Re: What's going to happen

[sashimaal]

Good analysis and explanation Path !

[smallville]

May be 6500 stays a great support.. goin down here will upset de crowd as well.. now that we got approval for IMF loan, the first step towards recovery is kicked off.. so more good news on de cards can lift ASI from current status..

I didnt analyse ASI after 6530 is broken.. But 6500 is even not far as a psychological support. so lets keep de fingers crossed.

[Leon]

Nice to see TAs rejuvenated again. Tnx to Path.

To my eye 6420-6430 is a good support area. As small says if mkt comes to that level 6360 is not far away(FIB 38.5%) with extra panic from the crowd.
Being ready with cash is my idea & that may give you extra comfort.
Good results & dividends keeping the mkt at bay right now.

[HUNTER]

Nice to see TAs rejuvenated again. Tnx to Path.

To my eye 6420-6430 is a good support area. As small says if mkt comes to that level 6360 is not far away(FIB 38.5%) with extra panic from the crowd.
Being ready with cash is my idea & that may give you extra comfort.
Good results & dividends keeping the mkt at bay right now.

I thought you spent all cash on that house.......
Looks like market is more attractive than a house for some traders..

[slstock]

1)
I see many techies were looking at ASI 6370- 6400 region for support and bounce back.
But I want it before that if it can be helped

In a post I made in mid May when ASI was close to 6700, I gave indication market can go red. Also gave an option to say ASI can test 6300 even if craziness happens.
https://forum.lankaninvestor.com/t983p975-cse-l-where-are-we-heading#68783


CSE is know to go crazy at times ( in short term). So predicting anything with 100% accuracy all the time is probability than reality.



2) Path said

"This is why I say market move by it's own forces, don't try to attribute it for the things happening around you.Because of this reason I always against unnecessary political arguments in a investor forum."

I partially agree with this.
Not fully.

When government make idiotic moves ( which ever government) it can have direct impact to stock market.

The crash from 6000 to 5800 was triggered due to the irresponsible way CGT was mentioned without clarification. It panic people a lot. It was clear. Else ASI 6000 may have held.


Same happened during MR time when mistakes were made.
Same happens when they do things to push market up too ( works both ways)

Those are not natural forces but external forces breaking market trends.

But bottom line is market will always find the level it want to be in medium term.
Short term there can be volatilizes upsetting market.

So political decisions do have an impact on market. It's a fact.
But I agree too much politics is not good.
I have even issued a note in the "Note to member thread" one time.


3)
I saw some post taken from Sunday Times where it hints CGT will be reintroduced from Oct 1st 2016.

Some minister said it.
Can we believe such?
Will Ranil make same mistake again.


But we can't prevent if it panics somebody to sell. ( right or wrong)

That why I say predictions ( technical or fundamental) has to be done with responsibility
as mass public is watching. It our duty.

If this crazy CGT scare catches fire and spread again via all forums and other sources, tomorrow can be Red even

I said it here as an example. Not to say CGT will be back.

[pathfinder]

Thanks SLS for the comment.I'm not totally against political discussions and discussions on government policies,in fact I too involved in such discussions earlier,what I'm opposing is the partial comments from some of the people wearing colored glasses.

What I'm trying to say is Mr.market take decisions by it's own.If market is on a bullish sentiment whatever the news comes it move up so same as in bearish market when bear in control whatever good news come ASI won't change it's direction.

If someone look at the ASI very closely ASI showed negative trend since Augest 2015 so any news came was taken as negative.Mr.market allow bear to rule for 6months.People tried to attribute it to the government,world economies,oil prices etc...

Then he decided it's enough and asked bulls to rule the market since March to May then everybody was in jolly mood and nobody was bothered to find reasons for the uptrend why????

Now again bear has taken the control will see how powerful he is.

A seasoned trader must be able to identify these cycles before the crowd and take decisions accordingly.

[Leon]

Nice to see TAs rejuvenated again. Tnx to Path.

To my eye 6420-6430 is a good support area. As small says if mkt comes to that level 6360 is not far away(FIB 38.5%) with extra panic from the crowd.
Being ready with cash is my idea & that may give you extra comfort.
Good results & dividends keeping the mkt at bay right now.

I thought you spent all cash on that house.......
Looks like market is more attractive than a house for some traders..

ha ha you remember that. I'm trying to see a balance in both.

[HUNTER]

I like to contribute to that discussion on, if, the market movements are governed by external forces and events OR if the markets move on its own regardless of what is happening in the society.

Both sides may have very valid arguments and examples. But, in extreme ends, I would say, both arguments are wrong.

As I have observed, markets also have some kind of net moods (sentiments), and those moods act as 'filters' to external events.

When the market is in a bullish mood, and if a 'bullish' news comes, then the market overreacts to it. If the news is 'bearish', the market will, to a greater extent, 'under-react' to it.

