PDA

View Full Version : When to re-enter the market?



Pages : [1] 2 3 4 5

Phaedrus
15-03-2008, 01:32 PM
Until the market as a whole starts showing a little strength, it may well be best to be out of it altogether. Here is a chart of the NZSX50 Index, with 10 assorted technical indicators - how these are used is a very individual decision. Gung-ho players would leap back into the market just as soon as any one of these indicators indicated a change of sentiment. Conservative, cautious investors would wait for all 10 to be triggered before commiting any funds. I favour an incremental approach, investing 10% of my capital as each indicator is triggered. These signals are simply permission to invest - you don't have to act if you can't find anything you want to buy!

Should you be unable to resist some of the "bargains" out there, just remember that buying while the market is falling is more risky than when it is rising, so any "premature" entries should be very closely monitored using short-term indicators and tight stops.

http://h1.ripway.com/Phaedrus/NZSXbuy315.gif

Year of the Tiger
15-03-2008, 02:12 PM
Thanks Phaedrus for this thread and your willingness to share your knowledge.

As always, I appreciate the clarity and lack of ambiguity in your posts which makes it so easy for me to understand. :)

Cheers
YOTT

macduffy
15-03-2008, 03:42 PM
Yes, many thanks, Phaedrus. It reinforces my resolve to wait before I buy some of those tempting morsels out there! After investing on fundamentals for longer than I care to remember, I'm now learning to take notice of TA. Proof than old dogs can perhaps learn new tricks!

;)

I guess its been asked before, but what charting software package do you use?

Cheers

airedale
15-03-2008, 04:49 PM
Phaedrus, as always your pictures are worth 10,000 words. Thanks for posting.

Sideshow Bob
15-03-2008, 09:24 PM
Phaedrus, as you know I really enjoy your posts, for which I thank you again.

However, are you able tell us of your actual trading results over the last month/3 months/6 months/year. It would just seem that with you skills, and knowledge, that you would be able to use this to obvious effect.

So that by this time, you would be sitting nicely on some beach in the Carribbean.....

I'm not trying to be smart, I would just like some sort of idea.



Thanks
SSB

tobo
16-03-2008, 11:08 AM
...However, are you able tell us of your actual trading results ...
Thanks
SSB

Have a look at the FBY Charts thread - Phaedrus #50 on 22/01/08 (page 3) and then on 07/02/08 (page 5) - for an example of application of his own rules to his own investing.

AMR
16-03-2008, 04:06 PM
So Phadreus, did you end up taking that buy signal from the FBU thread or did you filter it out as being a dangerous counter-trend trade?

Phaedrus
17-03-2008, 08:54 AM
Sideshow Bob, since completely selling out of NZ stocks at the end of November, I have made just four very small trades in over 3 months. They were FPH (loss), FBU (loss), MFT (gain), and NPX (gain). That's 2 wins and 2 losses for a small overall gain. Trading like this when the market has negative momentum is quite risky though and I would not recommend it for everyone.

Tobo, re FBU. In my opinion, this was a good stock, at a good price, giving a good buy signal - and buying it was still a mistake. This is a nice illustration of the importance of monitoring market sentiment as a whole - it really is the most important factor in your investment decisions. Ignore it at your peril.

AMR, you rightly classify the FBU buy as a "dangerous counter-trend trade". I did take a small position though, exiting at a loss a short time later. I am now back to 100% cash again.

duncan macgregor
17-03-2008, 09:38 AM
I am a bit like PHAEDRUS in one respect i cant resist a dabble even if i know its the wrong thing to do.
RUN WITH THE BULLS, SLEEP WITH THE BEARS, ANCOR YOUR BOAT, WAIT ON THE TIDE TO TURN BEFORE ROWING HOME.
Thats all it is regardless of your system, impatience to get back into a losing market will destroy you. Today is another losing day 8.5% sitting in the bank is your best option if you are carefull in what banks you leave it in. I think the worst has still to come, but that is only my opinion. Macdunk

Hoop
17-03-2008, 10:14 AM
A sea of red ink :(
NZX50 down 1.4%.

Not going to be a good day for the last week contrarian investors

Disc: 90% cash

Footsie
17-03-2008, 10:21 AM
Thanks Phaedrus

Look forward to the updates on this thread

I too have been keen on NPX.
Im also watching RAK, PPL for a turn.... but prepared to be patient.

Ultimately RAK and PPL could both go back to $1.00

redzone
17-03-2008, 11:39 AM
if you are going to buy ....buy good cash earning stocks.....ENV.AX....CEU.AX...DUE.AX....

sideline
17-03-2008, 12:04 PM
Hi, slighly off topic: Bear-Stearns have just imploded in the states:

Top value 17 Jan '07: US$169.73 per share
One year ago around US$150
Friday morning: US$57
Friday evening : US$30
Sunday night: company will be bought up by JPMorgan (thanks Footsy) in a share swap for US$2 (yes TWO) per share.
All regulatory approvals have been given already, the only thing required is shareholder approval!
Will they get it??

AMR
17-03-2008, 12:18 PM
Didn't warren buffet buy a stake in Bears Stearn a while back?

Footsie
17-03-2008, 12:26 PM
ITs JP Morgan not MS.

PPl said one of the big banks would go......... there may be more.

Footsie
17-03-2008, 03:55 PM
"Bear" Stearns anyone?

Asia pricing in a big fall on the dow.

lakedaemonian
17-03-2008, 04:17 PM
Personally, I'm thinking we are far, far closer to the beginning than the end of this bear.

Still too much shiny casino vaneer and lack of real substance...I'd rather invest than gamble, so i'll wait as long as it takes on equities

Mick100
17-03-2008, 04:48 PM
Keep in mind that for every seller there is a buyer and that not all buyers in bear markets are fools - no matter what Pheadrus's graphs would have you believe ...

Sorry Pheadrus - This point has to be made - If not by me, then by Buffet who has always been a 'value' buyer.

Yes - well said

trackers
18-03-2008, 09:16 AM
"Bear" Stearns anyone?

Asia pricing in a big fall on the dow.

Dow up 0.2%... Interesting

COLIN
18-03-2008, 09:28 AM
Dow up 0.2%... Interesting

"Interesting" - but what's your take?

We're certainly not out of the woods yet.

As for the RBNZ management of NZ monetary policy: my view is that a reduction in the OCR will have to take place much earlier than most of the pundits are forecasting. The lack of confidence is snowballing. Anyone who has been to property auctions of late will have sensed the paralysis that is creeping all over the place. People in general are tightening their spending habits and we all know how quickly the ripple effect can become a tidal wave. My fear is that RBNZ policy changes will be too tardy.

Phaedrus
18-03-2008, 09:47 AM
I'm not clear why you are apologising, Belg, or indeed what point you are making. You'll have to spell it out for me.

At a practical level, we are faced with the simple problem of when to re-enter the market. If you don't think much of my suggested approach, that's OK - though I would be interested to know exactly what it is that you don't like about it. How, then, will you decide when to re-enter the market?

I would be interested in your thoughts too, Mick. What do you see as being wrong with my system as proposed here? How do you propose timing your market re-entry?

winner69
18-03-2008, 11:40 AM
One thing about Phaedrus's sysyem (for want of a better description) is that if he was holding BSC.N I'm certain he would have been out early last year at about $150 ..... just look at the chart http://au.finance.yahoo.com/q/bc?s=BSC&t=5y&l=off&z=m&q=l&c=

No compromise or emotional attachment on P's part .... he would have been out of Bear Strerns ...... and the rationale approach is what P is highlighting on this thread

PS - must learn how to post charts one day

Mick100
18-03-2008, 04:31 PM
I would be interested in your thoughts too, Mick. What do you see as being wrong with my system as proposed here? How do you propose timing your market re-entry?

Nothing wrong with your system phaedrus

I never got out of the market - I raised some cash in dec-jan as a precaution as i'm leveraged. Have since reinvested over the past 6 weeks

Phaedrus - you make your bread and butter by timing the market whereas I make my bread and butter by buying undervalued shares - and there's plenty of them around at the moment - just wish I had more money

warthog
18-03-2008, 06:44 PM
Hi, slighly off topic: Bear-Stearns have just imploded in the states:

Top value 17 Jan '07: US$169.73 per share
One year ago around US$150
Friday morning: US$57
Friday evening : US$30
Sunday night: company will be bought up by JPMorgan (thanks Footsy) in a share swap for US$2 (yes TWO) per share.
All regulatory approvals have been given already, the only thing required is shareholder approval!
Will they get it??

Here's where to go for financial advice when it comes to your retirement ...
http://www.youtube.com/watch?v=gUkbdjetlY8

Lizard
01-04-2008, 09:23 PM
Hi Phaedrus,

Interesting April Fools Day move by the NZX50 today...freebie charts not totally clear, but looks as though a few of your indicators might be signalling a possible change in sentiment? Time for MacDunk to start buying?

(Bearing in mind the potential risk at this point and need for careful monitoring/tight stops etc as per your first post on this thread.)

AMR
01-04-2008, 11:50 PM
Hi Phaedrus,

Interesting April Fools Day move by the NZX50 today...freebie charts not totally clear, but looks as though a few of your indicators might be signalling a possible change in sentiment? Time for MacDunk to start buying?

(Bearing in mind the potential risk at this point and need for careful monitoring/tight stops etc as per your first post on this thread.)

I would agree with that. Some of the price behaviour lately seems pretty bullish. I was watching the HSI when the news of UBS writedown came out. It fell 400 points to quick time only to rally and recover 600 points.

That would signify pretty strong support does it not Phadreus?
http://img530.imageshack.us/img530/3738/hsi0142008fm5.png

duncan macgregor
02-04-2008, 07:59 AM
What has to be remembered is its that time of year to expect false signals. End of one financial year, start of another, with all the tooing and frooing that that creates. The American economy is in deep trouble, about to get worse, creating uncertainty in our markets. I am quite happy sitting in the sidelines getting my 8.5%, plus i expect another 8.5% in exchange rates in 2008. I would rather miss out on a few bob taking the risk at the moment than try and get out later in the year, when the markets all tank. Macdunk

Placebo
02-04-2008, 08:14 AM
What? They're gonna tank worse than now??

You have some info to share with us MacDunk? Do tell...

Dr_Who
02-04-2008, 09:06 AM
Some stability in the US market? If they can sort out the finance sector and start to bring some confidence back into the US market, the low interest rate and low exchange rate will hopefully push the economy back up again.

Footsie
02-04-2008, 09:06 AM
to my mind... this is still a classic bear market snap back rally that sucks everyone in.....


We need to move back above the 52 week EMA before I am convinced

Hoop
02-04-2008, 09:13 AM
What has to be remembered is its that time of year to expect false signals. End of one financial year, start of another, with all the tooing and frooing that that creates. The American economy is in deep trouble, about to get worse, creating uncertainty in our markets. I am quite happy sitting in the sidelines getting my 8.5%, plus i expect another 8.5% in exchange rates in 2008. I would rather miss out on a few bob taking the risk at the moment than try and get out later in the year, when the markets all tank. Macdunk

Similar strategy to you MD except I'm having a dabble at the moment with this recent rally. Everyone seems to be bullish at the moment but until the trends tell us otherwise this is just another short term rally beginning within the longer term bear market.
Therefore Bear market investing strategies should still apply.

PS agree Footsie (without any major trend breaks in the near future) it seems so

Key indicator to watch for on the DOW is the resistance line of 12800 if this is broken upwards it is a bullish sign.

Hoop
02-04-2008, 10:08 AM
A sobering chart to remind those people who think life has been great on the NZX50 during these past few days. (Note last index point date 31 March)

Selling pressure has been reduced (bollinger bands not on chart) and it seems the steep downward short term trend has broken.

I would not be surprised if a rally eventuates. (Wave B?) This may present short term opportunities for the risk takers. On a negative viewpoint it may be just another **breather then resumption of the downtrend

Has to break 3940 resistence to put a bullet into the bear.....this index figure seems a long way a way at this present time.

**Circled the breathers in the downtrend...I will call them breathers as I don't think they are big enough to be called rallies.

424

Phaedrus
02-04-2008, 12:23 PM
Hi Phaedrus, looks as though a few of your indicators might be signalling a possible change in sentiment?
(Bearing in mind the potential risk at this point and need for careful monitoring/tight stops etc as per your first post on this thread.)

That's right, Liz. Of the 10 indicators featured in the first post of this thread, 7 have now been triggered. I have been doing some restrained "special situation" buying over the last couple of weeks.

This is the first time in my entire investing life that I have had plenty of money available at a time when the market was depressed. What luxury! It presents a wonderful opportunity and I am being very careful not to spend up too large too soon.

This enviable situation is solely due to my index based "market overview" moving me into 100% cash last November. When I posted this system it was criticised on the basis that it would cause me to miss the "best buying opportunities"! Quite the reverse - it has, in fact, enabled me to make the most of such opportunities if/when/as they present themselves.

I'll post an update of the original chart. Just for old times sake.

duncan macgregor
02-04-2008, 03:12 PM
To soon in my opinion PHAEDRUS to get back in the market. I expect a few minor rallies before the next crash which in my opinion comes at the end of this year. Hope i am wrong but no worries, all i miss out on is buying opportunity against a few cents at the bottom.
Free trade with china will make a huge difference to what trends up or down plus the American economy downturn wont help either. Its going to be a bad year 8.5% in the bank plus an 8% exchange rate gain, is a much better return than trying to bottom pick this market. I learnt at an early age not to play at bottom picking if you want to stay out the pooh. Macdunk

Kookaburra
02-04-2008, 03:26 PM
To soon in my opinion PHAEDRUS to get back in the market. .... ...... 8.5% in the bank plus an 8% exchange rate gain, is a much better return than trying to bottom pick this market. I learnt at an early age not to play at bottom picking if you want to stay out the pooh. Macdunk

True but when those who have bitten off more than they can digest have to let things pass, there could be some fine pickings to be had.

Phaedrus
02-04-2008, 03:39 PM
Too soon in my opinion PHAEDRUS to get back in the market.
Gosh Dunc, I thought you were the demon full-time trader and I was the boring conservative old fart!

Certainly it is too soon to throw all caution to the winds and be anything like fully invested, but there are some really good trading opportunities out there.

I have made over 20% on PPL in 14 days, and over 40% on RAK in just 8 days, for example.

Get going lad, dust off your 30 day moving average, your 5% trailing stop and your 20% timeline and get stuck in! They work. Don't they?

Footsie
02-04-2008, 04:27 PM
phaedrus can you please post an updated chart.

I must say I am surprised to see you buying this bear market rally - its high risk trading
I thought you said that you dont buy during the "caution" period....
"Stop all buys, tighten all stops"

the rally in RAK , and PPL is purely the "fisher" effect. SHe has been forced to liquidate big chunks of her portfolio... also see TOX and AVE on the ASX.....
When the seller goes the price snaps back....
to have made 40% on RAK you would have had to use this information as opposed to yuor technical techniques
Anyway well done. I never thought id see RAK run that hard..... nice short now if you ask me

ratkin
02-04-2008, 05:12 PM
I must say I am surprised to see you buying this bear market rally - its high risk trading
I thought you said that you dont buy during the "caution" period....
"Stop all buys, tighten all stops"


Yes , it does seem odd that a week after pumpkin patch and rakon rally that Mr P has bought them , especially in the midst of his caution zone. I could understand throwiing aside caution after the big rally yesterday but to do so last week would of gone against everything he has been preaching for the last six months.
But hindsight is a great gift , must be up there with invisibility and time travel.
If the rally in those two stocks had amounted to nothing last week would he of been here telling us he had bought them?

duncan macgregor
02-04-2008, 05:19 PM
Gosh Dunc, I thought you were the demon full-time trader and I was the boring conservative old fart!

Certainly it is too soon to throw all caution to the winds and be anything like fully invested, but there are some really good trading opportunities out there.

I have made over 20% on PPL in 14 days, and over 40% on RAK in just 8 days, for example.

Get going lad, dust off your 30 day moving average, your 5% trailing stop and your 20% timeline and get stuck in! They work. Don't they? I think its much better to be a boring old fart at the moment. Its pointless saying i made this or that in the last fourteen days when we only have your word on it after the event. Tell the punters what to buy today not come back after and say i made a killing in a falling market. What do you suggest today for a short term trade with what type of exit strategy is much more to the point. Incidently PHAEDRUS do you know that at the moment i am the only investor on sharetrader ahead in the market in a competition. I AM WHIPPING THE BACKSIDES OFF SHREWDY AND STRAT. Hope you can make it to the Auckland event i will buy you a couple of wee drams if you front. Macduink

Phaedrus
02-04-2008, 05:44 PM
"I must say I am surprised to see you buying this bear market rally - its high risk trading."
Fear not Footsie - I'm still largely cashed up. Just keeping my hand in. I'm simply buying a few favourite stocks that seemed oversold and gave good clear buy signals. They are all on very tight leashes. It's not as if I am buying to Hold, come what may! No-one really yet knows if this is just another bear market rally. All I know is that, with appropriate stocks, it is big enough to be tradeable.

"I thought you said that you dont buy during the "caution" period....
"Stop all buys, tighten all stops".
Footsie,the original "caution" system was designed to get me cashed up early, keeping me out of a market crash - and it worked superbly. It was never designed to double up as a re-entry vehicle. In any case, I am now in virgin territory, having never before been faced with the delightful problem of having a large sum of money to invest in a distressed market. I'm just feeling my way here - same as everyone else.

"the rally in ... PPL is purely the "fisher" effect. She has been forced to liquidate big chunks of her portfolio....."
My PPL entry was based primarily on a trendline break and the glaringly obvious entry of "smart money" as flagged by the steep and sudden rise in the OBV, supported by W%R and Stochastic oscillator buy signals.

"to have made 40% on RAK you would have had to use this information as opposed to your technical techniques."
Not at all Footsie. This was a purely technical entry based primarily on the trendline break, with confirmation from W%R, RSI and Stochastic oscillators, along with a parabolic SAR buy signal.

"Anyway well done. I never thought id see RAK run that hard....."
Neither did I.......

http://h1.ripway.com/Phaedrus/nzsxBuy42.gif

AMR
02-04-2008, 06:14 PM
I have to say I did see it fairly early on but in my mind I wrote it off as a dog stock that should only be shorted...

Nevl
02-04-2008, 06:30 PM
So yesterday was the day to reenter the market. As usual!!

Phaedrus
02-04-2008, 07:48 PM
Yes, it does seem odd that a week after pumpkin patch and rakon rally that Mr P has bought them, especially in the midst of his caution zone. I could understand throwiing aside caution after the big rally yesterday but to do so last week would of gone against everything he has been preaching for the last six months.
But hindsight is a great gift, must be up there with invisibility and time travel.
If the rally in those two stocks had amounted to nothing last week would he of been here telling us he had bought them?

Ratkin, anyone that had been following my posts would know that I have recently been making very occasional "countertrend" trades. You claim that, had I made a loss on any, I wouldn't have mentioned buying them. Good God, man - can you not read? Go to post #8 on page 1 of this very thread and you will see that I mention two such losing trades!

