Investing strategies and secular bear markets

[Hoop]

The DOW Bull has survived against the odds...for now.

DOW is at 13620...broken back through the 13500 so the BULL MARKET is still intact.
So it seems the DOW did a false break. The chances of that happening is low (20-25%??).....So the DOW bull has sort of recovered back from the point of death. Now what? Will the DOW test it's all time high with all the negative data floating around it?

It didn't turn out the be a bear market but the prediction of the correction I issued early Nov proved correct which gives me confidence that I can invest with lesser risk in this uneven parnoid market.

It seems TA wise the warning can be lifted..... but why am I still uneasy???.

I invest mainly on the NZX which has temporarily decoupled from the rest of the markets due to local economic news and the much higher NZ$. So the bargains are hard to find, which will keep my portfolio cash heavy.

Secondary correction ended on the DJI S&P.....
False breaks have happened lately so may be prudent to be cautious

[winner69]

Well the market didn't like that 0.25% points rate cut ...... maybe reality is coming home to roost

The next few days could be interesting

Hoop - whats your read of the situation?

[Hoop]

Well the market didn't like that 0.25% points rate cut ...... maybe reality is coming home to roost

The next few days could be interesting

Hoop - whats your read of the situation?

Hi Winner
For some quirkey reason your post seemed to have appeared after my posting today, or I didn't notice it this morning.

If it was due to my inattentiveness then apologies to you is in order when I only responded to KW.

In answer to your question I honestly don't know.

Sorry... here comes the waffle...
I often refer back to history because the markets have a bad habit of repeating itself. As an example the DOW from 1999 to 2001 jumped all around the place (as it is doing now) for just over 2 years before the big one came (big correction or crash take your pick) late 2001 then the bear exited in 2003.
Even looking back in hindsight it is not easy to pick when that bear cycle actually begun as there were 4 corrections before the big one but I think it was the 4th one in 2001, however some might say it was the second one in 2000 followed by an extended period between Bull market (3) and wave A.
It is difficult to detect the end of bullmarket as each correction is followed by a rally and without hindsight one does not know if the bullmarket cycle has ended when each rally reaches a similar top point and each correction sort of respects the previous support or just breaks it and then moves up again (as the DOW is doing now). However analysts can read behaviour, double triple or even quadruple tops are bearish signs as it signifies volatility.
Bull market/bear markets wave theory illustrated in text books is easy to see and it is displays a sort of uniformly in a nice wave pattern, however in real life all sorts of patterns and durations may emerge and to complicate things even more it is not impossible to go from bullmarket(3) miss out the bear market(or a very very short bear duration) and wave straight back into Bull market(1)

This time around I think a bear will emerge if not all ready as the economy in America is going pear shaped.
The $64 question is will NZX see the bears... from recent history we escaped most of the dot com damage but at that time the NZ market was not in tandem with the DOW, this time we and the other major exchanges are.

Yes I will be watching the Dow with interest tomorrow morning.
I wouldn't be surprised if we are still experiencing the same scenario in several months time....equally I wouldn't be surprised if the guts fell out of the DOW tonight

I probably haven't answered your question Winner have I ??

Cheers Hoop

[Hoop]

Attachment 291

Quote from KW ....If you read the Intelligent Investor by Ben Graham it analyses the US market since it began, and it has spent periods where the average P/E is around 8. So it could halve if the US sinks into a long recession and pessimism takes over....

Historic PE Ratios up to 2004
About 15 at the moment I think


First success at a gif..attachment since swapping to Vista ))

[Yossarian]

would be interesting to know what would happen to the DOW if you took out its top 20 - probably not as dramatic but still a substantial effect I reckon.

It's like if you take out the 5 or 10 best index rises of the year, you usually end up with a bad year!

[winner69]

would be interesting to know what would happen to the DOW if you took out its top 20 - probably not as dramatic but still a substantial effect I reckon.

..... that will leave the bottom 10 stocks then

Will look it up for you

[Hoop]

Dow ended the day on its major support line of 12800. (down 2.0%)

My Warning been in place for nearly 2 months now. Do not assume the ASX or NZX is exempt. The market over the last 4 months has given the astute investors plenty of time and opportunities to create their necessary defense and quick exits strategies.

[Hoop]

You are uneasy, I am uneasy ...
Its because when the charts start warning of a downturn, it is at least expected, and things "correct" in a nice orderly manner (ie. Jul-Aug 07). Followers of TA know when to buy and sell, and FA investors happily cash up and wait on the sidelines until the see value re-emerge.
When the charts dont show any trend, and the indexes start bouncing all over the place with no clear direction, then we know that any downturn will probably happen as a "crash" and take us all by surprise with no time to get out :-(

Yep very true KW.. 1987 a pure example ..however this bouncing around at the moment would have the TA people on alert, as it is stuffing up their probabilties of it happening percentages with all this false breaking going on. Many FA thinkers think that with the DOW Av PE Ratio at around 16 the crash or a severe correction won't happen..so there is a polarity in thinking happening in the USA between the two disciplines. When they both agree it is on the subject that "if"
it happens it will be brief. However all a FA minded person has to do is to add another dimension and look back through history, analyse the still valid ancient theories like those of DOW and Elliott Wave principles and they will see the warning signs are there for the FA people as well as for the TA.

The last 2 hours on the DOW was not pretty..ended 299 points down to 13428.
This is below the magical 13500 again so we are back to the warning status again. I think it is safe to say now that the TA commentators will affirm that the DOW is in a bear market (dipping briefly below 12800 may with this present DOW falter now being not seen as a false break).

With the latest decoupling of the NZSX50 from the rest, the index number for us in NZ to watch for is 3900. If it goes below this figure it signals the beginning of a bear market cycle here in NZ. (At the time of writing the index is not far from that mark ... 3987 down 40 points).

Many of us know our 3R's in education....Reading writing arithmetic

The modern fad have the 3R's as reduce reuse and recycle.

A good one from a poster (Trader888) excising the 3R's rule in times of market turmoil is to cash up and......rest relaxation and recreation.