 1987 before drifting downwards slowly (losing momentum and I would hazard a guess strong divergence ) just before the crash - (also from memory)

STRAT

04-11-2007, 01:40 PM

Hi Phaedrus, Do you ever apply your extensive charting skills to the state of the US indices. If yes I would very much appreciate your perspective on the current state of the DOW, S&P etc.

Phaedrus

04-11-2007, 04:02 PM

I monitor the US, Aus and NZ indices quite closely, Strat.

Here is the DJIA chart for you - the S&P500 is so similar that it's not worth posting both. I use these charts to control my Short:Long trade ratio there. (If very bullish I will have 5 longs, very bearish 5 shorts, undecided 2 longs, 2 shorts and 1 cash, etc.)

A chart like this puts the recent plunge into perspective doesn't it!

http://h1.ripway.com/Phaedrus/DJIA114.gif

duncan macgregor

04-11-2007, 04:40 PM

PHAEDRUS, If you invest in overseas markets do you adjust your chart for exchange rates?. An example of this is the ASX has gained against the US dollar and about 8% against the NZ dollar so far this year. The price of gold is measured in American dollars looks really good this year in their market not so good in the NZ market and pretty flat in comparison in the Australian market. I would think that a chart of the american market is only accurate in America, over here we must subtract exchange rates. A chart starting this year investing in Australia from NZ would trend up 8% higher from this side of the ditch.
Wish i had your charting ability only interested in how far you take it. Macdunk

macduffy

04-11-2007, 06:39 PM

STRAT

04-11-2007, 08:03 PM

Thankyou Phaedrus. That was exactly the insight I was hoping for. One again very much appreciated

parker1other

04-11-2007, 08:10 PM

Macdunk (Duncan Macgregor) says to PHAEDRUS "wish i had your charting ability"
I would say to PHAEDRUS "wish i had your charting softwear"

Wilkins_Micawber

04-11-2007, 08:55 PM

Macdunk (Duncan Macgregor) says to PHAEDRUS "wish i had your charting ability"
I would say to PHAEDRUS "wish i had your charting softwear"

Charting software can be bought (Phaedrus uses Metastock I believe, which can be bought from Equis in the US for approx NZD$750) whereas charting ability (understanding) such as Phaedrus clearly has must be aquired over time (probably with much effort and some mistakes/costs).

parker1other

04-11-2007, 09:20 PM

thanks for that wilkins micawber,undoubtably many on this site share (silly pun ) your sentiments. can I spell check these posts?

Hoop

05-11-2007, 01:31 AM

The most important point surely in the Dow's performance is its influence on Americans' confidence and sense of well-being. In this respect, the NZD-adjusted trend is not relevant, except to the small minority of NZers who want to relate it to their USD investments.

I invest mostly in NZ shares, but monitor the Dow closely, reason......this year the global big secondary corrections have been hatched in the US market. I have been watching for signals that preempt the corrections, and act accordingly. Saved a few $ getting out of my weaker stocks in August. The August correction was very scary, it nearly ended the Bull market phase

macduffy

05-11-2007, 08:35 AM

I fully agree. It's the concept of NZD-adjusted figures/graphs of the DJIA which I find irrelevant to most NZ investors.

duncan macgregor

05-11-2007, 09:24 AM

The commodoty cost increases or decreases in a currency measured in another currency are very relevant to what the trend is in NZ. Gold for instance would have three completely different line trends in NZ, AUS, and america. If you invested in gold in Australia you would not have made much of a gain in comparison to investing in America with NZ in between.
That is only a concern if you invest in something that gets sold and measured in a different currency. NZ buys and sells a lot of items tied to the US dollars exchange rate, therefore the chart showing currencies trending against each other is very relevant. I only wondered how far PHAEDRUS takes it. The actual price can be completely different to the real price, but then the risk is, you get bogged down in detail, making things so complicated it becomes worthless. Macdunk

Phaedrus

05-11-2007, 11:05 AM

... do you adjust your chart for exchange rates? No - there is no point because the object of the exercise is to monitor the state of that individual market, regardless of how this may relate to our dollar.

...the ASX has gained against the US dollar This might be relevant if you were interested in transferring money between those two countries, but I'm not.

the ASX has gained about 8% against the NZ dollar so far this year. I view this a bit like an 8% dividend. Nice in the short-term and worth keeping in mind, but on its own not reason enough or big enough to be a deciding factor in where to invest.