Ratkin, Footsie mentioned his potential interest in PPL and RAK before I bought them. Would it have seemed "odd" to you if he had bought them?Winner69 has 'fessed up to having a flutter on RAK. Does that seem "odd" to you as well? I have spent literally years demonstrating the use of trendlines here on ST and repeatedly shown how often it pays to follow the "big money". Why on earth should it seem "odd" to you that I would take an occasional trade where these signals present themselves? I doubt that even you, Ratkin, could miss a Buy signal as clear as this one :-
http://h1.ripway.com/Phaedrus/PPLOBV.gif

Again, here is the break of a trendline that had been confirmed on many occasions, coupled with a breakaway gap up. Signals this strong don't appear very often - yet for some reason you seem to think it "odd" that I or indeed anyone else would act on them!
http://h1.ripway.com/Phaedrus/RAKtl.gif

Ratkin, having failed to cash up before the slide really got underway and then compounding your mistake by foolishly buying all the way down (you called it being brave!) you seem to resent anyone else making money out of the situation.

ratkin
02-04-2008, 07:58 PM
Im not going to bother arguing with you , however the glaring inconsistancy in what you say and what you do is there for all to see.

Your turnaround on your caution zone is a wonder to behold. The market sudddenly rallies and suprise suprise we find you have been trading for a week , not only that but you just happened to be trading on the weeks biggest winners.

Personally i think you have lost some credibility here, not content with rubbishing everybody elses methods you are now not even sticking to your own plan

Footsie
02-04-2008, 08:24 PM
phaedrus.... what you have posted is quite a short term chart of the index....

I refer you to
http://www.sharetrader.co.nz/showthread.php?t=5149&page=5

On one thread you are a short term trader and advocate buys...... on the other are a long term trader so 100% cash...

Admittedly you can trade to two strategies.... but phew thats hard.... as experience tells me its too hard

Surely this has all the hallmarks of a bear market rally....

Anyway FYI........ to all out there.....
I conducted a study on the ASX200 using RSI and 52 week EMA. I backtested 1991-2008.
What i found was startling.
Using these technicals to trade in and out of the market worked great during trending markets and extremely poorly the rest of the time.
In summary Using TA signals to time entry and exit (favourably assuming perfect liquidity in your stocks) you would have made only 66% of what you would have made if you'd been LONG THE WHOLE PERIOD>

Therefore you have to use your own intuition and pick a strategy that works for you.
I use TA to assist but ultimately realise that it has it flaws.

1. exercise caution in a bear. use TA to assist in ID'ing the caution zone
2. Buy on fundamentals
3. Sell when your stock is overvalued or earnings growth slows.....
4. use experience and gut instinct to guide you

Footsie
02-04-2008, 08:39 PM
PS
Phaedrus you know that i still hold you in high regard.
You have the best TA skills of anyone i've seen on this site or others....and you are obviously successful

Phaedrus
02-04-2008, 08:40 PM
The market sudddenly rallies and suprise suprise we find you have been trading for a week

I think you are the only one here that is surprised, Ratkin - I can only assume you havn't read or understood this post of mine from weeks ago :-
"Since completely selling out of NZ stocks at the end of November, I have made just four very small trades in over 3 months. They were FPH (loss), FBU (loss), MFT (gain), and NPX (gain). That's 2 wins and 2 losses for a small overall gain. Trading like this when the market has negative momentum is quite risky though, and I would not recommend it for everyone."


...not only that but you just happened to be trading on the weeks biggest winners
Regretfully, not all my recent tentative forays into the market have been as successful as these two have been so far.

Ratkin, do try and keep in mind that these trades are still open. They could easily collapse and unless I get out quickly enough, these "paper profits" could disappear as quickly as they came.

Abracadabra
02-04-2008, 09:00 PM
Phaedrus, as a relatively new trader still coming to grips with Meatstock I find your information invaluable. Thanks so much for updating the chart.

Phaedrus
02-04-2008, 09:25 PM
Phaedrus.... what you have posted is quite a short term chart of the index....
Which particular chart did you want updated?

"On one thread you are a short term trader and advocate buys...... on the other are a long term trader..."
I am very conscious of the fact that most ST participants are investors rather than traders and as such are interested in long-term, conservative indicators. Nevertheless I do incorporate many shorter-term indicators for those that are interested.

"Admittedly you can trade to two strategies.... but phew thats hard.... as experience tells me its too hard"
I don't find it hard at all, Footsie! In fact, for me it is almost the norm. For example, I traded FBU for many years using 3 separate strategies and have spoken quite often of this fact. Not all stocks are suitable though - I have also mentioned stocks where nothing will beat simply buying and holding (as long as the uptrend continues!)

"Surely this has all the hallmarks of a bear market rally...."
It could well be. Certainly any entries made now should be classed as "High risk" and kept on a very short leash.

"Anyway FYI........ to all out there.....
I conducted a study on the ASX200 using RSI and 52 week EMA. I backtested 1991-2008. What i found was startling. Using these technicals to trade in and out of the market worked great during trending markets and extremely poorly the rest of the time.
In summary Using TA signals to time entry and exit (favourably assuming perfect liquidity in your stocks) you would have made only 66% of what you would have made if you'd been LONG THE WHOLE PERIOD"
Footsie,that is pretty much what you would expect when using an index. Because they are a composite, they are less volatile than the individual stocks that comprise them. Once volatility falls under a certain figure, NO system will beat buying and holding. Another fundamental error is that you have tried to find "all-purpose" indicators. You need trend indicators when the index is trending, and oscillators when it is not. I have found plenty of stocks where it is literally impossible to find any moving average that enables the stock to be profitably traded. Such stocks are buy-and-hold candidates. This does not mean that TA is inapplicable though - in fact it really comes into its own with such stocks, monitoring the uptrend and giving clear signals when it weakens or ends.

"Therefore you have to use your own intuition and pick a strategy that works for you"
I would argue that you have to pick a strategy that works for the stock in question!

"I use TA to assist but ultimately realise that it has it flaws."
TA sure does have flaws, and you have to be aware of them. Nothing, but nothing is perfect. Fundamental analysis has its flaws too, and you have to be aware of them as well.

Lizard
02-04-2008, 10:20 PM
Thanks for the updated chart and comments Phaedrus.

I have found this whole market move quite fascinating. It has been such a long time since the opportunity came up to watch the progress of a decent downward slide!

The sheer weight of doom and gloom has been calling for a decent 2-3 day bounce - pretty much along the reasoning of KW and others elsewhere. It seems to me that the market needs some time to adjust here - until industrial companies actually start signalling an impact on earnings, I find it hard to see companies with P/E's below 10 and forecasts for double digit earnings growth getting hammered too much further (thinking more in terms of ASX here). Could be wrong though - I know never to be surprised at the extent to which the market can choose to "overvalue" or "undervalue" a share.

On the NZX side there remains the potential for a future reduction in OCR/fall in NZD to eventually make larger cap shares more attractive to foreign investors. Timing is the question though.

So despite the likelihood of global slowdown (to a yet unknown extent), I would tend to favour a volatile sideways market for a while, giving tradeable opportunities in shares that are oversold and wouldn't rule out the possibility that a rally in NZX shares exposed to forex factors could be triggered.

I really like your method, although have held many shares right through and worn the angst and also occasionally bought more on the days that I felt most sick with worry...a strategy that seems to work, though I usually toss out an equivalent $ value of shares from elsewhere a few days later to preserve cash. Will be interested to see how well the index charts work as a signal for buying and hope you get to take some profitable trades for your trouble.

Placebo
03-04-2008, 08:18 AM
Interesting discussion...!

Have to say I am utterly in awe Phaedrus, that anyone can make a gain in this current market. No fricken way will you find me in there! I am truly the "boring old fart" that Macdunk accuses you of being!


Personally i think you have lost some credibility here, not content with rubbishing everybody elses methods you are now not even sticking to your own plan

Nonsense. If anything his reputation is enhanced.

Arbitrage
11-04-2008, 03:50 PM
Phaedrus,
Considering the influence the Telecom share price has on the NZSX50, have you ever removed that share price from the database and replotted the index?
It seems that a number of the other major shares in the index have appeared to "turn the corner" and I was wondering whether the Telecom impact was acting as a drag on what, without Telecom, seems to be a more positive trend.
Any comments?

Dr_Who
13-04-2008, 09:13 AM
Phaedrus, would you have earned more just leaving money in the bank?

If you have recently invested in energy stocks like PRC & NZO, then no, your would not have made more money leaving it in the bank.

Phaedrus
13-04-2008, 03:41 PM
Phaedrus, considering the influence the Telecom share price has on the NZSX50, have you ever removed that share price from the database and replotted the index? It seems that a number of the other major shares in the index have appeared to "turn the corner" and I was wondering whether the Telecom impact was acting as a drag on what, without Telecom, seems to be a more positive trend. Any comments?

That is a very good idea Arbitrage and you make a valid point - but unfortunately it's easier said than done. I do not synthesize the Index from its individual constituent stocks - I download the Index data direct from my supplier and it would be quite a difficult task to "subtract" TEL from it. TEL does not totally dominate the Index though. You can see that the Index and TEL can and do move in different directions for months on end. I have marked the more obvious divergences here :-

http://h1.ripway.com/Phaedrus/TELndx413.gif

tobo
13-04-2008, 05:50 PM
.....TEL does not totally dominate the Index though. You can see that the Index and TEL can and do move in different directions for months on end.....
Thanks for that chart, Phaedrus. Very revealing.
The big divergences support Arb's contention that a "NZX49" without TEL would look different.
It would take brain calisthenics:eek: to figure it out exactly, but along the lines of:
taking Nov-Dec 07 NZX50 rose 3450 to 3600 (+4.4%).
Included in that is TEL's proportion of mkt cap x -7.1% drop ($5.60 to 5.20).
So "NZX49" would have been quite a bit more than +4.4%

Interesting idea. I suppose thats where industry sector indicies started

winner69
13-04-2008, 06:37 PM
Thanks for that chart, Phaedrus. Very revealing.
The big divergences support Arb's contention that a "NZX49" without TEL would look different.
It would take brain calisthenics:eek: to figure it out exactly, but along the lines of:
taking Nov-Dec 07 NZX50 rose 3450 to 3600 (+4.4%).
Included in that is TEL's proportion of mkt cap x -7.1% drop ($5.60 to 5.20).
So "NZX49" would have been quite a bit more than +4.4%

Interesting idea. I suppose thats where industry sector indicies started

....but remember the NZ50 is gross index so TEL huge regular dividend makes some difference.

Snoopy
14-04-2008, 03:33 AM
....but remember the NZ50 is gross index so TEL huge regular dividend makes some difference.

"Some difference"? I guess that is one way of putting it.

Running the actual numbers from 30th September 2006 -which is the time line of Phaedrus's price chart- when the Telecom share price was $4.35: Let's assume we held 9 Telecom shares on that date, giving a total Telecom investment of

9 x $4.35= $42.57

Today we have only have 8 shares valued at $3.58 (as one in 9 have been cancelled). The total value of our Telecom investment is now

8 x $3.58= $28.64.

However in the interim we have had a one off payment of $4.88 (the share that was cancelled half way through the year) and the following dividends:

(0.07+0.07)(8) +(0.145+0.07+0.07+0.07+0.12)(9)= $5.40.

That lot adds up to 'benefits per 8 shares over our time period' - of:

$5.40+$4.88= $10.28

So our total loss on our Telecom investment is:

$42.57-($28.64+$10.28)= $3.65, or 8.6% of the original investment total of $42.57.

Over that same period the NZX 50 has moved from around 3500 to around 3500. IOW it has hardly changed. In fact if you remove Telecom's performance of last week (where it declined by over 10%) there was almost no difference between the performance of the NZX50 and Telecom.

One week ago the argument would have been the other way around. Up until that time Telecom was *supporting* the NZX50. The hypothetical 'NZX49' would have been weaker if you had removed Telecom from the index.

SNOOPY

winner69
14-04-2008, 05:54 AM
Snoopy .... just a quick look at the NZX10 stocks would suggest TEL isn't the real driver of the performance of the NZ50 --- the FPA and FPH charts look like TEL and then the likes of AIA and FBU all gou up from Sep06 and then back to the same level as it was then.

Maybe somebody has the data by stock of the movements in the NZ50 .... but outside of the top 10 one really good stock (I take it there is one putside of NZO) wouldn't make difference to the overall index

Phaedrus
14-04-2008, 06:56 AM
.....Running the actual numbers from 30th September 2006 - which is the time line of Phaedrus's price chart - when the Telecom share price was $4.35......

I think you have misread the chart dates, Snoopy. The chart began 30th September 2005 - when the Telecom shareprice was $6.02. (TEL shareprice scale in blue on the right).

If you re-run your calculations using this figure, you will find that you are led to a very different conclusion!

Arbitrage
14-04-2008, 08:04 AM
Cheers Phaedrus.

It makes one think about the "usefulness" of the NZSX50 as an index for describing market direction which we see on the telly every night, and some people use in their investment decision making.

warthog
14-04-2008, 08:19 AM
So our total loss on our Telecom investment is:

$42.57-($28.64+$10.28)= $3.65, or 8.6% of the original investment total of $42.57.

Quite apart from the correct figure noted by P of $6.02, we could also look at your TEL investment in light of the RFRR [1] - the hog could be forgiven for concluding that it wasn't the most intelligent of ventures. Indeed, taking on the casino [2] might have been a better bet!

[1] http://en.wikipedia.org/wiki/Risk-free_interest_rate
[2] no, not gambling, but digging ... http://tinyurl.com/6n85vn

CJ
14-04-2008, 08:19 AM
I think one of the smartshare funds (FONZ???)run by the NZX uses the NZX50 but caps exposure to any share to 5%, therefore reducing the influence of the top 5 or so stocks.

Can anyone confirm of the top of their head?

Phaedrus
14-04-2008, 09:03 AM
It makes one think about the "usefulness" of the NZSX50 as an index for describing market direction which we see on the telly every night, and some people use in their investment decision making.

Some people do use the NZSX50 in their investment decision making - Me for one. I find it very useful indeed!
I benchmark my performance against it.
I use it to regulate my overall strategy.
It got me out of the market last November........
Equivalent Indices such as the NZSX All work just as well and give very similar plots.

CJ,
The NZX50 Portfolio Index comprises the same constituents as the NZX50 but limits the weight of any one security to 5% of the index market capitalisation.
This Index was developed to provide a measure of what most investors, particularly retail investors, would hold in a portfolio. The index was introduced on 3 March 2003 at a base value of 1000.

SmartFONZ tracks the NZX 50 Portfolio Index (http://www.nzx.com/market/index_summaries/NC50), which comprises shares in the top fifty companies on the NZSX Market (http://www.nzx.com/nzxmarket/nzsx). The composition of the index is weighted according to free float market capitalisation. The index excludes companies that do not meet market liquidity requirements. In addition, the index limits the weighting of any one security to 5% of the index, although weightings can fluctuate between 2.5% to 7% between quarterly reviews.
Each SmartFONZ unit represents shares as they are represented in the index. For example, a unit in SmartFONZ represents a parcel of the shares of the fifty companies in the index, in the same proportions as the index.

Arbitrage
14-04-2008, 07:54 PM
So you are benchmarking your performance against an index with about a 25% weighting for Telecoms share price performance? With the recent TEL prices this would make just about anyone look good. Are there other alternative indices that can provide a grouped view of the top performing share prices of major companies while dropping the non performers from the bunch?

Phaedrus
14-04-2008, 09:03 PM
TEL makes less difference than you would think, Arb. Take a look at this comparison - there are no divergences and for my purposes the 2 plots are virtually equivalent.

http://h1.ripway.com/Phaedrus/NZSX50fund414.gif

Nitaa
14-04-2008, 10:53 PM
So you are benchmarking your performance against an index with about a 25% weighting for Telecoms share price performance? With the recent TEL prices this would make just about anyone look good. Are there other alternative indices that can provide a grouped view of the top performing share prices of major companies while dropping the non performers from the bunch?You make a very good point. Another you could measure your performance is to take the average of the top 50 stocks but drop the top and and bottom 5 of the equation. This will give a good balance and less distortion.

duncan macgregor
15-04-2008, 08:26 AM
With another down day coming up in the market who in their right mind would want to jump in. It was so obvious at the end of last year that the markets were heading south with all the TA sell signals that this kid chickened out. The market is always right the worst has still to come. I expect when it rights its self next year the trend will rise very slowly at first so why rush in. I am happily sitting it out more focussed on the AUD and NZD cross rate to double up my interest from the bank. Macdunk

Arbitrage
15-04-2008, 10:56 AM
Duncan,
this is one of my concerns when talking about the market in general terms and reflected in the NZSX50. There are some individual share prices that when you look at plots and the various moving averages, they appear to have broken out of the downward trend. For example Contact and GPG would be "Buys" if we applied your formula wouldn't they?
Just because the NZSX50 is heading south (and okay Phaedrus showed that it is driven by others and not just Telecom), this should not mean that we get out of "the market"

Hoop
15-04-2008, 11:10 AM
You make a very good point. Another you could measure your performance is to take the average of the top 50 stocks but drop the top and and bottom 5 of the equation. This will give a good balance and less distortion.

Nita...
You can see that for yourself...what you are saying is nearly identical to the NZX midcap index There are 32 companies on this index the chart can be got from most broker sites (I use DB). All telling the same story Nita ...they are all pointing south at the moment.

One of the very few times I have noticed the top NZSE indexes being distorted was back in 1999-2000 or there abouts when the Dot Com bubble burst creating an overseas bear market phase. Many NZ top 40 companies kept there uptrends but the NZSE index was heavy weighted by telecom which distorted the index.
This index was modified to NZX50 in 2003

Phaedrus
15-04-2008, 11:41 AM
Interesting suggestions people, but when push comes to shove, there is little practical difference between the Indices.

You can see why I don't bother to "roll my own"!

