NZSX50 Index

[Phaedrus]

I use the NZSX50 Index to regulate my exposure to the NZ sharemarket. So long as all of the indicators shown on the chart below are positive, I have 100% of my NZ capital invested. Every now and then there is a retracement of sufficient magnitude to trigger the "medium-term" indicators. To me this signals a time for caution, during which all stops are tightened, all Sell signals must be acted on, and buying is prohibited. There have been 4 of these periods over the 5 year Bull market. You can see that each of these has stopped short of breaching the "long-term" indicators. No-one knows how low the current retracement will go or how long it will run for, but right now, it is no more severe than any of the others.
The rationale behind this system is that any serious major correction will be preceded by a period of weakness. There is plenty of time to exit the market in an orderly fashion so long as you monitor the situation carefully. The idea is that if you pass the parcel every time the music slows down, you will not be the patsy left holding if/when the music stops. I view it as a compulsory insurance policy! Currently, this approach has me 55% cashed up in NZ and 75% cashed up in Australia. My plan is to go to 100% cash should the current weakness extend below the long-term indicators. These have not been broken in 5 years. If this market tanks, I am NOT going with it.