The price of gold is measured in American dollars looks really good this year in their market not so good in the NZ market and pretty flat in comparison in the Australian market. This would perhaps be relevant if I was holding gold here, but I'm not.

Duncan, I'm quite sure that you are familiar with the concept of owning different shares for different reasons. The same idea holds for different markets. I'm in the NZ market for the high dividends (which I rely on to cover living expenses), capital gains and imputation credits. I'm in the Aus market for exposure to resource stocks and a bigger market. I'm in the US market for access to plenty of volatile fast moving heavily traded stocks. The ability to Short-sell stocks so easily and cheaply there means that the performance of the Dow index has no direct relationship with your own investment performance. My gains generally stay or are spent in their country of origin, so you can see why exchange rates are of no great concern to me.

As you would expect, the relative performance of these three markets is constantly changing. One or the other is always doing best. Does this mean I should therefore consolidate and transfer all my money into that market? Of course not! Duncan, at any given time you always have one stock out-performing all your others right? Shifting all your capital into that stock would not be a sensible move though. You continue to hold lesser performing stocks for reasons of diversification. The same principle applies to markets.

It's nice that you have discovered the Australian market Duncan. Good on you. Just don't get too one-eyed about it though, eh?

Bilo

05-11-2007, 03:47 PM

I respect your posts Phaedrus but there are occasions when I look back at the road ahead after looking in the rear-view mirror too long and I get very scared......a lot of red ink persisting in markets around the world....bad money news getting worse...

As I indicated on the other "blood on the floor" thread on Friday, this bear is out of circulation and only peering out of his cave for a few days.

Phaedrus

05-11-2007, 04:56 PM

Bilo - If you really are getting scared, do something about it.

Sell down until you stop worrying. Get cashed up or get Short.

airedale

05-11-2007, 05:39 PM

No - there is no point because the object of the exercise is to monitor the state of that individual market, regardless of how this may relate to our dollar.

This might be relevant if you were interested in transferring money between those two countries, but I'm not.

I view this a bit like an 8% dividend. Nice in the short-term and worth keeping in mind, but on its own not reason enough or big enough to be a deciding factor in where to invest.

This would perhaps be relevant if I was holding gold here, but I'm not.

Duncan, I'm quite sure that you are familiar with the concept of owning different shares for different reasons. The same idea holds for different markets. I'm in the NZ market for the high dividends (which I rely on to cover living expenses), capital gains and imputation credits. I'm in the Aus market for exposure to resource stocks and a bigger market. I'm in the US market for access to plenty of volatile fast moving heavily traded stocks. The ability to Short-sell stocks so easily and cheaply there means that the performance of the Dow index has no direct relationship with your own investment performance. My gains generally stay or are spent in their country of origin, so you can see why exchange rates are of no great concern to me.

As you would expect, the relative performance of these three markets is constantly changing. One or the other is always doing best. Does this mean I should therefore consolidate and transfer all my money into that market? Of course not! Duncan, at any given time you always have one stock out-performing all your others right? Shifting all your capital into that stock would not be a sensible move though. You continue to hold lesser performing stocks for reasons of diversification. The same principle applies to markets.

It's nice that you have discovered the Australian market Duncan. Good on you. Just don't get too one-eyed about it though, eh?

Phaedrus, you may not hold gold, but sometimes your posts shine like gold amongst the dross. Excuse the hyperbole:)

Bilo

05-11-2007, 06:25 PM

Bilo - If you really are getting scared, do something about it.

Sell down until you stop worrying. Get cashed up or get Short.

Thanks Phaedrus
I did all of those things last week.
Just a bit slow with shorting the index...
:)

Bilo

05-11-2007, 08:52 PM

Bilo - If you really are getting scared, do something about it.

Sell down until you stop worrying. Get cashed up or get Short.

Thanks Phaedrus
You spurred me from being simply defensive onto the attack. It looks like my short on the Aussie 200 might pay off - even tho a bit late with the index going the wrong way initially.:)

AMR

14-11-2007, 12:27 PM

Are we out of the woods yet? Wal-Mart has just released a decent profit announcement, and Goldman has announced they are unaffected by subprime. Is the subprime monster dead?

Also, I notice that the new high new low index on yahoo finance for the NYSE and NASDAQ is still strongly negative. is this terribly important?

STRAT

14-11-2007, 12:44 PM

Are we out of the woods yet?We are for today :D Tomorrow who knows :confused:

Hoop

14-11-2007, 01:10 PM

XX quote.."Is the subprime monster dead?"