The "headline" NZSX50 serves my purposes as well as any other Index.

http://h1.ripway.com/Phaedrus/NZSX50fund415.gif

duncan macgregor
15-04-2008, 12:08 PM
Duncan,
this is one of my concerns when talking about the market in general terms and reflected in the NZSX50. There are some individual share prices that when you look at plots and the various moving averages, they appear to have broken out of the downward trend. For example Contact and GPG would be "Buys" if we applied your formula wouldn't they?
Just because the NZSX50 is heading south (and okay Phaedrus showed that it is driven by others and not just Telecom), this should not mean that we get out of "the market" When the general trend is trending down at an ever increasing pace it pays to stand aside and wait it out. Some companies might go against this trend making small plays a worthwhile risk. I prefer not to take risks when in my opinion the market will head further south into a recession at the end of the year. If i were to pick a company it would be in the energy sector.
TPW ahead of CEN simply because of the green factor. I would think short term gain with all this rain for Hydro dams will come into it. Its come to late for farming service companies who will take short term hits. Manufacturing companies you can kiss goodbye with free trade. I hope that i am wrong but the market is no place for my money at this moment. I would think that my 8.5% plus an expected exchange rate gain will be a way in front of the average in 2008 regardless of which index you compare it withh. Macdunk

whiteheron
15-04-2008, 03:27 PM
Macdunk

I know you are vary wary of the market at present but have you had a look at base metals ? especially copper producers who are up and running with low cost mines in politically stable countries
These companies are selling at very low prices currently whilst the price of copper is at near all time highs, in my opinion with little likelyhood to the downside but a strong likelyhood to the upside

Even the so called expert commentators have recently been talking of copper prices of USD $10,000 to $12,000 per Tonne
The US situation has had little if any impact on the copper price, demand from Chindia is continuing to go gangbusters and production has been curtailed , especially in Chile and African countries because of shortage of electricity and other disruptions

The world population continues to grow, but more importantly the huge numbers moving into the middle class all want modern houses, vehicles and other goodies requiring copper
Other metals are also good but Copper is king of the base metals and will always be in high demand

I think it is worth a good look Macdunk
It is just a question of when and personally I dont think that is too far away

duncan macgregor
16-04-2008, 09:11 AM
WHITEHERON, When this correction is over thats when to jump into rising sectors, and not before. The very worst mistake is to base your investment decisions on fundamental rather than market values. You will notice that this downturn so far has cost fundamentalist investors big money. The TA investors are mostly sitting it out playing little side plays. This should tell you that fundamental investing only works in the good times.
I look at the metal charts for buy and sell signals, the company as long as running in profit with decent prospects is my last consideration. During a major downturn in the market, the demand will reduce first of all, followed by the metal price charts dropping to lower levels. This in turn will lower the sp of all the producing companies.
A good example of this was nickel last year, that followed the price of nickel up and down in unison. Never mind the company look at the price charts, do your homework on that with your finger on the sell button. The trouble with fundamentalists, is they get so wrapped up in the company they miss the big picture. Macdunk

Crypto Crude
17-04-2008, 01:02 PM
Mack a dad dunk...
Im a fundamentalist.... Im doing just fine...
You are a smart man, surely you Must be able to find cheap stocks staring at you on the computer...
THe market situation has not been a major disaster this year.... BUT I believe we are only half way there...
Before last week we had a good period of less volatility in the markets and plenty of sideways...
Last year specs took a hiding and now some look so cheap that its hard to think how they could get cheaper again...
I agree with Whiteheron, Finding stocks which have low downside and big upside is the only way to go, and has been my most important attribute in my game (apart from when I have alittle dabble outside that important rule)...eg, my spec resource plays...
This most important rule in thsi game, (low down big up)
has seen many of our stocks hold up well...
The only loss I can remember for some time is FAR when I bought in 14.5... topped up at 13.... sold at 12-12.5... went real small and lost a few hundie...
Oh and PRE, 3.3 to 3.2 when They sold their position in Fireball creek well (LMP currently drilling), I also PRE sold on that poor ann....
All others have been winners.... VPE didnot win, didnot lose...
traded it quite a few times...
...
Dont tell me you can't find a winner....?
do you have a stock pick...?
I'll give you mine... LMP....

Remember everybody... Mackdunks technical analysis had his
stop loss system selling New Zealand Oil And Gas...at $1.10.... less than two months ago?.....
what sort of joke is that? We all knew it was a great stock... MD knew it....
:cool:
.^sc

duncan macgregor
17-04-2008, 02:25 PM
SHREWDY, I have been right so far this year with the downturn. Whoopeedoo the herd charges in the opposite direction for a couple of days and all of a sudden get on the bandwaggon the band is playing never mind the reality of the situation. The reality is america will get the rug pulled out from under them after the olympics by china who are taking over as we speak. Nz has just said good bye to its manufacturing sector, we are now a sheep station, with this free trade deal. The world economy or should i say the western economy is in for a very bumpy year. The herd always rushes to far in both directions i much prefer to wait it out. I have people on to me for selling my nzo options at 9c at the start and heads for 90c. What they wont mention is that i bought PPP at 11c sold at 21c stuck it on MCR at $2-15 and more than doubled it all over again. It all comes back to common sense SHREWDY. My money sits in Australia waiting on the roadkill which hopefully you wont be part off. If i am wrong then i only missed an investing opportunity but if i am right the market will crash with me right out of it. Macdunk

STRAT
17-04-2008, 03:01 PM
You are a smart man, surely you Must be able to find cheap stocks staring at you on the computer...
it....
:cool:
.^scI have to a gree with Shrewd here Duncan. You are a trader and there is trading to be done.;)

duncan macgregor
17-04-2008, 03:36 PM
I have to a gree with Shrewd here Duncan. You are a trader and there is trading to be done.;) STRAT Youv gotta know when to hold, know when to fold, know when to walk away, know when to run. My first QUARTER was miles in front of the average punter STRAT you and SHREWDY included with the loot in the bank. I am kicking your butts in our competition, counting my pennies to buy a bit of road kill in my own good time. Macdunk

Mick100
17-04-2008, 03:56 PM
My first QUARTER was miles in front of the average punter

problem is macdunk that you were down 18% before you sold in jan
You sold out just a few days before the jan bottom
Your not going to recoup an 18% loss with your money in the bank
,

Crypto Crude
17-04-2008, 03:58 PM
MD,
The competition has nothing to do with it... Im not holding those stocks anyway.... The NZ economy has nothing to do with it.... who cares about Your 9c nzood, PPP and MCR trades...This is now and that was then...you dont hear others bleeting on and on about successful trades...You are just a big Kid..:p
....
We are both focused on the Auzzie market... NZ economy, manufacturing sector, free trade deal have nothing to do with our investment decisions, because we are both professed ASX investors only?
... All your money makers are ASX stocks...
....
...
..
.
I have an example...
I quite clearly remember you were ballastic on AGS...
aswell as SMY, AGM, perhaps MCR for awhile...
they all blew up...
You were raving AGS, (Probably for good reason)...
it hit $2.80...
its now 70cents...
Are there no shares that interest you...Are you kidding me mate?

Again, You are detracting from my real points...
Are there bargains to be had...?
Can you not find stocks with Low down Big Up?
Have you Run out of Stock Selections?
What are your current stock Picks?
:cool:
.^sc

Crypto Crude
17-04-2008, 04:15 PM
Mackdunk
What about Summit Resources... SMM...
you held this stock before.. it hit $6... its now trading at $1.80...
Its still the same company right?
:cool:
.^sc

ratkin
17-04-2008, 04:22 PM
This rally is going to have legs , it not a one day wonder there are some terrific results coming out of the states that are making the current sell off look way over done.
The IBM announcement after the bell will set the tone for tomorrow.

Regardless of that , in australia if you cant find a bargain with all the opus prime selling etc then there is something wrong.
On a fundamental basis some of those stocks are being given away.

Its all very well to say fundamentalists dont count in these sort of markets , however in the end it all comes down to fundamentals and when you see countless stocks being given away who wouldnt want to pick them up?

It dosent matter if you pick the bottom or not , pick the right stocks and in three years it not going to matter if you paid 50c or 60c , it would be a crime not to buy some of the aussie small caps. Once in a lifetime opportunity

Hoop
17-04-2008, 06:25 PM
Sorry to be a party pooper guys but why the celebrations ?

Have another look at Phaedrus's chart #77 and tell me what is there to celebrate, the chart looks bloody awful.

Hang on... I'll put my rose tinted glasses on......nope!.. still looks bloody awful

duncan macgregor
17-04-2008, 07:02 PM
Sorry to be a party pooper guys but why the celebrations ?

Have another look at Phaedrus's chart #77 and tell me what is there to celebrate, the chart looks bloody awful.

Hang on... I'll put my rose tinted glasses on......nope!.. still looks bloody awfulHOOP dont spoil their fun they seem to think everything in the garden is lovely. I really dont know why they want me to join them swimming against the tide. The time to get back in is when the tide has turned and not before. Look at the charts since the end of last year guys you are mugs if you dont take notice and act accordingly.
The worst has still to come I will get PHAEDRUS to post a chart at the end of this year to show you how right i am. Good luck guys hope you at least get back to square one by then, Macdunk has gone fishing. Macdunk

Footsie
17-04-2008, 07:19 PM
Macdunk.... i agree we are not out of the woods...

but also agree with rat.......... soo many opportunities in the aussie small caps thanks to OPES PRime......

get em while you can...........just make sure they have low debt

not every firm is going to go broke !!

ratkin
17-04-2008, 07:49 PM
There are some stocks out there trading at a lower price than the money they have in the bank.

I have used a scattergun approach and over the last month or so have taken up positions in fourteen different smallcaps.
Idea is that a few may indeed fail but over time i expect there to be a few real winners amongst them.

Paid less than half of what they would of cost as little as seven or eight months ago and they have done nothing wrong, just been the victim of margin selling and poor sentiment.

Im not a trader but try to invest with an eye for the future
An example of this is acr (Acrux) down from 1.70 to .80 , yet they are doing very well , just bought a drug to market, news that eight moths ago would of sent them over two dollars , now they dont even go up because ANZ selling into the good news.
No real debt and voted top by bio shares as the biostock most likely to survive long term.

There are many examples of good little companies which have been hammered down to ridiculous levels, some even trading at less than the money they have in the bank.

They may not go up in price anytime soon , buyers are hurting and off the sharemarket right now , however i was always taught that ,that was the best time to buy.
There no rush , if they really are good companies then one day the market will recognise it.

If people on the sidelines wont enter the market now then you have to wonder if they ever will .

STRAT
18-04-2008, 12:29 AM
This rally is going to have legs , it not a one day wonder there are some terrific results coming out of the states that are making the current sell off look way over done.
Hi Ratkin,
I think you will find some of those companies are making their money outside of the US and making gains from the falling dollar to boot

STRAT
18-04-2008, 12:36 AM
HOOP dont spoil their fun they seem to think everything in the garden is lovely. . . MacdunkDont remember saying anything like that nor do I think it is the case but there are still short term plays out there. So why just watch?

Phaedrus
18-04-2008, 06:04 AM
If people on the sidelines wont enter the market now then you have to wonder if they ever will.

Wonder no more, Ratkin - I can tell you what they are waiting for.

Some will have selected stocks that they want to buy, and will buy - once the shareprice stops falling and starts rising.

Others will be waiting for the market as a whole to reverse its current downtrend.

As you so wisely observe, there is no rush!

ratkin
18-04-2008, 08:02 AM
Very difficult to time the market , especially with many of the small caps.
They can do nothing for months on end then bang , up 20-50% in one day

Im a value investor by and large and when you see the prices of some of the small ozzie companies then it would be criminal not to step in.
The market clearly is not efficient where they are concerned and some are being given away.

to quote tim hanson "not only is the market selling crazily today, but it's doing so most crazily in the generally neglected small-cap universe. Put neglect together with insanity, and you can find some outrageously cheap stocks"

That quote was aimed at US small caps , the situation in oz is much , much better. The perfect storm for buying value

Snoopy
18-04-2008, 08:15 AM
I think you have misread the chart dates, Snoopy. The chart began 30th September 2005 - when the Telecom shareprice was $6.02.

If you re-run your calculations using this figure, you will find that you are led to a very different conclusion!

Oops Phaedrus, you are right- I misread your scale. For completeness the actual performance of Telecom shares over the period of your chart, including dividends, was -23%. What I consider salient though was *why* I misread your chart. That's because I did not consider looking at the time period that spanned 'before' and 'after' the unbundling announcement valuable, so I just assumed that no-one would do that.

I am not going to argue Phaedrus that if you simply bought and hold Telecom shares from 1st October 2005 until a week ago the investment performance has been poor, significantly underperforming the NZX. But since I never advocated such a strategy, I would regard such an argument as 'straw man'.

I would argue that Telecom suffered a 'regulation bomb' on the unbundling date that while always a possibility, was largely unpredictable in both timing and in magnitude. In order to avoid the 'Telecom underperformance effect' you have have to know the timing and effect of the regulation bomb 'in advance'. No fundamentalist investor could have known that. So while looking back 'with hindsight' makes those who had Telecom in their portfolio on October 2005 look bad, without the benefit of hindsight those investors could not have avoided the regulation bomb. Your point is akin to telling somebody they should not have got on the express train to Auckland on Christmas eve 1953 after it ended up twisted and wrecked at Tangiwai. Absolutely correct, but not useful.

There were two ways to respond to the Telecom regulation bomb after the event . Either 'sell out' or 'buy more'. 45% of the Telecom shares I own now, I did not own before the regulation bomb.

Since the regulation bomb the average price I have paid for my Telecom shares is $4.09 (including the capital repayment). That figure does not include an allowance for dividends, equivalent to 94cps over that time. In real terms my own purchasing and dividend harvesting performance since the regulation bomb is not materially different from the performance of the NZX50. So I would argue that both excluding Telecom from the NZX50 index as a 'comparison stick', and consequently from an individual investors portfolio in particular is not necessarily a recipe for portfolio underperformance.

SNOOPY

discl: hold TEL

duncan macgregor
18-04-2008, 08:49 AM
Dont remember saying anything like that nor do I think it is the case but there are still short term plays out there. So why just watch?STRAT you know that i will twist your words and heave it back at you surely. Why waste time in a falling market playing silly games when you can come in later for the kill like i did last year. I simply cant be bothered. Plenty of roadkill to buy up next year. Macdunk

Hoop
18-04-2008, 09:31 AM
There are some stocks out there trading at a lower price than the money they have in the bank......................

................If people on the sidelines wont enter the market now then you have to wonder if they ever will .

Ratkin,

You should stop assuming what other people do.

Unlike some who are in a bull market correction camp and wrongly assume all the sellers and people on the sidelines have low IQ's or are just pessimists camp .....I am in the camp that believe we are in a bear market. I am not a pessimist, I am a realist...from failure to learn from previous bear markets. I know from experience what a bear can do to you portfolio. ...The chances of an investor 100% in the market being smarter than the average bear (yogi quote:)) is very slim.

Ratkin I am in the present market...and making lots of unrealised money at this very moment. I have had my best investing month since December 2006 thanks to NZO,PPP,PRC. but I still have 60% cash. (probably increase to 80% shortly..as textbook says my % cash is too low and my exposed risk too high)

Recognising that the market has changed to a bear market phase results in changing ones strategy to suit the new market environment. My bear market strategy (one of many textbook bear market strategies) is to protect capital from evaporation via money sitting in the trading account earning interest or in fixed deposits earning high interest rates, and recognising that bear market rallies happen, venture out and play the market for the short term..remembering to cash at the first sign of trouble.
My textbook bear market strategy is a more risky type than the textbook very conservative safe option of being totally out of the market as it seems Mac Dunk has elected to do.

My main objective of this post is point out the fact that we are all investors that have differing strategies some better than others.
Bears are dangerious and can lash out at unexpected time with damaging results..this is the time to make sure that the investment strategy you use is a well recognised successful type...for me I use the simple textbook type.
Anybody who uses the "any bargain buy" method may find their bargains may be very expensive in tomorrows market....been there done that..doesn't always work!

STRAT
18-04-2008, 09:41 AM
STRAT you know that i will twist your words and heave it back at you surely. Why waste time in a falling market playing silly games when you can come in later for the kill like i did last year. I simply cant be bothered. Plenty of roadkill to buy up next year. MacdunkThrow my words back at me all twisted out of shape?:eek:
Yup I was counting on it:D
Dunno about silly games though. Looks like exactly the same game to me. Shares go up and Shares go down.

Here are two examples of recent buys for me thanks to our beloved Oil men. So the heads up was there for you to see too.

RPM.ASX buy 13/02/08 @ 6.0 now @ 8.8 and up 47%
LMP.NZX buy 07/04/08 @ 11.0 now at 15.0 and up 36% ;)

COLIN
18-04-2008, 10:05 AM
I would argue that Telecom suffered a 'regulation bomb' on the unbundling date that while always a possibility, was largely unpredictable in both timing and in magnitude. In order to avoid the 'Telecom underperformance effect' you have have to know the timing and effect of the regulation bomb 'in advance'. No fundamentalist investor could have known that. So while looking back 'with hindsight' makes those who had Telecom in their portfolio on October 2005 look bad, without the benefit of hindsight those investors could not have avoided the regulation bomb. Your point is akin to telling somebody they should not have got on the express train to Auckland on Christmas eve 1953 after it ended up twisted and wrecked at Tangiwai. Absolutely correct, but not useful.





SNOOPY

discl: hold TEL

The "regulation bomb" was entirely predictable. There was no way the Government was going to sanction the continued and unbridled monopoly over the country's telephone wiring system, and any "fundamentalist investor" - even if only half switched on - should have realised that.

duncan macgregor
18-04-2008, 11:42 AM
Throw my words back at me all twisted out of shape?:eek:
Yup I was counting on it:D
Dunno about silly games though. Looks like exactly the same game to me. Shares go up and Shares go down.

Here are two examples of recent buys for me thanks to our beloved Oil men. So the heads up was there for you to see too.

RPM.ASX buy 13/02/08 @ 6.0 now @ 8.8 and up 47%
LMP.NZX buy 07/04/08 @ 11.0 now at 15.0 and up 36% ;) You have got to be joking mate. LMP have had only ten grands worth of shares traded this morning thats no good for any self respecting trader. You have got to get in for the kill then jump out without collapsing the trend. I dont even consider a share with volume like that. Investing long term maybe if you want to drip feed your funds back out. Macdunk

STRAT
18-04-2008, 11:46 AM
You have got to be joking mate. LMP have had only ten grands worth of shares traded this morning thats no good for any self respecting trader. You have got to get in for the kill then jump out without collapsing the trend. I dont even consider a share with volume like that. Investing long term maybe if you want to drip feed your funds back out. MacdunkWe arent talking about 2 million shares here, anyway lets come back to talking about LMP in a few weeks :D;)

Oh and have a we look at the RPM chart :)

duncan macgregor
18-04-2008, 12:49 PM
Whether you are timing a bear market rally or a new bull market, I think you've missed it!
Here's a snapshot of my portfolio that made Year Lows in March, and have now gone back up by:
35.89%
6.32%
10.53%
30.85%
18.64%
26.69%
35.71%
20.25%
17.25%
15.87%
20.00%
27.96%
So its definately paid off to be buying over the last month or two. I dont beleave a word of it unless its given out indvance of the event. Right now right today what did you buy or tell us next time you do otherwise its bullsh*t. SHREWDY at least comes out in advance of the event i always do and my mate STRAT gets a bit Sneaky. C-MON KW show us if you dare. Macdunk

STRAT
18-04-2008, 01:01 PM
STRAT gets a bit Sneaky. . Macdunk:D:D:D:D:D:D:D:D:D:D:D:D:D

Crypto Crude
18-04-2008, 02:28 PM
Mackdunk-You have got to be joking mate. LMP have had only ten grands worth of shares traded this morning thats no good for any self respecting trader. You have got to get in for the kill then jump out without collapsing the trend. I dont even consider a share with volume like that. Investing long term maybe if you want to drip feed your funds back out. Macdunk

Mack dunk...
Next week there will be massive volumes if this comes through, there will be ample opportunity to sell on/after the announcement.... discovery ann and flow test ann...
This is the spec end of the market MD...
The beginning of a spec turning...
Becareful what you say...
All in so far have made a killing...
....
LMP ASX at 8.5, and 9.5....
LMP NZX 12c two nights ago....
LMPO 1.6c ave...
...holding 240k LMPO (sold a tiny amount at 100% profit)...
and 50k approx LMP....
I am not a gambler....
:cool:
.^sc

Snoopy
18-04-2008, 09:55 PM
The "regulation bomb" was entirely predictable. There was no way the Government was going to sanction the continued and unbridled monopoly over the country's telephone wiring system, and any "fundamentalist investor" - even if only half switched on - should have realised that.

