Winters coming
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Winters coming
Maybe the NZX50 won't be 5000 by xmas after all
maybe bobcats prediction of a big decline in world markets is about to happen (80% probability)
not even XRO can hold back the tide now
It wouldn't surprise me if there is no change to the OCR
Wheeler sees no inflation
Whatever he will talk down the NZD
This week 14 years ago the NASDAQ reached its all time high of over 5000
So the 4300 today doesn't look too good, but then again some say its approaching bubble territory again
Just reminds us bubbles bursting have terrible consequences unless one reacts quickly
Not buy and hold territory but trading the long term market cycle seems best
Don't take offence turmeric
If I was to imagine what you looked like a wheeler of some 10-15 years ago would fit the bill
My daughter once aspired to be Governor of the RB. Thankfully she saw better things to do
Precedent suggests they only like to move on MPS dates, but if I heard correctly, Wheeler wants to be at 3.75% by the end of this year, so one might be an OCR date, or perhaps one lift might be 50bps?
It seems Dr Copper's warning was mostly ignored by the "Equity Experts"...
Its different this time, right??? The real doctor is Dr Media and Dr Media has said Dr Copper has lost its mojo as an economic indicator ...hey we all believe in the written word so it must be true..eh?
Statement from JP Morgan Chase's USA's chief strategist:
Just after Lee defended his bullish outlook on CNBC, major U.S. stock market averages took a downward swing, with the Dow dropping 120 points by midday. But as investors worry about nearing the end of the five-year bull market's shelf life, Lee said every bull market that has lasted more than four years ends from a single culprit: a recession.
If that is indeed correct, question is:
Is the USA heading for recession?
Actually...I don't believe in argument that recession is the main cause of an end of the Bull market cycle...
From my viewpoint the main cause of an end of the Bull market cycle is exhaustion of available money towards that market....Remember the Economy and the Equity Market don't correlate all that well (Crestmont Research)..Its the sharemarkets own stellar success that sows the seeds of its own destruction (greed)....
At the start of the end (bull market) the overall market investor is so optimistic they will have all of their money invested, the only way to buy more is through borrowing and/or debt margins and because they are so convinced that the market will continue its stellar climb, they lose their fear and commonsense and do things e.g upping the mortgage on their house and using each correction as the "buying in the dip" opportunity....Institutions are criticised by their investors if they aren't all in taking advantage of the boom..
...but there comes a time when money needed to accumulate stock runs out and the leveraged assets reaches a tipping point... one by one buyers are reluctantly forced to leave the market, prices fall back due to fewer buyers and at some point margins are called ....money then evaporates and is lost forever adding to the available money woes... momentum to the downward trend increases ...
So the longer the Bull Market lives on in this last phase (Stage 4 ..exuberance state) the bigger mess to clean up....
I've re-posted this margin debt /S&P500 chart below...as you can see, already the potential mess at the tipping point will be huge enough for the Equity Market to cause a recession..It has done just that in history..I can see no reason why it should be different this time ..
The chart below is 20 years and shows the leading indicators turning before any recession effects.... ..going further back in history shows a similar stories... The famous and bizarre one being the tulip market which caused the 1634-1637 depression...and then we had the big one.. 1929 Wall St crash (Sharemarket crash not the sole cause) followed by the 1930-1933 Depression
When the sharemarket is not the cause of a recession (or worse) it is another leveraged overextended market such as Property, an innoviation (industrial revolutions) e.g railroads in the 1870's..or most often a combination of many market (all the ducks lining up in a row)
The financial market bust up and resulting economic slump is a result but not the cause.
http://www.advisorperspectives.com/d...since-1995.gif
OK this is America's problem, not NZ's..we are the rock star country ..right
Usually when there is a crisis, money heads back to the safe havens..NZ isn't a safe haven ...Paradoxically if America is in the sh1t the money still flows back because it has this safe haven status....Same story ...negative money flows creates lack of available money ...demands slows...we all know the story from here...
Bear markets generally start at the height of economic growth (when GDP peaks in the cycle). When GDP approaches zero or goes negative (recession) the damage (economic and shareprices) has been done. And a new bull cycle starts (or may have started)
Most say that the US economy is still growing so nowhere near a peak in this cycle, so no bear market about to happen soon.