So, a single news in (positive) correlation with market sentiments will exert a big impact while the news against the sentiments will have a lesser impact.

When someone has just won a billion rupee lottery, would he cancel his party if his wallet with Rs 1000/- is lost.

[Backstage]

Thanks all, this is very stimulating and educative.

Maybe the thread should be called "what might happen"

[pathfinder]

Exactly Hunter that's what I say,No news can trigger the change of ASI direction.ASI direction is decided by Mr.Market by his own, nothing else,all other news and gossips may be contributing or supportive to the decision of Mr.market but those are not the changing factors.

[dhanurrox]

market will boom.It wont fall.Desperation of palyers to keep market flat or little red was obvious last two weeks.

[slstock]

No news can trigger the change of ASI direction.ASI direction is decided by Mr.Market by his own,

How ?

[yellow knife]

Let me first quote  from Turn-Around of Peter Blair Henry...and support those who believe Market is Right...

" Stock Market reactions to economic reforms provide powerful forecasts of policy efficiency because they capture what author James Surowiecki call the " the wisdom of the crowds". Changes in the value of stocks reflect the average opinion of thousands of shareholders who do not care about ideological debates but simply want to know whether a given policy change will create or destroy economic value. Their collective assessment, as reflected in the national stock market index, is more reliable than the judgement of any individual...




Now the second paragraph...of the same book and let me now support the other side that Market is not Right and manipulated by one, some, few or many...


But rally how wise is the crowd...? Given the turbulence in financial markets since August 2007: it may seem like the height of either arrogance or ignorance to claim that the stock market is a reliable indicator or anything real..From Charles Kindleberger's classic work on financial crises, Manias, Panics and Crashes, to the burgeoning field of behavioural economics , there is a lot of evidence that the market does not always reflect the true underlying value of stocks, let alone anything useful about the broader economy....

[yellow knife]

If you are a long-term investor and If you have kept a note of different important events took place you can see whether news and incidents actually affected to market...

If you remove your coloured glasses and see events, irrespective of who was in power market reacted to news (wisely)

This if from my diary of investing...

Date	Investment	Market Value	News
8-Nov-11	26,371,742.78	27,302,429.10	Daya Gamage
9-Nov-11	26,396,622.42	27,105,946.80	Bill passed
11-Nov-11	26,400,473.90	26,960,204.10	in parliament
15-Nov-11	26,405,382.05	26,406,773.80	(Expropriation)
16-Nov-11	26,405,382.05	25,830,205.00
17-Nov-11	26,408,824.18	25,334,033.10
18-Nov-11	26,412,257.22	25,693,239.50
22-Nov-11	26,412,257.22	26,125,809.00
23-Nov-11	26,412,257.22	25,864,270.10
24-Nov-11	31,514,547.64	24,688,275.70

[yellow knife]

Thus I would say expropriation bill caused market to go down..and love to see if a TA can show the real impact to CSE with above dates

*************************************

Market is apolitical and irrespective of who is in power again market reacted for news...

Column1	Investment	Market Value	Column2
23-Nov-15	36,094,213.96	43,103,424.91	After budget
26-Nov-15	36,156,347.09	42,199,037.79	speech
30-Nov-15	36,215,293.49	42,100,800.10
1-Dec-15	36,215,293.49	42,329,547.93
2-Dec-15	36,215,293.49	41,284,137.64	Budget passed
3-Dec-15	36,274,952.69	40,747,680.35	by 2/3

[yellow knife]

So my belief is market react to news... Is it wisely or not ?

That's debatable and those who believe that people behave irrationally only in CSE please refer above book, Manias, Panics and Crashes...

[කිත්සිරි ද සිල්වා]

No doubt market reacts to news.
The scale of the reaction is more when the intent was to manipulate.
(Remember the recent hotel incident where a big investor's name was dragged in).

[pathfinder]

Don't take my point wrongly,News has an impact but it's not the deciding factor of ASI direction,when ASI is in a downtrend negative news has more impact than positive news,in other words ASI is more sensitive to negative news when it's on a downtrend.

Who is Mr.Market I'm referring to,Mr.market is the net sentiment of investors of CSE,At any given time there are people with bullish sentiment and another set with bearish sentiment,If net sentiment is positive ASI up, if it's negative ASI down,This is merely the heard behavior and Human psychology.

YK let's see your PF value with the time period you mentioned.As this is your PF and your choices of shares  does not represent total market hence the ASI.I'll add a chart of ASI for seven years as it's easy to discuss the matter.



From feb 2011 to june 2012 it was a bear period,so all those news had negative impact.

[dhanurrox]

upto 20, down to zero again.Nice control going on.See the trading patterns and times of AHPL,SPEN,SLT,DIAL...etc.Seems index flat game to continue today also

[Yin-Yang]

If I were asked, what would have the higher impact on market, I would choose 'rumor' over 'news'.

