We said it a long time back to expect financial difficulties and distress. The NSE 20 share Index has moved down in wave 1 (the first wave in a 5 wave series) and already the government is grappling with financial issues. Gosh, Socionomics is quite interesting.

Salaries crisis as counties, teachers await delayed cash





KRA has fallen short of its tax collection targets:



When the EURO bond was floated, we stated amidst strong opposition that the proceeds from the bond would NOT bring down interest rates. The fundamentalists had a field convincing us to expect manageable interest rate environment. Well, things are going haywire now.






link

As the Index probes below 3000 level soon expect even worse things. For one the conflict between the government and the opposition will intensify and will likely lead to violence. Some counties will consider seceding. Expect conflict between and amongst the religious groupings.

As companies issue profit warnings expect unemployment to rise.

@mnandii - Unlike many, I am offering a chance for you to make real money. If you give me specifics on those 4 counters and I see you are right... I will get on board. And I am not looking for freebies. If your initial advice works, I am willing to pay for performance.

I have done relatively well based on the Buy & Hold [not to be done blindly] using WB's advice/methods. I have learnt from him [& experience] that one should not invest when shady chaps run the firm no matter how good/cheap it looks e.g. Olympia, Sameer, KQ, etc. That includes most GoK controlled firms. My only GoK holding is KenRe & a few 'old' KPLC.

WB likes cash-rich firms [or firms that use debt very effectively] e.g.
- Unga which has reduced its Debt-Equity over time even with the recent Ennsvalley purchase. Most of the debt finances current assets eg inventory.
- KK (post-Segman) which has aggressively reduced naked $ debt & KES loans. Most of the debt finances current assets eg inventory.
- Williamson which has a lot of cash & paid 40/- as a dividend last year.
- Jubilee [effective use of float & why I like KenRe even though it's GoK controlled]
- Many banks. I picked I&M coz it is cheap on a PER basis, is conservative (low NPLs) & PAT growth is at least +15%.

[The above are HISTORIC purchases at lower prices except KK and some I&M. I was going to bail out of KK but stayed in as I saw progress by Ohana. Plus Ohana hinted at the AGM that interest has been shown in KK's assets by foreign buyers.]

I am scared of KenGen [huge debt load but most assets can't be easily sold to generate cash], KQ and EAPCC.
ARM has made effective use of debt BUT I will not buy ARM at these prices coz of USD debt & the high Debt:Equity ratio.
No to NBK with fake low levels of NPLs, and it has effectively breached CBK Capital Ratios. Add GoK control.

If you choose to take up the challenge, let's do this in a new thread topic so we can stick to the 4 stocks [KK, KenRe, I&M & WTK] and are easier to keep track of. Pay for performance!

Nice chart @Hisah. I see we are back up, thanks to the poor Sept NFP numbers. Still waiting for that surprise FED rate hike. Like Jesus, it will come like a thief The fall will be a sight to behold!

Tech/cartoon readings
I wonder if wazuans understand that NSE20 break below 4080 and 4000 handle is really significant! All that 2014 massive volume in numerous counters has erased most gains from 2012! Oversize distribution.

4000 - 4100 support zone is very significant since the long term trendline from the GFC low rebound at 2360 was clustered there. Breaking such a long term support trendline in the cartoon world is an ugly event that warns on pending further downside! The 2yr trendline broke down then the 4yr trendline broke down and now the 7yr trendline has broken down! The bears are getting muscular forcing through these breaks in just 8 months! @SPT, mnandii this is why I referenced "the trouble with the euro chart in forex" when NSE20 broke down the 4yr support trendline in a similar fashion.

4000 strong support is now turning into a resistance (selling) zone for the bulls. Bulls need to put up a one heck of a fight to maintain this level as bullish support since selling is overpowering buying hands down.

Fundies reading
I hope the market capitulates soon so that we can start forming a floor. This slow motion leakage is not helping in testing for a floor layer before the base forms once the bears are full and go into hibernation. But before we base out treasury needs to get its head back on! Absolute chaos in the money market, which has slammed instant brakes on the econ! A time is coming when treasury will be forced into a stimulus spree; inflation be damned! It's easier to deal with inflation than deflation.

USDKES

We posted this chart of USDKES back when the pair was rising above 100 level and stated clearly that we don't expect the 106.80 level to be violated.



Well, so far the level has maintained. Wave 2 peaked at 106.70. Shown below:



While it is still early to declare a tradeable top, action in shorter Time Frames (15 min) show impulsive drop which is consistent with expectation once a corrective wave completes. I'll post a short term price chart later. My expectation now is for the pair to continue falling toward 100/- and slightly below before it effects a corrective rise below 106.70.

In this case we only used one basic Elliott wave Rule as depicted below for a bull market:



Image credit: Elliott Wave International.

Things are ugly this early! I wonder how the gov will cope once NSE 20 Share Index starts probing sub-3000 levels. These are the times when the president wishes he was not the president.