Investing strategies and secular bear markets

[Heavy Metal]

Result of all - as of today nearly cashed up .... and not embarassed at all

Perhaps not embarrassed but still playing catch up when the market quickly recovered and is making record highs.

Those who saw this as just another correction in a bull market who bought more through the correction rather than panicked and sold in the insanity of mid August are sitting pretty and can take big profits at their leisure.

[Hoop]

Perhaps not embarrassed but still playing catch up when the market quickly recovered and is making record highs.

Those who saw this as just another correction in a bull market who bought more through the correction rather than panicked and sold in the insanity of mid August are sitting pretty and can take big profits at their leisure.

Yes, I was lucky enough to act on Colin Twiggs analysis in August which forewarned the correction and sold down acordingly( just keeping some long term stuff) and then had cash to buy in at the correction. However I was a worried chappie for a while, because the ASX DOW FOOTSIE to which the NZX is running in near tandem with, were seeing their correction values at levels bordering the end of Bull market (phase 3). Seeing these values rise again don't not necessarily mean the BM(3) was still intact it could have been that the market had in fact started a bear market and the market was in wave A (the early signs of wave A is very hard to predict).
My worries have eased slightly seeing the ASX reaching record highs (if only just).
Colin Twiggs thinks the DOW will soon see the end of BM(3). As of today he gives the DOW 50% chance of entering another correction starting now (and the beginning of wave A?). Will the ASX and NZX follow?

On a optimistic note many NZ stocks that topped out during Jan 2007 are looking (from a TA angle) as possible buys and energy stocks are positive.

I am 25% cash at the moment but may raise this level by selling my stocks pointing south at the moment.

With interest rates being where they are (7.5%) it is tempting to cash up more and leave it in my holding account (PIE status- Direct Broking)

[Hoop]

I may sound like the prophet of Doom, but it seems more people are questioning the whereabouts of what stage of the sharemarket cycle we are presently in.

An article today makes good reading. Kevin Armstrong, ANZ-National Bank's chief investment officer is worried where the Dow is heading. He thinks it could be heading not to a crash, but a more destructive loss of investor capital through a protracted bear market.

Alan McChesney of NZ Asset Management (NZAM) is more optimistic. He thinks the sub prime crisis and the property market slump will have only a mild effect on the US economy so estimates a soft landing not a crash to occur. However he rates a year + long bear market as a 50/50 call.

If the Dow is entering wave A, (there seems to be mounting evidence that this is going to happen if not already) my strategy as a NZ asset med/long term investor will be to cash up any of my stocks that start heading downwards in price, and not reinvest unless the stock is in a solid uptrend.
In other words I will be tightening up my criteria to reinvest. I expect to be eventually holding more cash than shares.

[Hoop]

Monday night/tuesay morning (NZ time) I might have a good idea which way the Dow is going to go (it is at crunch point at present) I think the Ords and NZX will follow the decision Wall St determines. Life could be bear. Ready to cash up my worst performing stocks.

Protacted bear markets affect long term investors the hardest so I am using short/medium tactics now, to minimise capital losses.

[Hoop]

Monday in USA been and gone and after a 100 down start the DOW finished only 5 points down.....so still none the wiser today.
The Dow still remains at the watershed, so the Bull is still alive but looking sick.

Colin Twiggs is negative, he expects another correction NOW of at least 10%. He wrote this as at 20th October, and has predicted the previous corrections before they happened.
With the DOW breather today this may present an opportunity to exit some less performing NZX stocks today althogh with the Labour weekend holiday the NZX might be in catch up (down) mode this morning so perhaps wait until ASX opens may be prudent, depends on the NZX opening however as many investors still think it's good times down under.

I think it is time to start departing the market, as the risk is now too high. Money in the DB trading account (PIE) at 7.5% is looking like a winning bet to me.

As at now my portolio is Stocks 80% Cash 20%

[Deev8]

Monday in USA been and gone and after a 100 down start the DOW finished only 5 points down.....

I believe that the Dow finished 44.95 points up at 13,566.97 on Monday. Friday's close was 13,522.02.

[Hoop]

Yes Deev..I tend to be rather slow in the mornings..it was a quick post and forgot about the day light saving effect..yes the Dow moved up quick in the end of trading and today it is 56 up at the moment to 13623.

It needs to be above 14000 to break the resistence and lessen the downward correction risk.

It's these secondary corrections coming out from the Dow which is causing problems to our markets.

For us to predict the next correction, it makes sense to monitor the Dow very closely (as I am doing).

Edit: another late end of session surge up 117 to 13684 since writing this post.

[Hoop]

The threat of a secondary correction from the DOW is easing. A good rise on friday to 13807 has to be seen as a positive move from the previous few days of hesitancy and intraday swings. Also the DOW has created a "floor" (resistance level) at 13500).
I am more relaxed now than last week, and if the DOW stays above 13500 I will not be cashing up my worst performing NZX shares just yet.

My Portfolio at Present
AMP (topped up), BRY (singapore shares on negative watch), DFH (bought mid Oct2007), DPC (sold down, may now accumulate (on positive watch)), FBU, FPH (bought end July 2007), GPG (sold down, on negative watch), NZO (topped up), PRC (accumulating), RAK (accumulating)

Watching
NPX(ex share) CEN(ex share) MFT (ex share)

[Hoop]

Dow failed to breach the 14000 upper resistance and is testing the 13500 support. This is the support line that I am watching... if it falls below the 13450 /13500 area it will be bearish and signal a possiblity of a secondary correction and the next resistence level down is 12800, (-5.5%). Below 12800 is bear territory and would signal the end of Bull Market 3.

I am nervous again. The secondary correction risk has risen.

Have added FBU to negative watch. Any correction will create FBU to break it's very long upward trendline.

[AMR]

FBU has to fall a long way to break the uptrend line - Phadreus has done a post over on the NZX forum. The resistance in the 1110s-1120s held up nicely today. If that had broken, FBU would have made a scary looking 6 month double top pattern.