I believe it is like the Loch Ness monster, all we see at the moment is its head and neck.....how big the rest of it is? we may find out next year when more loans come up for renewal or restructuring.

winner69

14-11-2007, 01:26 PM

.......Goldman has announced they are unaffected by subprime. Is the subprime monster dead?

Interesting these bankers are quick to deny subprime ... and forget about the the other dodgy stuff in thier portfolio

The Accounting Standards Board recently issued a new rule which requires a financial firm to divide its assets into three categories called simply enough, Level 1, Level 2 and Level 3.

Level 1 is stuff that can be marked-to-market, where an asset's worth is based on a real price, like a stock quote.

Level 2 is mark-to-model, an estimate based on observable inputs which is used when no quoted prices are available. You can go get several bids and average them, or base your assumption on what similar assets sold for.

Level 3 things are based on companies' "own assumptions" about the way assets would be priced, ie a guess .....come cynics say a simple eild assed guess

The latest estimate is that Goldman Sachs have about $70 billion of level 3 assets ...... and their equity is ony $40 billion. In other words Goldman have guessed that a portion of their assets are worth $70 billion - what happens if that guess is wrong ... 50% wrong and Goldmans equity gone down the gurgler

Sub prime dead .... credit crunch dead ..... don't think so

We will see more writedowns over the next year or so.

Bilo

14-11-2007, 04:30 PM

shasta

14-11-2007, 04:47 PM

I was concerned about this accounting change too Winner, until I started to ask myself how long it was going to take someone to count to $70Bn and then prove that another mistake hadn't been made. The valuation at a percentage of a number will only focus attention of the derivation of the percentage - the arguments could go on for a long time before we see anything other than an audit note - which probably exists already. The published valuation is only at a point in time. I think that perhaps more attention will go onto cash generation...

Bilo

On the ADY:ASX thread i posted the bloomberg article where the total subprime problem was quoted as amounting to $US400B!

I agree its only just unfolding & unfortunately the next reporting season will reflect further writedowns, the very reason IFRS has been introduced.

The US is always at the heart of accounting scandals & they want us to follow there lead?

peat

21-11-2007, 11:08 AM

I just thought I'd throw in this in case the bulls need some ammunition and this was the first thread title that seemed vaguely relevant.

Economic comment
Crazy gang
Dario Perkins
Following the publication of our year ahead note last week, the economics team convened
an emergency 'strategy' meeting in Robert's office on Friday afternoon. The agenda,
debated while consuming RL's secret stash of cognac, contained just one question for
discussion: are we genuinely insane? Our meetings and telephone conversations with
clients triggered this latest wave of soul-searching and self-doubt (on reflection, the cognac
didn't help). It seems investors are now overwhelmingly bearish, fundamentally disagreeing
with our constructive views on the global economy. Judging by the expressions we got from
some of them, they are even starting to doubt our sanity. This is alarming. Some
psychologists define 'madness' in a statistical sense. You are crazy when enough people
believe you are crazy. If this is the case, our next year ahead note will probably be written in
coloured crayons on our bedroom walls, annotated with giant diagrams of the inflation
monster.
Economic forecasts are notoriously unreliable. Yet, every investor now has the same
forecast; a major global slowdown. This seems strange. More remarkable still, there is little
evidence this outlook is actually materializing. The global economy has just enjoyed its
strongest sustained period of growth in three decades. Most major economies are still
growing above trend. Even the US, which is the epicentre for most of the growth fears, has
just expanded at an annualized pace of more than 4% for two quarters. Sure, there are lots
of downside risks, but the forecasts for a global recession are still only forecasts. I agree
these gloomy expectations might become self-fulfilling. But they would need to spread to
households and businesses, not a few investment bankers who are worried about their
bonuses. The bears should carry the burden of proof in this debate, but somehow it doesn't
seem to working like that.
The bear case rests on a number of assumptions, which result in a perfect sequence of
nasty shocks. First, US house prices fall sharply. Possible I suppose. Second, 'wealth
effects' force US consumers to cut their spending. Completely unproven. Third, US
companies slash jobs and cut investment. With the profit share at record highs, this seems
unlikely. Fourth, the collapsing dollar spreads the pain to the rest of the world. These
forecasts are not new, but the credit crisis seems to have raised the bears' conviction levels.
Lending standards have tightened and this should force households and companies to cut
their spending, even if they don't want to. Just look at the recent bank lending surveys in the
US and Europe, we are told. True, but it's still difficult to work out how much lending
standards have actually tightened. A modest but broad-based tightening, also consistent
with these surveys, is healthy.
Policymakers seem to be listening to their friends in financial markets. They have ignored
the complaints of manufacturers for the past decade, but investment bankers are granted an
input at the highest levels of policymaking. The Fed has cut interest rates more aggressively
than even its own rationale for pre-emption- Mishkin's 'optimal policy response' - suggested
would be appropriate. And now the Bank of England has joined in. By raising the possibility
of rate cuts in 2008, the BoE has also left itself vulnerable to financial markets trying to force
earlier moves. This is despite the fact there is still no evidence of any meaningful UK
slowdown (on the basis of my aborted shopping trip on Saturday - there were no free
parking spaces - interest rates should still be rising). It seems only the ECB is determined
not to be coerced by financial markets into cutting interest rates. So, am I crazy? Well,
ranting is certainly a worrying symptom. Or maybe Friedrich Nietzsche was right: 'Madness
is rare in individuals - but in groups, parties, nations, and ages it is the rule'.