Colin, if the regulation bomb was 'entirely predictable' as you claim, the share price would not have moved on the announcement.

SNOOPY

bermuda
19-04-2008, 12:04 AM
Colin, if the regulation bomb was 'entirely predictable' as you claim, the share price would not have moved on the announcement.

SNOOPY

Shrewdy might have a keg winner on this one. Got some options.

Phaedrus
19-04-2008, 06:44 AM
Ratkin, KW, Strat, Footsie, Shrewd Crude et al,

Why do you guys keep rabbiting on here about Australian stocks?

This thread is about when to re-enter the NEW ZEALAND market. That's why it is in the NZX forum. If it was about the Australian market, it would be in the AUS forum.

The charts and comments reference the NZSX50 Index - I would have thought it self evident that any conclusions drawn would apply solely to the local market.

Only a fool would use a New Zealand index to regulate their exposure to the Australian market!

Posts here about Australian stocks are not just off-topic, they are totally irrelevant.

Lizard
19-04-2008, 07:02 AM
Right now, we should probably be talking about the Dow though - if I could find the right thread...:)

Just trying to remember where that Dow chart is that I think someone talked you into posting once P? Not sure if I'm using the right parameters, but am guessing it would have smashed out of the old "caution" zone now? Not that I trade in the US, but just an interested observer.

STRAT
19-04-2008, 07:39 AM
Ratkin, KW, Strat, Footsie, Shrewd Crude et al,

Why do you guys keep rabbiting on here about Australian stocks?

This thread is about when to re-enter the NEW ZEALAND market. That's why it is in the NZX forum. If it was about the Australian market, it would be in the AUS forum.

The charts and comments reference the NZSX50 Index - I would have thought it self evident that any conclusions drawn would apply solely to the local market.

Only a fool would use a New Zealand index to regulate their exposure to the Australian market!

Posts here about Australian stocks are not just off-topic, they are totally irrelevant.
Apologies Phaedrus,
The conversation did start at whether Macca should be trading in this market or not and LMP is an NZX stock. :o

duncan macgregor
19-04-2008, 09:01 AM
I would think that anyone trading in the NZX would be very foolish to ignore the DOW or the ASX price movements. The DOW of late has had more influence in trends in the NZX range of companies than any other fundamental reason. The DOW goes down the NZX goes down The DOW has a good day the NZX has a good day. To discuss that here is more to the point than a companies fundamentals. Macdunk

ratkin
19-04-2008, 10:28 AM
Surely when to reenter the market has everything to do with how the major indices are faring.

Not off topic at all , and as we are so close to australia with many cross listed companies and many of their companies doing buisness in new zealand then it would be foolish to pretend they didnt exist just because we are posting on the NZ forum

COLIN
19-04-2008, 12:41 PM
Colin, if the regulation bomb was 'entirely predictable' as you claim, the share price would not have moved on the announcement.

SNOOPY

Snoopy - perhaps I should have added "to astute investors" - which description I would like to think applies to a goodly proportion of those who frequent this channel. However, I accept that we all have our failings - mine was that I didn't cash up the major part of my total portfolio in November last, instead of just a portion of it.
See, its not hard to admit our mistakes!

COLIN
19-04-2008, 12:49 PM
Also some good corporate earnings coming through in the US - helped, of course, by their plummeting dollar. Europe also up strongly. Seems inevitable then that the NZX will move in the green belt, I would have thought.

Hoop
19-04-2008, 01:13 PM
Right now, we should probably be talking about the Dow though - if I could find the right thread...:)

Just trying to remember where that Dow chart is that I think someone talked you into posting once P? Not sure if I'm using the right parameters, but am guessing it would have smashed out of the old "caution" zone now? Not that I trade in the US, but just an interested observer.
Hi Liz
Yes DOW watching is very important. The last year or so the Global sharemarkets have been in sync with each other, with the DOW,and the S&P leading the way.
I have copied my 10 march post from the Investing Strategies and secular Bear markets thread to show resistance levels (updated 19/4/08)

Originally Posted by Hoop http://www.sharetrader.co.nz/images/buttons/viewpost.gif (http://www.sharetrader.co.nz/showthread.php?p=183964#post183964)

Below are the present index levels and their resistance levels (RL).

Index....... Present ..........Major R L .........Next Impt RL

Dow ...........12849 ...............12800 breached..13000
S&P500.... ...1390................ .1400 ................1450
FTSE100... ...6057.................6000 breached....6100
Hang Seng...24198............ ...26000
Nikkei .........13476 ...............13600 ..............14700
ASX.............5504............... .6000..................6400
NZX ............3557............... .3900



I have updated the present column to today/yesterday closes but the other columns are still revelant.

FTSE is today at 6057 and DOW at 12849 both have just breached their resistence levels. The other indices have not yet reached these levels with the ASX and NZX still 10% below their respective resistance levels.
Also beware that this is the 4th breach in the last 3 months by FTSE the other 3 were bull traps.
Also be aware that the next strong resistance level for both FTSE and DOW is very close about 1.5% extra rise and this will require large amount of upward pressure to force another breach.

it must be taken into an account that this is a bearmarket, and false breaks are common in bear markets, so odds on this could be another bull trap.

Liz ..Colin Twiggs DOW chart 12th April is here (http://www.incrediblecharts.com/free/trading_diary_archives/2008-04-12.htm).....He is due to update it later today. Click trading Diary (top middle) on his web page to update to the latest announcement

Hoop
19-04-2008, 01:39 PM
Oh..I forgot to mention...

Jeff Cooper (short term trader put out an article on the 10th April that a breakout was signaled on TA. however thursday 11th and Fridays surprise fall stuffed that analysis up...but by thursday this week the similar signals were back and yesterday the DOW rise signaled an odds on breakout...may be this time. Jeff Cooper's short article can be seen here (http://www.minyanville.com/articles/AAPL-rimm-LNN-VMI-clf-reversal/index/a/16662)

Crypto Crude
19-04-2008, 03:06 PM
duncan macgregor

I would think that anyone trading in the NZX would be very foolish to ignore the DOW or the ASX price movements. The DOW of late has had more influence in trends in the NZX range of companies than any other fundamental reason. The DOW goes down the NZX goes down The DOW has a good day the NZX has a good day. To discuss that here is more to the point than a companies fundamentals. Macdunk

Good Point Mackdunk...
You have overlooked one major American initiative to come that will effect the sub prime issue, the dow, and then the NZSX.... This issue is The Cash distribution to US citizens, and the major follow on effect it will have/has already started to have...
Some Citizens have already spent this future distribution knowing they will make it back...
You are aware of this issue! maybe you have overlooked it?
there was one other time in history a US (tax rebate) was issued and the recession stopped the day they sent the cheques...
This time is abit different... Sub Prime issue is working its way through and markets now dont see this as the be all end all as I thought it may have had early on.......Distributions are much larger this time (saw on TV last distribution was 1974, 1975?.... down markets arenot over
maybe 40% of Sub Prime to come...

It is obvious looking at 10year DOW index, that DOW below 10k is not out of question.... Index has been below 8000, and above 14000 on numerous occasions in the last 10 years....


Im Now more worried what an Oil shock could do to the World Economies

Highest ever Nymex crude prices...
Oil prices are at record highs... Supply HAS peaked out all over the World...
Largest existing Fields are becoming depleted...
OPEC has bugger all excess capacity... If any real spare capacity...
saudi Arabia is no Giant...
The start of Peak oil is already here...
its hit this year...
Last year the IEA Report 'short,medium term outlook' publication said that Demand will tip supply in 2012...
we NOW need to discover 4 new North Seas to Replace declining production....
This time is now seriously different, we have rising oil prices in the face of Recessionary market sentiment....
I agree with Bermuda... $150US this year EASILY WITH a supply side constraint such as War, sabotage, hurricane, natural disaster...I Still believe that one would be sticking their neck out to suggest $150US per barrel this year for a sustained period of time, under normal market conditions a(eg, unforeseen events)...

$150-200US in the next few years is a sure thing...$150 This year though?

Oil shock to come worse than credit crunch?

:cool:
.^sc

ratkin
19-04-2008, 08:04 PM
Oh dear , this bear seems to have led to a big increase in large red letters on stockboards

winner69
19-04-2008, 08:13 PM
Oh dear , this bear seems to have led to a big increase in large red letters on stockboards


...... and i thought Shrewdie was Mary Holm ..... Mary wouldn't use such big red letters would she

Crypto Crude
20-04-2008, 11:00 AM
Its the only practical colour to use...
Theres Blood on the streets...
:cool:
.^sc

airedale
20-04-2008, 11:25 AM
Baron Rothschild was quoted as saying that the best time to buy was "when the streets are running with blood" .
Right now I am more cautious and wary of a bull trap.

Phaedrus
20-04-2008, 01:56 PM
The DOW goes down the NZX goes down. The DOW has a good day the NZX has a good day.

Duncan, you're blowing smoke again. Your simplistic market maxims are becoming increasingly divorced from reality.

Over the last couple of months the DOW and the NZSX50 Index moved in tandem on 23 days.

Over the same period, the NZSX50 moved against the DOW 20 times!

duncan macgregor
20-04-2008, 02:46 PM
Duncan, you're blowing smoke again. Your simplistic market maxims are becoming increasingly divorced from reality.

Over the last couple of months the DOW and the NZSX50 Index moved in tandem on 23 days.

Over the same period, the NZSX50 moved against the DOW 20 times! That makes me right 23 times to your 20 times with my simplistic methods. However if you take it another step further you will see that the overall trend of commodoties overseas has a very big influence on our share prices. The exchange rate is another example. To blindly think that NZ companies can be immune to overseas trends, and demands is a very stupid way to think. The big picture is what to look at before you look at any company fundamentals or charts. Macdunk

Phaedrus
20-04-2008, 03:10 PM
That makes me right 23 times to your 20 times

No no. I've claimed nothing. It makes YOU right 23 times and wrong 20 times.

Dunc, you said "when the DOW goes down the NZX goes down...." This sweeping statement is demonstrably false.

Your "rule" is about as much use as tossing a coin!

Crypto Crude
20-04-2008, 03:29 PM
phaedrus,
Mackdunk is right...
The NZ market doesnot follow the DOW exactly each day...
They are Highly correlated movements.....
you know this, what are you saying?
NZ has somewhat had a mixture of its own problems which are thrown into the mix...
World high OCR---> US has been dropping interest rates...
Finance company crash, here (unrelated to sub prime)...
threating inflation, one of the biggest house market slumps expected....
...
:cool:
.^sc

Phaedrus
20-04-2008, 03:33 PM
Surely when to reenter the market has everything to do with how the major indices are faring.

While major indices can and do affect us, we are only interested in them here to the extent that they affect our market. Whatever effect they have is already built in to our indices. Because of this, there is no need to attempt to "correct" the NZSX50 for movement of the DOW, for example. The DOW component is already there, it is already built in. There is, therefore, no inherent need to separately consider "major indices" as such. Their effects are already factored into local indices.

Ratkin, I fail to see how Australian small-caps could have any relevance whatsoever to timing re-entry into the NZ market.

AMR
20-04-2008, 03:35 PM
What sort of correlation is there on a weekly, or even monthly scale? Significantly better than 23 vs 20?

Crypto Crude
20-04-2008, 03:49 PM
AMR,
Print the NZX index graph... print DOW index graph... put them side by side and you will see the correlation is high, but not exactly equal to 1....
...
Im sorry, I dont know exactly how to post the graphs like phaedrus does...
:cool:
.^sc

duncan macgregor
20-04-2008, 04:43 PM
What sort of correlation is there on a weekly, or even monthly scale? Significantly better than 23 vs 20? You are quite right the markets follow each other some more than others. The NZX is greatly influenced by the DOW, as is the ASX. I made a killing last year following Nickel prices in london where almost all nickel companies in Australia followed the trends up and down in unison. To ignore overseas prices, and trends in markets and only concentrate on trends of compamies in NZ is very short sighted.
I would have thought you would have been more switched on to it than that PHAEDRUS. Macdunk

Phaedrus
20-04-2008, 05:17 PM
Duncan, I trade stocks in the USA and use an appropriate American index to monitor that market as a whole. I do not need to consider the effects of other major markets, because any influence they may exert is already expressed in the SP500.

I trade stocks in Australia and use the AllOrds Index to monitor the Australian market as a whole. I do not have to worry separately about the effect of other major indices because any effect they have is already reflected in the AllOrds.

Ditto NZ. A New Zealand Index is the best instrument to monitor the NZ market. Because it incorporates all influences (including movement of other major indices) it is all you need.

The market discounts everything.
This is the most basic and the most important tenet of Dow theory. The market (yes, even the NZ market) reflects every possible knowable factor that affects it.
"The sum and tendency of the transactions of the Stock Exchange represent the sum of all Wall Street's knowledge of the past, immediate and remote, applied to the discounting of the future. There is no need to add to the averages, as some statisticians do, elaborate compilations of commodity price index numbers, bank clearings, fluctuations in exchange, volume of domestic and foreign trades or anything else. Wall Street considers all these things." (Hamilton, W. 'The Stock Market Barometer', pp 40-41).

Bilo
20-04-2008, 08:10 PM
I think that the worm has turned. Where the index may have once reflected the sum of all the little stock specific trades there is now so much money being dumped onto indicies that the index drives share prices in major overseas markets and Australia. So some pimply faced young kid is deciding that the oil price is down therefore I will dump oilers, the Ni price is down so I will balance my index by dumping Ni producers, we are hot on coal stocks so they will trade at a PE of 50 in a bear market, they do this irrespective of individual company performance, because they obviously can't take in all the coy specific news. So we have good company's with good news getting trashed and coys with bad news being re-rated. We have competing indexes having cyber battles. The banks are using their own stocks to manipulate the day ends, while they dither over which of their stock holdings to selectively add/reduce. Just my observation of the carry-on that this liquidity crisis has accentuated in the ASX.

A major lesson for me has been to never go against the index no matter what the fundamentals may indicate. Something that to Phaedrus is akin to a religious obsession. Opting out of the stocks that the indexes use most to balance their positions is something I am still working on as some of my favourite coy stocks have been hijacked and index activity seems to be multiplying by the month.

NZX may be the exception as our market hasn't been hit by the computerised "bot" trading that plagues the ASX. Long may this remain.

AMR
20-04-2008, 09:52 PM
CMC are about to set up an NZX15 cfd futures index, so the dream is over.

Phaedrus,
On a totally different topic, are you able to knock up some technical analysis of housing prices?

upside_umop
20-04-2008, 11:30 PM
yeah, i was thinking the same (housing)...would be interesting to see the OBV of housing market at the moment.

patsy
21-04-2008, 05:50 AM
The market discounts everything.
This is the most basic and the most important tenet of Dow theory. The market (yes, even the NZ market) reflects every possible knowable factor that affects it.
"The sum and tendency of the transactions of the Stock Exchange represent the sum of all Wall Street's knowledge of the past, immediate and remote, applied to the discounting of the future. There is no need to add to the averages, as some statisticians do, elaborate compilations of commodity price index numbers, bank clearings, fluctuations in exchange, volume of domestic and foreign trades or anything else. Wall Street considers all these things." (Hamilton, W. 'The Stock Market Barometer', pp 40-41).

Phaedrus - this quote from the Dow Theory sounds remarkably close to the Efficient Market Hypothesis in what is called the EFH's Weak Form. The Weak Form of the EFH was established to discredit the use of TA. I'm unsure if you agree entirely with the quote because it seems to me it would fly in the face of your investment outlook.

duncan macgregor
21-04-2008, 06:04 AM
Nothing like the proof of the pudding to settle an arguement. I will tell you each morning this week a forecast of the NZX trend for that day only going off what the DOW did.
GOOD day, BADday, or INDIFFERENT day.

1, MONDAY is a good day. The result was
2, TUESDAY
3, WED.
4,THURS,
5,FRID,

I hope we have a rock and roll week to give me a real test. Macdunk

winner69
21-04-2008, 06:11 AM
Big call in the Sydney Morning Herald this morning

Share market expected to open higher

http://news.theage.com.au/share-market-expected-to-open-higher/20080420-27fo.html

STRAT
21-04-2008, 07:17 AM
Nothing like the proof of the pudding to settle an arguement. I will tell you each morning this week a forecast of the NZX trend for that day only going off what the DOW did.
GOOD day, BADday, or INDIFFERENT day.

1, MONDAY is a good day. The result was
2, TUESDAY
3, WED.
4,THURS,
5,FRID,

I hope we have a rock and roll week to give me a real test. MacdunkCome on Duncan , show us what you can do. It would be useful if you could give us two days ahead;). Predicting the days action on the ASX from the DOW the night before is easy enough to do and a day too late to make use of the information.

Phaedrus
21-04-2008, 07:31 AM
Over the last 2 months, the 2 indices have (on 1 occasion) moved together for 5 consecutive days.
They have also (on 1 occasion) diverged for 5 consecutive days. Now, I am not talking here of trivial unimportant differences such as the Dow going :-
UPday/DOWNday/UPday/DOWNday/UPday while the NZSX50 goes :-
DOWNday/UPday/DOWNday/UPday/DOWNday.
I am talking about the Dow going down/down/down while NZ goes up/up/up.
Statisticly, the odds are that there will be 3 days of agreement and 2 of disagreement.

Duncan, we are both pragmatists. Practical men who are not given to idle theorising. Please tell us all how you propose to actually make use of your newfound predictive abilities. Specifically, how would you use this skill to gain an edge on the market and make money?
Would this knowledge help people to decide when to re-enter the NZ market?

Serpie
21-04-2008, 08:02 AM
I will tell you each morning this week a forecast of the NZX trend for that day only going off what the DOW did.

That's hardly rocket science Dunc. I'm sure there are many mornings when we wake up, see the DOW result, and wish we would've pulled all of our money out (or put all of our money in) the night before. It's too late by then.

DOW up 226 on Friday, so I'm guessing that you're going to go out on a limb and say a green day for the NZX?

patsy
21-04-2008, 09:21 AM
Over the last 2 months, the 2 indices have (on 1 occasion) moved together for 5 consecutive days.


Phaedrus - you know perfectly well that a sample of a few days is not statistically significant so there is no point is seeing what happens with the Dow and the NZX over the next few days, weeks or even months.

William Bernstein (author of The Intelligent Asset Allocator) has calculated the correlation of the S&P with every market within the OECD and concluded that from 1971 to 2001, the S&P and the NZ index (i.e., whatever index we had before the gross NZ50) has a correlation of 63.1%.

Hoop
21-04-2008, 10:07 AM
Day by day DOW watching influencing your investing on NZX...good debate going on here.......

.........but I think many are missing the point.

As an example....In my posts since August 2007 I continuously mentioned that major Global share markets seem to be in sync...I am right!
Phaedrus says they are not in sync...P is right!

OK whose wrong..answer neither of us
Why? because we invest using different evaluation tools.

