NZSX50 - Good News!

**Phaedrus** · 20-10-2009, 05:10 PM

**lodger** · 20-10-2009, 05:50 PM

Looks like it is still within the 17% line

**Phaedrus** · 20-10-2009, 07:31 PM

Originally Posted by lodger

Looks like it is still within the 17% line

Pretty much right on it. The Index continues to sneak along the sideline. If we keep predicting a correction, sooner or later we will be right, you mark my words!

Originally Posted by belgarion

So the pattern is broken as we've passed through the 3238?

It would appear so, Belg. Of course, I never really believed..... Trouble is, the house is so full of tinned food, bottled water and sacks of rice that there is hardly any room to move. Not to mention the Krugerrands and stocks of ammunition.

**Hoop** · 21-10-2009, 10:35 AM

The pattern you guys are talking about was never really there...just a reliance of deja vu from the bull market correction of early 2005.

The pattern you should be looking at is the major overall pattern for 2009 Bull market cycle which is the inverse head and shoulder pattern which is almost fully formed now (unusually perfect

) at the 3375 area. (see Phaedrus butchered chart..sorry Phaedrus for ruining your artwork)

If this unusual perfection is achieved, this 3375 (blue line) will be the NZX50 biggest short/medium term hurdle as all completed Inverted H&S formations must end with a bull market correction.

As this level (3375) is common knowledge to chartists and the TA Target for a market correction was due at the 3200 mark ...some investors may become cautious by tightening their stops and start cashing their profits when those stops are triggered.

I am watching this 3238 mark closely..yes it has been broken but the new resistance mark has not been confirmed yet with a respected test.
This 3238 could be but not necessarily a psychological pre-empt point.

Before everyone starts panicking with the word correction e.g Lodger ... the "rule of thumb" bull market correction is 10%, comes with a short/medium term downtrend but normally doesn't break the primary uptrend. Most medium/long and long term investors will probably elect to hold and ride the correction out when it happens...On the NZX50 the average correction during the previous cyclic bull market was 10 % and the duration (downtrend from peak to trough) lasted between 2 to 3 months before the uptrend resumes and Winner69 goals are acheived....Definitely not the end of the world stuff

Note I used the word "when" and not "if". All bull markets end up getting ahead of themselves and pause to correct. Expect at least 3 corrections to happen within a Cyclic Bull market cycle...we have already had one (May June)..did anyone remember that one?

Disc: Still 87% invested

**jonu** · 21-10-2009, 11:04 AM

Another lurker delurking here Phaedrus.

While I wouldn't dare argue the more technical aspects of these index patterns, it appears pretty obvious that if most large investors/fund managers etc apply these principles when a trigger point is reached away she will go and become a self fulfilling prophecy.

I'm neither of the above and don't much envy their job of moving enormous amounts of funds around. It's a hell of a lot easier to sit on the sidelines and cherry pick with smaller amounts and hopefully pick stocks that won't necessarily be effected by the correction.

By the way has anyone thought what sector of the index might lead such a correction? In the old days you would have started with Telecom but I don't think that applies anymore. Financial? Resources? or more general?

The TA tips have been much appreciated thank you and have greatly enhanced my stock selections.

**lodger** · 05-11-2009, 11:56 PM

Phaedrus, is it too soon for an update on the chart? My feeling is that it's still tracking scarily close to plan.

**George** · 06-11-2009, 07:04 AM

Hi folks
Interesting thread, first time reading it, some points to make.
I follow the indexes on cmc and re yr bull market 10% correction,
there are conflicting facts to ponder.
Aus200 was down 8.2% from its high of mid Oct.
Dax down 10.88%, but US30 only down 3.9%.
Markets up this morning as I write and wondering if this is the next
leg up to possible targets of over 5,300 Aus, 11,500 US, and
7,000 Dax. This would imply a target for NZX of about 3,700.

From the start of this bull run in March, indexes have corrected
back close to their uptrend support line, altho Dax actually
went below it this week and today has moved above it again.
I used this trend line to get the figures above.
Stand to be corrected.
George