Maybe that guy from JPM is predicting a recession in a year or two and that when that happens in hindsight we can say yes economic growth peaked in early 2014 as did the share markets
So better to focus on the real indicators that tell us where we are heading in the economic cycle - the best one being consumer spending.
(Comments based on US market trends)
Not sure I would agree Winner that consumer spending is the best of all indicators but could appreciate that if you have a focus more on sentiment and the (P) rather than the economics and the (E) in PE, than possibly so.
Economic and share market cycles over the last 20 years have been tempered by more modern monetary and fiscal policies with information technology allowing the feedback loop for those policies to be more direct and focused.
Studying the fundamental drivers behind those policies IMHO provides the best indicators and triggers.
So what drives consumer spend?
Slowing and rising year-over-year real hourly earnings growth have been a generally helpful leading indicator of forthcoming downturns and upturns in Y/Y consumer spending. These have been followed by slowdowns and advances in the economy in general and, therefore, have also been a signal of forthcoming declines and upturns in the stock market.
Yes the driver of the P you mentioned.
Essentially agree with what you are saying MAC but I see a lot of these as tinkering to solve perceived problems. At the end of the day if the guy on High St has no money to spend the economy suffers to some extent no matter how creative and focused policy makers are
Might research some of your thoughts though in interest of bettering myself
Not me Belg...:D
A doom and gloomer would not be "in" 100% like me.....That may change a little today though...maybe?
The idea behind my posts is to pull my head out of the sand and look skywards to see If there are any clouds on the horizion .
There are some awful misalignments out there which is typical of a late stage of an mature bull market...so it pays to talk about it...eh?
At least when you suddenly get wacked around the ears you know what did it..and get out..rather than being in denial, full of optimistic hope, buying more shares on that "dip" with money that's not yours and then later blaming Mr Market for being irrational by not showing the "true" fundamental worth of your favourite stocks.
."money then evaporates and is lost forever adding to the available money woes" Yes I agree and its why I believe the FED will need to keep printing :)
Annualised PE Ratio is very high for this stage of the secular Bear cycle (13 years old)...Although it is still at the high side of fair value only because the inflation rate is in that sweet spot zone at 1.58%. Thats only one cog in the overall system however ...Strangely (that effect for the media and the laypeople), not many points mention share price value..probably because the market values everything as fairly valued according to its "now" system environment that it lives in....So the points mentioned are those things that slowly effects change within the system environment that the Equity Market lives in ..... Equity Market Cycle reversals are due to slow systemic changes, much of it undramatic so goes undetected (unless you look for it)*** .....the ultimate tipping point trigger could be a very minor insignificant event...(Butterfly wings...eh?) That's the reason why most investors don't realise the exact time of the bull/bear reversal believing the market fall to be another buy in the dip Bull Market Correction and the media is still bullish encouraging the market is healthy...so with that denial that's nothing has changed (no dramatic event) the money trap is set.
*** the reason for these types of forum posts
Many points cover Correlations and disconnects typical of the last phase of Equity Bull Markets throughout history ..such as the current Copper/Equity disconnect...High margin debt..High IPO activity...fiscal tightening..lower inflation environment showing signs of ending..Also sentiment indicators...and behavioural attitudes e.g Investors harshly criticising anyone who bearish....The absence of perma-bear fund managers...stupid,lack of commonsense activity doesn't seem stupid or risky anymore as they are now highly profitable activities ...Hmmm about 20 more..I'll try to find my list..I've got one for both top of bull and top of bull cycles on my computer somewhere...
So right .... amazing how many who think that tapering means QE has ended. Its still going on
I don't think it has down to $65 billion a month yet turmeric
Will continue for a long time ... at least to the next presidential elections ..... and wont stop until Wall St banks have managed to offload most of their toxic debt / mortgages to the Fed .... all under the guise of Quantitative Easing
There's a whole stream of currency threads moosie, see Forex
I shall forgive you for your all-time-high comment, as you are young and canadian ;)
the high for NZD/USD is ~ 1.25, (and in my lifetime too), so only another 40 cents before we retest it!
