Breakouts on the S&P 500 and in China and Japan, together with buying support across Europe and Asia, indicate a broad resurgence.
North American Stocks
The S&P 500 is retracing to test the new support level at 2120 after its recent breakout. Respect of support would confirm a further advance to 2200*. 21-Day Twiggs Money Flow is oscillating in a narrow range above the zero line, suggesting mild buying pressure. Upward breakout would signal another advance, while reversal below zero would warn of a correction.
* Target calculation: 2120 + ( 2120 – 2040 ) = 2200
CBOE Volatility Index (VIX) at 12 continues to indicate low risk typical of a bull market.
St Louis Fed Financial Stress index below -1.0 likewise displays low levels of stress in financial markets.
Dow Jones Industrial Average continues to test resistance at 18300. Buying pressure remains positive and breakout would offer a target of 19000*, confirming the S&P 500 signal. Reversal below 18000 is unlikely, but would warn of a correction to test the primary trendline and support at 17000.
* Target calculation: 18300 + ( 18300 – 17600 ) = 19000
Canada’s TSX 60 is testing resitance at 890. Breakout would signal the end of the correction and another test of long-term resistance at 900. 13-Week Twiggs Momentum holding above zero continues to indicate a primary up-trend. Breakout above 900 would offer a long-term target of 1000*.
* Target calculation: 900 + ( 900 – 800 ) = 1000
Europe
Germany’s DAX broke its descending trendline, indicating another attempt at 12500. A 13-week Twiggs Money Flow trough above zero would confirm long-term buying pressure. Reversal below 11000 is unlikely.
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* Target calculation: 12500 + ( 12500 – 12000 ) = 13000
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Shallow retracement on the Footsie suggests buying pressure. Recovery of 13-week Twiggs Money Flow above its descending trendline strengthens the signal. Breakout above 7100 would confirm a primary advance. The long-term target is 8000*.
* Target calculation: 7000 + ( 7000 – 6000 ) = 8000
Asia
The Shanghai Composite broke resistance at 4500, indicating continuation of its strong advance. 13-Week Twiggs Money Flow troughs high above zero reflect long-term buying pressure.
* Target calculation: 3500 + ( 3500 – 2500 ) = 4500
Economic data, however, continues to warn of a slow-down.
Barclays says China slide "undeniable", here showing M2 at multi-year lows pic.twitter.com/3i8MFxGA5k
— David Schawel (@DavidSchawel) May 22, 2015
//platform.twitter.com/widgets.js
Japan’s Nikkei 225 Index broke resistance at 20000, suggesting an advance to 22000*. Recovery of 13-week Twiggs Money Flow above the descending trendline would strengthen the signal.
* Target calculation: 20000 + ( 20000 – 18000 ) = 22000
India’s Sensex respected support at 26500 and is now testing resistance at 28000. Breakout above 28000 and the descending trendline would signal another attempt at 30000. Recovery of 13-week Twiggs Money Flow above zero would strengthen the signal. Another (TMF) peak below zero is unlikely, but would warn of a primary down-trend.
Australia
The ASX 200 found support between 5650 and 5550, highlighted by the latest long-tailed candle. Recovery above 5750 would signal the correction is over and another test of 6000 is likely. Mild decline on 13-week Twiggs Money Flow indicates medium-term selling pressure — not a reversal. Breach of 5550 is unlikely, but would warn of a test of primary support at 5120.
* Target calculation: 6000 + ( 6000 – 5750 ) = 6250
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