DJ New Zealand Index Falling Off A Cliff
EWM Interactive | Oct 25, 2018 05:43AM ET
October brought a real bloodbath to stock markets around the world. The Dow Jones Industrial Average and the S&P 500 just turned negative for the year and equities in Japan, China and Germany are also impulse , labeled I-II-III-IV-V. The sub-waves of wave III are also visible. According to the Elliott Wave theory, a three-wave correction follows every impulse.
Since the current drop is still too shallow in respect to the impulse pattern it retraces, we believe the DJ New Zealand index is still vulnerable. The bears are probably aiming at the support area left by the 2007 high near the 200 mark. In other words, another 50-60 points or 20% – 25% can disappear before the situation starts to improve.
Just because New Zealand stocks are cheaper compared to late-August does not mean they are cheap enough. In our opinion, it is too early to buy the dip. The bears remain in charge.
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