When to re-enter the market?

[Phaedrus]

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.

[Year of the Tiger]

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]

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]

Phaedrus, as always your pictures are worth 10,000 words. Thanks for posting.

[Sideshow Bob]

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]

...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]

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]

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]

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]

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