technology Archives - the patient investor

June 12, 2021

ASX: Financials suffer, A-REITs advance on lower rates

The ASX 200 advance is tentative, with a short doji candle signaling hesitancy, and we expect retracement to test support at 7000. The Trend Index trough above zero indicates longer-term buying pressure. Respect of support is likely and would signal a fresh advance.

ASX 200

Financial Markets

Bond ETFs broke through resistance, signaling falling long-term interest rates.

Australian Bond ETFs

A-REITs advanced on the prospect of lower long-term interest rates.

ASX 200 Property

Bank net interest margins, however, are squeezed when interest rates fall.

Bank Net Interest Margins

ASX 200 Financials retreated to test support at 6500. The trend is unaffected and Trend Index troughs above zero indicate long-term buying pressure.

ASX 200 Financials

Mining

Mining continues to benefit from the infrastructure boom, with iron ore respecting support at $200/ton¹. Troughs above zero, flag buying pressure, and respect of support both signal another advance.

Iron Ore

The ASX 300 Metals & Mining index is again testing resistance at 6000. Breakout would signal another advance, with a target of 6500².

ASX 300 Metals & Mining

Health Care & Technology

Health Care respected its new support level and is advancing strongly. Expect resistance between 45000 and 46000.

ASX 200 Health Care

Information Technology recovered above former resistance at 2000, warning of a bear trap. Expect resistance at 2250; breakout would signal a new advance.

Gold

The All Ordinaries Gold Index (XGD) is testing resistance at 7500. Breakout would signal a fresh advance, with a target of 9000.

All Ordinaries Gold Index

The Gold price is retracing to test the new support level at A$2400 per ounce. Respect of support is likely and breakout above A$2500 would be a strong bull signal for Aussie gold miners.

Gold in AUD

Conclusion

We expect A-REITs and Bond ETFs to advance on the back of lower long-term interest rates.

Financials are expected to undergo a correction as interest margins are squeezed.

Metals & Mining are in a strong up-trend because of record iron ore prices.

Health Care is recovering well and expected to test resistance.

Technology had a strong week but the outlook is still uncertain.

We expect the ASX 200 to retrace to test support at 7000 as its largest sector (Financials) undergoes a correction.

Notes

Tons are metric tons unless otherwise stated.
Target for Metals & Mining is calculated as support at 5000 extended above resistance at 5750.

May 15, 2021May 15, 2021

ASX Technology stocks fall

The ASX 200 continues to test its February 2020 high at 7200. Narrow consolidation below resistance is a bullish sign but we need to keep a weather eye on the US and China.

ASX 200

Financial Markets

Bond ETFs, in a sideways consolidation, indicate that long-term interest rates are holding steady. Inflation remains muted and the RBA is following through on their stated intention to suppress long-term yields.

Australian Bond ETFs

A-REITs are testing resistance at 1500. Reversal below 1340 is unlikely but would warn of a double-top reversal.

ASX 200 REITs

Financials are testing resistance at 6500. A rising 13-week Trend Index — with troughs above zero — flags buying pressure, suggesting that a breakout is likely.

ASX 200 Financials

Health Care, Discretionary & Technology

Health Care is testing resistance at 42500. The rising Trend Index is bullish but failure to cross above zero would confirm long-term selling pressure. Breach of 40000 would complete a bull-trap (a bear signal for investors) and warn of another test of primary support at 37500.

ASX 200 Health Care

Technology broke support at 1900 to signal a primary down-trend, imitating the pattern in US markets. Breach offers a medium-term target of 1400¹.

ASX 200 IT

Consumer Discretionary is testing its rising trendline. We expect a test of support at 2900 as the impact of government stimulus fades.

ASX 200 Discretionary

Mining

Iron ore retreated slightly, to $210/metric ton. Chinese steel mills are stockpiling — due to rising tensions with Australia and anticipated production curbs in China (to reduce pollution levels). The boom is only expected to last as long as stockpiling continues. Then prices are likely to fall steeply as mills run down stockpiles. Reversal below support at $175-$180 would warn of a sharp decline.

Iron Ore

The ASX 300 Metals & Mining found resistance at 6000. A tall shadow on this week’s candle warns of short-term selling pressure. Another test of support at 5000 is likely.

ASX 300 Metals & Mining

The All Ordinaries Gold Index (XGD) continues to test its new support level at 7000. Follow-through below recent lows would warn of another test of 6000, while recovery above 7300 would signal a fresh advance. Breakout above the long-term descending trendline would strengthen the bull signal. Gold bullishness is fueled by rising inflation fears.

All Ordinaries Gold Index

The Gold price, in Australian Dollars, is testing its descending trendline and resistance at 2400. Breakout above the two would deliver a strong bull signal.

Gold in AUD

Conclusion

Technology stocks have commenced a primary down-trend. Metals & Mining look highly-priced and susceptible to a sharp reversal. They have looked that way for months but sooner or later we are bound to see a rapid re-pricing.

Steady long-term interest rates and a buoyant housing market are lifting REITs and Financials respectively. Health Care and Consumer Discretionary look hesitant, while Gold stocks are making a tentative rally.

Notes

Target for XIJ is its 2400 peak extended below 1900.

October 31, 2012

Why We Can't Solve Big Problems | MIT Technology Review

Jason Pontin, MIT Technology Review Editor, provides some interesting insights into why innovation sometimes fails.

Sometimes big problems that had seemed technological turn out not to be so, or could more plausibly be solved through other means. Until recently, famines were understood to be caused by failures in food supply (and therefore seemed addressable by increasing the size and reliability of the supply, potentially through new agricultural or industrial technologies). But Amartya Sen, a Nobel laureate economist, has shown that famines are political crises that catastrophically affect food distribution. (Sen was influenced by his own experiences. As a child he witnessed the Bengali famine of 1943: three million displaced farmers and poor urban dwellers died unnecessarily when wartime hoarding, price gouging, and the colonial government’s price–controlled acquisitions for the British army made food too expensive. Sen demonstrated that food production was actually higher in the famine years.) Technology can improve crop yields or systems for storing and transporting food; better responses by nations and nongovernmental organizations to emerging famines have reduced their number and severity. But famines will still occur because there will always be bad governments.

Yet the hope that an entrenched problem with social costs should have a technological solution is very seductive — so much so that disappointment with technology is inevitable. Malaria, which the World Health Organization estimates affected 216 million people in 2010, mostly in the poor world, has resisted technological solutions: infectious mosquitoes are everywhere in the tropics, treatments are expensive, and the poor are a terrible market for drugs. The most efficient solutions to the problem of malaria turn out to be simple: eliminating standing water, draining swamps, providing mosquito nets, and, most of all, increasing prosperity. Combined, they have reduced malarial infections. But that hasn’t stopped technologists such as Bill Gates and Nathan Myhrvold, the former chief technology officer of Microsoft (who writes about the role of private investors in spurring innovation), from funding research into recombinant vaccines, genetically modified mosquitoes, and even mosquito-zapping lasers. Such ideas can be ingenious, but they all suffer from the vanity of trying to impose a technological solution on what is a problem of poverty…….

via Why We Can't Solve Big Problems | MIT Technology Review.