NZSX50 - Good News!

[alokdhir]

I'm cheating with hindsight ..... alokdhir responded to my post on the same day back on the 10th of May..

Originally Posted by Hoop

Yep and now with hindsight..it is easy to see those warnings turned out to be real.

Right!!!...second wave capitulation in this maturing Bear Market cycle (probably still stage 2 )..when will this latest rout stablise? nobody can predict 100%..
From a chartist perspective the current pattern looks to present a line in the sand somewhere around 4500 (target pricing). This figure has the best odds of a temporary bottoming out and resulting in maybe a Bear Market correction (sucker rally)..that's all just better odds...Need a few rabbits feet, optimistic crystal balls, other lucky charms....."

It's now 67 days later..Let see what's happened since..

A disappointing non sucker flat breather followed by another drop...The Market did see some sort of hope at 4500 but low positive momentum wasn't enough and selling recommenced..Typical bear market cycles are characterised by disappointments. one after another.

OK the market continued to drop some more and bottomed for the time being at a sharp 4200..Now its seems to have hit a strong resistance back at that magical 4500 line..The difference between the 4500"s is last time it was a technical target price of 4500 which was a line in the sand which has no support attached to it..This time 4500 is a part of the S&R (Support & Resistance) setup.

As we all know (or should know) while a Bear Market Cycle is operating any rally always fails at either it's first or second resistance levels. Rarely does it break though the second resistance level and if the Bear is hibernating it can suck investors to "back up the truck".

When do we know the bear could be dead?
Dow theory says a new up trend needs the trend line to be confirmed with at least 5 touches (3 higher highs and 2 higher lows) before it can be called an uptrend....At 5 touches or more it could still be bull trap and an extended sucker rally, although the more touches the lesser the chance of a sucker rally and higher chances of a cyclical reversal.

At the moment, the uptrend is unconfirmed so the index is not in a technical up trend and the index is having a problem busting through a very strong resistance level. The 4500 resistance has a conjunction of EMA200 + S&L line + Primary down trend line)..
Bear Market Investing Strategy uses short/medium term trading and says sell at resistance, buy at support (Rowing Strategy)

This is why most of us (divine beings excluded) can only use predictions. Nobody and no Discipline can predict 100%.

I would assume the NZ50C is still in a Bear Market Cycle (I see no evidence yet of a cycle reversal). In technical theory the index has a high chance of failing to bust through the ~4500 area and if it does break through be careful as there is a higher again chance of failing to bust through 4600.

In saying that the chart below tells us the 4500 strong resistance could be broken which is excellent news. However be careful buying in now...It could be a poor Risk V Reward as the next strong resistance is only +2% away. Beware of positive Media hype.

Attachment 13977

I remember we discussed bounce of 4500 and at that time u suggested till 4800 possible which eventually actualised till 4600 only ...so now it need cross previous tepid bounce high of 4600 then will find your original strong resistance of 4800 !! Seems market has strong resistances ahead but we have results seasons coming with many high dividends announcements which can help get investors in .

I will hope that market will behave nicely till our results season is around and all stocks going ex dividend then that lull can lead to final leg down to reach maybe double bottom levels or just higher by mid October ...just thoughts nothing confirmed till it actually happen ...lol

[Snoopy]

How can we have performed the same as America without having had historically high margins as well as elevated multiples to earnings? And this is where I don't have solid answers as I cannot find the historical data to know where we were at in 2012. If we had washed out multiples on washed out margins then it's easy to see how we did so well. This is what will make you rich, investing into low P/E multiples on washed out profit margins - aka 1982 the beginning of a 20 year bull market with 20% compound returns for 2 decades.

You may have to go to a library and ask them to pull out some old Saturday newspapers on microfiche SailorRob. Pulling out PERs from over ten years ago means you have to have access to data from over ten years ago. Stocknessmonster, it appears pulls down their market data after ten years.

Anecdotally though, I think your possible explanation that I have highlighted in bold could be right. 2012 was before what we now call Mercury (was Mighty River Power), Genesis Energy and Meridian Energy partially floated. These heavyweights, partnered by Contact Energy, that stormed up the NZX capitalisation charts then went on to trade at what some see as frighteningly high PERs. They must have made a significant difference to the 'average PER' statistic you are measuring.

Again anecdotally for most of my investment life PERs in New Zealand were less than you might find for a company trading in a similar industry on an overseas bourse. Now, I 'expect' the PER of a New Zealand listed company to be greater. Falling interest rates and the fact that NZ listed companies have traditionally paid out a larger percentage of their earnings as dividends will account for part of this. IOW companies that pay a good yield in NZ are a real substitute for term deposits in a way that is not true in most times on overseas markets. Thus share prices in NZ have been bid up, simply because TINA for income investors.

SNOOPY

[SailorRob]

You may have to go to a library and ask them to pull out some old Saturday newspapers on microfiche SailorRob. Pulling out PERs from over ten years ago means you have to have access to data from over ten years ago. Stocknessmonster, it appears pulls down their market data after ten years.

Anecdotally though, I think your possible explanation that I have highlighted in bold could be right. 2012 was before what we now call Mercury (was Mighty River Power), Genesis Energy and Meridian Energy partially floated. These heavyweights, partnered by Contact Energy, that stormed up the NZX capitalisation charts then went on to trade at what some see as frighteningly high PERs. They must have made a significant difference to the 'average PER' statistic you are measuring.