Yes..:)
AUDNZD five year lows ST forex thread
So are you suggesting FBU is going to go from bearish to bullish?
and
Are you suggesting that the RBNZ flagging another 4 rate rises this year is already factored into the NZ$..To me that flagging suggests NZ economy is going to remain/get stronger wouldn't it??...Wouldn't this suggest NZX50 index will remain strong and perhaps over take the AORDS index?..Wouldn't it also suggest the NZ$ will remain Globally strong and helped along by a resurgence of the A$ together with NZ 2nd biggest trading partner "coming right" economically.....
OK..that's a rosy argument side
I could come up with an equality pessimistic argument side as well..commodities ???(Aussi is commodity driven economy too?)...but hey I'm in optimistic mode today :cool:
..Try me tommorrow
NZX volumes up but value drops
http://www.stuff.co.nz/business/indu...ut-value-drops
Purely speculation below...
As Hoop likes to remind us, falls happen when everyone's 'all in' and there's no more money pushing prices up.
Are we seeing that with a larger amount of smaller trades occurring, and a fewer amount of larger ones??
... ... as in, the last guys left are now jumping in.
Attachment 5678
Each one of these downtrends lasts around 6 weeks or so and an average of about 200 points.
Attachment 5679
If a new one has started, sell now, wait six weeks, then buy up large :t_up:
Disc; NBT is in no way a chartist and takes no responsibility for any decisions made. Ask Hoop or someone else that knows what they're doing.
Pretty picture
Each one of these downtrends lasts a while and an average looses heaps
If a new one has started, sell now, wait a while and buy heaps
Sorry nbt - not the NZX50 but why ruin a good story
Don't be sorry Winner. Close correlation between the two. Makes sense.
Attachment 5681
Certainly something to be aware of. When it falls it's going to hit hard I guess.
A significant feature of the last phase of a bull market cycle is often the lack of a decent correction which keeps everyone "in" capturing capital gain and are happily believing this uptrend will last a lot longer time yet ..In this last phase when correction indicators go off they "cry wolf" and investors eventually lose belief,criticise, and then ignore...When optimism reigns supreme and nearly everyone ignore warning signs, the cyclic top is near...(DOW Theory)
I made this chart this morning for a bloke who was interested in Bollinger Bands..I didn't intend to post it on ST as the market is in this "cry wolf" (Moose roaring season:D) phase...... but since everyone is posting pretty pictures, I thought "what the hell"...here is mine for what it's worth.
The predicament this person had was figuring out which way the trend would go after the Bollinger Band squeeze..adding some TA indicators helps solve the puzzle so the chart below is self explanatory....and odds favour it to be bleak this time.
...but looking back all these other corrections on the chart, TA is starting to look more like a "Drama Queen" with these "cried wolf" warnings as the corrections are followed by numerous higher highs reducing investors fear and starts breeding "buy in the dip" investors who actually cause these corrections to become shallower and shallower as their numbers grow...
However investors who use TA for buy/sell timing of shares should stay loyal to the discipline it's prudent to lay low during the warning periods...and treat the minimal opportunity cost of doing so as an insurance policy ...There will a time when topping up in a dip will prove an expensive lesson about downtrend/reversal risk
http://i458.photobucket.com/albums/q...5007042014.png
Hoop well done
Your comment re dips becoming shallower and shallower. Read this http://hussman.net/wmc/wmc130415.htm
ESP the bit about Somette
Ill stick my neck out and say last mth performance was a outlier and well revert to the mean this mth
like i say reversion to the mean this mth
Actually rotation from growth stock like tech has been occurring for a while now money going to utilities, defensives
So Hoop, in the absence of a blatantly obvious catalyst such as a major country going bankrupt for example, how does a chartist tell whether it's a healthy correction or the start of a proper bear cycle?
Where are we in your opinion? My 'charts' suggested its another correction (I'm not a chartist, this is simply what has been happening and I appreciate that won't go on in this pattern forever) Winners chart suggested we're well overdue for a bear cycle that hadn't started yet, and I think your chat seems to suggest we're in a decent bear cycle?
