Tag Archives: equities

NZ50, Auckland Property Market, and HSI Elliott Wave Technical Analysis – 12th July, 2015

I’ve been following the New Zealand stock market for a while now. This is the first time I’ve shared this analysis with members and the general public.

I’ve also more recently with interest been watching what’s happening in China and Hong Kong.

Note: This analysis is not a full Elliott wave analysis, but just the analysis I’ve already done for these markets to date.

NZ50 ELLIOTT WAVE AND TECHNICAL ANALYSIS

NZ50 monthly 2015
Click chart to enlarge.

For the NZ50 to confirm a bear market I would want to see:

1. A breach of the aqua blue bull market trend line by a close of 3% or more of market value below that line. (The trend line is breached on the daily chart at 5,846.97, so we need a close at 5,674.56 or below.)

2. A new swing low below the end of primary wave 4 at 5,097.08.

3. A breach of the maroon trend channel on the monthly chart.

While the bull market trend line is not breached by 3% or more a bull market should be expected to remain intact. Primary wave 5 may yet continue higher.

I am confident that my labelling of primary waves 1 through to 4 is correct. Primary wave 3 is just 1.1 points short of 2.618 the length of primary wave 1. This is a remarkable Fibonacci ratio between waves which lasted 10 and 54 months, respectively.

One cause for concern at the monthly chart level is there is so little divergence between price and RSI at the recent high. The last time the NZ50 saw a big bear market was preceded by years of strong persistent divergence between price and RSI. That it is not happening now may indicate primary wave 5 may not be over. There is no Fibonacci ratio between primary wave 5 and either of 1 or 3.

NZ50 weekly 2015
Click chart to enlarge.

Primary wave 2 was a deeper 0.43 flat correction, and primary wave 4 was a more shallow 0.08 zigzag.

Within primary wave 3, there is no Fibonacci ratio between intermediate waves (3) and (1), but intermediate wave (5) is just 0.9 points longer than 0.382 the length of intermediate wave (1).

There is negative divergence between price and MACD at the weekly chart level.

NZ50 daily 2015
Click chart to enlarge.

At the daily chart level, primary wave 5 is off to the left of the chart. Within primary wave 5, there are no Fibonacci ratios between intermediate waves (1), (3), and (5). Intermediate wave (2) is a 0.29 zigzag and intermediate wave (4) is a 0.14 flat correction; there is perfect alternation.

So far, since the last all time high at 5,927.10 on 16th March, there looks like what is a clear five down on the daily chart which was followed by a three up. Another five down has made a new low very recently and thursday last week saw a new low below that, and so this movement cannot be labelled A-B-C because a new low has been made after it was done. It would better be labelled 1-2, 1-2. This indicates some strong downwards movement next week as the middle of a third wave down begins.

ADX does not yet indicate a trend, however, and the market has been moving sideways in a range although the movement has a slight downwards slope.

The bull market trend line which goes back to June 2012 was breached about 5,846.97. If next week continues down as I expect, and we see a close at 5,674.56 or below, then I would have a little more confidence in expecting the NZ stock market is in a bear market. Next week shall be interesting.

AUCKLAND PROPERTY MARKET TECHNICAL ANALYSIS

Auckland Property Market 2015
Click chart to enlarge.

There looks like a fairly typical looking bubble developing in the Auckland Property market (Auckland has about 1/3 of the NZ population, so this is our largest market). The problem with bubbles and the problem with highs is they’re ridiculously difficult to pick an end for. Therefore, in this instance, I would use trend lines: if the lines are breached to the downside, then the bubble has most likely burst.

While New Zealand’s government debt has been rising in recent years, it is still relatively low in comparison to other countries. Currently, the debt is at 35.9% of GDP, so the country may be in a reasonable state to weather another economic downturn. However, household debt is not looking very healthy and looks to possibly have just last month reached new highs, over 160% of disposable income. It may be that recent entrants into the overheated Auckland property market are over-leveraged and are not ready to withstand an economic downturn.

The magazine cover on the chart is from the NZ Herald Property supplement section, from March 2015, and meets the criteria for a classic magazine cover indicator of a bubble / high.

New Zealand was affected economically during the Global Financial Crisis (or Credit Crunch), but not on the same scale as the USA or Europe. Comments from members and readers in New Zealand (or world wide) about NZ50 and Auckland property market are welcomed.

HANG SENG INDEX ELLIOTT WAVE AND TECHNICAL ANALYSIS

HSI monthly 2015
Click chart to enlarge.

The most recent rise on HSI, from the end of primary wave B, does not look at all like a third wave, not even the start of it.

The big drop for the GFC (to the low of October 2008) subdivides as a three. The following wave up also subdivides as a completed three, but it is less than 90% of the prior drop. So this cannot be a big flat correction and is more likely to be a huge combination, or less likely a double zigzag. A combination may be more likely because they tend to have deep X waves whereas double zigzags tend to have rather shallow X waves.

Within cycle wave X, primary wave C subdivides as a completed ending expanding diagonal. Because the diagonal is expanding, there is no (theoretical) limit to how long the final fifth wave can be so most certainly it could continue higher yet.

For a bear market to be indicated for HSI I would want to see the following things:

1. A new swing low below the last major low at 23,252.63 (the end of minor wave B within intermediate wave (5) ).

2. A breach of the bull market trend line (on the daily chart below) by a close of 3% or more of market value. This line is not yet met.

RSI did not reach overbought levels on the monthly chart just before the DotCom crash of 2000 – 2003, but it did though for the crash prior to that, the Asian Crash of 1997, which was preceded by RSI twice reaching overbought levels (but it showed no divergence).