My evaluation of the share markets is from a longer term viewpoint than P's. For me, the major global share markets are in sync as they all have entered a bear market phase all triggered at a similar time....due to macro factors which affect the world.
Local (micro) factors I observe but ignore if irrelevant to the overall picture (which in isolation, most are)

I am a day watcher and analyse the closing day indices with interest and react to Macro signal events not micro signal events. I use discipline to able me not to fret from minor day by day fluctuations which may cloud my judgement.

A macro signal example ...very large worldwide company going belly up dropping the DOW by 6% overnight, causing The DOW to totally breach a major support level I would consider an alert for me to react with my NZX investments.

A micro signal example... Google or Amazon or Joe bloggs's family business having an increased profit and the DOW jumps 2% on the "feel good" news and breaks no primary resistance levels...Nah, I consider that irrevelant.


My perception of it all is mentioned below and if it's wrong I don't care:)

Short term analysis.....DOW / NZX not in sync and will never be in sync due to totally different influencing local and political (micro) factors.

Medium term ....DOW/NZX may briefly follow each other in tandem

Long term .....Through history seldom...but during the last year they are in sync.

I'm not going to waste my time researching this and post graphs to prove if my perception is correct as these facts are of no benefit to my investing strategies.

Large macro factors seem to effect DOW/NZX in similar ways. I evaluate these factors, TA, historical referencing, or otherwise to create some sort of advanced warning system.

Phaedrus
21-04-2008, 10:16 AM
Phaedrus - you know perfectly well that a sample of a few days is not statistically significant so there is no point is seeing what happens with the Dow and the NZX over the next few days, weeks or even months.

I think that comment should be addressed to MacDunk, Patsy! I agree with you that his "competition" period is way too short to have any significance at all. My "last 2 months" comparison has more meaning, but I am quite happy to accept Bernstein's longterm correlation estimate of 63.1%. The point here being that, at a daily level, this is not high enough for Dow movement to be reliably or usefully predictive of NZSX50 movement.

It is a big job to do a longterm comparison of US/NZ indices, but you might be interested to know that I have done 2 previous surveys, each covering 1 calendar year. One gave a negative correlation of 4% (The old NZSE40 Index was slightly more likely to move against the Dow than with it). The other, more recent one showed that the NZSX50 moved against the Dow 35% of the time. I think we probably have to accept that the correlation between US and NZ indices does in fact vary, depending on prevailing market conditions.

Phaedrus
21-04-2008, 10:32 AM
"It makes one think about the "usefulness" of the NZSX50 as an index for describing market direction" (Arbitrage)
"Right now, we should probably be talking about the Dow" (Lizard)
"anyone trading in the NZX would be very foolish to ignore the DOW" (MacDunk)
"when to reenter the market has everything to do with how the major indices are faring" (Ratkin)
"Mackdunk is right..". (Schrewd Crude)
"To ignore ... overseas trends in markets.... is very short sighted" (MacDunk)
etc etc.

There is a rare degree of consensus here - though it is a little ironic that I stand accused of paying too little attention to the Dow. I'll wager that I study it more closely than any of you! I have to. I trade there.

I will have one last shot at trying to explain why I think you are all wrong and why I think that, when using the NZSX50 index to make decisions about the NZ market, you need not factor in other indices such as the Dow. What's more, you should not!

Let's say that the NZX was more or less flat for an entire week and one of you lot turned to the Dow for another perspective. You see that the Dow has been DOWN for 5 straight days......

Case (1) You do not realise that the NZSX50 index already incorporates all Dow influence and so you reference it yourself. You see the sustained fall and say "Wow, the Dow is looking very weak - we tend to follow it so I am pessimistic about the NZ market." You would be Bearish and looking to sell.

Case (2) You are fully cognisant of the fact that the NZSX50 Index already includes all Dow influence, but you see that the Dow has had a very bad week. You say "Look at how well the little NZ market has stood up against the influence of the Dow! They had a really bad week and we didn't move! Think what will happen here when/if the Dow goes up! This makes me optimistic about the NZ market." You would be Bullish and looking to buy.

Case (3) (Me) I know that NZ indices already incorporate all Dow influence (indeed, ALL influences) so I am quite happy to judge the NZ market as a whole by the NZSX50 alone. I observe that it is tracking sideways and see this as a consolidation zone - a time to do nothing. A time to wait and see whether the coming break will be up or down. Not pessimistic. Not optimistic. Not Bullish. Not Bearish.

The basic premise on which Dow theory is built is that the index discounts everything.

Understand that concept and you will understand my argument.

ratkin
21-04-2008, 11:43 AM
The basic premise on which Dow theory is built is that the index discounts everything.

But what if Dow theory is wrong.

Serpie
21-04-2008, 11:50 AM
Which also raised the old question:
If the market is always right, then why do we have corrections?

patsy
21-04-2008, 12:16 PM
Which also raised the old question:
If the market is always right, then why do we have corrections?

Nothing in the Dow Theory or the Efficient Market Hypothesis postulates that the "market is always right", in the sense that the share price reflects the "true value" (whatever that is) of a company. Both postulate that the market reflects the aggregation (i.e., average) of the expectations of investors. Confusing the concept of "right price" and "price reflecting total expectations" is one of the most common mistakes when people criticize those two theories. The expectations of the market may be way off as a result of greed, fear, or wrong information.

patsy
21-04-2008, 12:22 PM
Phaedrus - your argument is correct. If there was a perfect correlation between the Dow and, say, the NZX or ASX (or any index from a market where there is a time lag between such market and the USA), then we'd have a perfect arbitrage opportunity to make HEAPS of money.

For example, just before the US market closes, we should be able to see where the Dow stands. If the Dow is up, then we should buy an index ETF (either ASX or NZX) in the US before the actual corresponding market opens. The rise in the index (and, consequently, in the ETF) would be reflected only after the market opens (i.e., after we buy the index), and then we dump the ETF as soon as the American market opens on the following day - we pocket the difference. If the Dow is down, then we should short such ETF, etc.

Of course, this arbitrage opportunity doesn't exist because of the very reasons you explained!

duncan macgregor
21-04-2008, 03:11 PM
There is never a perfect correlation in any market, only a general tendency to play follow the leader. Fear and greed, play a large part along with some other harder to decipher influences that are not always easy to spot. When a shot rings out next door, all the bunnies in this paddock run for cover. Historic repeat events have an easy to work out following. Example the Americas cup, and ports of Auckland, where the trend up was very similar to the first event the second time.
Then we had APOLLO mining in Australia whose sp followed the apollo missions up and down. A sudden shock up or down in one market will influence the others. To say this does not happen simply because on no where days the markets dont match trends perfectly is being blind to reality. If America attacked IRAN tomorrow, the NZX would plummet, which has nothing at all to do with market or company fundamentals in this country. Never mind arguing the point if you dont get it, i dont see the critics coming forth with reading tomorrows market today. Macdunk

duncan macgregor
22-04-2008, 07:40 AM
Nothing like the proof of the pudding to settle an arguement. I will tell you each morning this week a forecast of the NZX trend for that day only going off what the DOW did.
GOOD day, BADday, or INDIFFERENT day.

1, MONDAY is a good day. The result was [NZX 50] up1% [ASX all ords] up 2.9%
2, TUESDAY indifferent to slightly down if anything result was NZX minus .3% asx minus .5%
3, WED.a worse day than tues
4,THURS,
5,FRID,

I hope we have a rock and roll week to give me a real test. Macdunk DAY one was on the button. TUESDAY will be indifferent to sligtly down if anything.

duncan macgregor
22-04-2008, 05:15 PM
What a surprize got it right again.
NZX 50 down .3%
ASX ALL ORDS down .5%
I will tell you what the market will tomorrow before it opens i have got to be wrong one day this week to satisfy the people that dont know how to read the market. Macdunk

peat
22-04-2008, 05:56 PM
woopty doo Dunc.
as others have stated what a pointless exercise in self aggrandisement.

duncan macgregor
23-04-2008, 07:03 AM
woopty doo Dunc.
as others have stated what a pointless exercise in self aggrandisement. Others have stated it cant be done. The only way to prove it can is do it and stick their nose in it when you prove it. It can end up with egg all over the face so keep your fingers crossed. Bad day today i expect the NZX to drop over .6% sellers should sell early buyers should buy late. Macdunk

Major von Tempsky
23-04-2008, 07:06 AM
when to re-enter the market?
After Phaedrus' alzheimers takes him out of chicken entrail reading.

STRAT
23-04-2008, 08:25 AM
DAY one was on the button. TUESDAY will be indifferent to sligtly down if anything.Come on Macca, give us all something we can use. Tell us before open this morning what will happen tomorrow;):D:p

lakedaemonian
23-04-2008, 08:39 AM
I still think we are looking at, on average, a lot more pain than gain for the foreseeable future.

BUT I have to admit I'm finding the following equities quite interesting:

NZX: Oceana Gold......gold/commodities play and hedge against the NZD.

NYSE(ADR): China Life Insurance........50% discount to recent highs, long-term China play, hedge against NZD, opportunity to indirectly bet on the Yuan.

Canadian Royalty Trusts(CANROYs).....seem to have clearly bounced off their recent lows, hedge against NZD, opportunity to bet on rising energy prices, big fat dividends.

The one thing I wish I could find is an Australasian fertilizer producer/distributor that will benefit from rising energy prices......AND is selling at a discount. Any ideas?

Have a look at Potash(POT) trading in the US market.......5 year return 1800%, 1 year return 200%....simply......wow.

Phaedrus
23-04-2008, 09:04 AM
Others have stated it cant be done. The only way to prove it can is do it and stick their nose in it when you prove it.

It's not that "it can't be done" Duncan - it's that it is not worth doing!

Reason (1) On a daily basis, your rule "The DOW goes down, the NZX goes down" has a very high failure rate (roughly 40%). Keep in mind here that a failure rate of 50% is as bad as it gets. (If your rule was 100% wrong, we would have an absolutely infallible, totally reliable contrarian indicator!)

Reason (2) Your "daily predictions" are of no practical use. You have been unable to explain to us how you actually apply this predictive skill to trading or would use it to time re-entry into the NZ market.

Reason (3) This information is readily available to everybody. It gives you no edge, no advantage.

Reason (4) Lack of timeliness. As Serpie said "That's hardly rocket science Dunc. I'm sure there are many mornings when we wake up, see the DOW result, and wish we would've pulled all of our money out (or put all of our money in) the night before. It's too late by then."

You're quite confused here, Duncan. No-one has stated that "it can't be done", that there is no relationship between the Dow and the NZX. We all know there is. All of the world's markets are inter-related to some degree.

STRAT
23-04-2008, 09:06 AM
I still think we are looking at, on average, a lot more pain than gain for the foreseeable future.

BUT I have to admit I'm finding the following equities quite interesting:

NZX: Oceana Gold......gold/commodities play and hedge against the NZD.

NYSE(ADR): China Life Insurance........50% discount to recent highs, long-term China play, hedge against NZD, opportunity to indirectly bet on the Yuan.

Canadian Royalty Trusts(CANROYs).....seem to have clearly bounced off their recent lows, hedge against NZD, opportunity to bet on rising energy prices, big fat dividends.

The one thing I wish I could find is an Australasian fertilizer producer/distributor that will benefit from rising energy prices......AND is selling at a discount. Any ideas?

Have a look at Potash(POT) trading in the US market.......5 year return 1800%, 1 year return 200%....simply......wow.Have a look over STB.ASX

duncan macgregor
23-04-2008, 09:06 AM
Come on Macca, give us all something we can use. Tell us before open this morning what will happen tomorrow;):D:p STRAT DONT BE A PATSY. I told you that i was out the market sitting it out for 2008 what more is there to say?.
You rubbish me for being out the market and want me to join you playing tiddlywinks with LMP. My claim was picking the market on a daily basis only going off whatever the DOW gets up to. The good major is having a go about chicken entrails which is rather amusing considering his record with downtrending shares. Macdunk

STRAT
23-04-2008, 09:19 AM
STRAT DONT BE A PATSY. I told you that i was out the market sitting it out for 2008 what more is there to say?.
You rubbish me for being out the market and want me to join you playing tiddlywinks with LMP. My claim was picking the market on a daily basis only going off whatever the DOW gets up to. The good major is having a go about chicken entrails which is rather amusing considering his record with downtrending shares. MacdunkA Patsy?:eek: Does this mean Im taking the wrap for something I didnt do? :D

Ive never rubbished you Duncan but I have stuck up for you from time to time ;). We both spent a lot of time with an eye on the DOW and spot nickel prices last year to help determine entry and exit times with nickel stocks and Im more than happy to disclose that you did a better job of it than I did by far. :D

I just thought while you are bragging it would be great for you to tell us something we can actually use :p

Placebo
23-04-2008, 09:48 AM
I just thought while you are bragging it would be great for you to tell us something we can actually use :p

Don't hold your breath. Dunk's strength is pointing out the screamingly obvious. Surprising insights and unexpected gems are usually from other sources ;)

COME ON DUNK YA KNOW YA LOVE IT!!

Phaedrus
23-04-2008, 09:55 AM
when to re-enter the market?
After Phaedrus' alzheimers takes him out of chicken entrail reading.

Alzheimer's is spelt with a capital A and should also have an apostrophe. My guess is that you knew both of these things, but had simply forgotten. Do you have lapses like this very often? Has poor long-suffering Mrs MvT ever remarked on your failing memory?

My "chicken entrail reading" is working so well that it really would require a force majeure to take me out of it.

I suspect that "when to re-enter the NZ market" is not a problem you are faced with, MvT. Given your well known propensity for doggedly riding out downtrends, my guess is that you never got out of it!

duncan macgregor
23-04-2008, 09:59 AM
Nothing at all about bragging STRAT. I am out the market as you know simply because at the moment the market is at the beginning of a crash. When i said our market follows closely to whatever the DOW gets up to i was rubbished. I only set about proving that it does. If that is bragging then i am bragging . The people that rubbished me now say well what use is this which is another way of saying they were wrong in the first place. I really dont care if its of any use to the average investor that cant work things out for themselves.
I told you what the market will do long term, i tell you each day this week what it will do short term only to prove a point. A short term trader can use this to their benefit by timing their buy or sell at the start of the day before thhe market opens. Macdunk

shane_m
23-04-2008, 10:03 AM
DM what makes you think the market is at the beginning of a crash?

duncan macgregor
23-04-2008, 10:13 AM
DM what makes you think the market is at the beginning of a crash? To many things going in the wrong direction.
The American economy,Price of fuel, Free trade with china which brings to a close to manufacturing in NZ. To many pigeons coming home to roost we are in for a very tough year. Macdunk

Footsie
23-04-2008, 10:19 AM
Dunc

look back at history.....

markets "crash" when their has been irrational exuberance..... and the crash is sudden and shocking

think tulip , think 1929 & 1987 and think south sea bubble.....

Right now NZx and ASX are well off their highs. we werent in a "bubble" here to start with . If the market was going to crash it would have already happened.....

sure we cant rule out a prolonged bear (where the market slowly falls another 20%) ......... but crash.... sorry not this time.
maybe in property but not in NZ or AU shares


Stop being such a chicken little !!

STRAT
23-04-2008, 10:37 AM
A short term trader can use this to their benefit by timing their buy or sell at the start of the day before the market opens. MacdunkSorry mate I fail to see how that would help a short term trader. To use that info for a buy or sell on the day would only be of use if one could predict what will happen the next day as well. If you can tell me what the DOW will do for two days in advance then you may be onto something:D

Hoop
23-04-2008, 10:41 AM
Footsie quote.... think tulip....

This true story is a gem :D:D:D:D

Charles Mackay (http://en.wikipedia.org/wiki/Charles_Mackay), in his book "Extraordinary Popular Delusions and the Madness of Crowds (http://en.wikipedia.org/wiki/Extraordinary_Popular_Delusions_and_the_Madness_of _Crowds)", tells a story of the time:
A wealthy merchant had paid 3,000 florins (Av wage 150 florins a year) (280 pounds sterling) for a rare Semper Augustus tulip bulb, and it disappeared from his warehouse. After thoroughly searching his warehouse, he saw a sailor (who had mistaken the tulip bulb for an onion) eating it. The sailor was promptly arrested and spent months in jail.

Ref Wikipedia

Phaedrus
23-04-2008, 01:34 PM
Duncan,
Is it possible that your fixation with the DOW has blinded you to opportunities right under your nose here in NZ?

I agree that this is a time for caution, but there are some good opportunities about. Although you claim to be a "full-time trader", you have all your money sitting in an Australian bank earning 8% or whatever while here, for example, NZO has risen well over 60% in just 3 months. I'm not suggesting for a moment that it was possible to have bought right at the bottom, but why miss out on an uptrend like this simply because the Dow is weakish?

When the thrill and drill is over and the music stops, you can always pass your parcel to the braindead, cash up and continue waiting for roadkill - right?

macduffy
23-04-2008, 01:56 PM
I hesitate to enter this debate by the expert and
illustrious by here's my timid tuppence worth.

First penny. In over 45 years of equity investing I've learnt that it seldom pays to be totally in the market or completely out of it. For that reason, I normally have between 50% and 85% of my " equity" capital, invested.( These days largely in the Aussie market but that's another story.)
Second penny. As time goes by I pay increasing attention to a primitive form of Technical Analysis while remaining fundamentally a fundamental. Increasingly, I've come to the conclusion that every available tool needs to be used to try to gain an edge.

:)

duncan macgregor
23-04-2008, 02:27 PM
PHAEDRUS, The only fixation i have is increasing my capital with the least risk. The DOW is only one little indicator as you well know. I know there is all sorts of winning trades to make in a falling market, just for the sake of being in the market. It all comes back to risk management. That is why i only invest in AUSTRALIA. NZ has had it in the financial world.
I had it so easy last year, that i prefer to bide my time, let the market tell me its time to make a come back, not jump in for the sake of it.
Look at all the poor suckers riding the market down at the moment who will only be to glad to sell out at the bottom. You and i both know when the market has turned, why rush in?.
My money sitting idle in the bank is worth more than interest taking the exchange rate into account.
The first quarter of this year nobody other than myself is in the black in any sharetrader competition which says a lot for being out the market. Incidently the NZX seems at this moment to be going against the DOW so you might get one back. Macdunk

AMR
23-04-2008, 04:22 PM
Has there been any research done into the influence of the sharemarket vs the influence of commodity prices? For example, oil is in an uptrend and the ASX is trending side ways. Will shares in an aussie oiler go with the sharemarket or will they go with crude prices?

My guess at the answer : They kinda cancel each other out. Some ozzie oilers such as BPT are still stuck in their trading ranges. NZO on the other hand has been going from strength to strength.

AMR
23-04-2008, 04:23 PM
PHAEDRUS, The only fixation i have is increasing my capital with the least risk. The DOW is only one little indicator as you well know. I know there is all sorts of winning trades to make in a falling market, just for the sake of being in the market. It all comes back to risk management. That is why i only invest in AUSTRALIA. NZ has had it in the financial world.
I had it so easy last year, that i prefer to bide my time, let the market tell me its time to make a come back, not jump in for the sake of it.
Look at all the poor suckers riding the market down at the moment who will only be to glad to sell out at the bottom. You and i both know when the market has turned, why rush in?.
My money sitting idle in the bank is worth more than interest taking the exchange rate into account.
The first quarter of this year nobody other than myself is in the black in any sharetrader competition which says a lot for being out the market. Incidently the NZX seems at this moment to be going against the DOW so you might get one back. Macdunk

If equities suck, why don't you buy into trending markets, like a crude contract or a natural gas contract, or even softs?