Looks like Jesse Colombo from Forbes is the latest to bring up the elephant in the room: http://www.forbes.com/sites/jessecol...d-in-disaster/
I know for the past 10-odd years, many have been calling a house price bubble, but for how much longer will NZ's cheap credit inflated house prices survive? Then what will happen to that mountain of debt householders accumulated during period of historically low interest rates? If there is a resultant avalanche, where will the stock market end up?
It's a cyclical matter, some cycles are longer and more volatile than others, but whether it proves to be a soft landing or a pop it will end sometime, IMO it’s got at least 12-18 months to run yet.
One aspect overlooked by Jesse Colombo is the intergenerational and demographical effect of the baby boomers. Remember when they all finished school and the resulting school closure debacle a few years on in the 80’s and early 90’s.
The wealthiest generation in human history are just about to start selling down those 3, 4 and 5 bedroom suburban homes and go looking for more suitable retirement dwellings and/or aged care facilities when the time comes.
Not all of the cash raised from selling ones previously family home finds its way back into the property sector, some goes to retirement savings and living expenses, a nice overseas trip, perhaps some will even leave the kids a sports car.
Baby boomers are now aged 54 through 69, tick tock ………………..
MAC, what happens in 12-18 months time when it has run its course?
Some pain Winner for generation X at the top of the interest rate cycle and for a few years that follow, but I don’t think it will be the hard landing the professional gloomer's make a living from portraying, how would they sell papers.
Attachment 5738
So true...that demographic bulge is approaching the golden years. Babyboomers are heavily invested in real estate and underinvested in financial assets (even when compared to AUS, USA and UK). The signs are not good for the property market. Hwever, if/when the property market approaches long-term valuation multiples in an orderly way, maybe it will not be all bad news for shares and the financial markets generally if downsizing boomers convert their real estate gains into an income earning portfolio and some wealth is transferred to younger mortgage-encumbered householders.
I think your chat seems to suggest we're in a decent bear cycle?...The chart above is the NASDAQ chart..Its more ugly now but it isn't in a bear cycle (yet)..
how does a chartist tell whether it's a healthy correction or the start of a proper bear cycle?...The 11 year weekly chart below shows 2 bull cycles and one bear cycle....A healthy correction is a 10% correction it hurts but it creates available money by "stopping out" disciplined investors...A unhealthy correction is the 5% or less type as these corrections aren't big enough to create enough available money and the bull market eventually exhausts itself...The OBV tells the story ...see the OBV topping out just before the double top formation in 2007....also see the orange arrow at the beginning of this year as available money is exhausted but the question is... could this be due to the Govt floats? or due to unhealthy corrections? money leaving for a better market? or a combination of factors?
Correction or Reversal? (new bear market cycle)...Each discipline have their guidelines..a chartist discipline is usually the breaking of multiple indicators all at the same/similar time (ducks lined up in a row) ....Normally technical break down begins around the 7 or 8%..so closely watch and apply confirmation methods as the correction proceeds but becareful of the B wave this is a short relief rally...
A tell tale sign is a failed rally to create a new record high after the ending of the correction"s ABC wave. Its commonly accepted by the media that a drop of more than 20% is deemed a bear market cycle...Technically a drop of 20+% would nearly always break all the indicators...
Winners chart suggested we're well overdue for a bear cycle that hadn't started yet......The lifespan of a cyclic bull market cycle averages about 3.75 years but its not uncommon for a bull cycle to live to be older than 6 years and its not uncommon to have 2 bull cycles with a mild short lived bear cycle in the middle ....The law of averages suggests that we are overdue for a cyclic reversal...back to bear cycle...