[yellow knife]

Well Path... Bear sentiment means investors believe the future economic out look is negative and often they come to that conclusion by bad news...2011 we had a bubble which was due to burst and that was the beginning of bear...but the declining rate accelerated with lot of negative news...

Date	News
13-Feb-12	Oil price increase  and
14-Feb-12	Iranian sanctions
15-Feb-12	A fisherman killed in Chilaw protesting against oil pirce increase
16-Feb-12	Spot dollar at 119 after free float
17-Feb-12
15-Feb-12
22-Feb-12
23-Feb-12
26-Feb-12
28-Feb-12
1-Mar-12	spot dollar at 123
2-Mar-12
5-Mar-12
6-Mar-12
12-Mar-12
13-Mar-12
14-Mar-12
15-Mar-12	Spot dollar 124.00
16-Mar-12
19-Mar-12
20-Mar-12	losing geneva human rights
21-Mar-12	spot dollar 130
23-Mar-12
26-Mar-12
28-Mar-12
30-Mar-12	dollar at 127
2-Apr-12
4-Apr-12	IMF 400 million
5-Apr-12
10-Apr-12
17-Apr-12
19-Apr-12
23-Apr-12	spot dollar 131.60
24-Apr-12
27-Apr-12
2-May-12
3-May-12
7-May-12
9-May-12	NSB TFC Deal
10-May-12
11-May-12
14-May-12
17-May-12
18-May-12	Sarath Fonseka
22-May-12	Sarath fonseka released
23-May-12
24-May-12
25-May-12

[yellow knife]

in the same manner most of following were negative

Column1	Column2	Column3
17-Aug-15	General Election
19-Aug-15	Ranil Won 106 to 93
20-Aug-15	Market correction -red ASI below 7500
21-Aug-15
24-Aug-15	three cabinet minsiters appointed, Managala, Wijedasa	ASI 7331
25-Aug-15	cabinet yet to be decided	ASI 7231.58
27-Aug-15
28-Aug-15		ASI 7362
2-Sep-15	Parliament innaguration	ASI7240
3-Sep-15
8-Sep-15	Hayleys ESOP
9-Sep-15	other ministers appointed
14-Sep-15
15-Sep-15	70% ceiling on leasing vehicles by cbsl
16-Sep-15
21-Sep-15
22-Sep-15
25-Sep-15	Geneva Human Rights
29-Sep-15
30-Sep-15
1-Oct-15	USD @143
2-Oct-15
5-Oct-15	70% Ceiling on leasing removed
6-Oct-15	PM delievers speech at Japan Parliament
7-Oct-15
8-Oct-15
12-Oct-15
13-Oct-15
15-Oct-15
19-Oct-15
20-Oct-15
21-Oct-15
22-Oct-15
23-Oct-15
26-Oct-15
28-Oct-15
29-Oct-15
30-Oct-15
5-Nov-15	PM made a specail announcement on economy
6-Nov-15
9-Nov-15
11-Nov-15	USD @ 144	ASI 7019.23
12-Nov-15	Avangarde expropriated as per Rajitha
17-Nov-15
18-Nov-15
19-Nov-15
23-Nov-15	After budget speech
26-Nov-15
30-Nov-15
1-Dec-15
2-Dec-15	Budget passed by 2/3

[First Guy]

Most of us look only at local level news and developments and completely ignore global developments.

In the past those who have followed some details globally have been rewarded. For example those who monitored copper, aluminium prices were able to more accurately predict performance of certain shares and rewarded with good gains.

CSE can be directly affected by government policies and all these ad-hoc laws/taxes. But at the same time, it is part of a much larger area. Luckily Foreign exposure to our market is low compared to those like India so when global markets are affected we are not affected too much. Sometimes this is good.

But there are some facts. When oil prices were coming down there were sell-offs around the world including Sri Lanka. These events have also coincided with government policy changes. So it may not be easy to determine which had the most effect.

Latest was the Brexit. Now actually this may bring some investments into the country. But at the some point this is going to go out too. We are all too happy when foreigners invest but not so when they realize profits and get out? It's like when the bank is happy when you deposit money but at some point you have to take it back.

I am also one of those who don't follow much of these stuff but know how important it is. Some in the forum have looked at things in great detail and know what is affecting and what is not. Thumb up to them. Some have only the government to blame. (not that it should not be)

Last two days were interesting, profitable and exciting. But days like that won't continue for days, or it may. But everyone must look at a bigger picture. Who here asked why it went up?

Path - please continue this thread

YK - if you can include some global events in your table

[Future123]

Great work YK.

What I feel is before 08 Jan 2015 period was good for construction sector, tile, banking and finance and they were booming and profiting like nothing. It's sort of a vibrant era.

After 08 Jan 2015, good period for food sector. It's mainly consumption and companies engaged in food and poultry benefited a lot. Also export companies gained due to weaker rupee.