NZSX50 - Good News!

[Phaedrus]

To me, that chart was quite intriguing and I am surprised and disappointed at the absence of any feedback. No comments, no scepticism, no approval, no abuse, no surprise, no disagreement, no thanks, no argument, no discussion, no sarcasm, no humour.... nothing. And yet, that post has been read by hundreds of people. I wonder why I bother!

Maybe the total lack of interest is because this involves an Index rather than a stock.
Maybe I didn't make my point clearly enough.
Maybe no-one even noticed the pale yellow lines - let alone appreciated their import.
Maybe readers here are not interested in the "big picture".

I feel that this topic is worth one last shot before I give up, so starting again..... "Deja vu" is a feeling that one has witnessed a new situation previously, as though an event has already happened before, in the recent past. Quite by accident I stumbled across the fact that the current market uptrend bears a striking resemblance to that of 5 years ago. I have marked earlier market reversal levels and almost without exception these are repeated in the current market with astonishing precision. Isn't that Spooky, Possums? This even extends to minor points as marked by small arrows and dotted lines. The only exception that I can see is marked by light blue arrows, where the resistance/support didn't make it all the way across. I attribute this to unusual sunspot activity at around that time. (Joke).

This is all a bit unsettling for me. You see, I have never believed that Support and Resistance levels were very useful concepts when applied to Indices. I utilise Support and Resistance levels extensively with stocks but have never been able to conceive of a rationale that would apply to composite entities such as Indices.

Now, here are the big questions :-
(1) Can this extraordinary state of affairs continue?
(2) Will the market again reverse at 3240?
(3) Can we then expect a repeat 10% (330 point) correction?
(4) Will the market again find Support at 2900? (A nice round figure)
(5) At this stage of my life, can I embrace the Dark Side?
(6) Does anyone care?

I suspect the answer may be NO to all.

[Walfootrot]

Hi Phaedrus- i'm sorry that no one has replied to your comments. I found the chart very interesting. Please keep contributing - folks are watching your comments.

Let me ask you a question- did you sell your stocks at the market peak of 4800 in 2007 and buy back again in March 2009 at 2450? In other word does tracking of indices determine your investment strategy totally or are their other factors you take into account?

I personally find charts to be a useful tool for "setting the scene" i.e. does the market appear to be generally over/under priced are we in an uptrend/down trend- together with other factors- what is the state of the global/local economy- how confident are investors feeling etc. My specific buying pattern works within this scene setting by a detailed study of the entity I intend buying into or selling out of.

What I find hardest to do is to get into the minds of company directors- what are their strategies and are they winning strategies- XRO vs PGW for example.

[Phaedrus]

Hi Phaedrus - did you sell your stocks at the market peak of 4800 (?) in 2007 and buy back again in March 2009 at 2450? In other word does tracking of indices determine your investment strategy totally or are their other factors you take into account?

Wal, the philosophy behind my Index monitoring systems was exhaustively discussed here. My approach has been tuned and refined over the years, but in essence it remains the same as explained in that old post from 2007. There is further explanation in post #8 and others on that same thread. Did I keep to my system? Yes.

The NZSX50 peaked at 4333 and it had fallen to 4071 before most of my exit indicators were triggered. Similarly, the market bottomed at 2418 in March, but had risen to around 2600 by the time most of my "re-enter the market" indicators had fired. I did indulge in a few short-term trades on the way down, though, with mixed success. Many of my old charts have been bumped from the system but I am able to re-post any that are of particular interest to anybody. Just ask.

Yankiwi, if it hadn't been for your query I would never have stumbled across this interesting situation. I am sorry if you felt targeted by my rant - believe me that was never my intention and I apologise whole-heartedly if I have offended you in any way at all. My beef was with the lousy 250:1 reader/contributor ratio. There are too many overly shy lurkers here I reckon!

Thanks for the support, people. I appreciate it.

