hisah wrote:VituVingiSana wrote:hisah wrote:hisah wrote:whiteowl wrote:I have a feeling the downtrend will resume next week.
The index is quite oversold, I expect November to be a rebound month. Infact I hope the bounce holds until Q2 2016, then we get the proper selloff to test 2011 lows. This is in order to confirm if that low was solid or not. A bull that starts from that low will be awesome if the bulls are to blow away the NSE20 6161 all time high barrier. @whiteowl I hope you are alive and well as the bear claws get powerful. We had this discussion back in November 2015.
NSE20 is currently testing the 2011 lows (3103) as per expectation as the sell off flash hit 3123. Was this low solid or not? That's what we're bound to know in coming weeks. The volume spike is fantastic since it's larger than the spike back in 2011.
If the market bases out at this level and restarts the bullish run from here that will be an awesome double bottom! #Respect. Nice call. Though the trigger seems to the "Banking Amendment" which was unexpected. What's your next call?
Most of the TA fans expect further downside, but I'm of the opposite view that the market may base out and form a solid double bottom. The above analysis had also factored in the unpopular rate cap, which I discussed again click here back in April 2016. The only outlier that will negate the double bottom scenario is if the US Fed bank hikes their rate more than expected. That would hit emerging market harder. But should the sovereign debt crisis trigger (likely), I foresee a crazy stampede into quality equities across the global! This is why the likes of apple, google etc are getting bid beyond reason! At the NSE, mpesa bank is displaying similar behaviour. The trick will be to ID those NSE counters that will likely get a bazooka bid when such an event triggers. Finally, FTSE 100 is coiling post Brexit and ready for an explosive move higher. Will this pull along FTSE NSE KE...? Interesting observations and a brave call for the bottom however I hold a different view.
After brexit happened markets retreated into relative calmness. It is almost incredible that there is no headline grabbing crisis ever since but it is a matter of time. Italy is holding a referendum in October and not much is known of the fate awaiting its banks. By virtue of participating in a NIRP environment eurozone banks are treading on thin ice. That's a stack of dominoes waiting for a tipping point.
The sovereign debt crisis is a slow burner at first and then it transforms into a cascade of default after default. When it comes calling, the USD will be in the driving seat. Any currency that can't mitigate capital loss vs the USD will have capital fleeing and by extension its stock market. Having quit the EU, Britain stands to gain plus it has tax advantages @20% which is lower vs most EU countries. Most of the countries with a lower tax rate than Britain are Eastern European countries but the latter are shackled by regulations leaving Britain in prime position. Ireland registered a GDP growth of 26% in Q1 or Q2 in what initially looked like an aberration/miscalculation but it turned out to be solid. Why? Capital inflows and a tax rate of 12.5%.
Towards that regard, GBP should do well vs the rest of the eurozone. Similarly for the Swiss franc (though over time it has lost its appeal). There are a couple of other so-called safe havens which should outperform when things go south but its always a relativity game.
US indices have been playing in a safe zone for the better part of the last two years until recently when they registered some marginal uptick. If this plays out the way it is increasingly looking like, then US stocks will rally hard for a short period of time (kinda like the NSE in August/September 2014) before eventually giving way to a vicious bear. FTSE should closely mirror the same pattern.
KES vs USD has absolutely refused to retrace its losses from 80's range and has made three digits its new home. Without an improvement in our fiscal position, balance of payments and current account deficit there is no platform for strength against the dollar. This places KE and its stock market firmly in the losers camp in the battle to attract capital in the short and medium term.
With regards to the bottom call, I don't think we have seen the last of the bear run. I don't expect the 3000 mark to collapse without a fight but I think it will give way in the next shakeout event. Even if a rally ensues from current levels it is hard to picture much upside to it.
The main purpose of the stock market is to make fools of as many people as possible.