STRAT

21-11-2007, 07:37 PM

Hi Phaedrus, May I be so bold as request an update of your opinion regarding the US markets?

upside_umop

25-11-2007, 03:43 PM

I was going to ask the same. I get those emails from Colin Twiggs, and he explained the uptrend has been broken on the DJI and if support is broken at 12800 it would represent a primary trend reversal.

Do you agree?

ratkin

25-11-2007, 07:30 PM

If they crash then Phaedrus will appear the next day , provide a lovely colour chart and explain to you all that the week before was the time to exit all stocks

duncan macgregor

25-11-2007, 08:27 PM

If they crash then Phaedrus will appear the next day , provide a lovely colour chart and explain to you all that the week before was the time to exit all stocksBeing a bit unfair on PHAEDRUS RATKIN. Charts only show what has happened in the past with the likely outcome for tomorrows market going forward.
The market can change direction quite sharply on the odd occasion out of the blue making complete nonsense of fundamental or technical analysis forecasting systems. PHAEDRUS does an excellant job with his charts you should learn from that and be gratefull. Macdunk

upside_umop

25-11-2007, 08:46 PM

If they crash then Phaedrus will appear the next day , provide a lovely colour chart and explain to you all that the week before was the time to exit all stocks

Considering he makes a living from it, and a few others do too, i would say it works...to me its always a helpful insight.

MaccyDee is onto it, can help explain the unexplained...and give warning and warming signs..

Mick100

25-11-2007, 09:12 PM

ratkin is right

the charts make a lot of sense when doing a postmortem

Long term charts (5 - 10 yrs) are useful for following secular trends

the short term charts which phaedrus uses arn't much use at predicting future market action.
.

Glendoonie

25-11-2007, 09:30 PM

If they crash then Phaedrus will appear the next day , provide a lovely colour chart and explain to you all that the week before was the time to exit all stocks
Ooooh, do I detect the green-eyed monster? :p

Phaedrus, your opinion wrt the US markets; the implications of a break in the uptrend of the DJI with support broken at 12800 is most respectfully requested.

Now, back to your lair please, Ratkin.

Year of the Tiger

25-11-2007, 10:03 PM

If they crash then Phaedrus will appear the next day , provide a lovely colour chart and explain to you all that the week before was the time to exit all stocks

Last year sometime (or maybe a bit longer), I looked at a block of charts that Phaedrus posted where he indicated that it looked the particular stocks were going to trek upwards for a while based on their recent and and slightly longer history. With my limited funds, I picked out two of them and bought the number of shares that I could afford then proceeded to watch them every day. It helped me to learn a lot by having some starting point and following on watching the charts as well as what was happening with the companies. I sold both lots of shares later on at a very nice wee profit just after their share prices were starting to drop.

I have Phaedrus to thank for posting the indicators at the time and enabling me to follow on from there and do some of the hard yards myself. I read all (well, most) of his posts and have found his generous sharing of knowledge has helped me so much.

YOTT

Mick100

25-11-2007, 10:18 PM

I heard an esteemed chartist say on tuesday last week that if the dow broke below 12845 then we were officially in a bear market - the transports have already put in a new low - the dow falling below 12845 would be confirmation of the bear market

the dow closed at 12790 the next day - so we are officially in a bear market according to dow theory, ie, sell all your shares as soon as you can.:D

shasta

25-11-2007, 10:39 PM

Last year sometime (or maybe a bit longer), I looked at a block of charts that Phaedrus posted where he indicated that it looked the particular stocks were going to trek upwards for a while based on their recent and and slightly longer history. With my limited funds, I picked out two of them and bought the number of shares that I could afford then proceeded to watch them every day. It helped me to learn a lot by having some starting point and following on watching the charts as well as what was happening with the companies. I sold both lots of shares later on at a very nice wee profit just after their share prices were starting to drop.