At the peak of 2007, before the Global Financial Crisis, RSI was heavily overbought, but there was no divergence and RSI moved strongly higher right up to the peak and then fell with price.

Again, RSI is close to being overbought (not there yet), but it does not appear to be a reliable indicator for HSI (unlike the S&P500).

Volume data for July is incomplete (because the month is incomplete), and the volume for June shows an increase beyond that of May, and both months have reasonable volume. This increase in volume supports the fall in price.

Volume spiked on the last upwards month for April, which is very typical behaviour for the end of a rise in price.

HSI daily 2015
Click chart to enlarge.

The double trend line has worked so far nicely to show where the bull market has been finding support.

The ending diagonal is most likely complete, but it is still possible that intermediate wave (5) could continue higher. When the bull market trend line is breached, then the fifth wave zigzag would break below the (2)-(4) diagonal trend line, which is the same as the bull market trend line, so the possibility that intermediate wave (5) could continue higher would be extremely unlikely.

The recent fall on HSI is 20% of its market value. ADX is clear and strong: there is a trend and it is down.

The high for HSI was 29th April. NZ50 had its high later, on 16th March.

S&P 500 Elliott Wave Technical Analysis – 1st February, 2013

Last analysis expected more upwards movement from the S&P 500 towards a target at 1,518 to 1,519. Price has risen during Friday’s session as expected, and the target is not yet met.

The structure on the hourly chart looks very typical and price remains well within the parallel channel.

The wave count is the same with just the one daily and one hourly chart for you to end the week.

Continue reading S&P 500 Elliott Wave Technical Analysis – 1st February, 2013

S&P 500 Elliott Wave Technical Analysis – 31st January, 2013

The main wave count from last analysis expected more upwards movement for the session (after a small dip down) while the alternate expected downwards movement. At this stage it is too early to decide which wave count is correct and so we should assume the trend remains the same, until proven otherwise. “The trend is your friend.”

I have the same wave counts as yesterday with a slight adjustment to the main hourly wave count.

Continue reading S&P 500 Elliott Wave Technical Analysis – 31st January, 2013

S&P 500 Elliott Wave Technical Analysis – 30th January, 2013

Last analysis expected more upwards movement from the S&P 500 for Wednesday’s session. Price has moved lower but remains within the allowable limit, above the invalidation point on the hourly chart.

The wave count remains the same. I have an alternate hourly wave count for you today.

Continue reading S&P 500 Elliott Wave Technical Analysis – 30th January, 2013

DJIA Elliott Wave Technical Analysis – 5th October, 2012

The main hourly wave count for last analysis expected price to move higher during last week, which is what happened.

Both the first and second daily wave counts remain the same and have the same mid term target.

I have just one hourly wave count for you this week.

The first and second daily wave counts differ at the monthly chart level. Monthly charts can be reviewed in the historic analysis category here.

Continue reading DJIA Elliott Wave Technical Analysis – 5th October, 2012

S&P 500 Elliott Wave Technical Analysis – 27th September, 2012

Yesterday’s main hourly wave count expected upwards movement for Thursday’s session which is what happened.

I have still the same charts as yesterday for you. The targets are the same. The main hourly wave count is not confirmed but it has a much better look and a higher probability today.

The first and second daily wave counts still have about an even probability. They differ at monthly chart level, and at cycle degree. Monthly charts may be viewed here.

Continue reading S&P 500 Elliott Wave Technical Analysis – 27th September, 2012

S&P 500 Elliott Wave Technical Analysis – 25th September, 2012

Yesterday’s analysis had three hourly wave counts. Movement below 1,452.06 invalidated two of the wave counts.

The wave count which is correct expected downwards movement to find support at the lower edge of the parallel channel which is where downwards movement ended for the session.

At this stage I have two hourly wave counts. The point of differentiation, the confirmation / invalidation point, is close by. The main hourly wave count has a higher probability than the alternate.

Monthly charts can be seen here.

Continue reading S&P 500 Elliott Wave Technical Analysis – 25th September, 2012

S&P 500 Elliott Wave Technical Analysis – 20th September, 2012

Last analysis expected the S&P 500 to move lower during Thursday’s session towards a short term target at 1,447. Price has moved lower as expected reaching 3.58 points short of the target and ending exactly on the lower edge of the parallel channel on the hourly chart.

I have the same two wave counts which still have about an even probability. They differ at cycle degree and you can see the monthly charts here.

At this stage the two wave counts diverge in their expectation of direction for tomorrow’s session.

Continue reading S&P 500 Elliott Wave Technical Analysis – 20th September, 2012

S&P 500 Elliott Wave Technical Analysis – 18th September, 2012

I still have the same two monthly wave counts running alongside each other, with about equal probability at this stage. The historical analysis has been updated and you can see monthly charts here.

With more sideways and slightly lower movement yesterday I have readjusted the hourly wave count slightly. This changes the target by 5 points and the invalidation point moves slightly lower for the first wave count.

Continue reading S&P 500 Elliott Wave Technical Analysis – 18th September, 2012

S&P 500 Elliott Wave Technical Analysis – 13th September, 2012

Last analysis had two target zones. Price has reached just above the upper edge of the higher second target zone which was 1,451 – 1,459.

At this stage a careful analysis of the structure which has unfolded so far should be able to tell us if this trend is over or has yet more life left in it.

I have just one daily and hourly wave count for you today.

Continue reading S&P 500 Elliott Wave Technical Analysis – 13th September, 2012