At the moment the old Bull is healthy...
http://i458.photobucket.com/albums/q...011yrchart.png
Many thanks Hoop, for your informative post and chart above. Much appreciated.
rubbished here as well
http://www.stuff.co.nz/business/indu...nalysts-bubble
We (NZ) should be proud to have a high dollar ....a sign of success I reckon
May it keep going up (maybe even back to the days when I got 1.40 odd US dollars for my little old 1 NZ dollar)
My next post relates to this 27year old wannabe but until then lets look at some quick glance 1yr chart comparisons...Yes there are some equity trend flattening but no big corrections after each exurbant steep climbs but that's what you should expect from old age Equity bulls...Aussi is the exception it doesn't show up on this chart but its post 2008 equity melt down bull died a couple of years ago, followed by a short shallow bear cycle and now back as a younger bull.. you will notice that the AOrd equities has the bigger corrections and lacks the contiuous steep climbs. The DOW shows this too but its due to only having 30 stocks in its index and any one or two unperforming stocks can make a difference.
Currency charts speak for themselves...and yes I agree with Winner69 ...over an established long term periods a high currency signifies good and stable economic health...
http://i458.photobucket.com/albums/q...ce21042014.png
In my opinion Forbes online has gone downhill in quality reporting...shame really...Its following the likes of Matchwatch adding drama to attract the online masses...
First of all...I have an open mind and crashes do happen...so I will not discount a crash happening in the near future...but as for Jesse Colombo I will never credited him as a seer for it.. he's written a very simplistic one sided article on a very serious subject which can cause serious consequences.
He is also presented no chartist skills as he used charts in a biased manner..
example
http://blogs-images.forbes.com/jesse...singPrices.png
New Zealand’s housing prices have doubled in the past decade, forming a property bubble:....Counter argument NZ housing prices trend has decelerated from doubling in the previous 6 years to increasing 12% nationwide in the last 6 years due mostly to 2 centres Auckland and Christchurch..
Counter reasoning: the housing bubble was far larger back in 2007 (see chart)...Using Jesse Colombo chart logic the NZ housing bubble should've burst back in 2007/2008...
My Personal Opinion: I do realise that there more downward negative pressure being applied recently to the property market with the adding with the cyclic bottoming of interest rates to the other negative factors, new restriction to enter the market, to the already lessening trend of household income, changing demograghic profile, etc. There are more negatives than positives now..
I think the duogenerational secular bull market (50yrs) has now reached its limits and I wouldn't be at all surprised to see a secular bear market begin from here ...but ending in a crash is not the only option....since 2008 (see chart) there seems to be a slow orderly market re adjustment (degassing)...The RBNZ have gently applying the screws (as other countries have done) it was a risk in my opinion but backed with hindsight it seems to be working with having positive results and not the feared negative crash catalyst effect...
Enough time spent on this Jessie guy..except to say that this article argument is forum grade stuff (apologies to ST) .......
Jesse Colombo has responded on 21st April defending his argument
I was referring to Mr Colombo...but now you mentioned it....Nah.. just kidding :D.....
Back to topic...You noticed I added the Russell 2000 index...The media says it to be a leading indicator for the S&P500 ..Theory has it that when a cyclic reversal threat emerges investors fly away from smaller companies back to "safer" and large yielding stocks such as utilities .....I'm not convinced the Russell 2000 is a leader though...I will chart S&P 500 with the Russell 2000 comparison when I get time....
lets hope that the Nasdq and the Russell 2000 are just corrections,,,
For those who went into panic, or paroxyms of laughter after reading what Jesse Colombo had to say for himself, and if you hadn't already figured out what motivates his type, here it is, in black and white. Nice money if you can get it.... "Gloomy economic predictions can pay, literally. The intense interest in Forbes columnist Jesse Colombo's warning of a New Zealand economic bubble will fatten his wallet, as Forbes online contributors are paid for 'clicks' and paid extra for repeat visits".
From http://www.stuff.co.nz/business/indu...rsday-April-24
The Russians are on the march and US stocks down,NZX under pressure come monday
Nek minnit
I'm pretty sure Russian investors are feeling the squeeze even more so: http://www.bloomberg.com/news/2014-0...ts-rating.html
Perhaps Moosie-the-Trader could short some Russian stocks...
tech stocks not the space to be utilities are, In NZ things like POWER COMPANIES, TEL, RBD, TWR will outperform me think reliable companies with good solid earnings and divs, just look at the dow utilities everything down and that index up on fri
One would find relatively safety with cash positive stocks like DIL though. Having survived the last 2 weeks relatively well when compared to the other NZ tech stocks. PLUS FYR statements will be released next week! I predict Tuesday...