Mick100
23-04-2008, 05:08 PM
Has there been any research done into the influence of the sharemarket vs the influence of commodity prices? For example, oil is in an uptrend and the ASX is trending side ways. Will shares in an aussie oiler go with the sharemarket or will they go with crude prices?

My guess at the answer : They kinda cancel each other out. Some ozzie oilers such as BPT are still stuck in their trading ranges. NZO on the other hand has been going from strength to strength.


Unfortunately, in recent times (past 6 months) the commodity producing cos have been tracking the general trend in the sharemarket, not the commodity's that they produce. I have most of my share investments in commodity related companies and I run a commodity trading account as well - there has been a strong negitive corellation between the two in recent months. Over the long term I would think the commodity producers will track the commodites rather than the general sharemarket. Junior gold companies have never been cheaper relative to the gold price since the beginning of this bull market in 2001. I see it as a once in a decade buying opportunity - same things still applies to some of the mid cap and junior oilers (eg PSA)
.

Dr_Who
23-04-2008, 06:11 PM
Junior gold companies have never been cheaper relative to the gold price since the beginning of this bull market in 2001. I see it as a once in a decade buying opportunity - same things still applies to some of the mid cap and junior oilers (eg PSA)
.

I totally agree with your post. Thanks to Opes Prime we have a lifetime opportunity to get set for this commodity boom period. I have been slowly picking up cheap stocks in aussie.

lakedaemonian
23-04-2008, 06:12 PM
Unfortunately, in recent times (past 6 months) the commodity producing cos have been tracking the general trend in the sharemarket, not the commodity's that they produce. I have most of my share investments in commodity related companies and I run a commodity trading account as well - there has been a strong negitive corellation between the two in recent months. Over the long term I would think the commodity producers will track the commodites rather than the general sharemarket. Junior gold companies have never been cheaper relative to the gold price since the beginning of this bull market in 2001. I see it as a once in a decade buying opportunity - same things still applies to some of the mid cap and junior oilers (eg PSA)
.


I'm sure I'm not reminding you of something you haven't already considered, BUT

....with commodity producing companies you have labour risk, management risk, financial risk, operational risk, environmental risk, banana republic dictator nationalizing your investment risk, etc.

Investing in JUST the underlying commodity directly can potentially be less risky than a commodity producing company.

Mick100
23-04-2008, 06:49 PM
I'm sure I'm not reminding you of something you haven't already considered, BUT

....with commodity producing companies you have labour risk, management risk, financial risk, operational risk, environmental risk, banana republic dictator nationalizing your investment risk, etc.

Investing in JUST the underlying commodity directly can potentially be less risky than a commodity producing company.

I,m fully aware of the differences between trading commodities and investing in commodity producing companies - thanks - as i stated - I do both

Jim Rogers argues that the long term returns from trading commodities in the futures market are far better than returns from investing in commodity producing companies for those reasons you point out lake. From my experience, over the past 6 months, this argument of jim Rogers is starting look like it's dead right
.

lakedaemonian
23-04-2008, 07:55 PM
I,m fully aware of the differences between trading commodities and investing in commodity producing companies - thanks - as i stated - I do both

Jim Rogers argues that the long term returns from trading commodities in the futures market are far better than returns from investing in commodity producing companies for those reasons you point out lake. From my experience, over the past 6 months, this argument of jim Rogers is starting look like it's dead right
.

I'm a big Jim Rogers fan....he seems spot on with his long-term views

winner69
24-04-2008, 05:53 AM
Incidently the NZX seems at this moment to be going against the DOW so you might get one back. Macdunk

That was yesterday ...... todays pick is?

I reckon the NZX will remained unchanged tomorrow ..... not a good day to make money

duncan macgregor
24-04-2008, 07:46 AM
That was yesterday ...... todays pick is?

I reckon the NZX will remained unchanged tomorrow ..... not a good day to make money Got it wrong yesterday with the market going against the overseas trend. Today the overseas markets are up and the price of gold down which shows optimism for a decent leg up today. The NZX will have a very good day i would think despite the long weekend fronting up. Two right one wrong is not a good count so lets see what today brings. Macdunk

Phaedrus
24-04-2008, 08:37 AM
Got it wrong yesterday with the market going against the overseas trend.....Two right one wrong is not a good count..... Macdunk

True enough Dunc. Equating with a failure rate of 33%, it really is not very good at all.

You had better get used to being wrong quite often about this. Bernstein (The author Patsy quoted) found a 37% "failure rate" in a survey covering 30 years.

If we combine our efforts, adding my short survey to your even shorter one, we find the NZ market going against the Dow for 21 of the last 46 trading days. That's a failure rate of 45%.

You've lost this one before you start, Dunc. When are you going to give it up?

duncan macgregor
24-04-2008, 09:02 AM
True enough Dunc. Equating with a failure rate of 33%, it really is not very good at all.

You had better get used to being wrong quite often about this. Bernstein (The author Patsy quoted) found a 37% "failure rate" in a survey covering 30 years.

If we combine our efforts, adding my short survey to your even shorter one, we find the NZ market going against the Dow for 21 of the last 46 trading days. That's a failure rate of 45%.

You've lost this one before you start, Dunc. When are you going to give it up?PHAEDRUS when you stop looking you are dead. Nobody ever found anything worth finding without looking. When i close my mind to ideas, and get entrenched in rail track thinking that, this or that is the only way, thats when i know that i have joined the ranks of the brain dead.
I dont care about failure rate, when it costs nothing. I notice the failure rate of some of the people with no sell systems at the moment, which is costing them heaps. Come out before the event like i do then we might compare failure rates. I am the only person in front of the market in any trader competition on SHARETRADER so far this year. I really dont care about egg on the face as long as i have skiting rights. Macdunk

whiteheron
24-04-2008, 05:12 PM
I am the only person in front of the market in any trader competition on SHARETRADER so far this year. I really dont care about egg on the face as long as i have skiting rights. Macdunk

I dont know how you work that one out Macdunk
On the ASX 2008 Sharetrader comp, according to my calculations, you are currently on around minus 27 % whereas I am on around minus 11 %
(Couldnt help that brag)

As you know I am heavily into Aussie mining and energy stocks, eg AWE, CUE, CUO, EXS, MCR, OXR, PEM (but not skiting about that one at present), QGC, TMR, TZN,

I could write a book on this but in a few words
increasing world population
millions moving to middle classes, China India and other developing countries hence growing demand for minerals and energy
best recources already found and in most cases substantially consumed
new deposits ever more difficult to find and develop, including country risk, cost, distance from infastructure etc
mergers and takeovers to acquire resources and minimise costs
etc etc etc

Companies in or close to production with low cost structures are in an excellent position to benefit from the continuing mining boom

Dont worry about the USA too much, although it is still a large force on the world stage the demand for minerals and energy is largely coming from the developing countries, and not just for making cheap products for export to the USA, they are developing huge internal economies as well

duncan macgregor
24-04-2008, 06:24 PM
WHITE HERON, Look up investment groups and clubs at the bottom of the page. SHREWDY and STRAT forced me into a competition where at the moment am the only person on sharetrader in front of the market. The prize is skiting rights which i am using up as long as it lasts. Macdunk

Crypto Crude
27-04-2008, 02:13 PM
Mackdunk,
You are a mad man...
check this out...
In the Auzzie Competition you were down 22% as of last months results, THis month you will drop further...
Heres MDs results...
AGM UP 3.3% with lucky takeover, PEM down 59.8% this year, PDN down 25%, NWE down 17.1%, MXR down 15.8%...This month so far, MXR has dropped further from 16c to 14, and PDN has dropped from $5.09 to $4.30ish....
...
On the NZX competition you picked AUSTRAL PACIFIC.... down one third...
and HGD has almost halved....
If it werent for your most hated stock NZO then you would be way down....
So you got alittle lucky with AGM in our Comp, and ASX comp... woop de do....
possibly first month this year where I will lose top spot on NZX comp....
you dont here me firing my gun off in the Air like an Arabian...
we Wouldnot hear the end of it if you were at the top...
You are still going on and on about what happened early last year....
:rolleyes:
.^sc

Crypto Crude
27-04-2008, 02:16 PM
Some posters have overlooked the US rebate issue...
Rebates are coming out earlier than first thought...
Markets will hold up for the next while as US citizens bank cheques...
:cool:
.^sc

duncan macgregor
27-04-2008, 02:33 PM
GOOD ON YOU SHREWDY, old Macdunk is whippin your ar*e in our little competition and smart enough to be out the market against your advice. I only selected NWE because you said you would recommend it to your granny otherwise i would have selected NZO. I wonder how many in 2008 will be in front at the end of this year. You are still playing catch up to my bank interest with all that roadkill round the corner to buy when the time is right. Big crash coming later hope you are shrewd enough to see it coming.
Macdunk

Crypto Crude
27-04-2008, 02:43 PM
Yes I would have recommended NWE to my granny at that time (when I said it)...
production stage started to look shakey,
She would have been long sold by then... just like I was...
Im way ahead of you this year even with my big hit last week with LMP, and LMPO...
Im still part cash, so Im only playing with what Im prepared to lose.....
whats your take on the US Rebate cheques MD?
:cool:
.^sc

duncan macgregor
27-04-2008, 02:56 PM
SHREWDY, My take on the rebate is the market will recover for a nice blip up then carry on trending down. I much prefer being out the market at the moment quite content to let the market run its cycle. The NZ economy will have its share of troubles with free trade to china driving it into a farming back water and lowering living standards. It looks like last man out switches the lights off. Big shake ups in the near future dont get caught in shares like LMP that have a low volume. Macdunk

Dr_Who
27-04-2008, 04:25 PM
WHITE HERON, Look up investment groups and clubs at the bottom of the page. SHREWDY and STRAT forced me into a competition where at the moment am the only person on sharetrader in front of the market. The prize is skiting rights which i am using up as long as it lasts. Macdunk

Have you been sniffing glue again? :eek:

Lizard
28-04-2008, 08:32 PM
http://h1.ripway.com/Phaedrus/nzsxBuy42.gif

Well now that all the re-entry indicators have probably been well and truly triggered it seems time to start thinking about when it might be time to get out again! We have yet to see the extent of overflow from the financial and housing sector to the "real economy" - i.e the effect on forecasts and profits for core NZX50 companies such as FBU, NPX, WHS, PFI etc. Maybe it will be negligible and we have seen the worst. Or quite thinkably, there will be a second major down wave at some stage.

So the question for Phaedrus is; from a TA standpoint, to monitor the NZX for "exit" signs, would you now use the indicators/periods you used for re-entry or some other indicators/period (at least until a longer term trend is established)?

bermuda
28-04-2008, 09:25 PM
Well now that all the re-entry indicators have probably been well and truly triggered it seems time to start thinking about when it might be time to get out again! We have yet to see the extent of overflow from the financial and housing sector to the "real economy" - i.e the effect on forecasts and profits for core NZX50 companies such as FBU, NPX, WHS, PFI etc. Maybe it will be negligible and we have seen the worst. Or quite thinkably, there will be a second major down wave at some stage.

So the question for Phaedrus is; from a TA standpoint, to monitor the NZX for "exit" signs, would you now use the indicators/periods you used for re-entry or some other indicators/period (at least until a longer term trend is established)?

Re enter the market at your own peril.

Things are going to get very bloody . Oil goes higher and inflation fuels a winter of discontent. A lot more companies will start going on strike trying foolishly to play catchup.

If you are going to be in the market make sure it is oil and gas and coking coal....otherwise start shorting.

Lizard
28-04-2008, 09:34 PM
Re enter the market at your own peril.

Things are going to get very bloody . Oil goes higher and inflation fuels a winter of discontent. A lot more companies will start going on strike trying foolishly to play catchup.

If you are going to be in the market make sure it is oil and gas and coking coal....otherwise start shorting.

In context bermuda, that chart is an old one from I think around page 2 of this thread...since then, the gains have been pretty spectacular. This automatically leads to me taking some profits. However, my "system" is rather vague and ineffectual at the market level, so I am interested in seeing how Phaedrus' more defined system stacks up.

scamper
28-04-2008, 10:34 PM
In context bermuda, that chart is an old one from I think around page 2 of this thread...since then, the gains have been pretty spectacular. This automatically leads to me taking some profits. However, my "system" is rather vague and ineffectual at the market level, so I am interested in seeing how Phaedrus' more defined system stacks up.

isn't there some old chestnut that reads "sell in May and go away"?
i don't actually know the background to that, but it should be considered by the cautious.

Hoop
29-04-2008, 09:47 AM
isn't there some old chestnut that reads "sell in May and go away"?
i don't actually know the background to that, but it should be considered by the cautious.

Old sayings have a generalised facts based around it. Remember it is generalised and sometimes doesn't come true e.g DOW 2007.

In NZ I'm always cautious around NZX reporting time.. August Sept October. It tends to be a seasonal thing so consider that we are opposite to Northern Hemisphere but remind yourself the large Northern Hemisphere markets do have some network effect.

The Background...
Quotes from CNN money 2/5/2005 (http://money.cnn.com/2005/04/29/markets/worstsixmonths/)
.... The second quarter, which starts in April, tends to be weaker, as the positive effects of holiday bonuses and the holiday retail sales period fade out, and a "spring cleaning" mentality kicks in, Hirsch said.
As summer rolls around, people would rather be spending less time in the office and more time enjoying the weather. That change in psychology often extends to the market as well, Hirsch said, with lower trading volume and more rangebound markets.
When the fall creeps in, the psychology switches to getting back to school and back to work and, from a stock standpoint, to cleaning house. To that end, September is traditionally the biggest loser on a percentage basis for the Dow, S&P 500 and Nasdaq.
October, which starts the fourth quarter, can be tough at the beginning but usually turns around by month end, and the quarter as a whole tends to be more upbeat, especially once work bonuses and the holiday sales period kick in.

How true is the saying ??
quote CNN money same article..
....To demonstrate the strength of the November through April period versus May through October, the Stock Trader's Almanac tracks the gains you'd see if you invested $10,000 in the Dow industrials on Nov. 1 of each year and then sold April 30.
If you'd done that every year since 1950, you'd have earned $492,060 on a $10,000 investment, according to the Almanac. But if you'd reversed the whole process, and invested the compounded $10,000 during the May-October period, after 54 years you would have ended up with a $318 loss.
For the S&P, the gains would be $349,165 over the 54 years during the "best" six months and gains of $7,102 during the "worst" six months....

Phaedrus
29-04-2008, 09:56 AM
Well now that all the re-entry indicators have probably been well and truly triggered it seems time to start thinking about when it might be time to get out again! We have yet to see the extent of overflow from the financial and housing sector to the "real economy" - i.e the effect on forecasts and profits for core NZX50 companies such as FBU, NPX, WHS, PFI etc. Maybe it will be negligible and we have seen the worst. Or quite thinkably, there will be a second major down wave at some stage.
So the question for Phaedrus is; from a TA standpoint, to monitor the NZX for "exit" signs, would you now use the indicators/periods you used for re-entry or some other indicators/period (at least until a longer term trend is established)?

The 10 indicators shown here are tailored to the current "medium-term" downtrend and are for modulating entry into the market. They give a good "medium-term" overview of the market, but are not meant to provide exit signals for open trades. Any open positions should be monitored separately, each with its own individual suite of indicators. With these 2 systems in place, you are protected from the effects of any ongoing general market weakness, but are free to capitalise on individual opportunities in the meantime. I have not set up any formal "MOVE TO 100% CASH RIGHT NOW" system, but a drop below the March low of 3484 would certainly quench my current (short-term) optimism.

I would agree with all of you here that are advising caution, and any trades should be tightly monitored. Nevertheless, this is a time of great opportunity, offering potential for substantial gains.

We each have own own level of risk tolerance and we are all somewhere on the Greed/Fear continuum. Buying or trading at times like this is not for everyone, but with appropriate safeguards there is a lot of money to be made - right now.

http://h1.ripway.com/Phaedrus/NZSX429.gif

Lizard
29-04-2008, 10:23 AM
Thanks Phaedrus. That is pretty much what I thought you would say - i.e. monitor individual positions closely and wait for a longer term trend (or perhaps a range) to emerge before re-instating a set of indicators for the index itself. Oh and yes, watching for a break of earlier index low as perhaps the ultimate "move to 100% cash" level in the mean time.

If the index was to break clear of the early April peak, would it then be appropriate to reset the period on the indicators (i.e. go back to longer RSI etc based on emerging trend) to establish another "caution" mechanism (or perhaps more correctly to allow you to relax a little bit by establishing a less volatile "non-caution" zone!) or would that be premature?

Phaedrus
29-04-2008, 11:58 AM
If the index was to break clear of the early April peak, would it then be appropriate to reset the period on the indicators (i.e. go back to longer RSI etc based on emerging trend) to establish another "caution" mechanism (or perhaps more correctly to allow you to relax a little bit by establishing a less volatile "non-caution" zone!) or would that be premature?

If the index breaks above the early April peak, we have a new, month-long uptrend. To my mind this would be best monitored by establishing new indicators tailored to that uptrend. We haven't got much to work with right at the start though, and over this interim period, the "old" indicators featured in this chart should work reasonably well.

This is just how I do things, Liz. I guarantee that no-one else on the planet will be doing the same!

Lizard
29-04-2008, 01:39 PM
This is just how I do things, Liz. I guarantee that no-one else on the planet will be doing the same!

Thanks Phaedrus. Since I am somewhat out of my depth when attempting to use more than basic FA for a macroeconomic view of market direction, then leaning more heavily on TA for managing market risk makes sense for me. My fallback "safety mechanism" has always been to blindly re-balance the portfolio between various asset classes and markets whenever I feel uncertain (pretty regularly!). Better than nothing, but a long way from optimal.

You may be the only person on the planet doing things exactly this way, but I'm impressed so far at the potential such a system seems to hold and which has so far been confirmed during this downturn. Am very grateful that you've detailed enough ideas and explanations to make it possible for others of us to apply something similar. :)

Lizard
02-05-2008, 01:57 PM
If the index breaks above the early April peak, we have a new, month-long uptrend.

Looks like we might get that today.

Phaedrus
02-05-2008, 02:15 PM
Dow theory tells us that we should assume a trend is still in effect until the opposite trend is definitely in place.

The NZSX50 has been in a downtrend for 7 months, but if it closes today higher than the 7/4/08 peak of 3644, this index will now in an uptrend, thus ending the downtrend that began in October last year.

Right now, the NZSX50 is at 3657, so this looks to be quite likely.

Mick100
02-05-2008, 03:19 PM
The NZSX50 has been in a downtrend for 7 months, but if it closes today higher than the 7/4/08 peak of 3644, this index will now in an uptrend, thus ending the downtrend that began in October last year.

.

