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Archive for June, 2010

World Market Indices from 52 Week High/Low

June 30, 2010 Leave a comment

How much have major stock markets worldwide dropped from their 52-week highs after yesterdays 2-4% drop?

Source: Google Finance, WSJ

Where do we go from here? Most bearish commentators expect a 20-30% correction from the recent peak (52-week high) before another sustained rally… Can we expect another 5-15% drop? Is the correction almost over or are we in for more downside?

Yesterday I pointed out the bearish technical signals on the S&P500 charts which – here are charts for some of the markets above with similar signals (mostly bearish)

UK – FTSE 100

FTSE 100 Technical Analysis - 30Jun2010

Chart Souce: stockcharts.com

Japan – Nikkei 225

Technical Analysis of Nikkei 225 index as of 30Jun2010... Price & MACD moving in opposite direction creating negative divergence & price-action confirmed by death cross - 50-day SMA crosses 200-day SMA

Chart Source: stockcharts.com

 

Canada – TSX Composite Index

Technical Analysis of TSX Composite index as of 29Jun2010... Price action indicates an ascending triangle and a possible continuation pattern...

Chart Souce: stockcharts.com

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S&P 500 Technical Analysis – Down from here to re-test July 2009 lows?

June 29, 2010 1 comment

S&P 500 broad market index is likely to continue downtrend and re-test July 2009 lows…

Head & Shoulders Pattern projecting S&P 500 at 870

S&P500 Head & Shoulders Pattern projecting S&P 500 at 870

Chart: Stockcharts.com

Fibonacci Analysis, Descending Triangle & MACD crossover

S&P500 - Fibonacci Analysis, Descending Triangle & MACD crossover for June 29, 2010

Chart Source: Stockcharts.com

RIM sell-off overdone? Is RIM relatively cheap at 10x Forward Earnings?

June 28, 2010 Leave a comment

 judge for yourself…

  P/E (TTM) Forward P/E (2011) ROE (TTM)
S&P 500 20.34    
Industry 45.99    
       
RIM 11.42                10.17 35.66
NOKIA 22.31                 9.48 7.89
HTC 14.89                12.10 34.6
APPLE 22.63                16.65 33.97

Source: Reuters

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RRSP vs TFSA (Part 1) – Should I contribute to RRSP or TFSA account?

June 21, 2010 Leave a comment

The answer is pretty easy IF you know what your tax rate will be when you start making withdrawals from your retirement accounts (RRSP or TFSA)

RRSP or Registered Retirement Savings Plan is a retirement plan that provides immediate tax benefits when a contribution is made to the account. Money in the account grows tax free. However any subsequent withdrawals from an RRSP account are taxed at the account holders then marginal tax rate.

In summary, Tax benefit received now and tax paid in future

TFSA or Tax Free Savings Account as the name implies is a tax exempt account i.e. the money grows tax free (like an RRSP) and any withdrawals from this account are not taxed. Any withdrawal from a TFSA account is not taxed!

In summary, Tax paid now but tax benefit received in future upon withdrawal

There are 3 answer choices depending on your personal situation:

1. Current Personal Income Tax Rate EQUALS Future Tax Rate
Both accounts will have same after tax value.

2. Current Personal Income Tax Rate GREATER Future Tax Rate
Contributions to RRSP account will have a higher after tax value than TFSA all else being same.

3. Current Personal Income Tax Rate EQUALS Future Tax Rate
Contributions to TFSA account will have a higher after tax value than RRSP all else being same.

Toronto Housing Market 1999-2010

June 17, 2010 Leave a comment

The recent rise in house prices across Canada bucking the trend elsewhere in the developed countries has given plenty of fodder to media & economic research houses…

Here is my take on it…

Until 2005 the house price rise in Toronto was at a constant rate year-over-year… the recent rise in prices since April/May 2009 has been at a much higher rate than the 10 year average AND it has been on decreasing sales i.e. fewer houses sold but at higher prices… this is analogous to rise in share prices but on lower than average volume…

Toronto Housing Market 10 year history of House Prices & Units Sold

Source: Teranet House Price Index

Number of resale homes sold in toronto since 2006 by month

Source: Teranet House Price Index

Canada Housing – Change in Number of resale homes sold in last 10 years

June 17, 2010 Leave a comment

This is a very interesting and rather anomalous chart of the yearly change in Number of Sales… I wonder what happened in 2005 in Ontario that resulted in a huge spike… it is strange!

Change in "Number of Sales" of resale homes in Canada's Big 6 cities

Source: Teranet House Price Index

Canada House Prices change – Monthly & Yearly for the last 10 years

June 15, 2010 1 comment

Year-over-Year house price changes for Canada’s biggest 6 metropolitan cities and the aggregate of these cities…

Yesterday I pointed out that house prices in Calgary are 7% below the peak in 2007… the charts below explains some of this… Calgary experienced the highest year-over-year and month-over-month change from 2005 to 2006 of almost 50%… thats right 50% appreciate in 1 year!!… that probably beats the housing boom bust down south

And interestingly, Toronto has experienced the sharpest yearly increase (15%) even though the preceding increase up to 2008 & the following descent in early 2009 weren’t this severe.

Year-over-Year House Price Change in Canada's 6 metropolitan cities

Source: Teranet House Price Index

Again, the monthly chart tells the same story

More importantly, the recent monthly price appreciation is in a downward trend nationwide… I think this was bound to happen and will continue for the next year or so primarily due to upcoming Harmonized Sales Tax on new homes and the recent increase in mortgage rates… the big economic research shops expect house prices to drop 5-10% in the next year or so

Month-over-Month House Price Change in Canada's 6 metropolitan cities

Source: Teranet House Price Index

Feedback & comments welcome…