According to anz securities (ex DB) the index is at 5201 now.
I did say 5500 before the end of the year
No more 5000 by Xmas predictions ..... maybe 6000 by Xmas is the new cry
John could raise $297.5M for the surplus in tax just from light and idle reading here on ST. Do consider making your IR3's picture perfect this year.
http://www.interest.co.nz/news/69871...kdown-tax-comp
Can someone tell me who's the next in line to be added to the nzx50 after PEB get kicked out?.
EBO. Majority of their earnings are in Australia.
PAZ,[unlisted market] Most/all of their products are exported.
1c change in the NZD/USD exchange rate translates into approximately NZ$ 1M difference to the bottom line for Sanford !
Airworks is another to benefit
Becareful what you wish for Snapiti...
High currency most often signals good stable national economic health....
I've got this feeling NZ is coming out of the other side of its economic sweet spot..all the ducks are slowly leaving that row....Hmmm maybe the time is near to start looking at Aussi (or further a field) again
Well if that's the case, that was the quickest economic boom I've ever seen. Premature ejaculation. I guess "rockstar" is correct, then. I'm not talking Stones. I'm talking one hit and then oblivion, drug addled middle age, and then an embarrassing ending doing voice overs for cartoon trains.
Hi Sharetraders,
I hope it's not inappropriate for me to ask this on a public forum, but I am a daily Sharetrader follower and respect the wisdom of many posters on here.
I'm hoping some of you may be able to offer some thoughts (not financial advice!).
I need to exit my portfolio for a house purchase over the next 8 weeks and would like to time my exit as strongly as possible to lock in maximum gains.
I currently hold:
IFT
GPG
SUM
MRP
SML
THL
MELCA
HNZ
It really would be much appreciated if anyone could offer some insight as to an exit strategy, any FA / TA advice of which stocks to exit first or hold for another 6 weeks.
Kind regards and many thanks
Shambles
Hmm - feels like being asked to predict whether we will have sunshine or rain on August 3rd, 2014 (i.e. the Sunday 8 weeks from now). Would you believe anybody who claims that they can predict today the weather on that date? Personally I wouldn't hold any funds which I need within weeks or months as shares:scared:.
Many of your shares are as well in the short term quite sensitive to what the public thinks the next government will look like. Shares like e.g. MELCA / MRP / IFT are likely to rise if the mood goes towards National and are likely to drop if the mood goes towards Labour/Green/Purple/Grey.
Long term I think that your portfolio looks quite healthy (actually, I hold most of these shares as well and don't intend to sell anytime soon), but I guess this doesn't help a lot with you current decision. Anyway - good luck for getting it right - and I hope that you have enough buffer that it won't hurt you too much, whatever the share price is doing!
Shambles Sum has Q2 sales figures due out by July 10th so should see a small spike in price maybe to $3.60 ? Something to consider anyway.
I concur with Black Peter and wouldn't be holding any funds which I need within weeks or months as shares.
The longer you leave the decision to sell, ie the shorter the time before you need the funds, the more risk you taking.
I'd be selling up soon and not taking any chances with being 'forced' to sell on a bad day or two.
But whatever you do make it your considered decision.
Yes, if you are unconditional on the property, Monday would be a good day to liquidate.
Thank you everyone for your replies, I appreciate all your comments.
Moosie, I haven't got my head around charting tbh, I really should spend some time educating myself how to understand more than general trend lines and basic fundamentals!
COUTA. Thanks for your thoughts re SUM. I may split my holding there, sell half this week then follow sentiment closely to offload the rest.
Hoop, the house is a rental to add to the portfolio, with a view to redevelop into high end townhouses over the next 2-3 years. It's a good site in a top suburb .. and a great price. Shame to have to largely exit my portfolio, but this deal is a no brainer.
Black Peter, Winner, Xerof and Snapiti. Duly noted, trying to squeeze the extra 2-3% top end when the alternative could quite easily be negative territory. Never a bad thing to leave some in it for the next guy..
