NGC turned up in my Momentum Stock Scan, but bearish divergence on 21-day Twiggs Money Flow warns of short/medium-term selling pressure.
But respect of the bottom trend channel (at $1.80) and recovery above $2.00 would mean all’s forgiven and we can expect another advance.
New orders for durable goods fell 4.0% in January. And bookings for nondefense capital goods excluding aircraft — a measure of future business spending on equipment — dropped 4.5%. Although the declines were larger than expected, they shouldn’t raise alarm bells. That’s because much of the weakness traces to special factors.
The first is the end of a tax credit that allowed 100% deduction for equipment bought last year. Not surprisingly, businesses front-loaded their purchases early in 2011.
The second reason is a quirk in the very volatile orders series: New bookings tend to fall in the first month of a quarter, then rebound in the second or third months. The pattern is especially acute in the first quarter.
via Equipment Demand Hasn’t Dropped Out, Just Taking a Breather – Real Time Economics – WSJ.
Comment:~ Accelerated tax write-offs stimulate new capital investment by the private sector, as companies bring forward or initiate expenditure in order to take advantage of the tax deduction. But there is bound to be a (partial) offset when the accelerated write-offs are removed.
China’s capital controls have served it well. It was little harmed by the Asian financial crisis of 1997-98 and has been largely insulated from the global tumult of the past four years. That resilience in the face of external trouble has emboldened conservatives in Beijing who support the status quo.
But there are also problems in maintaining such rigid capital controls. Chinese savers have few investment outlets for their money and plough it into the property market instead. Perhaps most important from a political standpoint, plans to transform the renminbi into a rival to the dollar have run into difficulty – foreign companies do not want a currency that cannot be invested in its country of origin.
“Internationalisation of the renminbi is now a clear mandate, so resistance for capital account liberalisation has been diminishing,” said Liu Li-gang, an economist with ANZ. “The wind has shifted.”
China’s top leaders have given a series of signals in recent months that they want capital account reforms to get into gear.
via China outlines plan to loosen capital controls – FT.com.
In an interview with SPIEGEL published on Monday, [Interior Minister Hans-Peter Friedrich] said: “Greece’s chances to regenerate itself and become competitive are surely greater outside the monetary union than if it remains in the euro area.” He added that he did not support a forced exit. “I’m not talking about throwing Greece out, but rather about creating incentives for an exit that they can’t pass up.” It was the first time a member of the German government called on Greece to leave the currency.
Hudson Bay Minerals [HBM_ca] follow through above 12.50 would confirm a primary up-trend.
21-Day Twiggs Money Flow holding above zero indicates buying pressure, while recovery of 63-day Twiggs Momentum above zero suggests a primary up-trend.
The arc of China’s development is not that different from the rapid industrialization phase of countries such as South Korea, Japan or even, much earlier, western Europe and the U.S., even if the magnitude of China’s arc is on an unprecedented scale. The country’s well of cheap labor, transferred from farm to factory, is starting to run low. Demographics, too, are working against growth. The value of foreign-developed technologies diminish as they age. Most of all, the economy needs to move up the value chain if it is to clear the barrier at which so many developing economies fall, that point where per capita income reaches at $10,000-12,000 a year. Vault it, and a nation becomes a middle income country on the road to being a rich one. Fail, and the country ends up stuck on a plateau of disappointed expectation.
….It is the politics that is the quagmire. There are clear implications for the Party in adopting market reforms. No country has done so successfully and remained a one party state.
….Reining in the power of the SOEs provides a particular challenge to the reformers. SOEs, like the military, are a source of power, money and influence for the princelings, the descendants of Mao’s original revolutionary leaders, an elite collective dynasty of some 400 families who hold extensive sway over the Party, army and the economy.
The World Bank report offers [China’s reformers] a strategic description of the way forward rather than policy prescription. Its six strategic directions for China’s future are:
Another long-term (monthly) chart. This time of Japan’s Nikkei 225 Index, which has rallied off support at 8,000. Expect resistance at 10,000 but a breakout would signal that a bottom is forming. Recovery above 11000 would indicate a new primary up-trend.
The Hang Seng Index is approaching its target of 22,000. Expect retracement to test the new support level at 20,000. Respect would confirm a strong primary up-trend.
* Target calculation: 20000 + ( 20000 – 18000 ) = 22000
A monthly chart of the Shanghai Composite Index reflects China’s soft landing over the last two years. The gentle down-trend is likely to continue, with the current rally testing the descending trendline around 2850.
Australia’s ASX 200 index is struggling to break medium-term resistance at 4300. 63-Day Twiggs Momentum continues to indicate a primary down-trend (breach of its rising trendline would strengthen the signal). Failure of support at 4180 would warn of another test of primary support at 4000.
* Target calculation: 4300 + ( 4300 – 4200 ) = 4400
