Month: April 2015

Real Estate in Toronto

Hamilton

Average home prices, 60-year price trend, Toronto real estate - Google Chrome_2015-04-21_10-53-14

Longer term charts are hard to come by. This one is from torontotransitions.com but based on data provided by the TREB. I had to improvise at both ends to get what I wanted and that is a full 5-wave sequence. I am guessing that there was a significant low during or immediately following the Great Depression, say 1930. I have absolutely no idea at what level waves 1 and 2 were, they could be much lower than I have drawn which would simple make the entire channel so much steeper. In Toronto free standing homes are now over 1 mln. on average but in the GTA (Greater Toronto Area) the average price for a single dwelling was, I believe , about $633M., essentially at the top of the chart.  We could go a little higher to accommodate a steeper channel, but lets simple assume that an even $650M is high enough.

     This blog does not predict or in anyway attempts to anticipate the future. All it does is apply,  in a rather moronic way, EW principals which are themselves entirely empirical. So if 5-waves up are complete you should expect a three wave correction to the level of the 4th wave of previous degree, that is on the way up,  AND/OR to a level that takes away about 62% of the entire up move. Both are at about $275M. From $650M to $275M is $375M, or, measured from the peak, 58%. Todays article in the Economists suggests that house prices are 35% overvalued based on affordability and rental metrics, fundamentals in other words. Judging by the duration of previous downtrends, about 10 years on average this should take a bit longer and very wild swings could occur before the bottom is reached.

    But then , fortunately, EW is just some cult technical tool used by a few mad practitioners.

P.S. The chart is corrected for inflation using 2014 as a base. This makes prices in the past look higher than they were nominally!

OIL update

Hamilton

Then, Feb. 13 and now charts.

Oil feb 13 2015oil april 20 2015

We have had numerous variations in the interim, none of which wanted to follow the script perfectly, but so far at least the main point was up to about $60 and then to a new low. Contracts have changed and these numbers are not properly adjusted for that. Expect a few dollars higher and then the trend should change to the downside. Keep an eye on RDS, Royal Dutch, short term it should go only a few dollars higher.

HXU update, TSX

Hamilton

HXU han 8 2015 s

This was our take on the HXU back on January the 8th. We do not take credit for being prescient as, frankly, we had a hard time believing it. We show it anyway for the benefit of EW in general, that it does actually have predictive powers. Below is where we are today;

hxu april 20 2015 1HXU april 20 2015 2

We show two charts, not because my readers are elderly, but because there are two, distinct possibilities. First that there was indeed a triangle, on the right, and that the thrust out still has a few dollars to go to get to the approximate $8 the triangle measures at the mouth, that is about $34 which is also a double-top level going back to early 2008. Secondly, that there never was a triangle, just an irregular wave 4 and since then we have been working our way up in a diagonal or wedge. Both scenarios allow for slightly higher levels but given the RSI and MACD I would not hold my breath. Note , by the way, that the suggested timing for a top is, ideally, about 4 months into this year. If you did, albeit by accident, followed the prediction verbatim you will have gained $31.25 – $25.50 = $5.75 , or about 25% if you wait a little longer. Soon it will be time to buy the HXD!

The TSX can accommodate both the above scenarios. It is no more than a good days trading away from double topping.

TSX april 20 2015

The Beginning of the End (not stocks but fossil fuels).

Hamilton

solar 16 april 2015

From Bloomberg. They are saying that , for the first time in 2013, the world added more renewable energy capacity, 143 gigawatts, than the conventional fossil capacity, 141 gigawatts. The driving force behind this development is the dramatic drop in the cost of solar panels as well as other technologies. Gridparity has already been reached in many parts of the World which means that the little guy can generate his own power at a cost below what he has to otherwise pay to Hydro. For my international readers I must point out that Hydro in Canadian English means electricity, not water!

If this prognosis 30 years in the future is entirely correct, in a World where many economists are challenged to even predict the past, is neither here nor there. The trend at least is perfectly clear. Add to that the electric car – an affordable one! – and greener office buildings and all of a sudden the future of oil and coal becomes much clearer. The critical force in this development is the small scale at which this conversion process can spread like wildfire.