Thank you Gentlemen, and once again, for the regular insightful evening readings.
[QUOTE=belgarion;485363]Hi Shambles,
My DIY advice would be:
Absolute Gold.
Thank you Belg
Maybe the Market is agreeing with you Belg...
or
Maybe just another healthy bull market correction for this geriatric bull.
this is a broken neckline from a very flat H&S pattern so chart pattern theory has it it will be another shallow correction..The lower and wider the pattern the less reliable it is (Bulkowski).... target price 4910 [5070-(5230-5070)] but there are 2 major supports around 4950 area so odds reaching 4910 is lower
http://i458.photobucket.com/albums/q...5023062014.png
NZX data feed about is good as half the stocks on it.
so the first fix didn't work .... suppose the next fix will
Just as well the rest of the world doesn't care about this little country
Headline: "NZX Crashes".
Gaynor not impressed. Hasn't been able to buy his 300000 ATM
"It's not that it happened, it is the regularity of it happening," Brian Gaynor, executive director of Milford Asset Management told BusinessDesk. "It happens around the world, you get these things, but it is happening too often with the NZX and I think it dents confidence in the way the organisation is run. It shouldn't have these kind of problems.
http://www.nzherald.co.nz/business/n...ectid=11283023
It became technically broken last week (Monday 23rd) Belg. It broke a small support, the EMA50, and more seriously it broke the H&S pattern neck line all on the same day....see my last weeks chart 24th June Post#1678
The H&S (head & shoulder) pattern is very flat so one would expect the break would only create a small correction.
....however....
My discipline is similar to Phaedrus'..... when the index (where my shares are included in) breaks down I cease to buy new company shares (cease accumulating too) and strictly keep to the selling discipline, any sell signal MUST be adhered to...that mean't my favourite AIR shares that triggered sell signals had to be sold...
For me... it stays this way (no buying) until the NZX50 triggers buy signals again
Treasury and Reserve bank have this wrong. Brakes are being applied too hard and too fast.
If you are a dairy farmer in the Waikato with no debt you're unquestionably doing well, although even then you're looking at a payout that's significantly reduced this coming season too what it has been.
Buesiness confidence is being sapped by higher interest rates and consumer confidence will follow.
NZX 50 forward PE ratio's are stretched to the limit and face an acid test against rising interest rates.
Further...we are seeing an almost unprecendented supply of new listings coming to the market so overall I think its hard to make headway when you appear to be swimming against the tide. Who could be surprised if the market corrects or at best goes sideways for the next quarter or two ?
BB...there are tons of TA indicators and various TA methods that others may prefer..The buy signals I will be watching will be the indicators that I'm personally comfortable with...I keep it simple with only a few indicators...using too many indicators can overcomplicate matters and affect decision making..
So..with reference to the charts I post on ST the signals would be from:
Charting
1....a clear break above the EMA50 currently at ~5150
2....a clear break above the 5150 (5160) resistance (ex 2 weeks ago support) line
3....Change of trend ...create a higher high..has to be above 5200
4....A failed H&S (head & shoulder) pattern....needs the index to break above the pattern's upsloping neck lines...say 5200 by this Friday or 5220 by the following Friday.
TA indicators...(all 3 are negative or downtrending atm)
5....OBV needs to reverse to an uptrend
6....RSI (14) needs to rise up to above 50 and/or confirm an uptrend.
7....DMI when +DI crosses to be above the -DI
Usually the TA indicators signal closely with the charting lines and patterns...sometime a "warning" divergence happens when "unusual" trading behaviour is detected by the indicators..
I take note but don't act upon a single buy trigger...I wait for confirmation from other signals...With a solid reversal many buy triggers will fire off close to each other or all at once...The more trigger signals firing the stronger the chance of that event will continue to happen.
Sometimes life can be a bitch and things get complicated...If I'm undecided or smell a rat I will look to some other specific TA indicators for help
NZX50 closed at 5146 up 5 (+0.1%)..It's not far away but more work has to be done to repair its technical damage...until that happens I stay on the sidelines.