[Hoop]

Another interesting question (for me anyway )....
Q....How strong are these R&S lines,...some just don't work???
A....When I have doubts about R&S especially in 2008 crash times when a resistance line seemed like it never existed...I compared these R&S lines with other R&S systems. One of the best is the Ichimoku Kinko Hyo Charting System. This system is a better measure of Resistance and Support as it is multidimensional... not just a simple drawn 2 D line on a chart that most of us use here on ST.

The NZX50 chart below may seem complex but when looking at it for the first time remember to keep it simple by remembering 2 things that are the topic of this Sharetrader (ST) thread
1... looking for powerful R&S lines using Ichi as a reference
2... Looking for a future change in a trend (e.g when could a possible correction occur).

OK ...for our two goals and keeping it ultra-simple we will ignore several bits of information on the chart including the green and the single red line...no worries.
Also remember the inside of the kumo (cloud) is resistance and/or support

Looking for powerful R&S lines..the most obvious one is the 2750 in July 2009 ..see how the index bounces up off the bottom of the Kumo (shaded green). when we see the bounce + there was a similar action at this 2750 at the beginning of 2009 we know that R&S 2750 line is huge.
Another R&S level which is of interest is the 3378 line which is not far away now....it was powerful back in Aug/Sept 2008. Is it powerful now? we will know when it happens. 3600 could be another to watch in the future. Also note that new R&S levels can be formed.

When will there be a possible trend change? Notice how the Kumo extends past today into November 2009. The Kumo expands and contracts with volatility of the index. The thicker the kumo the greater the Resistance ad Support it provides..when the Kumo becomes very thin to the point that it may twist ( e.g red to green...green to red) at this point the Kumo (or lack of) offers the least support and could result in a trend change....downwards in this case.

See from the chart when the index is above the kumo it falls when the Kumo is thin

At this moment notice how the index is not far above the Kumo..also note that within a month that kumo will be not be as thick and with the index a lot nearer the kumo this time increases the chance that any selling pressure maybe enough to cause a downtrend change pulling the index down back into the Kumo to test its weak thin bottom support...If the index falls below the Kumo ..the kumo becomes a resistance object.


Using Ichimoku in conjunction with Phaedrus chart using R&S lines the 2 different principles confirm with each other that this is a time that an investor should be cautious and alert.

[lissica]

My beef was with the lousy 250:1 reader/contributor ratio. There are too many overly shy lurkers here I reckon!

Lurker delurking here.

I read the forums daily, and I find your posts informative and useful in my decision making.

Having said that, I like being environmentally conscious about what I write. Too many pixels are wasted on useless comments ^_^

I try to post when I have something to say...which is rarely.

If the NZX50 hits 4300 on 19 Dec 2011 I'll send you a Xmas present and a few sacrificial goats your way.

[bull....]

Nzx is still one of the worst performers on a return basis over the last 6 months does this mean we have a better chance of better returns going ahead to catch up with the rest or does this mean we will plunge quicker when the rest do?

[kizame]

Pheadras,your posts are brilliant and have taught me heaps.

Over the last few years I have learned through you,regarding TA, to 'Keep It Simple' which is what I adhere to now,you are a great teacher with too much bloody time on his hands haha.
But seriously,you put a lot of time and effort into demonstrating the principles that Probably keep you profitable,ha.
The fact that so many people view your posts,must be uplifting even if they don't comment.

[kizame]

Hoop,perhaps you could explain what all the colour coded lines are on your chart,I am presuming the red thin line is the nzx50? Much abliged.

[macduffy]

Hi Phaedrus.

Re question 6, the answer is an emphatic "YES".

I don't have answers to the other questions although I suspect that history never repeats exactly. Meanwhile, your charts and interpretations continue to enlighten us all. Much appreciated!

[Romer]

Hey Phaedrus. DO keep up the posts. I find your analysis fascinating and must acknowledge that some of your sayings have become entrenched in my investment strategies.
I sold up everything on 25 September as I wanted to lock in some very healthy gains and I kind of needed a break from stock-watching. Now of course the question is "when to re-enter?" - - - I am thinking I will be looking out for that dark green line to be hit.
Thanks again for your erudite posts. Keep up the good work!!!!