Europe breaks support

DJ Europe Index broke support at 225, signaling another down-swing to the 2010 low at 205. The calculated target is lower at 195.

DJ Europe Index

* Target calculation: 230 – ( 265 – 230 ) = 195

TSX 60 retreats

The TSX 60 Index retreated to test its rising trendline at 705. Penetration would warn of a test of primary support at 665. And failure of support would signal another down-swing with a target of 600*.

TSX 60 Index

* Target calculation: 665 – ( 735 – 665 ) = 595

European indices warn of another down-swing

The German DAX Index broke support at 5500 to warn of a down-swing to 4500*. Declining 13-week Twiggs Money Flow below zero indicates strong selling pressure.

German DAX index

* Target calculation: 5500 – ( 6500 – 5500 ) = 4500

In France, the CAC-40 Index reversed below support at 3000, led by a sell-off in French banks. Expect support at the 2009 low of 2500, though the calculated target is even lower. 13-Week Twiggs Money Flow again signals strong selling pressure.

France CAC-40 Index

* Target calculation: 3000 – ( 3700 – 3000 ) = 2300

The FTSE 100 is consolidating above 5000, but is likely to be dragged lower if major European trading partners fall. Breach of support would offer a target of 4400*.

UK FTSE 100 Index

* Target calculation: 5000 – ( 5600 – 5000 ) = 4400

Dow acid-test

The Dow is headed for the band of support between 10600 and 10800 — a real acid-test. Support is likely to fail unless we see a substantial increase in volume, indicating buying support. Breach of 10600 would confirm another down-swing with a target of 10000*.

Dow Jones Industrial Average

* Target calculation: 11000 – ( 12000 – 11000 ) = 10000

European stocks threaten breakout

DJ Europe Index ($E1DOW) reversed below 230, threatening another down-swing — with a target of 200. Twiggs Momentum oscillating below zero indicates a primary down-trend. Follow-through below 225 would confirm the bear signal.

DJ Europe

* Target calculation: 230 – ( 270 – 230 ) = 190

Europe consolidates

Dow Jones Europe Index ($E1DOW) recovered above 230 and is expected to consolidate between 230 and 250. The bear market remains strong, with 13-week Twiggs Money Flow below zero indicating selling pressure. Reversal below 230 would test the 2010 low of 205, though the calculated target is lower*.

Dow Jones Europe Index $E1DOW

* Target calculation: 230 – ( 265 – 230 ) = 195

Denial is not a river in Egypt

Dow Jones Industrial Average rallied, suggesting a second higher low above primary support at 10600/10800.  Expect a test of 11900/12000, but this does not mean the bear market is about to reverse. We are still in the early “denial stage” of the bear market, identified by sporadic bargain-hunting, high volatility and a general lack of direction. Declining volume indicates a lack of enthusiasm from buyers and sellers. Failure of primary support would change that, leading to a sharp fall to 10000*.

Dow Jones Industrial Average

* Target calculation: 11000 – ( 12000 – 11000 ) = 10000

Flight to safety

10-Year Treasury yields fell to a new low on Friday, warning of further falls in the stock market as investors seek save havens in Treasurys and precious metals.

10-Year Treasury Yields