Disc: Equities 60%(and decreasing) Cash 40%(and increasing)
From Robert Shiller . OK, he's talking about the USA - but does it apply to the NZX as well?
“I am definitely concerned. When was [the cyclically adjusted P/E ratio or CAPE] higher than it is now? I can tell you: 1929, 2000 and 2007. Very low interest rates help to explain the high CAPE. That doesn’t mean that the high CAPE isn’t a forecast of bad performance. When I look at interest rates in a forecasting regression with the CAPE, I don’t get much additional benefit from looking at interest rates… We don’t know what it’s going to do. There could be a massive crash, like we saw in 2000 and 2007, the last two times it looked like this. But I don’t know. I think, realistically, stocks should be in someone’s portfolio. Maybe lighten up… One thing though, I don’t know how many people look at plots of the market. If you just look at a plot of one of the major averages in the U.S., you’ll see what look like three peaks – 2000, 2007 and now – it just looks to me like a peak. I&rsq uo;m not saying it is. I would think that there are people thinking – way – it’s gone way up since 2009. It’s likely to turn down again, just like it did the last two times.”
Professor Robert Shiller, June 25, 2014, The Daily Ticker
We’ll all forgive you Moosie because you are a humble TA.
Both history and fundamental analysis tells us that sharemarket’s typically prosper in rising interest rate environments, particularly growth stocks.
It’s when central banks consider it is time to reverse policy and stop raising interest rates that you need to be concerned about economic growth stalling, forward earnings projections dropping off, and resulting detrimental effects on the sharemarket.
http://www.sharetrader.co.nz/showthr...tes#post462006
http://disciplinedinvesting.blogspot...-good-for.html
Not so, growth stocks prosper for a couple of reasons,
Generally investor cash moves from cyclical stocks which tend to become fully valued on elevated PE ratio's to profitable growth stocks, or near profitable growth stocks, as investors seek the same returns that cyclicals no longer provide.
Also growth oriented companies with large piles of corporate cash, record levels as at present, will now start to apply that cash as capex in pursuit of taking profits from an improving economy. Investors will follow this growth and the shareprice returns it offers.
Any dip in growth stocks (not defined as spec tech stocks) with good fundamentals should be looked at as a gift about here.
Moosie - this guy agrees with you
Sharemarkets set for biggest tumble since GFC, says veteran investor Han K. Lee
http://www.canberratimes.com.au/busi...707-zsyj6.html
Thought of MAC when I read this bit - “Now the situation is even more perverse. It doesn’t matter whether the latest data is good or bad, brokers are finding a rationale to interpret everything as an excuse for why shares should continue to rise.” ....even PEB maybe
Partially Disagree.
Interest rates are not considered a driver of the Stockmarket...why?
Before the 1980s interest rates had a loose correlation with Equities..Yep..rising interest rates together with rising stockmarket ...All this changed with the introduction of Monetary policy...when the correlation flipped to reverse correlation when interest rates were used as a tool to control inflation..Inflation is the primary driver of the Stockmarket and as Monetary policy was introduced into the various countries their stockmarkets interest rates did react but only when inflation was present as well..
Most of the data from various "media researchers" don't allow for these differences and some mix the pre-monetary data with the post monetary data.. so some of it is muddled statistical lies..
I quickly dragged this chart of Google Search as this chart reinforces the story with the flipping of the loose correlation to reverse correlation occurring about 1982 with the S&P 500 in red.
http://streettalklive.com/images/sto...500-061713.PNG
As I don't want to bore everyone by writing a book on Sharemarket Theory..there is much written on this subject as studying the Secular cycles highlights the true drivers of the sharemarket which are inflation and the Annualised PE Ratio ...you see the interest rates don't seem to have a large effect in Secular bear cycles either with or without Monetary Policy...
So to make it totally plain to everybody..The only reason why the S&P 500 is considered overvalued but not well overvalued considering its historically very high PE Ratio is because of its driver (inflation) being in its sweet spot of 1 to 2% range.. when inflation moves either up or down outside of its sweet spot range the sh1t will hit the fundamental fan...
A lot of information regarding the interest correlation? subject is scattered throughout on the Investing Strategies and Secular Bear Markets thread