A GOOD WAY TO FINISH THE WEEK, but,

I won't sleep well until this announcment has been confirmed by macklunk and his 30 day MA;)

COLIN
02-05-2008, 03:45 PM
A GOOD WAY TO FINISH THE WEEK, but,

I won't sleep well until this announcment has been confirmed by macklunk and his 30 day MA;)

I'm afraid you're in for many long restless nights. Doomsdayers don't recant that easily!
I have generally found Duncan's contributions stimulating, and often instructive, but I just cannot understand his stance on some issues, e.g. his continual denigration of NZO where he seems to want to refuse to face facts. He's a bit like the writer of a letter in today's "Press" who claims that 9/11 was orchestrated by the American Administration.

Phaedrus
03-05-2008, 10:23 AM
I prefer to bide my time, let the market tell me its time to make a come-back

My question, Duncan, is this :- What would it take to get you back investing again? What, specifically, would the market have to do that would entice you back in?

The NZ market has been presenting wonderful opportunities to make large gains in a short time. Many good sound stocks have risen sharply from their lows of just a few months ago, eg RYM up 30%. RAK up 50%. NZO up 60%.

Duncan, I accept that you have made the tactical decision to move all your money to Australia, but the situation there is even more clear cut. While your money sits in the bank at 8% per annum and the Australian AllOrds Index is not doing much overall, individual Aus sectors are performing magnificently and have climbed well above their lows. In less than 4 months, even XFJ (Financials) and XUJ (Utilities) are up 20%. XMJ (Materials) is up 30% and XEJ (Energy) is up 40%. I'm sure I don't need to point out that by selecting the strongest stocks in any given sector it is not difficult to markedly improve on these already spectacular figures. I can't remember the last time I saw such opportunities.

There has been plenty of "roadkill" available - but you are so in thrall of the Dow that that you haven't picked any up! A weak US economy and the probability of the Dow falling further should not blind you to the spectacular gains that you could be making right now.

Even if you genuinely believe that "the market will head further south into a recession at the end of the year", that is many months off and as a "full-time trader" you would be watching for such an eventuality and be out of the market if/when any recession loomed.

As you yourself say "Its like that in the market..... the quick and nimble of mind will always beat a plodder."

I've just had an awful thought, Dunc - you haven't tied your money up in a term-deposit have you? That would explain everything!

duncan macgregor
03-05-2008, 10:44 AM
PHAEDRUS, No worries about me sticking money in term deposits. I have no need to be in the market for the sake of being in the market. I am convinced the market will downtrend into a recession later into the year, with all sorts of contradictory signals to catch out the unwary. Why would you bother investing when you think that?. The floating rate for a mortgage is now 11% which makes money hard to find for a lot of potential investors. The factories are closing up shop and moving on, we are in for a bad year regardless of any blips in the market. The money i took to Australia is now worth 9% more simply because of the exchange rate for starters. The market still has to take a few more hits before it comes right. Macdunk

Phaedrus
04-05-2008, 12:15 PM
My question, Duncan, is this :- What would it take to get you back investing again? What, specifically, would the market have to do that would entice you back in?
The NZ market has been presenting wonderful opportunities to make large gains in a short time. Many good sound stocks have risen sharply from their lows of just a few months ago, eg RYM up 30%. RAK up 50%. NZO up 60%.

Duncan, I accept that you have made the tactical decision to move all your money to Australia, but the situation there is even more clear cut. While your money sits in the bank at 8% per annum and the Australian AllOrds Index is not doing much overall, individual Aus sectors are performing magnificently and have climbed well above their lows. In less than 4 months, even XFJ (Financials) and XUJ (Utilities) are up 20%. XMJ (Materials) is up 30% and XEJ (Energy) is up 40%. I'm sure I don't need to point out that by selecting the strongest stocks in any given sector it is not difficult to markedly improve on these already spectacular figures. I can't remember the last time I saw such opportunities.

There has been plenty of "roadkill" available - but you are so in thrall of the Dow that that you haven't picked any up! A weak US economy and the probability of the Dow falling further should not blind you to the spectacular gains that you could be making right now.

Even if you genuinely believe that "the market will head further south into a recession at the end of the year", that is many months off and as a "full-time trader" you would be watching for such an eventuality and be out of the market if/when any recession loomed.

You haven't answered my question Dunc. What, specifically, would the market have to do to entice you back in?

Here is a 5 year chart of the XEJ (Australian energy sector). Do you really think that this "still has to take a few more hits before it comes right."!!!!!
Do you see any evidence of the Dow's malign influence here? Is there any sign of the current market "weakness"?
You forecast that "We are in for a bad year regardless of any blips in the market". Speak for yourself! I am having a really, really good year so far!
http://h1.ripway.com/Phaedrus/XEJ54.gif
To intentionally decide NOT to profit from outperformance like this seems quite bizarre to me. I can't understand it at all. Yet, in the face of such spectacular returns, you keep on and on telling us about how you once picked up a small one-off exchange rate windfall when you shifted some money to Australia. (Which, of course, you would still benefit from even if you did buy shares with the money).

Dunc, the 8% bank interest that you are getting is a laughable sum when compared to returns like this. I believe that your level of caution is excessive and that you are carrying a very heavy opportunity cost because of it.

airedale
04-05-2008, 12:34 PM
Colin Twigg's newsletter seems relevant here.
(http://www.incrediblecharts.com/pan/adclick.php?log=yes&bannerid=837&dest=http://www.wise-owl.com/entry.asp?component_id=492)

http://www.incrediblecharts.com/pan/adlog.php?bannerid=837&clientid=2&zoneid=0&source=&block=0&capping=0&cb=1e0762bc4d05bacae04ac80e34336b44
http://www.incrediblecharts.com/pan/adview.php?what=zone:37&source=20080503_w_weekly_newsletter&n=ab3b5d6c
Dow Signal Confirmed


By Colin Twiggs
May 3, 4:00 a.m. ET (6:00 p.m. AET)
These extracts from my trading diary are for educational purposes and should not be interpreted as investment or trading advice. Full terms and conditions can be found at Terms of Use (http://www.incrediblecharts.com/legal_vizhon/terms_of_use.htm).
Overview


The Dow Industrial Average reversal to a primary up-trend has now been confirmed by the S&P 500 (http://www.incrediblecharts.com/tradingdiary/2008-04-19.htm#sp500). Expect a test of the 2007 highs at 14000. While the market is recovering, this is more a function of cheap money than a booming economy — the old maxim still applies: Don't fight the Fed. Milder than expected employment losses may hint at a soft landing, but the housing market collapse and resultant credit squeeze are likely to plague the economy for some time. Banking, housing and other cyclical sectors should be treated with caution.


The FTSE 100 and Nikkei 225 have also confirmed the Dow signal, while Asia-Pacific markets all look promising.
USA (http://www.incrediblecharts.com/tradingdiary/2008-05-03.php#usa)


Dow Jones Industrial Average (http://www.incrediblecharts.com/tradingdiary/2008-05-03.php#dow_jones-industrial-average)


The Dow closed above 13000, confirming the breakout, after a short retracement respected the new support level at 12800 — signaling buying pressure. Twiggs Money Flow (http://www.incrediblecharts.com/technical/twiggs_money_flow.htm) holding above zero confirms the buying pressure signal. Reversal below 12800 is now unlikely and would warn of another test of 12000/11750.
http://www.incrediblecharts.com/tradingdiary/images/20080503_djiaa.png
Long Term: Dow purists may disagree (the January reaction only lasted 8 days but retraced roughly half of the previous decline) but the breakout should be treated as a reversal of the primary trend. The signal has now been confirmed by the S&P 500 (http://www.incrediblecharts.com/tradingdiary/2008-04-19.htm#sp500).


The Volume Oscillator (http://www.incrediblecharts.com/technical/volume_oscillator.php) (63,5) highlights unusual activity levels. A large spike in January shows strong support at 12000. The March spike, on the other hand, shows resistance. However, the index continued to rise, indicating that sellers were overwhelmed by buyers. We would normally see a similar pattern at the April breakout, but low levels indicate an absence of sellers, who would normally be expected to recoup some of their earlier losses as prices recovered. These potential sellers remain in the wings and could strengthen resistance at the previous high of 14000.
http://www.incrediblecharts.com/tradingdiary/images/20080503_djiaa_w.png
http://www.incrediblecharts.com/pan/www/delivery/avw.php?zoneid=91&n=a4347625 (http://www.incrediblecharts.com/pan/www/delivery/ck.php?n=a4347625&cb=INSERT_RANDOM_NUMBER_HERE)
S&P 500 (http://www.incrediblecharts.com/tradingdiary/2008-05-03.php#sp500)


The S&P 500 broke through resistance at 1400, confirming the Dow reversal to an up-trend. Twiggs Money Flow holding above zero signals buying pressure. Look for confirmation from a retracement that respects the new support level.
http://www.incrediblecharts.com/tradingdiary/images/20080503_spx.png
http://www.incrediblecharts.com/pan/www/delivery/avw.php?zoneid=125&cb=INSERT_RANDOM_NUMBER_HERE&n=a2542a11 (http://www.incrediblecharts.com/pan/www/delivery/ck.php?n=a2542a11&cb=INSERT_RANDOM_NUMBER_HERE)
Small Caps (http://www.incrediblecharts.com/tradingdiary/2008-05-03.php#smallcaps)


The Russell 2000 broke out of its trend channel and is testing resistance at 730, lagging the large cap indices. Large caps are likely to lead the recovery: expect the ratio against the Russell 1000 to fall.
http://www.incrediblecharts.com/tradingdiary/images/20080503_smallcaps.png
Technology (http://www.incrediblecharts.com/tradingdiary/2008-05-03.php#technology)


The Nasdaq 100 was least affected by the housing market collapse and recovered fastest, testing resistance at 2000, half-way to the earlier high of 2200. Twiggs Money Flow (http://www.incrediblecharts.com/technical/twiggs_money_flow.htm) shows buying pressure rising.
http://www.incrediblecharts.com/tradingdiary/images/20080503_ndx.png
Transport (http://www.incrediblecharts.com/tradingdiary/2008-05-03.php#transport)


The Dow Jones Transportation Average has climbed steeply since commencing a primary up-trend. Fedex also confirmed a primary up-trend. A positive sign for the economy.
http://www.incrediblecharts.com/tradingdiary/images/20080503_transport.png
http://www.incrediblecharts.com/pan/www/delivery/avw.php?zoneid=86&cb=INSERT_RANDOM_NUMBER_HERE&n=a4680a73 (http://www.incrediblecharts.com/pan/www/delivery/ck.php?n=a4680a73&cb=INSERT_RANDOM_NUMBER_HERE)
United Kingdom: FTSE (http://www.incrediblecharts.com/tradingdiary/2008-05-03.php#ftse)


The FTSE 100 broke through resistance at 6100, signaling reversal to a primary up-trend. Twiggs Money Flow indicates strong buying pressure. Expect a short retracement to confirm the new support level, followed by a test of the 2007 highs at 6750.
http://www.incrediblecharts.com/tradingdiary/images/20080503_ftse.png
India: Sensex (http://www.incrediblecharts.com/tradingdiary/2008-05-03.php#india)


The Sensex broke out of its trend channel, indicating the down-trend has weakened. Expect a short retracement to confirm the new support level at 16500, followed by a test of primary resistance at 19000. Rising Twiggs Money Flow (http://www.incrediblecharts.com/technical/twiggs_money_flow.htm) reflects buying pressure.
http://www.incrediblecharts.com/tradingdiary/images/20080503_india.png
Japan: Nikkei (http://www.incrediblecharts.com/tradingdiary/2008-05-03.php#n225)


The Nikkei 225 broke above 14000, signaling reversal to a primary up-trend. Twiggs Money Flow (http://www.incrediblecharts.com/technical/twiggs_money_flow.htm), confirms strong buying pressure.
http://www.incrediblecharts.com/tradingdiary/images/20080503_n225.png
China: Hang Seng & Shanghai (http://www.incrediblecharts.com/tradingdiary/2008-05-03.php#n225)


The Hang Seng index broke through 25000, reversing to a primary up-trend. Rising Twiggs Money Flow signals strong buying pressure. Expect a test of the 2007 high at 32000.
http://www.incrediblecharts.com/tradingdiary/images/20080503_hsi.png
Even the Shanghai Composite shows signs of recovery, with Twiggs Money Flow crossing to above zero, reflecting short-term buying pressure. Expect a short retracement to confirm support at 3600 followed by a test of resistance at 4800.
http://www.incrediblecharts.com/tradingdiary/images/20080503_ssec.png
http://www.incrediblecharts.com/pan/www/delivery/avw.php?zoneid=104&cb=INSERT_RANDOM_NUMBER_HERE&n=a48515d5 (http://www.incrediblecharts.com/pan/www/delivery/ck.php?n=a48515d5&cb=INSERT_RANDOM_NUMBER_HERE)
Australia: ASX (http://www.incrediblecharts.com/tradingdiary/2008-05-03.php#asx)


The All Ordinaries broke through medium-term resistance at 5700 after Wednesday's long tail and strong volume signaled accumulation (buying pressure). Expect a test of 6000. Reversal below 5700 is unlikely, given the bullish signals from the Dow and FTSE 100, and would warn of another test of 5200.
http://www.incrediblecharts.com/tradingdiary/images/20080503_xao.png
Long Term: Penetration of 6000 would signal a primary up-trend. Twiggs Money Flow (http://www.incrediblecharts.com/technical/twiggs_money_flow.htm) high above zero signals strong buying pressure.






Top of Page
Home (http://www.incrediblecharts.com/) Terms of Use (http://www.incrediblecharts.com/legal_vizhon/terms_of_use.php) Privacy (http://www.incrediblecharts.com/legal_vizhon/privacy_policy.php) Advertise Here (http://www.incrediblecharts.com/legal_vizhon/incredible_advertising.pdf) Contact Us (http://www.incrediblecharts.com/support/contactlist.php)


© Copyright 2001 - 2008 Vizhon Corporation and its associates. All rights reserved.



http://www.3dstats.com/cgi-bin/connect.cgi?usr=00001233Pauto&js=1&title=Incredible%20Charts%3A%20Trading%20Diary&url=http%3A//www.incrediblecharts.com/tradingdiary/2008-05-03.php&refer=&zone=0&resolution=1024x768&color=16&Tips=0.7123200850097667 (http://www.3dstats.com/)

ratkin
04-05-2008, 12:43 PM
Twiggs has changed his tune , couple of weeks ago he was very bearish.
Typical chartist , using the rear view mirror to drive his car

Phaedrus
04-05-2008, 01:40 PM
Twiggs has changed his tune, couple of weeks ago he was very bearish. Typical chartist, using the rear view mirror to drive his car

That's a bit rich coming from you, Ratkin - someone who didn't have the wit to get out of the falling market, while charts flagged significant weakness quite early in the piece.

Twiggs merely changed his mind when conditions changed - what do you do?

airedale
04-05-2008, 02:05 PM
Typical chartist, you say, Ratkin. Colin Twiggs as a chartist should be saying what he is saying. When the market changes one recognises the changes.

winner69
04-05-2008, 02:43 PM
I note that 80 odd of the ASX300 went up by 5% or more last week .... thats not too bad for a market in turmoil is it ... and does sound better than money in the bank with some currency gains ... but those currency games come as well

Mick100
04-05-2008, 02:50 PM
Have to agree with ratkin here

From what I read twigs never acknowleged the fact the momentum indicators such as RSI had been rising since the jan lows - some other chartists were drawing attention to the improving RSI AND OTHER THINGS SUCH AS THE DIVERGENCE BETWEEN THE TRANSPORTS AND THE INDUSTRIALS

He had an extremely bearish biase in all his charts and commentries

COLIN
04-05-2008, 02:53 PM
Airedale: Thanks for sharing all that with us. As a non-chartist I found it considerably instructional, and it confirms my own view that now is not the time to be idly sitting on piles of cash. But we need to be quite selective in the sectors we choose, remembering that asset allocation rather than individual stock selection is the material factor in optimising overall returns.
Thanks, again.

AMR
04-05-2008, 04:13 PM
Have to agree with ratkin here

From what I read twigs never acknowleged the fact the momentum indicators such as RSI had been rising since the jan lows - some other chartists were drawing attention to the improving RSI AND OTHER THINGS SUCH AS THE DIVERGENCE BETWEEN THE TRANSPORTS AND THE INDUSTRIALS

He had an extremely bearish biase in all his charts and commentries

Twiggs called the uptrend on the transports a couple weeks back I think...but yes, he does seem overly bearish.

You mentioned there were some others who called it quite early...who are they?

airedale
04-05-2008, 04:52 PM
We can discuss whether Twiggs was bearish for too long, or whether he was being conservative before acknowledging that the market has turned.
It is a matter for personal assessment.
The title of this thread is "when to re-enter the market".
It is another set of indicators to assist those who are still undecided.

ratkin
04-05-2008, 07:35 PM
That's a bit rich coming from you, Ratkin - someone who didn't have the wit to get out of the falling market, while charts flagged significant weakness quite early in the piece.

Twiggs merely changed his mind when conditions changed - what do you do?

Im quite happy with my investment approach thank you very much and am quite happy to have not sold out in a falling market. As a long term investor im more interested in buying more during the dips.

Saying - i didnt have the wit to get out i consider rather a rude comment , but not unexpected coming from you.

duncan macgregor
04-05-2008, 08:21 PM
I really dont care if i miss out a few cents at the bottom of the market by being slow to get back in. You dont lose money being out of the market you only stand still. The average investor in the market has gone backwards in 2008 so far. i have gained in exchange rate plus bank interest, which beats the average. I dont get back in because a chart shows that the average mug punter thinks the crisis is over. I get back in when i think the crisis is over, and not before. I do it my way after all its my money i risk investing in enterprizes i have no control over. I think the worst has still to come until i think otherwise i stand aside you are welcome to your views after all its your money. Macdunk

Mick100
04-05-2008, 08:42 PM
You dont lose money being out of the market you only stand still.

Depends on the rate of inflation

Inflation appears to be cranking up, in which case you could lose purchasing power having your money sitting in a bank - assuming that inflation rates go higher than interest rates leading to a negitive real return - so you may end up going backwards;)


ARM , I was reading several chartist who were pointing out positive signals during feb-march but don't recall names off the top of my head. Seems, at the time, not many people were interested in reading anyone who had something positive to say.

ruethewhirl
05-05-2008, 07:31 AM
There is no doubt that Twigg's chart interpretation is sound, and I often buzz over to his diary page for a quick overview of markets.

One irritating thing about Twiggs - he has "invented" a new indicator, and puts it on all his charts... this guy wants to be a super leaguer!

He is prone to confirmation bias as well - he was displaying a model that was supposed to predict a postulated up-coming recession - but when the model began to suggest that the recession was no longer on the cards, he wrote that he decided that the model was now "incorrect" and that he wanted to stop showing it and was only continuing to publish it due to an outcry from subscribers to his diary entries...!

Did anyone else notice that he began publishing a whole lot of weird graphs of obscure economic data as well, to "back up" his theory of imminent market collapse?

ratkin
05-05-2008, 09:30 AM
Yes, that was why i was critisising him. He wasnt content to just put up the charts, he was looking ahead and putting a very bearish outlook on them , almost as if he wanted them to go really low.
Then when the rally came , he changed his tune in an instant.

Normally hes good , he will just put the charts up and point out areas of resistance , breakouts etc , but during the "crisis" he started preaching crash.

