Hoop,
Would you please post a chart of NZ50 for us.
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Hoop,
Would you please post a chart of NZ50 for us.
Hi Percy...One of the hardest parts of TA is to figure out a trendless chart which has resulted from a steep previous drop. This dead cat bounce flattened out into a holding trendless event is a worry as it can end up going either way. It has a complex head and shoulder look about it or a diamond ..both really don't fit properly so their resulting line break through 3315 (not drawn on the charts) could be regarded as a less reliable break downwards sell signal.
So what to do...
Many Common TA indicators tend to be confusing during trendless events so work on support and resistance lines, watch for sudden volume changes, momentum.. ignore the media, etc. Also look back long term and see what cycle the index is in (Bull cycle) as a reference to percentage chances.......... With many overseas market turning into a cyclic Bear markets watch the NZX50 for those lower highs and lower lows.
I have added two charts.... the 1/2yearly chart shows us that the NZX50 is retesting its major 3247/3255 support zone.... any break downward would see a test of the 3097 (cyclic change) area....It looks like we are at a cliff edge atm.
Same applies to an upturn buy signal on a higher high (3400) which would test that original primary trendline coming up from beneath it
I have added a 3 year chart to point out the current cyclic bull market cycle.
Personally..I hate trendless index events...thats the reason I'm pessimistic and why I'm not accumulating any NZ shares atm and selling those that have gone doggy.
I took me awhile to draw these charts as StockCharts seem to have wrong data (highlighted on chart)
http://i458.photobucket.com/albums/q...5021112011.png
http://i458.photobucket.com/albums/q...120113year.png
Hoop.
Many thanks for the charts and excellent commentary.I had looked at Yahoo charts and saw NZX50 was under 200 day moving average.I had a friend who wanted to buy some EBO,FRE,HLG and POT.I told her I thought it best not to buy,as NZX 50 looked weak,however I thought FRE was strong.
I will get her to read your post as I think it will give her a clearer picture than I can give her.thanks again.
Hoop - the NZX has been quite resilient over the last year or so -- hovering wrond the 3300 mark
In April 2010 it was 3307. Since then it has gone to 10% below that mark and then went to 8% above the 3300 mark. Since giving that 8% up (plus a bit more for a few days in August) it has essentially been 3300 plus or minus a couple of percent (from 3300 ranging from-1.5% / + 2.9%) since then
Seeing whats going on in the world thats a pretty stable state for nearly 3 months. Wouldn't say trendless but steady at around the 3300 mark
Prob reflects the boring nature of the NZ market .... not much to get that excited about
That
Don't know if I have done the right thing Belg..
Just could not resist picking up NPX today @ $2.40..
It is giving a return of 9%
With the CEO picking up 60000 and a director 20000 a few weeks ago they must have plenty of faith..
Hmmmm.....things are looking a little grim here.
Is this another test of the bottom trading range or something a bit more sinister?
In theory a warning of a trading range breakout comes when a cycle gets cut off from reaching its destination range limit (see A on chart)...Hmmm... theory v in practice agree only in perfect world ..eh?
http://i458.photobucket.com/albums/q...5007122011.png
Hoop,
Thank you for your chart.As you point out things are looking a little grim,and as Belgarion noted liquidity is very low.
Just as well the US had a good night else we would ahve seen the NZX50 falling below 3200 which has not been seen since Septemeber
So the NZ X50 continues to trade within 3300 plus a few % (like 3200 to 3400) - somethign it sone for a while now
Stuff from Stats NZ this morning says our current account deficit for the Sept quarter was $0.7 billion larger than the June quarter .... and that again we saw net outflow of people out of NZ in Nov and for the 12 months the largest net loss since Seot 2001
The attached chart shows our current account deficit over the years (from the Stats report) - as I undersatnd it the amounts are for the quarter so we need to add each quarter cumulatively to get where things are going ..... dosn't it mean we that cumulatively the total deficit is getting bigger and bigger .... and bigger ...... we hardly ever run a surplus .... no wonder the people are following the money out of the country
Prob wrong again in this assessment but thats how I see it anyhow
It's not as big a problem as it was - as a % of GDP, we've reduced the deficit in our international investment position somewhat over the past few years. Not a lot though. On our side have been improving trade balances - mostly helped by oil exports offsetting our imports (which had become the least manageable part of our trade deficit prior to Tui, Kupe, Maari etc coming on stream) and through strong prices for commodities.
