Monthly Archives: September 2016

Elliot Wave or Coppock. A Bear or a bull?

As noted previously, some analysts would see the current Elliot Wave pattern as persuasive evidence for an ongoing Australian bear market.

The chart below shows the ASX200 over an 11-year period with the Elliot Wave A, B, C waves of the bear market labelled in red. Wave A started in November 2007 and Wave B started in March 2009. Wave C which started in March 2015 might be expected to run for some time and distance. The target for the C wave (the end of this bear market) from this chart is probably at least the 3150 level which was the low of the 2008 bear market.

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While the Elliot Wave projection for a bear market is one possible outcome, the Coppock indicator on the chart below shows a very different signal in about June 2016 which suggests a future bull market in Australian equities.

These two longer term… Continue reading

What investors want

The recent survey of 7100 investors in 22 countries by Natixis is of particular interest. It includes 300 Australian investors and provide a glimpse into investor behaviour and beliefs. It seems that most investors are very concerned and recognised the need to invest for retirement but they simply have no idea how to invest to get the returns that they will need.

Investors have unrealistic expectations of the equity markets and:

  • are looking for returns of about 9% over the inflation rate.
  • have little understanding of the issues of volatility
  • do not understand the relationship between risk and return
  • are unduly cautious and risk adverse
  • fifty-one percent of investors did not have financial goals
  • amazingly 63% of investors had no financial plan.

Most investors have little understanding of risk, return and volatility. About 60% of investors worldwide did not seem to understand the role of bonds and equities in asset… Continue reading

The Coppock indicator and current market risk

The Coppock indicator is very useful for finding the probable start of a new bull market and is used on the monthly charts of an index. Over the last 40 years the Coppock indictor has provided a high probability indication of the start of a bull market in Australian equities. An entry signal to a new bull market is given when the Coppock indicator is negative and then starts to rise. It is a lagging indicator, so lacks precision but nevertheless is very useful for investors.

coppock-16

From the above chart the Coppock gave an entry signal to a new “bull” market in Australian equities in about July of 2016. The question is whether this is a valid entry signal or one of the few false starts that Coppock has provided over the past 40 years.

When one looks at current world political and economic events, there is much uncertainty. World… Continue reading

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