US: S&P 500 and Nasdaq 100

The S&P 500 respected support at 1350/1370, again confirming the primary up-trend signaled by 63-day Twiggs Momentum in December 2011. Immediate target for the advance is 1450*. Reversal below 1350 is unlikely but would warn of a correction to 1300.

S&P 500 Index

* Target calculation: 1300 + ( 1300 – 1150 ) = 1450

The Nasdaq 100 gapped above 2700, on its way to a re-test of resistance at 2800. Completion of the flag formation indicates another primary advance. Reversal below 2650 is unlikely but would warn of a stronger correction. Retreat of 21-day Twiggs Money Flow below zero would also give a bear warning, while respect of the zero line would indicate buying pressure.

Nasdaq 100 Index

* Target calculation: 2800 + ( 2800 – 2650 ) = 2950

Abundance of land, shortage of housing | Institute of Economic Affairs

Kristian Niemietz looks at how housing costs in the UK have exploded in recent decades. Real-terms house prices in 2011 were more than two-and-a-half-times higher than in 1975, with rent levels following suit. In the USA, Germany and Switzerland, real-terms house prices are still close to their 1975 levels.

· Housing affordability measures show housing to be unaffordable in every single one of the 33 regions in the UK.

· The main difference between the UK and its north-western European neighbours is not in demographics, but in completion rates of new dwellings.

· Empirical evidence from around the world shows that planning restrictions are the key determinant of housing costs.

via Abundance of land, shortage of housing | Institute of Economic Affairs.

Forex: Japanese Yen

The greenback is consolidating between ¥80 and ¥82 against the Japanese Yen. Recovery above ¥82 would indicate a fresh primary advance, with a target of ¥90*. Respect of zero by 63-day Twiggs Momentum would confirm a strong primary up-trend.

USD/Japanese Yen

* Target calculation: 85 + ( 85 – 80 ) = 90

Forex: Euro and Pound Sterling

The euro continues to test medium-term support at $1.30. With the dollar currently “the best horse in the glue factory”, support is likely to fail, signaling a re-test of the primary level at $1.26. A 63-day Twiggs Momentum peak below zero would indicate continuation of the primary down-trend; failure of primary support would confirm.

Euro

* Target calculation: 1.26 – ( 1.35 – 1.26 ) = 1.17

Sterling is testing resistance at $1.62. Recovery of 63-day Twiggs Momentum above zero indicates a primary advance, but news that the UK has dipped back into recession may inhibit further gains. Reversal below the rising trendline would warn of another test of primary support at $1.53, while breakout above $1.62 would signal an advance to the 2011 high of $1.67.

Pound Sterling

Forex: Canada's Loonie breaks out

The Loonie broke through resistance at $1.01 against the greenback, indicating an advance to the 2011 high of $1.06. This confirms the earlier signal when 63-day Twiggs Momentum recovered above zero.

Canadian Dollar/USD

* Target calculation: 1.01 + ( 1.01 – 0.96 ) = 1.06

Forex: Aussie Dollar and South African Rand

The Aussie Dollar encountered support at $1.03, evidenced by several long tails on the daily chart. Recovery above $1.045 would confirm that the correction has ended and would signal another advance to $1.08. Respect of zero by 63-day Twiggs Momentum would confirm the advance.

Aussie Dollar/USD

The Aussie is declining against the South African Rand. Failure of support at R7.90/R8.00 would test the rising trendline around the R7.50 mark. Breach of the trendline and/or follow-through of 63-day Twiggs Momentum below zero would warn of a primary down-trend.

Aussie Dollar/South African Rand

* Target calculation: 8.00 – ( 8.50 – 8.00 ) = 7.50

Crude and commodities

Brent Crude is drifting lower but so far has not seriously tested medium-term support at $115/barrel. Respect would confirm the primary up-trend, offering a target of $135*. Respect of the zero line by 63-day Twiggs Momentum would also strengthen the signal.

ICE Brent Afternoon Markers

* Target calculation: 125 + ( 125 – 115 ) = 135

The broader CRB Commodities Index is headed for a test of primary support at 295. Respect of zero (from below) by 63-Day Twiggs Momentum indicates continuation of the primary down-trend. Breach of primary support would confirm the signal.

CRB Commodities Index

* Target calculation: 295 – ( 325 – 295 ) = 265

Dollar and gold test key support levels

The Dollar Index continues to struggle with resistance at 80. Reversal below 78 would signal the end of the primary up-trend and a re-test of the 2011 low. Reversal of 63-day Twiggs Momentum below zero would strengthen the warning, while respect would indicate another primary advance.

US Dollar Index

* Target calculation: 82 + ( 82 – 78 ) = 86

Spot Gold failed to respond to the listless dollar, testing the long-term trendline and support at $1600/ounce. 63-Day Twiggs Momentum oscillating around the zero line indicates indecision. Recovery above $1700 would indicate a fresh primary advance, while failure of $1600 would warn of a primary down-trend — with a long-term target of $1200*.

Spot Gold

* Target calculation: 1800 + ( 1800 – 1600 ) = 2000; 1500 – ( 1800 – 1500 ) = 1200

An earnings season only a pessimist could love – The Globe and Mail

With more than 25 per cent of S&P 500 companies having reported their first-quarter results, 80 per cent have exceeded analysts’ consensus profit estimates – a record pace, and well above the historical average of 62 per cent.

….The record “beat rate,” as earnings trackers call it, can’t gloss over the fact that earnings forecasts have been in decline for months – leaving expectations so low that topping them is a dubious achievement……..Major earnings-tracking services such as Factset, Thomson Reuters Research and S&P Capital IQ expect S&P 500 year-over-year earnings growth of between 4 and 4.5 per cent for the quarter ended March 31. That would be the weakest profit growth in more than two years.

via An earnings season only a pessimist could love – The Globe and Mail.

Durable-Goods Orders Fall – WSJ.com

March orders for nondefense capital goods excluding aircraft, which economists consider a proxy for business investment, fell 0.8%. The weakness extended to a host of categories, including machinery, computers and primary metals. Economists cautioned that special factors likely made the report appear somewhat worse than the underlying trend. First, the December expiration of a government tax credit for business investment caused many companies to move ahead new orders, which translated into artificial weakness in the early-year figures.

via Durable-Goods Orders Fall – WSJ.com.