I have Phaedrus to thank for posting the indicators at the time and enabling me to follow on from there and do some of the hard yards myself. I read all (well, most) of his posts and have found his generous sharing of knowledge has helped me so much.

YOTT

Its nice to see posters acknowledge the likes of Phaedrus, he doesnt have to post the charts he does, but we can all learn from them.

We have lost several "valued" posters from ST (Robbo that includes you!), who stopped posting due to ungrateful & uninformed comments.

It's human nature that because someone (Phaedrus) posts charts with an opinion, they tend to incur more uninformed posts than thanks!

It always intrigues me that a new thread will have some 100+ views before it gets a reply, & as soon as someone says anything, the knockers come crawling out ...

Im not a techie by any stretch, but DO appreciate the contribution Phaedrus makes on ST.

shasta

25-11-2007, 10:43 PM

duncan macgregor

26-11-2007, 06:55 AM

Its nice to see posters acknowledge the likes of Phaedrus, he doesnt have to post the charts he does, but we can all learn from them.

We have lost several "valued" posters from ST (Robbo that includes you!), who stopped posting due to ungrateful & uninformed comments.

It's human nature that because someone (Phaedrus) posts charts with an opinion, they tend to incur more uninformed posts than thanks!

It always intrigues me that a new thread will have some 100+ views before it gets a reply, & as soon as someone says anything, the knockers come crawling out ...

Im not a techie by any stretch, but DO appreciate the contribution Phaedrus makes on ST. I to appreciate PHAEDRUS and his charts learned a lot from his input on selling sytems. The MICK a hundreds and their warped ideas about getting it so right, that they dont need a selling system get it so wrong most of the time. Take his NZO options for instance, watched them go from 30c back down to 8c like a great dumb wally, with no TA idea whats so ever. Nobody gets more flack than old MACDUNK its the nature of the game i find it amusing to have spoiled brats snapping at my heels i dont care. MICK and i have a go at each other now and again for a bit of fun we dont take it seriously and get all upset like some of you. MACDUNK

Phaedrus

26-11-2007, 09:12 AM

It is all too easy to focus on day-to-day market movements and lose sight of the big picture. One way to see underlying trends more clearly is to use the Zig-zag "indicator" set such that small changes are ignored. This 3 year chart features a 4% Zig-zag (blue)

You can see that it is only 6 weeks since the Dow made an all-time high and that it is still in an uptrend. (A downtrend would require a lower low after a lower high. While it has made a lower low, this was after a higher high)

So, is the current 6 week downtrend any more severe than any of the other "medium-term" downtrends shown on the chart? Yes it is. You can see from the red trailing stop that, for the first time in 3 years, the Index dropped more than 8%.

Volatility is increasing.

Clearly this is a time to exercise a considerable degree of caution.

http://h1.ripway.com/Phaedrus/DOW1126.gif

26-11-2007, 12:42 PM

Hommel

26-11-2007, 01:18 PM

My thoughts exactly KW. I have very little investment in US, but I still fear that if US goes into recession it will have a downward effect on Aussie and NZ markets. I have been sitting watching for a few weeks now and thinking "Do I cash up or not?". Most of the Aussie companies I hold are looking quite healthy though so it is really hard to sell. Maybe I should just sell a few that I am not 100% confident in (of their short term future). It is a good time to accumulate cash to buy off shore currency when the time is right.

whiteheron

26-11-2007, 01:27 PM

Hi folks

I have read and enjoyed your posts on the important subject of the USA and its effect on other markets if/when it goes into a bear market
This is a subject that I have thought about a great deal (but I dont by any means profess to be an expert or anything like it)

For what it is worth here are a few of my thoughts/conclusions

The influence of the USA on other world economies has been diminishing over the last few years and will continue to do so as the emerging economies gain momentum (they have plenty at present) and begin to mature, a process that will probably take several decades BUT DONT UNDERESTIMATE THE INFLUENCE OF THE USA it is still the worlds largest economy and will remain an important economic force for some years yet
A recession in the USA will not have as much effect on other economies as it has in the past but will have a marked effect nevertheless

A very real problem that the USA has is the continuing devaluation in its currency and I dont see any early or quick fix to this --- you cant continue consuming far more than you earn and fighting wars for ever and ever, eventually somthing will have to give

By printing more treasury bonds etc the US is effectively transferring the cost of its wars to other economies when they take up the bonds, another matter that surely cannot continue ad infinitum

There seems to me to be a number of matters that will be difficult to resolve

What does the future hold ?
I find it difficult to predict with any degree of definity but world economies appear relatively sound at present even though there are matters like the mortgage sub prime meltdown problem etc to contend with

In the meantime I am sticking with mining/resource stocks
Well managed producing companies, I believe, will continue to flourish

Mick100

26-11-2007, 01:42 PM

On to more pressing questions than whats happening with the Dow!

