ASX

ASX, Australia update

Hamilton

Nothing in North America seems to work all that well, the Australian index however is performing pretty much as expected. (see previous blog):

asx may 2012

This index has been remarkable consistent. In approximate terms it loses 50%, then regains 50%, loses 50% and regains 50%. It is presently right at a large trend-line and the next move is down 50% except that we are now about to enter wave 3 down and that should normally be the most forceful and longest . As a minimum one would expect it to at least equal wave 1, roughly 1000 points, 1600 is far more common and then there is still a 5th wave to go.

What is remarkable about this index is that is highly dependent on China, generally considered to be the growth engine of the World today. Secondly it is also an exporter of raw materials first and foremost. As a consequence one would think that this index should have some prognostic value with respect to Canada’s TSX. Here it is;

tsx may 2012

Notice that “essentially” the charts are very similar except that the Canadian index has relatively larger retracements and as a consequence has stayed closer to peak values. In all other respects they do seem to be listening to the same drummer and what is not yet evident in Canada is already painfully so in Australia. The question for us, living next to the US (bad economy)and them living next to China (good economy) should be, why are we doing better? or are we and is this just a unsustainable fluke. Could it be that we have better leaders, a more entrepreneurial people, a more competitive industry? Don’t think so.

ASX S&P200, Australia

Hamilton

ASX200

From Bloomberg, this is the ASX200, the main index down under. Notice that after the initial high (A) around October of 2009, it took another year and 3/4 to just marginally eek out a higher high, not even managing to take out the high in the intervening correction (b). This index went from loosing about 1/2, to regaining 1/2 and most recently again losing about 1/2 so far.

As Canadians we should be concerned with what happens down under. Even though we do not share the distinction of once having been  a continental sized prison camp, we do share all the blessings that came from being members of the British Empire Club, English being ,perhaps the most important. Lately we are both “commodity” countries which has come in good stead when feeding the insatiable hunger of China. Geographically, Australia is closer the the earth’s booming center so one would expect their market to do better. It has not. The TSX, in relative terms, was a bit over 6000 at the peak! The Aussie $$ ,on the other hand ,  did;

Aussie$

Roughly the Aussie $ follows the same pattern as the stock market, except it does it with much more gusto, an excellent reason to get out of Aussie $$. And, for that matter, the C$;

Can$

The C$ fell in a clear 5-waves from the peak in Nov. of 2008 at about 0.91 0r, if you prefer 1.10 Clearly good times are good for the C4 and bad times are bad. The next move appears to be down, perhaps al the way to 1.30 or 0.77.

PS. Also from Bloomberg, Alan Greenspan said that Monday will probable be a down day as a result of the downgrade and all the turmoil. The Maestro is back in form.