Is a Bear Market starting to play out on the NZX ?

[Lewylewylewy]

What could go wrong is generally a good question to be asking.

I think govts will eventually have to reduce spending or increase taxes. Both will be bad for economic growth. People have lost their jobs and businesses, which we're yet to see as a reduce in demand for goods and services. Could take a few years to recover. Bad situations give rise to bad politics, so we're could expect some turmoil to go with that. Hopefully some powerful dictators around the world won't decide to distract their populace with a war.

Back to shares though, for me the question is, how will the market react to this? Novice shareholders who only understand "buy when the price goes down, and sell when it gets back to where it was" will at some point stop buying because the graph won't show the price as "cheap" anymore. Then we will see the first announcements coming in that will either trigger a drop in sp due to fundamentals being weighed. This may cause novices to buy back in if they didn't get burned already, or prices might hold up as investors price stock on forward performance, under the assumption that next year will be good. Alternatively this could see another drop. One thing's for sure, if there's another year of poor performance, i think we'll see another drop.

But my suspicion is that after this V shape, we'll see a gradual drop and sideways movement over the next few years before things start to go gradually up again as we enter the start of the bull.

But hey, who knows?!

Nevertheless, it's a good time to be a trader, and a good time to be a long term value investor if you can avoid stocks with capital raises and pick the performers. I'd still rather be in a confident bull market though, life is much simpler.

[kiora]

What could go wrong is generally a good question to be asking.

I think govts will eventually have to reduce spending or increase taxes. Both will be bad for economic growth. People have lost their jobs and businesses, which we're yet to see as a reduce in demand for goods and services. Could take a few years to recover. Bad situations give rise to bad politics, so we're could expect some turmoil to go with that. Hopefully some powerful dictators around the world won't decide to distract their populace with a war.

Back to shares though, for me the question is, how will the market react to this? Novice shareholders who only understand "buy when the price goes down, and sell when it gets back to where it was" will at some point stop buying because the graph won't show the price as "cheap" anymore. Then we will see the first announcements coming in that will either trigger a drop in sp due to fundamentals being weighed. This may cause novices to buy back in if they didn't get burned already, or prices might hold up as investors price stock on forward performance, under the assumption that next year will be good. Alternatively this could see another drop. One thing's for sure, if there's another year of poor performance, i think we'll see another drop.

But my suspicion is that after this V shape, we'll see a gradual drop and sideways movement over the next few years before things start to go gradually up again as we enter the start of the bull.

But hey, who knows?!

Nevertheless, it's a good time to be a trader, and a good time to be a long term value investor if you can avoid stocks with capital raises and pick the performers. I'd still rather be in a confident bull market though, life is much simpler.

I can't see that the "weight" of money from "novices" could push the market up so much
" if you can avoid stocks with capital raises and pick the performers" but from what I see is the stocks that have had a capital raise have continued on upwards trajectory.I can't see why but the "market" sees different to what I see.
PS it was always the right to buy SKL at $.50 many years ago when they did a capital raise.

[blackcap]

But my suspicion is that after this V shape, we'll see a gradual drop and sideways movement over the next few years before things start to go gradually up again as we enter the start of the bull.

.

I thought we were still in the one and same bull that has been going on for 10+ years. But some technical people could probably correct me.

Still very interesting to see that the minority in the poll did call it correctly and that the majority were wrong. Often the way with markets. If everyone is expecting a crash it does not eventuate and vice versa. At the peak of bulls and when markets are over-extended, that is when everyone is piling in.

I read somewhere the other day that the amount of shorts out there is at all time highs. That could power the market even further ahead for a while yet as the short covers come out. For a local example, what would you do if you were short AIR (I am) How much longer can you afford to see these daily increases and increased "good" news re flights resuming etc....

[winner69]

"................

[dobby41]

Technically did the Bull end and the very short Bear start - and we are back in a Bull again?
Or was it a quick correction to the Bull?

[Biscuit]

Technically did the Bull end and the very short Bear start - and we are back in a Bull again?
Or was it a quick correction to the Bull?

My take is that the Bull ended and we entered a Bear market. Only time will show if we are actually out of that for real. Weird times we live in.

[Hoop]

Debt? ....When I went to school (when Pterodactyls flew the skies instead of AirNZ )..I was told central banks didn't occur debt when buying financial instruments (assets) they created money to buy..therefore they don't incur debt....Actually they can have an embarrassing amount of credit on their balance sheets during crises. Atm the FED has $5 trillion in assets on it's books and rising fast!!!!.

[SBQ]

MMT (Modern Monetary Theory)

The debt is an illusion and not all debt is the same. US debt is inherently safer.

There will be no crisis as modern economics has shown, the US has more 'tools' than they did over 100 years ago when the rules on economics were different. This is what distinguishes between what the US can do vs what developing places like Zimbabwe can't do (i'm referring to tools of monetary policy).

and before you everyone starts criticizing about US debt per GDP, they should criticize places like Japan's debt. Oh and over 75% of the US debt is internal, what China owns is not going to matter.

[dreamcatcher]

S&P´s best 50-day rally in history..........

[Hoop]

I thought we were still in the one and same bull that has been going on for 10+ years. But some technical people could probably correct me.....

Technically did the Bull end and the very short Bear start - and we are back in a Bull again?
Or was it a quick correction to the Bull?

My take is that the Bull ended and we entered a Bear market. Only time will show if we are actually out of that for real. Weird times we live in.

When does a Cyclical Bear Cycle begin?
1...Official Cyclical Bear Market Cycle, when market falls more than 20%.
2...Dow Theory.. A Cyclical Bear Market Cycle occurs in 3 stages..Start with a sharp decline, retrace part of the decline. longer term slower more gradual decline as fundamentals deteriorate. A sequence of lower highs and lower lows to create a primary down trend
3...Technical Bear Market cycle final confirmation when price breaches the MA200 line.
4..Technical..when primary trend line breached and confirmed.
All 4 have happened except the DOW Theory 3rd phase...
When does the Cyclical Bear Cycle end?
1..Technical ...When a primary higher high and high low is recorded (not a secondary higher high higher low[short term]) breaking through key resistance levels..The establishment of a new primary up trend line
2..More than a 100% retracement from a nadir to create another record high (for V shape patterns)
3..After a bottom pattern is confirmed with subsequent higher highs and higher lows creating a primary up trend (After typical DOW Theory 3rd phase Bear cycle patterns)
4..MA200 price break out ..needs more technical confirmation to avoid possible false breaks
When does a Cyclical Bull Cycle not end?
1.. Technical ..Resumption of the primary up trend line after a quick break (unconfirmed) ..Not sure if it applies if the break is >-20% and unconfirmed..probably counts as a very short cyclical bear market cycle
2..Technical..Failure to break down through bull/bear supports.
3..Very short term breakdowns (flash crash) followed by recovery
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