However, on the current account side we get hurt by the fact that for every $1 of New Zealand assets held by overseas investors, we only hold about 54 cents in overseas assets. It looks as though the majority of this is in debt markets. So we have the continual drain of interest payments - although fortunately the rates are quite low at the moment, with the government able to raise long term debt at under 2.5% interest. A big chunk of September Quarter deficit looks to have come from increased government debt issues purchased by overseas investors.
It would all be great if the government could find ways to invest this money that generated more than 2.5% return from overseas (buy italian bonds?!). :) Unfortunately, it is more likely that this money will be spent on overseas goods for the construction industry than on creating export industries.
Another problem of late is that overseas assets declined in value relative to NZ assets over the September Quarter - possibly this is exchange rate related. However, we tend to hold a much higher proportion of overseas assets as equity rather than debt, so perhaps more volatile in value.
One of the most curious things about this months figures is the big jump in financial derivatives on both sides of the equation that I can't find an explanation for.
It's a biggish issue as to what it might take to return the net IIP to something more balanced. The biggest windfall gain that could contribute would be to alter the trade balance on energy through more petroleum exports - or perhaps, more radically, the long term move towards locally generated energy sources for transport industry.
Otherwise, it will be a slow slog to get to a point where we own as much of overseas economies as they do of ours - investing wisely offshore and repatriating the profits is good, but pumping it into spec shares and losing the lot is not...
Btw, for comparison, Australia has an IIP liability to GDP ratio of 53% by my calculation, compared to NZ at 73%. Despite being the beneficiaries of a major resources boom over the past few years, they are still running a current account deficit, albeit smaller than NZ's in this particular quarter.
These guys think we are heading into dangerous territory with the ever increasing 'deficit'
http://www.stuff.co.nz/business/6176...rse-economists
Of course we are .... all part of the big plan ...... let the cuountry run up huge deficits .... ones that need fixing ..., sell the real assets of the country on the cheap .... to whom one may ask .... obvious eh the rcih greedy few ........ and we think the Occupy movement are a lot of useless layabouts!
The palns working in parts of Europe .... the common people are getting raped and pillaged ..... NZ's turn soon?
Don't know where this fits with share trading / investing .... but prob has an impact somewhere
The only thing I see blowing out in New Zealand are the levels of paranoia.
NZ was in a very shaky current account position back in 2007 and everyone turned a blind eye while we ran deficits of 8-9% of GDP. Now we hit 4.3% and people start comparing us with countries like Spain and Italy...ignoring the advantage of a floating currency. We also have very little borrowing that needs to be rolled over in the next two years, so they can throw our bond yields to the ceiling and it won't actually start to impact for a while - meantime, our GDP should be helped by the stimulus of a Christchurch rebuild - even if to a lesser extent than may be forecast. So even though the reinsurance inflows may have already been provisioned for, the extra trade imports would expect to be offset by increases in GDP in the BoP ratio.
Anyway, just so you can sleep easier, Winner, I have searched around and had to download the data to create this chart for you.... NZ's IIP net liability as a % of GDP (I was going to make the figures negative, as they should be, but I can't work out how to make this version of Excel put the Axis label above the line!). While the overall liability leaves us vulnerable to the world view on us, it's not a deteriorating picture in the 10 year time frame. Which is not to say it won't become so - but not to say it will either.