Again anecdotally for most of my investment life PERs in New Zealand were less than you might find for a company trading in a similar industry on an overseas bourse. Now, I 'expect' the PER of a New Zealand listed company to be greater. Falling interest rates and the fact that NZ listed companies have traditionally paid out a larger percentage of their earnings as dividends will account for part of this. IOW companies that pay a good yield in NZ are a real substitute for term deposits in a way that is not true in most times on overseas markets. Thus share prices in NZ have been bid up, simply because TINA for income investors.

SNOOPY

Excellent reply Snoopy, another NZX veteran brought up the same points regarding the energy companies. Would be a great project going through the old papers. Maybe one day.

Cheers

[alokdhir]

I'm cheating with hindsight ..... alokdhir responded to my post on the same day back on the 10th of May..

Originally Posted by Hoop

Yep and now with hindsight..it is easy to see those warnings turned out to be real.

Right!!!...second wave capitulation in this maturing Bear Market cycle (probably still stage 2 )..when will this latest rout stablise? nobody can predict 100%..
From a chartist perspective the current pattern looks to present a line in the sand somewhere around 4500 (target pricing). This figure has the best odds of a temporary bottoming out and resulting in maybe a Bear Market correction (sucker rally)..that's all just better odds...Need a few rabbits feet, optimistic crystal balls, other lucky charms....."

It's now 67 days later..Let see what's happened since..

A disappointing non sucker flat breather followed by another drop...The Market did see some sort of hope at 4500 but low positive momentum wasn't enough and selling recommenced..Typical bear market cycles are characterised by disappointments. one after another.

OK the market continued to drop some more and bottomed for the time being at a sharp 4200..Now its seems to have hit a strong resistance back at that magical 4500 line..The difference between the 4500"s is last time it was a technical target price of 4500 which was a line in the sand which has no support attached to it..This time 4500 is a part of the S&R (Support & Resistance) setup.

As we all know (or should know) while a Bear Market Cycle is operating any rally always fails at either it's first or second resistance levels. Rarely does it break though the second resistance level and if the Bear is hibernating it can suck investors to "back up the truck".

When do we know the bear could be dead?
Dow theory says a new up trend needs the trend line to be confirmed with at least 5 touches (3 higher highs and 2 higher lows) before it can be called an uptrend....At 5 touches or more it could still be bull trap and an extended sucker rally, although the more touches the lesser the chance of a sucker rally and higher chances of a cyclical reversal.

At the moment, the uptrend is unconfirmed so the index is not in a technical up trend and the index is having a problem busting through a very strong resistance level. The 4500 resistance has a conjunction of EMA200 + S&L line + Primary down trend line)..
Bear Market Investing Strategy uses short/medium term trading and says sell at resistance, buy at support (Rowing Strategy)

This is why most of us (divine beings excluded) can only use predictions. Nobody and no Discipline can predict 100%.

I would assume the NZ50C is still in a Bear Market Cycle (I see no evidence yet of a cycle reversal). In technical theory the index has a high chance of failing to bust through the ~4500 area and if it does break through be careful as there is a higher again chance of failing to bust through 4600.

In saying that the chart below tells us the 4500 strong resistance could be broken which is excellent news. However be careful buying in now...It could be a poor Risk V Reward as the next strong resistance is only +2% away. Beware of positive Media hype.

Attachment 13977

After seeing todays close over last attempted high of 4617 ...today it closed at 4633 ...Does that make the overall charts positive ?

Now we have a very fair chance to try to reach 4800 ....your original bear market rally target if had taken support at 4500 !!

Will like to know your thoughts about latest price action and what it has done to the charts

Is 4800 still a target or higher possible ?

Also does it negate Bearish outlook or not yet ?

[see weed]

Is the NZX closed today no trades and at 10.10am

[bull....]

Is the NZX closed today no trades and at 10.10am

i had a trade go thru at open , looks like a data display issue ?

[Sideshow Bob]

Is the NZX closed today no trades and at 10.10am

Looks like is trading NZX, New Zealand’s Exchange

Perahps just a little slow.....

[see weed]

I'm on the ASB Securities site and still nothing i will ring them.

[see weed]

up and running now

[Hoop]

After seeing todays close over last attempted high of 4617 ...today it closed at 4633 ...Does that make the overall charts positive ?

Now we have a very fair chance to try to reach 4800 ....your original bear market rally target if had taken support at 4500 !!

Will like to know your thoughts about latest price action and what it has done to the charts

Is 4800 still a target or higher possible ?

Also does it negate Bearish outlook or not yet ?

Hi
Its been a while since I last visited ST forum...I've only just now seen your post..
Obviously time has answered some of your questions.
I think at this stage the question has to be asked if this is a sucker rally or is it the real thing?
We don't really know the answer until it happens. We can guess or predict with models and be optimistic with these better looking fundamentals, yet the Buffett indicator shows Wall St (the elephant in the room) as still overvalued. Other variables can come into play and be problematic, such as America poking the stick up the dragons bum one to many times....

Anyway back to TA.

The Chart below shows this rally reaching an conjuntion area with primary elements in play..From a Chartist point of view this is very exciting.. Looking back through history Conjunction points have nearly always been seen as big turning events, so I'm watching this one with great interest.
To break through a conjunction area requires great buying pressure so watch out for the signs of positive sentiment with increased market activity.
This current NZX50 conjunction contain primary elements suggests if a breakthrough occurs it would be a Market Cycle reversal and the NZX50's status would change to Bull.
With the change to Bull an investor can change from rowing to sailing investment strategy with less risk/ more reward such as buy and hold strategy.

But for now, take care as we ain't quite there yet...

NZ50C 17082022.jpg