When to re-enter the market?

[AMR]

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]

So yesterday was the day to reenter the market. As usual!!

[Phaedrus]

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 :-


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!


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]

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]

phaedrus.... what you have posted is quite a short term chart of the index....

I refer you to
http://www.sharetrader.co.nz/showthr...?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]

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]

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]

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]

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]

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.