Category: Australia & NZ

Posted on

Nikkei, ASX find support but India & China weaken

Dow Jones Japan index found support at its long-term rising trendline.  Follow-through above 77 would indicate the correction is over, suggesting an advance to 100*. Breach of the trendline, however would warn that the primary trend is weakening.

Nikkei 225 Index

* Target calculation: 85 + ( 85 – 70 ) = 100

The ASX 200 also encountered buying pressure, with a hammer candlestick at the primary support level of 4900. Recovery above 5000 would indicate the correction is over, but breach remains as likely and would confirm the primary down-trend suggested by bearish divergence on 21-day Twiggs Money Flow.

ASX 200 Index

India’s Sensex is testing medium-term support at 19600. Breach would signal a correction to test primary support at 18000. Bearish divergence on 21-day Twiggs Money Flow warns of selling pressure. Recovery above 20000 is unlikely, but would suggest an advance to 22000*.

BSE Sensex Index

* Target calculation: 20 + ( 20 – 18 ) = 22

Dow Jones Shanghai Index broke its rising trendline, warning that the rally is running out of steam. Failure of support at 294 would signal another test of primary support at 275. Respect of support is unlikely, but would indicate a test of primary resistance at 314.

Shanghai Composite Index

The overall outlook for Asia remains bearish apart from Japan.

Posted on

The history of Australian land prices | Leith van Onselen | Macrobusiness.com.au

Re-blogged with kind permission from Macrobusiness.com.au

Posted by Unconventional Economist in Australian Property on June 4, 2013

Australian Housing

By Leith van Onselen

As argued previously, the sharp escalation of Australian home prices since the mid-1990s has been caused primarily by a surge in land values, which roughly doubled in size relative to the size of the economy, as measured by GDP (see next chart).

Housing Values to GDP

The explosion of land values is also reflected by the below chart showing the growth of house values (including both structures and land) far outstripping the growth of the ABS project homes index, which measures the cost of building new dwellings (excluding the land):

House Prices v. Construction Costs

On Friday night, Prosper Australia released a brand new long-run dataset on Australian land values, which has been painstakingly developed by Philip Soos, who is a research Masters candidate at Deakin University as well as a researcher for Prosper Australia. The data has been pulled together from a variety of public and private sources, including from economists Robert Scott, Doug Herps, Alan Taylor, Terry Dwyer and Nigel Stapledon.

While there is lots of useful data in the series, my favourite dataset is illustrated by the below chart showing the ratio of Australian land prices (residential, commercial and rural) to GDP:

Land v. GDP

As you can see, land prices relative to GDP doubled between 1996 and 2010. And while land values have deflated somewhat, it would appear they have much further to fall.

My long held view is that residential land prices (and by extension house prices) will experience a “slow melt” whereby values relative to GDP deflate back to their mid-1990s (pre-boom) level. The big question is whether this deflation will occur via prices falling outright or by GDP growth outstripping price growth. With any luck (from a financial stability perspective), the adjustment will take place more through real price reductions than nominal price falls. But the process could take a long time.

Soos’ land price dataset can be downloaded from here.

Posted on

Forex: Aussie tests support

The Aussie Dollar is testing its major support level at $0.95/$0.96. Declining 13-week Twiggs Momentum warns of a long-term down-trend. Breach of $0.95 would offer a target of $0.80.

Aussie Dollar/USD

* Target calculation: 0.95 – ( 1.10 – 0.95 ) = 0.80

Posted on

Half a million investors have walked away from stocks, ASX finds | The Australian

Andrew Main at The Australian writes (May 21st) that the number of Australians who own stocks decreased by more than half a million between 2010 and 2012. According to an ASX survey, total share ownership (including managed funds) peaked at 55 per cent in 2004 before dropping to 38 per cent by 2012.

One of the biggest losers in the survey was the managed funds industry, which copped a shellacking through the GFC for the fact that its charges were in many cases out of line with the indifferent performance provided by fund managers. The percentage of investors who had equities exposure through managed funds fell from 32 per cent in 2004 to only 12 per cent in 2012. The survey concluded that a lot of investors had decided that they may be able to do better as investors by going direct and not paying a manager.

Read more at Half a million investors have walked away from stocks, ASX finds | The Australian.

Posted on

Forex: Aussie, Yen and Euro find support

The Aussie Dollar broke support at $0.96 against the greenback before retracing, the long tail indicating buying pressure. Expect a weak bear rally to test resistance at parity before another decline breaches primary support, offering a target of $0.90*.

