Tag: NIFTY Index

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S&P 500: Stocks lift but jobs and profits a red flag

The S&P 500 has advanced steadily since breaking resistance at 3000.

S&P 500

Lifted by Fed liquidity injections in the repo market.

S&P 500 and Fed Assets

Optimism over improved global trade has spread, with the DJ Euro Stoxx 600 breaking resistance at 400.

DJ Euro Stoxx 600

South Korea’s KOSPI completed a double-bottom reversal to signal an up-trend.

KOSPI

And India’s Nifty Index broke resistance at 12,000.

Nifty

Commodity prices remain low but rising Trend Index troughs on the DJ-UBS Commodity Index suggest that a bottom is forming.

DJ-UBS Commodity Index

Crude spiked up with rising US-Iran tensions but is expected to re-test support at 50 as supply threats fade.

Nymex Light Crude

Fedex recovered above primary support at 150, but the outlook for economic activity remains bearish.

Fedex

Falling US wages growth warns of slowing job creation.

Average Hourly Wages

Declining employment growth highlights similar weakness.

Employment Growth

Initial jobless claims, while not alarming, are now starting to rise.

Initial Claims

Growth in weekly hours worked has slowed, with real GDP expected to follow.

Real GDP and Weekly Hours Worked

While GDP growth is slowing, corporate profits (before tax) are also declining as a percentage of GDP.

Corporate profits Before Tax/GDP

Market Capitalization of equities has spiked to a ratio of 20 times Corporate Profits (before tax), an extreme only previously seen in the Dotcom bubble.

Market Cap/Corporate Profits before Tax

The market can remain irrational for longer than you or I can stay solvent, but this is a clear warning to investors to stay on the defensive.

We maintain our view that stocks are over-valued and will remain under-weight equities (over-weight cash) until normal earnings multiples are restored.

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The eye of the storm

“On Wednesday, the US Department of Commerce added Huawei – and 70 other companies – to its “Entity List.” …. Huawei cannot buy parts or components from US companies without the explicit approval of the US government.” (Trivium China)

We are sliding towards a fully-fledged trade war. Following straight after the imposition of tariffs by both the US and China, US action against Huawei will be taken as a direct attack on Chinese industry.

The CCP is already stoking nationalist sentiment to bolster public support.

“Last night and today, CCTV replaced regularly scheduled programming with two films about the Chinese army fighting the US in the Korean War.” (Trivium China)

Market response is so far muted. On the daily chart, the S&P 500 correction is modest. Expect another test of 2800. Breach would offer a target of 2600.

S&P 500

The Nasdaq 100 retreated below its new support level at 7700 but Money Flow remains strong.

Nasdaq 100

China’s Shanghai Composite found support at 2900.

Shanghai Composite Index

Japan’s Nikkei 225 is ranging between 20000 and 24000. Expect another test of primary support at 20000.

Nikkei 225

India’s Nifty is testing support at 11000. Respect would confirm the primary up-trend.

Nifty Index

In Europe, The DJ Euro Stoxx 600 is undergoing a correction that is likely to test support at 365. But Trend Index above zero continues to signal buying support.

DJ Euro Stoxx 600

The Footsie found support at 7200, with Trend Index again signaling buying support.

FTSE 100

10-Year Treasury yields are testing support at 2.40%. One of the few clear signs that markets are growing increasingly risk averse, as demand for bonds drives down yields.

10-Year Treasury Yields

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Risk averse rather than fearful

The S&P 500 is again testing the band of primary support between 2600 and 2550. Follow-through below this level would warn of a bear market. Volatility (21-day) is in the amber zone between 1% and 2%. A real test of market resilience will be the next sizable rally or advance. If declining volatility remains above 1%, that would warn of an imminent market sell-off.

S&P 500

The Nasdaq 100 is in a similar position, with declining Money Flow warning of medium-term selling pressure.

Nasdaq 100

Of the big five tech stocks, only Microsoft looks strong. Facebook is in a primary down-trend but Apple and Google are testing primary support. Apple’s exposure to China is obviously a concern. China accounts for roughly 25% of Apple’s global market but Apple estimates that it is responsible for 4.8 million jobs in China which gives them some negotiating clout.

