Fundamental investors look at fundamentals so when prices go out of whack, they stop/reduce buying or start selling.
I have sold shares/positions in the past when they seemed untenable in light of the prices vs the underlying performance.

BTW, I do not invest in an index but in specific shares/stocks with the top 5 constituting 80%+ and the top 10 would be 95%+.

...........In 2015 I predicted the end of the bull run in NSE 20 Share Index. The very first post in this thread is testament to that. But as always no one listened. The bulls were busy cheering on with the funadmentalists on the leading edge. Well, the index has fallen all the way from over 5000 to now 2300. I don't remember any fundamentalist having the audacity to call all that drop!

Fundamental analysts and especially macro-economists have been proven over and over never to have the ability to tell when a trend is likely to change. Eg Elliott Wave International (EWI) has been predicting the end of the bull run in the DOW for ages. Now the DOW has started it's long drop down and there's still more downside to come. But you know what fundamentalists are saying right now? They are advising people to buy, that the current drop is simply a correction. Well, many people will make that damn mistake and buy. And they'll lose.

In 2015 I predicted the end of the bull run in NSE 20 Share Index. The very first post in this thread is testament to that. But as always no one listened. The bulls were busy cheering on with the funadmentalists on the leading edge. Well, the index has fallen all the way from over 5000 to now 2300. I don't remember any fundamentalist having the audacity to call all that drop!

Please please give Elliott Waves the benefit of doubt? I pray you spare some time and do some reading on it? Maybe even jus subscribe for the Financial Forecast service at EWI for a month? I promise you it will be worth your while.

How will fundamentalists know the bottom if they keep buying every dip?

KCB



KCB BANK GROUP fell from 184.53 to 44.11 to complete wave (A). Afterwards it has been consolidation in a likely triangle pattern (the converging trend lines) of wave (B).

I expect KCB to resume its drop to below 22.00

The general idea is not to wait/look for dips though those are welcome but look at the current price and see if it makes sense. Some may buy smaller lots regularly if it looks like there may be dips. The underlying (fundamental) numbers/performance have to make sense.

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.

Kenya is going to experience a war, either with itself or with an external neighbour.