Bull or Bear

[Wino]

This to me is a vexing question. Consider the ALSI, is it trending up or down in short to medium term? I applied Elliot wave theory to try and gauge. Lets look at the two scenarios. If one thinks we are in a cyclical bear trend then the fall from 32900 to 18100 in May 08 to Mar 09 could be considered as downwave A and a 61% Fibonacci retracement of the rise from April 2003 to May 08 when ALSI increased from 7645 to 32900. The bounce back from July 09 to April 10 when ALSI increased from 18100 to 29500 which is a Fibonacci retracement of +/-73% from the 08 fall could be considered wave B which would mean we are now in downwave C which could extend to below the end of wave A and potentially end up in the 12000-14000 area. 29500 therefore becomes an area of major resistance and 18100 major support? The DJIA wave B retracement is at 61%. If one considers that we are still in a cyclical bull phase, then one could consider the increase from April 03 to May 08 as an upwave 1, the correction in 08 as wave 2 and we are now in a major upwave 3 which potentially could head towards the 38000 to 40000 area before the next major correction. I would like to hear your opinions as I am a firm believer in "the trend is your friend" methodology.

[theyoungster]

you cant go wrong with bull market provided you wait long enough, and buy profitable dividend paying companies

[GarethJ]

Unless it's a bear market...

[Wino]

Well, which is it? If its bear, then one could buy those good divvie shares much cheaper in 3 to 6 months. If its bull, then the right time could be during this mini correction. Although one is following a system, it would be nice to have more clarity on the general trend. To me, it is quite murky at the mo.

[john_1]

Wino...tis really simple put your chart on closing prices so that you get a single black line. Then take a 200 day moving average...and overlay it on the chart...NOW here is the trick...go stand as far from the screen as you can..and look if the two line are currently going up..or currently going down...if its up..its a bull..if its down..is a bear...Noe the trick is to buy as close to that line in a bull and to sell as close to that line in a bear...anything else is just noise! hope this helps

[TOPIX]

Have a look at this article - http://www.earnforex.com/forex-e-books/beginner-forex-trading/Peaks_and_Troughs_Pring.pdf Do the chart and stand away as John says. This will prevent you from the noise of small movements. Look at the highs and lows. What do you see?

[#7]

Best strategy I know right now is to cost average into cash positive high div stocks (for longer term investment purposes). BTI & Grindrod are two of my current favourites that are looking really good. Even if BTI drops from here, I can still rely on a 5% div yield to offset the loss. Cost averaging is key, I think, because if you are buying longer term, then you don't really know if we are near the bottom or not. If you wait for confirmation in this kind of volatility, you will be picking up your stocks 10% more expensive.

[#8]

nice tip, thanks for that,.. so i suppose for shorter span trades, one can use the 50d MA in the same manner,.. Tx,..

[Wino]

Thanks for the input. It seems as if the 200 SMA is a major support line for the ALSI and liquid stocks such as Anglos which was tested just a few days ago. Furthermore it looks a similar situation that was experienced early Feb after the mid Jan correction. Does the frequency of these corrections mean anything? Skaap, thanks for that. I also identified Altech as such a company paying regular divvie in the 5% region. I have been accumulating on weakness.

[Mar-11]

I think the pattern we are seeing in the alsh(and topi) @ the moment are remarkable similiar to pattern before the big decline in May 08. if you break alsh up from Jan 07 to May 08, you will see very similiar pattern developing since september last yr.. The dip we have just experinced would be equivelent to dip on 21 Jan 08 (on old pattern). If the pattern continues in the same manner, we will see a new year high,(3RD HIGH)before a major major decline??

[Mar-11]

I think the pattern we are seeing in the alsh(and topi) @ the moment are remarkable similiar to pattern before the big decline in May 08. if you break alsh up from Jan 07 to May 08, you will see very similiar pattern developing since september last yr.. The dip we have just experinced would be equivelent to dip on 21 Jan 08 (on old pattern). If the pattern continues in the same manner, we will see a new year high,(3RD HIGH)before a major major decline??

[#12]

EMA not SMA ? imo

[Wino]

You are making a good point. If the ALSI holds these levels or even rises slightly by the end of the week then we could well see the high of 29600 tested again in the short term. That blows the Elliot wave out of the water and the 200 sma will hold its upward trend. The reverse of course could easily happen. So, I suppose I will wait till the end of the week to see which way the wind blows.