Big Five tech stocks

If two more of the big five broke primary support, that would in my opinion signal a bear market.

Asia

The Shanghai Composite Index is consolidating in a narrow band below 2700. Downward breakout is likely and would signal another decline, with a target of 2300.

Shanghai Composite Index

India’s Nifty is testing resistance at 11,000. Respect would be bearish, warning of another test of primary support at 10,000. Declining peaks on the Trend Index warn of long-term selling pressure.

NSX Nifty

Europe

Dow Jones Euro Stoxx is in a primary down-trend. Follow-through below 350 confirms a bear market, warn of a decline to test 305/310.

DJ Euro Stoxx 600

The Footsie also broke primary support at 6900. Retracement is testing the new resistance level but respect of 7000 is likely and would confirm a bear market, with a target between 5600 and 6000.

FTSE 100

There is a high level of uncertainty in global markets at present. Europe has Brexit and Italy. The US has investigations into Donald Trump’s election campaign. China has the threat of a trade war with the US. But my sense is that the market has become risk averse rather than fearful. There is no sign of panic selling as yet. But investors are clearly on the defensive and prepared to sell off vulnerable stocks.

Adopt the pace of nature: her secret is patience.

~ Ralph Waldo Emerson

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Nasdaq warns of broad market correction

Tech stocks fell sharply, with the Nasdaq 100 closing below support at 7400, warning of a correction. Twiggs Money Flow (21-day) cross below zero indicates medium-term selling pressure. Follow-through of the index below 7300 would signal a correction to test 7000.

Nasdaq 100

The S&P 500 has so far respected support at 2870. Breach would confirm  a broad market correction and test the rising LT trendline at 2800.

S&P 500

Asia

In China, the Shanghai Composite Index is headed for another test of primary support at 2650. Trend Index peaks at/below zero indicate long-term selling pressure. Breach of 2650 would offer a long-term target of 2000, the 2014 low.

Shanghai Composite Index

India’s Nifty is undergoing a strong correction. Breach of support at 10,000 would warn of a primary down-trend.

Nifty Index

Europe

Dow Jones Euro Stoxx 50 is again testing primary support at 3300. A Trend Index peak at zero warns of mounting selling pressure. Breach of 3300 would warn of a primary decline, with a target of 3000.

DJ Euro Stoxx 600 Index

The Footsie is also testing primary support, at 7250, but a recovering Trend Index indicates buying pressure.

FTSE 100 Index

Rising US interest rates are already hurting developing economies like India and China, and a looming US-China trade war would threaten a global contraction.

Only when the tide goes out do you discover who’s been swimming naked.

~ Warren Buffett

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India & Singapore

India’s Sensex found short-term support at 16000, but 21-day Twiggs Money Flow below zero indicates continued selling pressure. Breach of 16000 would test the band of primary support at 15000.

BSE Sensex Index

The Nifty similarly found short-term support at 4800, but 63-day Twiggs Momentum below zero warns of a continuing primary down-trend. Failure of the 4800 level would test primary support at 4500.

NSE Nifty Index

Dow Jones Singapore Index found short-term support at 222 — the 61.8% Fibonacci level. Expect a rally to test 230 but respect would warn of a decline to test primary support at 203. 63-Day Twiggs Momentum crossed below zero, warning of a primary down-trend.

Dow Jones Singapore Index

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India & Singapore

India’s Sensex broke the 61.8% Fibonacci level at 16500, indicating a test of primary support at 15000. Reversal of 13-week Twiggs Money Flow below zero warns of strong selling pressure. Failure of support at 15000 would offer a target of 12000*.

BSE Sensex Index

* Target calculation: 15 – ( 18 – 15 ) = 12

The Nifty is similarly headed for a test of primary support at 4500. Failure would confirm the primary down-trend indicated by 63-day Twiggs Momentum reversal below zero.

NSE Nifty Index

Singapore’s Straits Times Index broke medium-term support at 2900. The primary trend is still up but expect a test of support at the rising trendline (2800). Failure of support and reversal of 63-day Twiggs Momentum below zero would both warn of a primary down-trend.