Hoop
05-05-2008, 09:52 AM
Did anyone else notice that he began publishing a whole lot of weird graphs of obscure economic data as well, to "back up" his theory of imminent market collapse?

I think many of you are missing the point .......markets are an evolving identity (human based hence contains human psychological behaviours). All that the TA chartists do is take a snapshot of the present time and apply analysis to it using the "now" data with the past data.
Twiggs hasn't changed his tune... he is reading the market as it is happening....A little over a month ago the USA financial market was in threat of collapse, there was not doubt about that. The FED + the president's band of men flooded the financial market with available money to stem the crisis. Without FE intervention the TA chartists tell us the equity markets would've collapse. The FED TA analysis confirmed this threat of collapse and sharp intervention was actioned This has solved/temporarily averted the crisis but as history has shown in the past this money does and has not trickled down to the bottom (mum & dad + kids), much of it has spun off into the equity markets, hence the stock-market bounce through TA primary supports.

All the TA analysts are doing is monitoring this and are reporting the sudden turnaround in the markets...No u turns no sudden change of heart ...just accurately reporting market behaviour as it happens now.

For those who ignore TA...ignore the behavioural trends of the markets....not a wise idea for any active investor.

Phaedrus
05-05-2008, 10:00 AM
Good post, Hoop. Thanks.

It seems all but impossible to keep this thread on track. Totally unrelated topics raised here include :-

Bear-Stearns
Warren Buffett
JP Morgan
Hongkong33 Index
Telecom re-regulation
Base Metals
Australian small caps
London Nickel prices
Dow theory
Alzheimer's disease
ASX Sharetrader competition
Colin Twiggs expertise
etc etc.

Carry on the wide-ranging discussions by all means, but I am out. I am tired of chasing red herrings! Here, by way of my farewell to this thread, is an update of the chart that began it.

http://h1.ripway.com/Phaedrus/NZSXbuy55.gif

This chart served its purpose admirably, giving re-entry signals on 2/4/08, just 4 trading days after the (current!) low of 27/3/08. You really couldn't get much better than that.

With hindsight, the only change I would make to this chart would be to delete the Inertia indicator. You can easily see that it is too slow and way out of synch with the other 9 indicators.

duncan macgregor
05-05-2008, 10:30 AM
It depends on your outlook for tomorrows market nothing more nothing less. The herd outlook according to PHAEDRUS is that the downtrend is over as well it might be. I prefer to err on the caution side when buying or selling much rather buy on the late side or sell on the early side. TA only looks at herd movement not what causes it to move. When the market changes it moves about giving false signals as it is doing now.
Nothing has changed for the market to change direction. I see it as a false signal. America is getting deeper in the pooh with its credit crisis, nothing changing there. NZ is going into a recession with factories relocating overseas, rising inflation plus its own share of a credit crisis.
PHAEDRUS come out the cupboard what company have you bought into in the last week, its pointless to say the market is showing buy signals without showing what you bought. Its going to be a very tough year in 2008 you are welcome to my share of the spoils. Macdunk

COLIN
05-05-2008, 11:58 AM
It depends on your outlook for tomorrows market nothing more nothing less. The herd outlook according to PHAEDRUS is that the downtrend is over as well it might be. I prefer to err on the caution side when buying or selling much rather buy on the late side or sell on the early side. TA only looks at herd movement not what causes it to move. When the market changes it moves about giving false signals as it is doing now.
Nothing has changed for the market to change direction. I see it as a false signal. America is getting deeper in the pooh with its credit crisis, nothing changing there. NZ is going into a recession with factories relocating overseas, rising inflation plus its own share of a credit crisis.
PHAEDRUS come out the cupboard what company have you bought into in the last week, its pointless to say the market is showing buy signals without showing what you bought. Its going to be a very tough year in 2008 you are welcome to my share of the spoils. Macdunk

Duncan (Braveheart) I admire your fortitude in holding out against overwhelming forces, but for some reason the image that comes to mind is that scene we saw on TV where the Iraqi Information Minister ("Comical Ali") was giving an interview and denying that the American army was advancing on Baghdad, notwithstanding that we could actually hear the sound of shells bursting all around, mortar fire, rockets and whatever.
(Of course, your retort will be that the Mission still remains Unaccomplished!)

But I do wish you well, as you sit fast in your bunker, surrounded by sand bags filled with cash. I just hope that that cash doesn't end up being devalued!

Cheers.

Belumat1
05-05-2008, 04:42 PM
I need your help guys.

I have some doubts about the long term view.
What I need is if it possible an historical charts because I have one but I m not sure it s correct.
It show me a top during 1986
a bottom 1990 and then ......
the top of last year

Please could you attach one ? NZ All index

My view it might be this only if I look at that long time ..... but ......
http://bp1.blogger.com/_6nTmMn9wzb4/SB6YjTpkC5I/AAAAAAAAADE/rKQRv-bD36E/s1600-h/nz+all+index+Elliot+analysis++2+may+08.JPG

I wait for your news.
Thanks

STRAT
07-05-2008, 12:03 PM
Just wondering whether any of you guys and gals are still on the sitting on the sidelines ASX included?

tim23
07-05-2008, 04:50 PM
Duncan is I think -he will be happy with a large fall on the market today. I have sold JWI; only things I have bought though is PRC via the rights and then again in the $1.20s and DES on the ASX.

duncan macgregor
07-05-2008, 05:31 PM
Duncan is I think -he will be happy with a large fall on the market today. I have sold JWI; only things I have bought though is PRC via the rights and then again in the $1.20s and DES on the ASX. TIM i am not happy to see the market drop any day just to prove a point. I would much rather be wrong. I fully expect the market to continue to drop, with contradictory buy signals now and again. It all makes no difference to me as i am out the market expecting a crash at the end of the year. Macdunk

tim23
07-05-2008, 07:45 PM
I qouoed a while ago when market is weak - money shifts from weak to strong and you asked which am I - I ask now which are you Duncan?

duncan macgregor
07-05-2008, 10:08 PM
I qouoed a while ago when market is weak - money shifts from weak to strong and you asked which am I - I ask now which are you Duncan? Tim i play to win when the odds are on my side much harder than the average investor. When i think the odds are against me i stand clear. you are very welcome to prove how strong you are swimming against the rising tide, i prefer to swim when it turns. Macdunk

Nitaa
07-05-2008, 11:25 PM
Tim i play to win when the odds are on my side much harder than the average investor. When i think the odds are against me i stand clear. you are very welcome to prove how strong you are swimming against the rising tide, i prefer to swim when it turns. MacdunkDuncan. Clearly you will have more success by buying a ticket in a chook raffle. Maybe at the fair ywhere you put the ping pong ball in the clowns mouth. At least that way you are guarenteed to win a prize.

Meanwhile, inflation is eating away your money whilst the savy investor is making sensational returns on certain stocks.

Good luck for the future though guy.

duncan macgregor
08-05-2008, 10:03 AM
NITA, Inflation still has not caught up to my exchange rate gain which is about 10% in a year and a half and trending up. The very thing that you gleefooly bleat on about [the price of oil] is what will bring you back to earth sooner rather than later. When your pack of cards tumbles round you in a collapsed market due to the credit crisis you might wish that your only worry was inflation. The time to be out the market is right now look at the average in the share competitions this year against last year. Macdunk

AMR
08-05-2008, 10:11 AM
Duncan, why don't you take a look at forex? There's never a bear market there.

Footsie
08-05-2008, 12:20 PM
NZ looks stuffed to me.....

we are about to catch a bad cold

tim23
08-05-2008, 08:02 PM
Tim i play to win when the odds are on my side much harder than the average investor. When i think the odds are against me i stand clear. you are very welcome to prove how strong you are swimming against the rising tide, i prefer to swim when it turns. Macdunk

Thanks - how can you tell when the tide has turned? and whick stocks do you decide to buy, it all sounds a bit haphazard to me?

COLIN
08-05-2008, 09:25 PM
Today's developments, as I read them, confirm a significant disconnect between the local "real" economy and the movement in NZ share prices. (As I noted the other day, the sharemarket moves many months ahead of the real world, and foreshadows what is likely to happen down the track.)
Today we had evidence of a dramatic turnaround in employment numbers (down), a dramatic downturn in house sales (50% or so for two successive months), on top of further strong evidence of declining retail sales. And what does the local sharemarket do? It moves decidedly upwards. Of course, the reason must be that the market sees today's developments as putting increasing pressure on the Reserve Bank to hasten reductions in the OCR, and also hence the weakening of the NZ dollar. Accordingly we saw higher prices for the likes of FBU (housing implications) and SAN (better export realisations.)
And I also note that this rise in the NZX was opposite to the trend of the DOW - down approx 200 points. I wonder how our wily resident Scotsman explains that!

Wilkins_Micawber
08-05-2008, 09:36 PM
And I also note that this rise in the NZX was opposite to the trend of the DOW - down approx 200 points. I wonder how our wily resident Scotsman explains that!

More of the repititious inane dribble that we've come to love and respect him for (think TUI beer ads here :rolleyes:)
Yawn ...

Halebop
08-05-2008, 11:08 PM
It's worth noting just how "traditional" and "expected" the cycle of anticipated or actual interest rate drops and initially positive markets are. Alas, these are typically followed by lower earnings announcements and declining capitalisation rates. Do we expect alleged attempts at hoisting inflation to be positive for equity markets in the long run? History has a darker tale to tell.

My instinct, not-withstanding markets peaking above recent resistance lines is that we are in a trading range and not a return to bull conditions. I think the next bout of bad news will be more readily felt than good news. Pick winners carefully because even those "China Driven" commodity markets require consumers in Europe and North America feeling expansive. I suspect once China is done tooling up for (and hosting) the Olympics will be the true test of unbroken exponential economic expansion theories.

Disc: 100% Cash

winner69
09-05-2008, 06:02 AM
It's worth noting just how "traditional" and "expected" the cycle of anticipated or actual interest rate drops and initially positive markets are. Alas, these are typically followed by lower earnings announcements and declining capitalisation rates. Do we expect alleged attempts at hoisting inflation to be positive for equity markets in the long run? History has a darker tale to tell.



You are on to it halebop ...... there will be lower earnings (globally) along with a shrinking of earnings multiples.

Even so even in these times some stocks buck the trend so picking a few of these winners is the key

Arbitrage
09-05-2008, 07:31 AM
. Pick winners carefully because even those "China Driven" commodity markets require consumers in Europe and North America feeling expansive. I suspect once China is done tooling up for (and hosting) the Olympics will be the true test of unbroken exponential economic expansion theories.

Disc: 100% Cash

Reuters UK overnight:
"One of HSBC's most actively managed fund divisions has been reducing its exposure to commodities, expecting a major correction in the high-flying sector."


http://uk.reuters.com/article/stocksNews/idUKORM83595420080508

foodee
09-05-2008, 12:04 PM
It's worth noting just how "traditional" and "expected" the cycle of anticipated or actual interest rate drops and initially positive markets are. Alas, these are typically followed by lower earnings announcements and declining capitalisation rates. Do we expect alleged attempts at hoisting inflation to be positive for equity markets in the long run? History has a darker tale to tell.

My instinct, not-withstanding markets peaking above recent resistance lines is that we are in a trading range and not a return to bull conditions. I think the next bout of bad news will be more readily felt than good news. Pick winners carefully because even those "China Driven" commodity markets require consumers in Europe and North America feeling expansive. I suspect once China is done tooling up for (and hosting) the Olympics will be the true test of unbroken exponential economic expansion theories.

Disc: 100% Cash



Halebop as usual an insightful post. I think China is well down the tract securing its energy and resource needs. Her next push will be into food and water. She will be securing land outside China for food ect.

cheers

ratkin
09-05-2008, 05:58 PM
My portfolio just had its best day for six months. They all went wooosh on the same day.
Wouldnt of picked it before start of play , just shows you have to be in to win

Dr_Who
10-05-2008, 07:22 AM
Reuters UK overnight:
"One of HSBC's most actively managed fund divisions has been reducing its exposure to commodities, expecting a major correction in the high-flying sector."


http://uk.reuters.com/article/stocksNews/idUKORM83595420080508

How many funds do you know that gives an outstanding return? NONE in my books. Play against the funds and you are certain to make money. I do agree that there will be a time to exit the commodities market, but not just yet. The corporate activites in Aussie for miners and oilers alone tells a different story. BHP's T/O offer for Rio Tinto and BG T/O for QG is a good example and there will be more to come.

If you look at the Aussie oilers they are trading at very cheap multiples while the oil prices continues to climb. Most of my aussie portfolios are doing very well and $AU to strong against $NZ.

STRAT
10-05-2008, 11:44 AM
More of the repititious inane dribble that we've come to love and respect him for (think TUI beer ads here :rolleyes:)
Yawn ...Well, Macca says he is 100% cash.

Halebop says he is 100% cash too and I reckon that speaks volumes. If winner69 and Phaedrus also declared being 100% cash I would have to seriously consider selling up.

Footsie
10-05-2008, 01:31 PM
ratkin

what stocks are yuo holding?

warthog
10-05-2008, 04:23 PM
My portfolio just had its best day for six months. They all went wooosh on the same day.
Wouldnt of picked it before start of play , just shows you have to be in to win

So what would that make the alsbolute percentage change in the value of your portfolio in the last six months?

tim23
10-05-2008, 07:20 PM
Macca says he is cash but on the PEM post on ASX says he carrying lots of free stuff so hes not out of the market is he?

duncan macgregor
10-05-2008, 11:10 PM
Macca says he is cash but on the PEM post on ASX says he carrying lots of free stuff so hes not out of the market is he? TIM, I look on it that i am out of the market. i only share trade in real life, but left some freebies to run out of curiosity from some of last years profits in my now ignored investing account. I really dont look on that as investing to any kind of strategy, only leave it where it was as some form of curiosity to see what eventually happens.
AGM, MCR,SMY, all bought in early JAN2007 and IGO bought in march or april i think. My trading account left it for dead so i only trade. i did have Three five per cent losses on PEM and another on NWE but dont tell SHREWDY but to counteract that i am up about 11% in exchange rate since jan 2007.
When i look at that in real terms after doubleing my money that now equates to 22%.
I dont really care if i am in the market or not, or if what i do pleases anyone, i do it my way, say what i do when i do it, and dont mind being abused. I really looked at the market in dec and thought this reminds me of 1986 before the crash, so far its only a crash in slow motion so take care my friend. Macdunk

Nitaa
11-05-2008, 02:34 AM
Duncan...What crash?.. my portfolio has gone gang busters this year.

my only stocks i since jan 1 are;
ppp up from about 27 cps to 35cps (30%)
nzo $1.00 to $1.64 (64%)
nzood 7.5 cps to 13 cps. (74%)

ps. all of my remaining stocks are all free carry... i.e capital plus plenty of nzo profit now in the bank

zacman
11-05-2008, 08:50 AM
Nita, I suspect that like myself, you describe yourselve as an investor as opposed to a trader. I feel that those that those that enter and reenter the market after consulting their charts and macro economic indicators have miss out on the better opportunities.

I wonder if those who say they have x% in cash or have put some stock on their watchlist, miss the boat. You make a judgement call about the likes of NOG or PRC and invest accordingly. To wait for a chart to tell you that all is safe means that you miss out on big early gains.

I have 2 rules for my investment decisions. Firstly, only invest what you can survive if you lose it, and secondly, diversification only serves to limit your potential gains.

I accept that charts can help with the actual timing on an investment by showing trends but as Ratkin said above you have to be in to win.

zacman

dumbass
11-05-2008, 09:38 AM
talking of timing, dow at a very interesting trendline juncture

green trendline from all time high has been breached but failed to rally higher and is now being tested

red line current rally is now being tested

good time to watch and see which way market breaks

my opinion would very much lie in the bear camp and for the sharp decline that i believe is coming soon there needs to be a large degree of optimism in this bear rally.

often the japanese currency has a inverse relation to equity markets
yen crosses show some key trendline breaks indicating an increasing risk aversion enviroment

bullish for yen , bearish for nzd and other carry trades and equity markets

just hope everyone is very cautious in current enviroment

Halebop
11-05-2008, 10:23 AM
Nita, I suspect that like myself, you describe yourselve as an investor as opposed to a trader. I feel that those that those that enter and reenter the market after consulting their charts and macro economic indicators have miss out on the better opportunities.

I wonder if those who say they have x% in cash or have put some stock on their watchlist, miss the boat. You make a judgement call about the likes of NOG or PRC and invest accordingly. To wait for a chart to tell you that all is safe means that you miss out on big early gains.

No chart tells you all it safe. It just illustrates a trend. Trends are not predictive but the math and empirical research on trends demonstrate that a certain trend will lead to more of the same in more cases than not. At some point this will of course fail, hence no chart tells you all is safe.

Long term investors know the "early" gains are decidedly not "big". "Early gains" might mean nothing more than temporary noise. ... in the same way as the late gains at the end of the bull run were quickly given up - just noise and opportunities to lose money.


I have 2 rules for my investment decisions. Firstly, only invest what you can survive if you lose it, and secondly, diversification only serves to limit your potential gains.

While I agree that diversification limits gains, you cannot apply this rule with the first. In the long run if you want to outperform you should treat each dollar as money you cannot afford to lose. Long term out performance is determined by a lack of losers, not a surplus of winners. It only takes one loser in a less diversified portfolio to smash your hard won average into the territory of market average patsies.


I accept that charts can help with the actual timing on an investment by showing trends but as Ratkin said above you have to be in to win.

There is no way "being in" will let me win on a declining share price. This should be especially obvious within a less diversified portfolio.

Belumat1
11-05-2008, 04:20 PM
DUMBASS
well done !
I appreciated your graphs.
It's important following the USD-JPY when you trade the index.
So, I thought to post one to help all the others.
Have a look if you like it.
http://bp2.blogger.com/_6nTmMn9wzb4/SCaB3UCxHWI/AAAAAAAAAE8/AFwTkk5AOLE/s1600-h/usd-jpy+vs+s%26p+index+%28short+term%29++9+may+08.GIF


Thanks

COLIN
11-05-2008, 10:28 PM
DUMBASS
well done !
I appreciated your graphs.
It's important following the USD-JPY when you trade the index.
So, I thought to post one to help all the others.
Have a look if you like it.
http://bp2.blogger.com/_6nTmMn9wzb4/SCaB3UCxHWI/AAAAAAAAAE8/AFwTkk5AOLE/s1600-h/usd-jpy+vs+s%26p+index+%28short+term%29++9+may+08.GIF


Thanks

Seems to be some correlation there, I agree. Well, at least for the 18 months covered by the graphs.
So, what does it tell us about what investment strategy we should employ this week?

dumbass
12-05-2008, 08:11 PM
sell your house and short the dow

Dr_Who
13-05-2008, 10:57 AM
Who else here has a view that interest rate in NZ will not drop but stays the same? With high commodity prices and falling dollar, surely this will fuel further inflation. So NZ economy has a big problem. High inflation and slowing economy.

STRAT
13-05-2008, 12:21 PM
Who else here has a view that interest rate in NZ will not drop but stays the same? With high commodity prices and falling dollar, surely this will fuel further inflation. So NZ economy has a big problem. High inflation and slowing economy.Hi Doc, I was thinkin they may drop a tad later in the year.