The ASX 200 is once again testing support at 5380/5400. Declining 21-day Twiggs Money Flow below zero indicates medium-term selling pressure. Correction to 5300 is likely. The primary trend remains upward and this should prove a good entry point for long-term investors. Recovery above 5470 is unlikely at present, but would signal another primary advance.
* Target calculation: 5550 + ( 5550 – 5400 ) = 5700
ASX 200 VIX remains low, indicative of a bull market.
Summary:
The S&P 500 retraced to test its latest support level at 1950 after a downward GDP revision for the first quarter. Respect indicates medium-term buying pressure — also evidenced by rising 21-day Twiggs Money Flow. Follow-through above 1970 would confirm a test of 2000*. Reversal below 1950 is unlikely, but penetration of the secondary trendline would warn of a correction.
* Target calculation: 1900 + ( 1900 – 1800 ) = 2000
The CBOE Volatility Index (VIX) remains low, indicative of a bull market.
The Shanghai Composite Index respected primary support at 1990/2000. 21-Day Twiggs Money Flow oscillating above zero indicates buying support, but this may be due to the managed “soft landing”. What we do know is that a fall below zero would definitely signal selling pressure. Breach of support would signal a decline to 1850*. The primary trend is expected to continue its downward path, but further ranging between 2000 and 2150 is likely. An abrupt fall is a fairly remote possibility.
* Target calculation: 2000 – ( 2150 – 2000 ) = 1850
The ASX 200 made a false break above 5470, but 21-day Twiggs Money Flow below zero warns of medium-term selling pressure. Breach of support remains likely and would indicate a correction to 5300. The long-term trend, however, remains upward. Support at 5300/5400 would offer a great entry point for long-term investors. Recovery above 5470 is unlikely at present, but would signal a test of resistance at 5550.
* Target calculation: 5400 + ( 5400 – 5000 ) = 5800
I repeat my warning from last week: Momentum investors should not attempt to time secondary corrections and need to endure the present volatility in order to reach their intended investment goals.
Summary:
The S&P 500 retraced to test its latest support level at 1950 after a downward GDP revision for the first quarter. Respect indicates medium-term buying pressure — also evidenced by rising 21-day Twiggs Money Flow. Follow-through above 1970 would confirm a test of 2000*. Reversal below 1950 is unlikely, but penetration of the secondary trendline would warn of a correction.
* Target calculation: 1900 + ( 1900 – 1800 ) = 2000
The CBOE Volatility Index (VIX) remains low, indicative of a bull market.
The Shanghai Composite Index respected primary support at 1990/2000. 21-Day Twiggs Money Flow oscillating above zero indicates buying support, but this may be due to the managed “soft landing”. What we do know is that a fall below zero would definitely signal selling pressure. Breach of support would signal a decline to 1850*. The primary trend is expected to continue its downward path, but further ranging between 2000 and 2150 is likely. An abrupt fall is a fairly remote possibility.
* Target calculation: 2000 – ( 2150 – 2000 ) = 1850
The ASX 200 made a false break above 5470, but 21-day Twiggs Money Flow below zero warns of medium-term selling pressure. Breach of support remains likely and would indicate a correction to 5300. The long-term trend, however, remains upward. Support at 5300/5400 would offer a great entry point for long-term investors. Recovery above 5470 is unlikely at present, but would signal a test of resistance at 5550.
* Target calculation: 5400 + ( 5400 – 5000 ) = 5800
I repeat my warning from last week: Momentum investors should not attempt to time secondary corrections and need to endure the present volatility in order to reach their intended investment goals.
The ASX 200 found support at 5380/5400. Recovery above 5470 would break the descending trendline, suggesting that the correction is over — and a test of resistance at 5540/5560 likely. But 21-day Twiggs Money Flow whipsawing around zero indicates indecision. Respect of (or a false break above) 5470 would suggest correction to 5300.
* Target calculation: 5550 + ( 5550 – 5400 ) = 5700
ASX 200 VIX making new lows, however, indicates a bull market.
The ASX 200 rallied on Monday, but 21-day Twiggs Money Flow at zero indicates (medium-term) buying pressure is weak. Follow-through above 5470 would signal a test of resistance at 5540/5560, but China continues to weigh on the index and reversal below 5380 would warn of a test of 5300.
* Target calculation: 5550 + ( 5550 – 5400 ) = 5700
ASX 200 VIX making new lows is indicative of a bull market.
Summary:
The S&P 500 broke through 1950 and is expected to test the next resistance level at 2000*. Rising 21-day Twiggs Money Flow signals medium-term buying pressure. Reversal below 1925 is unlikely at present but would warn of a correction.
* Target calculation: 1900 + ( 1900 – 1800 ) = 2000
The CBOE Volatility Index (VIX) continues its downward path, indicating low risk typical of a bull market.