Aussie Dollar/USD

* Target calculation: 0.96 – ( 1.02 – 0.96 ) = 0.90

The euro has so far respected primary support at $1.27. Breakout above resistance at $1.30 would suggest a primary up-trend; confirmed if the euro follows through above $1.32. Breach of support is unlikely, but would offer a target of $1.20/$1.22*.

Euro/USD

* Target calculation: 1.27 – ( 1.32 – 1.27 ) = 1.22

The greenback retreated sharply against the yen as Japanese investors repatriate offshore bond and stock investments — see Mrs Watanabe Brings Home the Bacon. But the longer term trend is unchanged. Respect of support at ¥100 would signal a fresh primary advance. Breach of the long-term declining trendline indicates the 30-year secular bear trend is over. Long-term target for the advance is the 2007 high at ¥125*.

USD/JPY

* Target calculation: 100 – ( 100 – 75 ) = 125

Posted on

Shanghai rising but Nikkei, ASX selling pressure

Germany’s DAX is retracing to test the new support level at 8000. Respect would confirm a primary advance, but bearish divergence on 13-week Twiggs Money Flow warns of selling pressure — a fall below zero would warn of a reversal. Breach of 8000 would test the rising trendline around 7500.
DAX Index

Dow Jones Europe encountered strong resistance at 290, but remains in a primary up-trend. Penetration of the rising trendline would warn that the trend is losing momentum, while failure of support at 270 would signal a reversal.

DJ Europe Index

The Nikkei 225 ran into massive selling between 15000 and 16000. The gravestone on the monthly chart, supported by bearish divergence on 13-week Twiggs Money Flow, warns of a reversal.

Nikkei 225 Index

India’s Sensex is headed for a test of long-term resistance at 21000, but bearish divergence on 13-week Twiggs Money Flow warns of selling pressure. Respect of resistance would indicate another test of primary support at 18000.

BSE Sensex Index

The Shanghai Composite Index respected support at 2150 and is headed for another test of resistance at 2500. Breakout above 2500 would complete an inverted head and shoulders reversal (as indicated by orange + green arrows), signaling a primary up-trend. That is still some way off but would be good news for Australia’s beleaguered resources stocks.

Shanghai Composite Index

The ASX 200 is headed for a test of primary support at 4900. Breach would also penetrate the rising trendline, indicating reversal to a primary down-trend. Bearish divergence on 13-week Twiggs Money Flow has been warning of strong selling pressure. The falling Aussie Dollar is forcing a retreat of offshore investors from the market, but the boost to export earnings is likely to present a buying opportunity for Australian investors when the correction is over.

ASX 200 Index

Posted on

Charter schools study shows better outcomes with less public funds

Charter schools receive less funding than equivalent public schools, but in many cases are achieving improved outcomes for disadvantaged kids. Ray Fisman writes:

Minnesota’s charter school law allowed educators and other concerned individuals to apply to the state for permission to operate a government-funded school outside of the public education system. In order to obtain and keep their licenses, these new schools needed to show they were serving their students effectively, based on goals laid out in the school’s “charter.” City Academy, America’s first charter school, opened in St. Paul the following year. Its mission was to get high-school dropouts on track to vocational careers, and it is still operating today.

Principals are able to operate outside the constraints of the public education system and are assessed on results.

…..While they’re funded with public money, they generally operate outside of collective bargaining agreements (only about one-tenth of charter schools are unionized) and other constraints that often prevent principals in public schools from innovating for the good of their students (so the argument goes). In exchange for this freedom, they generally get less funding than public schools (though they’re free to look for private donations, and many do) and have to prove that they are making good on the promises set out in their charters, which often means showing that they improve their students’ performance on statewide standardized tests.

The program has been so successful that there are now almost 6000 charter schools nationwide. Fisman reports on a study of enrolments at six Boston charter schools between 2002 and 2008:

“….Getting into a charter school doubled the likelihood of enrolling in Advanced Placement classes (the effects are much bigger for math and science than for English) and also doubled the chances that a student will score high enough on standardized tests to be eligible for state-financed college scholarships. While charter school students aren’t more likely to take the SAT, the ones who do perform better, mainly due to higher math scores. The upshot of this improvement in college readiness is that, upon graduation, while charter and public school students are just as likely to go on to post-secondary education, charter students enroll at four-year colleges at much higher rates. A four-year college degree has historically meant a better job with a higher salary……. a ticket to a better life for many students.”

He warns that “Not every charter school is right for every kid” but they do highlight the benefits of a decentralized education system where schools are assessed on outcomes rather than conformity to a program. Other studies have shown that increased public funding does not improve education outcomes. Ever wondered why bureaucrats continue to promote this as a solution?

Read more at Do charter schools work? Slate | Ray Fisman

Powered by WordPress / WordPress Maintenance Service By Website Helper