My Valentine gift for you......ASI - 4 year cycles

ASI have had lows and peaks within 4 year cycles in the past. The year 2017 is the beginning of the present 4 year cycle. The stocks you need to buy to benefit from this expected rally will be the biggest companies who are the leaders in their respective sectors. The chart that explains the performance is given below.

All Share Index will hit ALL TIME HIGHS

On the 7th of December 2015 I posted thus......

 "Quote"

A must see Chart - ASI target of 8672 points, then 11109 points.

I know you may not believe me if I say that the ASI will go upto 8672, and the completion of the trend will be a whopping 11109 points.

I firmly believe that the re-rating of the Country happened  in 2009. Therefore the trend that started during 2009 for me is the 1st uptrend, which paved the way for the re-rating of the way the market would behave from there on. I think most would agree with me on that. Purely from the price behaviour, we can now see that the trend we saw from the latter part of 2008 to the beginning of 2011, succeeded in basing a promising future for the market and the index in particular.One day before the end of 2008, i.e. 30th of 2008 the index closed at a low of 1454.83, and rallied to an all time high of 7863.74 by 15.02.2015. Thereafter the market just plummeted to a low of 4725.57on 6.6.2012. Thus completing the 1st post war trend.  Based on the Fibonacci extensions  the ASI is trending side ways in the 38.2% region,at present. Was it a planned development? obviously not. Once we breakout of that area, the index would test the next level of 61.8% of the previous trend to 8672 points. Thereafter for the completion of the trend by 100% it could hit the region of 11,100 points. I personally believe that this will be a reality. But the fundamentals relevant to the market should support the trend. Therefore the period of this expectation is somewhat far fetched. But that doesn't mean that it's not going to happen in our time. Because we can't forget the fact that we have an entire country to do economic activities after 2009. The chart in question will show us how fast and successful it is going to be. 

"Unquote"

As you can see the index to move from 1800 points to 7800 points took a little over 25 months i.e. December 2008 to February 2011. Thereafter it took roughly about 16 months to retrace from 7800 points to 4700 points. If you break it down on a monthly basis, the market went up by 240 points per month since Dec 2008 to Feb 2011, and fell about 193 points a month from Feb 2011 to June 2012. 

Going back to the above period between 2008 December and June of 2012, the trend extension shows a whopping 11,000 points.  

But the next uptrend that started from June 2012 at 4700 points to the peak of  7600 in Jan 2015, had an average monthly gain of 97 points per month, but the drop from 7600 points in Jan 2015 to 5800 points in April 2016, was a drop of 120 points per month. This movement therefore looks slower relatively to the earlier trend. The main reason for this is the level of leveraging in the market since June 2012 is not as large as earlier. The next being the Fear psychosis, and Panic. Free money that was available is not available any longer. Therefore the aggressiveness that we saw before is not there amongst the traders. The naive attitude and knowledge of the Local participants are not visible as freely as we saw in the past.

The trend extension based on this period from June 2012 to April 2016, shows a completion at 8700 points. 

As mentioned above the curbing of loose and illiterate trading, may slow the pace but certainly not the trend. However experience tells me that at some point the Leveraging will increase and the participation of Institutional and Retail Traders will take the market to where it belongs.