The Shanghai Composite Index rebounded Friday after a tough week and continues to test primary support at 1990/2000. Breach of support would signal a decline to 1850*. 21-Day Twiggs Money Flow oscillating above zero indicates buying support; a fall below zero would suggest selling pressure. The primary trend is expected to continue its downward path, but this is a managed descent and an abrupt fall seems unlikely.
* Target calculation: 2000 – ( 2150 – 2000 ) = 1850
After a strong surge on Thursday the ASX 200 retreated below 5450 on Friday, suggesting another test of support at 5400. Reversal of 21-day Twiggs Money Flow below zero indicates medium-term selling pressure. Breach of support is likely and would indicate a correction to 5300. Recovery above 5500 is unlikely at present, but the long-term trend remains upward.
* Target calculation: 5400 + ( 5400 – 5000 ) = 5800
Summary:
The S&P 500 broke through 1950 and is expected to test the next resistance level at 2000*. Rising 21-day Twiggs Money Flow signals medium-term buying pressure. Reversal below 1925 is unlikely at present but would warn of a correction.
* Target calculation: 1900 + ( 1900 – 1800 ) = 2000
The CBOE Volatility Index (VIX) continues its downward path, indicating low risk typical of a bull market.
The Shanghai Composite Index rebounded Friday after a tough week and continues to test primary support at 1990/2000. Breach of support would signal a decline to 1850*. 21-Day Twiggs Money Flow oscillating above zero indicates buying support; a fall below zero would suggest selling pressure. The primary trend is expected to continue its downward path, but this is a managed descent and an abrupt fall seems unlikely.
* Target calculation: 2000 – ( 2150 – 2000 ) = 1850
After a strong surge on Thursday the ASX 200 retreated below 5450 on Friday, suggesting another test of support at 5400. Reversal of 21-day Twiggs Money Flow below zero indicates medium-term selling pressure. Breach of support is likely and would indicate a correction to 5300. Recovery above 5500 is unlikely at present, but the long-term trend remains upward.
* Target calculation: 5400 + ( 5400 – 5000 ) = 5800
Momentum stocks have suffered a fair degree of turbulence since April, after a strong first quarter. Investors unfortunately have to endure periods like this, when the market appears hesitant or lacks direction, in much the same the same way as travelers can expect turbulence during an air flight. It is important is to resist the urge to avoid discomfort by exiting positions. Enduring uncomfortable parts of the journey are necessary if you want to reach your intended destination. Our research on both the ASX and S&P 500 has shown that attempting to time secondary movements in the markets does not enhance but erodes performance: the average (re-)entry price is higher than the average exit price after accounting for brokerage.
A basic rule of thumb in investing is that investors need to endure higher volatility in order to achieve higher returns. If your investment time frame is long-term, it is important to focus on the end result and not be overly concerned by weekly fluctuations.
The ASX 200 is testing medium-term support at 5400. Long tails and recovery of 21-day Twiggs Money Flow above zero signal buying pressure. A close below 5400 would warn of a test of 5300, while recovery above 5460 would suggest another attempt at 5550.
* Target calculation: 5550 + ( 5550 – 5400 ) = 5700
While not as strong as North American markets, the weekly index has maintained a healthy distance above a green Ichimoku Cloud. There are no signs of a long-term trend reversal.
ASX 200 VIX is also holding at low levels indicative of a bull market.
The Aussie Dollar is testing resistance at $0.94. Consolidation in a narrow band suggests continuation of the rally towards $0.97/$0.98. Recovery of 13-week Twiggs Momentum above zero suggests a primary up-trend, but we may see the RBA intervene to prevent this. They may need to follow the RBNZ, introducing macro-prudential controls (e.g. setting a maximum 80% LVR percentage), to take the steam out of the housing market while lowering interest rates to weaken the currency.
The ASX 200 respected resistance at 5500 and is headed for a test of medium-term support at 5400. Reversal of 21-day Twiggs Money Flow below zero warns of medium-term selling pressure and a correction. Breach of 5400 is likely and would test support at 5300 and the rising trendline. Respect of 5400 is unlikely, but would suggest another rally to 5550.
* Target calculation: 5550 + ( 5550 – 5400 ) = 5700
ASX 200 VIX below 12, however, continues to indicate low risk typical of a bull market.
The ASX 200 closed below short-term support at 5500, warning of another test of support at 5400. Declining 21-day Twiggs Money Flow indicates short-term selling pressure. Breakout above 5550 is unlikely in the short-term, but would signal an advance to 5700*.
* Target calculation: 5550 + ( 5550 – 5400 ) = 5700
ASX 200 VIX below 12 indicates low risk typical of a bull market.