If we assume the US economy is going into a recession due to falling house prices, rising oil prices, and increased cost of borrowing money, and that the US market enters a bear phase .....

Then what is going to happen to the NZX and ASX? Just how coupled are the these markets to the US? If Australia and NZ economically are still rocking along, will we experience a bear market as well regardless?

For those of us that dont invest in the US, this is our biggest conundrum. Do we sit on the sidelines of the NZX and ASX and wait out a US recovery? Or do we continue investing in the belief that our markets will stay standing over the next few months?

This is exactly what we should be concerned with at the moment - will the asia-pacific economies decouple from the US or will the US drag down asia with it when it (almost certainly) goes into reccession next yr

What we have to watch is the value of the chinese/HK curencies which are partially pegged to the USD under the crawling peg system
Most mainsteam economist will argue that if the US goes into reccession and the USD weakens further the americans will mot be able to continue buying chinese produced goods and chinese economic growth will fall off the cliff which in turn would have a very negitive effect NZ/OZ economies

However there is another line of thought - that is, if US consumption takes a nosedive and this subsequently effects chinese exports then the chinese will revalue or float their currency. The effect of a much stronger chinese currecy will be that chinese exports will be more expensive to the rest of the world but thier imports would be cheaper which would benifit countries that export to china. Chinese domestic prices will decline leading domestic consumption in china to increase substancially - will it be enough to take over the current american consumption? I read an article recently which predicted that it would take another 3 yrs before asian consumption could replace american consumption (the middle class in china stands at around 300 million curently - people earning 10,000 US or more)

The thing to watch is the value of the chinese currency relative to the USD - it is increasing slowly

Hoop

26-11-2007, 02:42 PM

The DOW was up 181 points on Friday & closed at 12,980.

I doubt the bears have awoken from there caves just yet...

From looking at Text books, historical investment activity, chartists, and fundamentalists, buy/sell behaviour, investor behaviour at the end of a Bull market (phase3), etc, etc.... I am personally convinced and sad to say that the DOW bull will probably die sometime this week, and the other bulls ASX and NZX will follow and maybe FTSE.

As all the ducks (bad signals from various world investment markets) have lined up in a row...many TA investors have already left the market and have taken their cash with them. As this secondary correction is now nearly 3 weeks old, those die hard investors still left in any of the various markets ..their investments must be close to their sell trigger points..... Thus any more drops in the correcting market may trigger a self fulfilling steeper fall.

I have been cashing up orderly these last 2 weeks, a bit more frantic today as I think time is running out... nearly 80% cash and I am not longer a long term investor.(everything for me now until Bear3 is short term)
Note to those who think I am a pessimist...during the end of Phaedrus caution in August I went from 30% to 10% cash.

Mick100

26-11-2007, 03:18 PM

.

I have been cashing up orderly these last 2 weeks, a bit more frantic today as I think time is running out... nearly 80% cash and I am not longer a long term investor.(everything for me now until Bear3 is short term)
Note to those who think I am a pessimist...during the end of Phaedrus caution in August I went from 30% to 10% cash.

For those people who still can't distinguish commodity stocks from the rest it pobably is wise to be completely out of the markets at the moment.

In the 1970s energy and food prices increased substancially in price while the general share market went sideways/down for 15 yrs. We are entering a similar period now IMO. Commodities could get dragged down in a general sell-off but they will soon bounce back
Get into the right sectors (food, energy, precious metals) or get out!
,

Hoop

27-11-2007, 10:41 AM

....... I am personally convinced and sad to say that the DOW bull will probably die sometime this week, and the other bulls ASX and NZX will follow and maybe FTSE

The DOW bull died this morning (NZ time) Closed 12743
RIP
HOOP

Mick100

27-11-2007, 11:04 AM

....... I am personally convinced and sad to say that the DOW bull will probably die sometime this week, and the other bulls ASX and NZX will follow and maybe FTSE

I think the above statement is only partly right - your assuming that what's always happened in the past will determine future behavour of markets.
The ASX and NZX are going to decouple from the DOW at some stage because they are commodity based economies
.

