ELLIOTT WAVE ANALYSIS OF THE NSE 20 SHARE INDEX

This is my interpretation of the path of the NSE 20 Share index from the low of Sept. 2002. I've obtained the chart from the FINANCIAL TIMES Website
link

Elliott wave analysis is mine.
Looking at the chart, one can convincingly conclude that it is possible to chart the path of the NSE using Elliott Waves. For those interested in learning the waves you can read ELLIOTT WAVE PRINCIPLE: KEY TO MARKET BEHAVIOUR BY Frost and Prechter. You can get the entire book free and alot more from www.elliottwave.com.

It is instructive to note that Prechter and Frost, in the book, predicted the great bull market from 1979 (i.e the DJIA). To date the American market has far exceeded even their own expectations. Prechter won the U.S Trading Championship in 1984 with a record 444% gain.

Prechter

Prechter is currently researching on social causality via the Socionomics Institute.

Now to our analysis:



This chart shows a 5 wave move from the low of Sept. 2002 (1009 points) to the high of Jan 2007 (6026 points). Note the zigzag in wave IV and the triangle in wave four of wave V.

This five wave move is called an Impulse Wave. I don't have data from before 1998 so I guess this is a fifth wave move of a much larger impulse wave.

A fourth wave usually divides an impulse into a Golden Section. From the low of Sept. 2002 to the high of wave III (at 3176) is a gain of 2167 (i.e. 3176-1009). Wave V has a gain of 3558 points (i.e 6026-2468).

Now, wave I through wave III, (i.e 3176-1009=2167) multiplied by 1.618 ( a Fibonacci ratio) gives 3506 points vide:

(3176-1009) X 1.618 = 3506 points.

Wave V had a gain of 3558 points i.e 6026-2468.
The difference btw the two figures (3558 vs 3506) is 52 points which is one and half percentage points from the exact figure!

WHY I CONSIDER A HUGE BEAR MARKET FOR NSE

1. From the high of 6026, the NSE 20 Share index has fallen in five waves (i.e waves 1, 2, 3, 4 and 5). From the low of March 2009 (at 2576 points), the NSE has moved in 3 waves. Or, at the very least, the move from the part I've labelled A to the part labelled B cannot be considered an impulse wave due to overlap. The Elliott wave pattern that has such characteristics is called a ZIGZAG. A Zigzag is a three wave move that subdivides 5-3-5. So presently we have 5 waves down from the 6026 high, thus forming wave A. Wave B is the three wave move from the low of March 2009 at 2576 to present levels. What remains is another five wave down which is likely to take the 2576 low!!!

2. Also note the DIVERGENCE between the RSI and the highs that the NSE is making presently.

3. From the low of Sept. 2002 to the high of Jan 2007 NSE had a gain of 5017 (i.e 6026-1009) points over a 5 year period. From the low of March 2009 to presently, the NSE has only gained about 2497 points (i.e 5073-2576) over a 5 year period. This is about half the gain of 2002-2007. So we now have a market which shows weakness in breadth apart from not making a new high beyond 6026 points.

4. Economically Kenya has one of the highest taxation levels with little efficiency. Electricity prices are high etc etc. Our debt obligation, though not necessarily un-manageable at this point, has accelerated over the past few years. Alot of grand projects are being announced which appear to be good news. In Elliott analysis complacency usually reigns at the very top of a move.

CONCLUSION

NSE 20 Share index is over-extended and it is time for a big correction in the market.

Regards to all.

This is back them days in 2014. The wave labels may have changed but the conclusion remained the same - a bear market of huge proportions. No one believed then.

TODAY:


I was making the forecast for a huge bear market at the point currently labelled blue [y]X (when the index was about 5000). Wazuans almost killed me for daring to go against the established opinion that the path for the market was up and up.

Even today I want to state categorically that when the market will eventually bottom (at about 1700 - 1400) wazuans will be on the opposite camp, fully bearish and making negative statements about the market! Yes, there will be blood on the streets(literally and metarphorically) but that will be the best time to buy.

You are killing guys who are clinging onto every small bounce in the market to proclaim that a bull is in the offing.

Hehehe!

Watulie like about 1 - years. Let them keep hard cash (not in the bank!) They'll reap abundantly.

The Socionomic Theory of Finance
Waves of social mood affect every aspect of your life. They regulate the tone of politics, popular entertainment, the economy and the stock market. You can use these influences to your advantage. Society can't do it, but an individual can. You will learn to read the news in a completely different way. You may even start predicting the news. This book will open a whole new world to you. It is exciting, intellectually fulfilling, fun and practical. Many readers say it changed their lives. Find out why.

The Treasury could be forced into steeper spending cuts than previously anticipated at the beginning of the year if it is to achieve the projected fiscal deficit of 5.7 percent by next June due to flagging revenue performance.

The government has already cut billions in the budget amidst tax rise.

Economic analysts at Commercial Bank of Africa (CBA) say in the latest weekly note that the shortfall of Sh60.5 billion in tax collections for the three months to September 2018 means the Treasury has a tight balancing act of cutting expenditure without harming the prospects of growth, with higher borrowing one of the options on the table.

@mnandii have you ever looked at the Athens General Composite Index? It has two twin peaks around 6300 and 5300 then moved all the way down to 600. Never thought an index can be hammered that much. That is one massive negative social mood in Greece

According to this article, ECB forced that unprecedented action on the Cyprus government. The politics in Germany at the time also seem to have contributed.
https://www.economist.co...what-happened-in-cyprus