Singapore Straits Times Index

Dow Jones Singapore Index is similarly testing medium-term support at 230. Failure would indicate a test of the primary level at 210. Declining 13-week Twiggs Money Flow warns of medium-term selling pressure; reversal below zero would have long-term implications.

Dow Jones Singapore Index

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India & Singapore

India’s Sensex is testing support at 16500 (61.8% Fibonacci retracement). Recovery above 17500 would signal the start of a fresh primary advance. Reversal of 13-week Twiggs Money Flow below zero, however, warns of strong selling pressure. Failure of support at 16500 would test the band of primary support above 15000.

BSE Sensex Index

The Nifty is similarly testing support at 5000. Reversal of 63-day Twiggs Momentum below zero warns that the primary down-trend will continue, but recovery above the descending trendline at 5200 would indicate that the correction is over.

NSE Nifty Index

Singapore’s Straits Times Index fell sharply to test medium-term support at 2900. Failure would indicate a correction to the rising trendline. Respect of support, especially if strengthened by a 63-day Twiggs Momentum trough above zero, would signal the start of a fresh primary advance.

Singapore Straits Times Index

* Target calculation: 2900 + ( 2900 – 2600 ) = 3200

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India & Singapore find support

India’s Sensex index found support at 17000. Recovery above 17500 would indicate respect of the support level and another attempt at 18500.  63-Day Twiggs Momentum oscillating above zero already indicates a primary up-trend but only recovery above the November high of 18000 would confirm. Target for an advance would be 20000*.

BSE Sensex Index

* Target calculation: 18.5 + ( 18.5 – 17.0 ) = 20.0

The Nifty index is similarly testing support at 5200, while recovery above 5400 would confirm the primary up-trend. Target for an advance would be 6000*.

NSE Nifty Index

* Target calculation: 5600 + (5600 – 5200) = 6000

Singapore’s Straits Times Index continues in a narrow consolidation above the double-bottom neckline at 2900, suggesting continuation of the primary up-trend. Target for the expected breakout would be 3200*.

Singapore Straits Times Index

* Target calculation: 2900 + ( 2900 – 2600 ) = 3200

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Australia and Asia

Australia’s ASX 200 index continues to range between 3850 and 4350. Declining 21-day Twiggs Money Flow reflects medium-term selling pressure, but the long-term rise reflects buying support. Failure of support at 4000 would suggest another test of 3850, but only breakout from the range will offer a clear long-term signal.

ASX 200 Index


China’s Shanghai Composite index respected resistance at 2300, suggesting a decline to 2000*. Deep negative values on 63-day Twiggs Momentum are evidence of a strong primary down-trend.

Shanghai Composite Index

* Target calculation: 2150 – ( 2300 – 2150 ) = 2000

India’s Nifty Index is headed for a test of the upper border of its downward trend channel at 5200. 63-Day Twiggs Momentum holding below zero continues to indicate a strong primary down-trend.

S&P/NSE Nifty Index

* Target calculation: 5600 + ( 6600 – 5600 ) = 5100

Japan’s Nikkei 225 Index fell sharply Monday to test short-term support at 8360. 13-Week Twiggs Money Flow below zero indicates selling pressure. Breakout below 8200 would warn of another primary decline, with a target of 7400*.

Nikkei 225 Index

* Target calculation: 8200 – ( 9000 – 8200 ) = 7400

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India NIFTY and Singapore Straits Times Index

India’s NIFTY index continues its primary down-trend, breaking support at 4700 on the weekly chart. 63-Day Twiggs Momentum holding below zero confirms the down-trend. Target for the primary decline is 4000*.

NSE NIFTY Index

* Target calculation: 4700 – (5400 – 4700 ) = 4000

The Straits Times Index also shows 63-day Twiggs Momentum declining below zero, suggesting a primary down-trend. Respect of the descending trendline on the weekly chart strengthens the signal.  Breakout below primary support at 2500 would offer a target of 2100*.

Straits Times Index

* Target calculation: 2500 – ( 2900 – 2500 ) = 2100

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