Mick100

27-11-2007, 11:07 AM

Mick100

27-11-2007, 11:07 AM

Footsie

27-11-2007, 11:13 AM

Dow is not dead yet

A retracement to 12300 is on the cards. This is the long term support for the 5 year bull market.

There has only been 2 recessions in a decade twice in the last 300 years (in the US)
1890's and 1930's
As you will remember from school these two periods of time are recognised "depressions".
This is hardly the case now.

THe US went into recession from mid 2000 to early 2003
The likelihood of another prolonged recession now is very remote

I'm still calling for a global recession at the end of the decade. It will fit nicely with the slowdown in China.

Importantly Australia's "golden" boom will run another 2 years. Go long Miners and IT.
Stay outa banks.

Mick100

27-11-2007, 11:19 AM

sorry about the repitition of the post - computer problems

duncan macgregor

27-11-2007, 11:51 AM

Hoop

27-11-2007, 11:51 AM

I think the above statement is only partly right - your assuming that what's always happened in the past will determine future behavour of markets.
The ASX and NZX are going to decouple from the DOW at some stage because they are commodity based economies
.

Mick you may be right. Not all markets follow each other, however they seem to be in tandem at the moment.

Please note that I assume you (and others) have already deduced that I am no expert...I am a info gatherer and I apply my basic skills and action them upon that info received. This years investments for me have been unspectacular at best due mostly to too much poor info being received and deduced. It is up to the posters on this forum to decide whether my deductions are right this time. Hint...been wrong too many times this year:(

Mick you may be right about the Markets uncoupling.....but (no offense) I am not going to risk my $few00,000 in cash to find out if you are right.

80% cashed up and increasing.

27-11-2007, 01:02 PM

I'm taking the opposite approach and avoiding commodites (well mostly, except for gold and agriculture :-). I'm looking for domestic only companies, that are undervalued but have good prospects regardless as to what happens to the price of debt/metals/oil/etc.

Property, telecommunications, engineering, IT is where I'm at. Now I sold up in August, and bought back in cheap in Sept, so nothing in my portfolio is giving a sell signal. This time I'm not selling out, but riding it out. I also seem to have a very contrarian portfolio, as when the market goes down I am usually up (like today :-)

I have a nice line of credit that is untouched, so a big market meltdown that would bring some of my nice to have companies into my valuation range would be good! SEK, REA, MLB I'm looking at you .....

Hoop

27-11-2007, 01:07 PM

Your time frame is too long Footsie. Completing a double top formation happens at below 12800, which has happened. Double tops are very bearish indicators.
Also a fall below 12800 indicates a lower low from the Bull market(3). As there is no such thing as Bull market(4) {Dow theory} this lastest fall from the last peak is now the part of the wave (1) formation {Dow Theory}.The break of the 12800 could be false, are you a betting man???

Footsie is it from your TA Workings of the double top you got the retracement to 12300 as the theorical target? In practice I have seen many indices that don't stop there, especially if that activity breaks a support line or such like.

Your quote...Dow is not dead yet

A retracement to 12300 is on the cards. This is the long term support for the 5 year bull market.

Wrong..It's not the 5 year 12300 support the 7 year 12000 is... but....
If the DOW falls to the 12300 mark the long 20yr uptrend line will probably be broken, next stop is 12000 the 7 year major support line...notice how close this is to now(12743). Once the 12800 support is broken there is blue sky from then down to 12000

My attempt to produce a chart may fail but here goes....A long term perpective shows a clearer picture
http://www.sharetrader.co.nz/C:/Users/Richard/Pictures/36yearDOW%20Graph.gif
A 36 year Dow chart shows a bull market over that time and will not be broken until the DOW hits below about 6000..the 35 yr uptend line...so its "Statistics more statistics and lies" situation...if one reworks the figures it's always possible to get a favourable result to suit one's needs. Note the 1987 stockmarket crash never broke the 25 yr uptrend line :):( neither did the 2002/3, but both were destructive to the shareholders.

As long as a country has positive growth over the very long term, the very long term graph will always be pointing upwards.

Trivia from my other post (History). There's been 8 major falls in the last 100 years..5 were in years ending in 7. In the last 20yrs there has been 3 ..1987 (-48.6%) 1997 (-117.9%) and 2001 (-37.8%) and Sept and November are the months that had the larger amount of the falls in.