Attachment 3736
New Zealand got raped and pillaged in the late 1980's and early 1990's. We came close again with our inability to close down a housing bubble and agricultural bubble, parts of which remain a risk. Our WFF commitments may have been on the generous side and, in my view, the expenses of policy advice, regulation and monitoring abound unchecked. However, we are not in the kind of dire straits that require us to plunge into an austerity spiral - especially not in a one-way competition with the rest of the world.
Still, caution is required. The recently announced improvement in savings rates could become mirage-like if it has been caused by Christchurch homeowners paying off their red-zone mortgages and not yet investing in a new property. We need to stay on the glide path if possible - investing wisely is the most important thing we can each do in this regard.
Update
Breakout warning is now a reality.
Was the previous inflow of money holding up the NZX50 causing it to be one of the few global Equity markets still in a cyclic Bull market cycle...
now that money is exiting ......:(
Winner...free camping ground this Xmas
http://i458.photobucket.com/albums/q...ZX20122011.png
Good stuff there Liz .... you'll make me think more deeply about such stuff
Whatever it's not affecting the economy - Sept number out and the economy growing at an annualised 3.2% .... more than those doozie economists are projecting for next year .... and with Dec quarter being up as to all accounts makes you wonder what these guys are on when they run their models .... jeez 3.2% growth now has to be 4%-5% by this time next year .... even if the rest of the world is struggling
Yep, and if we could run 4-5% GDP growth, then a 4.3% current account deficit would be infinitely sustainable without an overall deterioration .... :D
I thought this bit from today's release looked positive from the perspective of the average NZer:
Explained further here:Quote:
Real gross national disposable income (RGNDI) increased 2.8 percent for the year ended September 2011, while GDP grew 1.3 percent over the same period. The difference between RGNDI and GDP for this year was mainly due to an increase in the terms of trade effect. Current price exports of goods and services increased 9.5 percent for the year ended September 2011, while prices of exports increased more than prices of imports over the same period
Quote:
While GDP is a measure of domestic production or economic activity over a given time period, RGNDI can be viewed as a broad welfare indicator. Net flows of income with the rest of the world are also included in RGNDI, as not all of the income generated by domestic production accrues to New Zealand residents. RGNDI measures the volume of goods and services New Zealand residents have command over.
Okay, so I agree with you Belgarion - GDP will rise. What I disagreed with you originally on was the current account balance though - the actual deficit is likely to increase on the basis of increased imports. However, as a % of GDP, the rise in GDP may off-set that.
On the back of a that, we could also expect a rise in GDP to perhaps trigger some OCR increases... and perhaps that in turn risks a re-start of the carry trade, rise in value of the NZD and associated frustrations for exporters. It would be nice if enough risk aversion has been learned in recent years to ensure we don't see an instant return to debt-fuelled household spending patterns. :)
LOL
That Phaedrus's Post was a frustrated reaction to all the posters who kept harping on about TA predicting the future..He kept replying that his TA could not accurately predict the future and it should be used as designed... to time the buy ins and sell outs of that particular stock returning the best profit in relation to the amount of risk involved (the sweet spot).....so he drew that chart to prove his point..but unfortunately for P it worked very well (too well) for quiet some time before it broke down, probably much to his surprise :D.
No discipline is 100% accurate, but P noticed that his TA method had much better results when that particular stock's market index was in a primary uptrend and so he created his MSI indicator as a guide...basically to minimize the investment risk even further by ignoring his own TA buy signals when his MSI was in the red zone.
His methodology when MSI was red was basically "when kicked out, stay out" Bear Market Strategy.
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Back to the NZ50
Colin Twiggs email today shows USA markets resumming their Bull market cycle (primary up trend) together with Brazil and South Africa.
Canada and South Korea are looking likely to follow
The European markets are threatening but their indicators are weaker
Australia seems to be bottoming out
The Asian markets continue to trade in their bear market conditions.
I couldn't see NZX50 anywhere so I drew up one.
The NZX50 seems to follow the good news as well with a primary breakout and hopefully this will be confirmed with the MA200 nearby and the testing of the 3350 resistance level
http://i458.photobucket.com/albums/q...5020012012.png