Nov 2007 ?? your guess:D

Hoop

27-11-2007, 01:13 PM

....My attempt to produce a chart may fail but here goes

Bugger it failed ..someone must teach me how to do this successfully.......caution.. I'm a slow learner.

baxter

27-11-2007, 03:31 PM

FOOTSIE.....Why would you recommend staying out of banks in a downturn. During the last two bear markets I recall the Banks being one of the few areas that did well. (Politically controlled BNZ excepted) (have held some Westpac long term)

Footsie

28-11-2007, 10:40 AM

Hoop

28-11-2007, 02:37 PM

Banks are fully valued

they've had their time in the sun.

You want growth people.

Hoop - you cant pay too much attention to charts. I've seen stocks "break" below levels only to recover and rally. 12,300 is the trend support i get on my chart.

You buy undervalued stocks with good growth prospects, regardless of market conditions.

Sure I use TA to help timing, but rely on FA first

Footsie we are similiar in that respect, I to am a FA by nature using TA for timing and the position of markets overall.

However I find that yet again I seem to lose money in the later stage of a bull market cycle usually due to poor results published by companies without warning e.g RAK. In a Bear market or early Bull market I'm OK I make money, it's just this end of BM that I seem to have trouble with. I have concentrated more on TA this time around with better results(less of a loss) and identifying future falls using TA signals on indices. I find FA is less reliable in BM(3) as the projected company/market information seems to be met with disappointment at report time.

As you say there will aways be opportunities no matter what cycle we are in whether Bull or Bear.

Yes ..I am aware of false breaks...but is this one of them? I hope so for everyones sake, but this time I'm in doubt, so I'm holding on to my cash

I still have some stocks NZO and PRC that are doing OK and I am in a nice position with lots of cash to take advantage of the next rally.

The nice thing about cash is, I get 7.6% on a daily balance in the DB trading account with monthly interest payouts:):)
It will pay for the chrissie presents + food + grog for the big family......can't complain about that :D:D

Successful investing Footsie and to all:)
Hoop

28-11-2007, 04:06 PM

How banking works. Bank gets $1 in, and uses it to lend $10 out. Bank then sells $10 loan to third party, and gets $10 back in and uses it to lend $100 out. On and on we go. Now the party has stopped. Bank cant sell $10 loan anymore, so can't lend $100. Bank cant borrow cheap money from overseas to lend out (at least without raising interest rates and killing their business entirely). Customers stop giving bank the original $1 (high mortgage interest rates, high petrol, inflation in food, childcare, school fees etc so they have no savings left to give to bank), so bank cant lend out anything.

Thus arrives the end of record profits from the banking sector.

peat

07-12-2007, 10:03 AM

I must admit I dont quite understand how Bush and his buddies can change the situation regarding the American mortgage foreclosure but they are doing it. For a free market economy they sure know how to intervene when the music dies at the party.
And BOE lowers interest rates!!??
Seems to me those central bankers are pussies - or are they just being pre-emptive. Bollard seems to be taking more the Bundesbank/ECB approach as outlined in this artice from ABN AMRO.

http://www.abnamrocraigs.com/pdfs/Morning%20Update%20071207.pdf

If you cant access that pls advise.

PS we need a few more threads discussing general economy stuff imo.

Hoop

07-12-2007, 11:03 AM

Banks are fully valued

they've had their time in the sun.

You want growth people.

Hoop - you cant pay too much attention to charts. I've seen stocks "break" below levels only to recover and rally. 12,300 is the trend support i get on my chart.

You buy undervalued stocks with good growth prospects, regardless of market conditions.

Sure I use TA to help timing, but rely on FA first

Footsie
Yes you are proven correct, the DOW did a false break. The chances of that happening is low (20-25%??).....So the DOW bull has sort of recovered back from the point of death. Now what? will the DOW test it's all time high with all the negative data floating around it?
Yes Peat USA and the free market!!!!! With all this financial manipulation, I should be estatic that they are keeping the economy buoyant through a rough patch, but I have this unlying bad feeling that they are just patching the problem and not fixing the underlying causes. Also how much money are they throwing at this rapidly growing financial beast and how much have they(Feds + banks) got left to throw at it....It's a worry.

In theory... now the DOW has passed the 13500 resistance, I should be buying up again on the NZX but there doesn't seem to be any stocks that look cheap and attractive, it seems with the recent local economical factors changing the NZX has temporarily decoupled from the rest of the markets.
Your thoughts??