Asia: India recovering but China & Japan bearish

China’s Shanghai Composite Index is testing its upper trend channel at 2160. Follow-through would indicate a rally to 2250, while reversal would indicate a decline to 2040*. 63-Day Twiggs Momentum continues to signal a strong primary down-trend.

* Target calculation: 2100 – ( 2160 – 2100 ) = 2040

Hong Kong’s Hang Seng Index, however, broke through resistance at 20000 (weekly chart), indicating an advance to 22000*.  Recovery of 63-Day Twiggs Momentum above zero would confirm — further strengthened if the descending trendline is penetrated.

* Target calculation: 20 + ( 20 – 18 ) = 22

Japan’s Nikkei 225 index continues to warn of strong selling pressure — with a peak below zero on 13-week Twiggs Money Flow. Failure of support at 8200 would signal another test of the 2008/2009 lows at 7000*. Breakout above 9000 is unlikely, but would signal an advance to 10000.

* Target calculation: 8000 – ( 9000 – 8000 ) = 7000

India’s Sensex is testing resistance at 17500. Breakout is likely and would signal an advance to 18500. Completion of a 13-week Twiggs Money Flow trough above zero would indicate strong buying pressure.

* Target calculation: 17.5 + ( 17.5 – 16.5 ) = 18.5

NSE Nifty shows a similar picture. 63-Day Twiggs Momentum rising to a new 2012 high would indicate a primary up-trend. Target for the breakout would be 5650*.

* Target calculation: 5350 + ( 5350 – 5050 ) = 5650

Singapore’s Straits Times Index broke through resistance at 3040. Recovery of 63-day Twiggs Momentum above zero suggests that the primary up-trend is intact. The calculated target is 3300* but the trend channel suggests resistance around 3200.

* Target calculation: 3000 + ( 3000 – 2700 ) = 3300

Colin Twiggs

Colin Twiggs is a former investment banker with almost 40 years of experience in financial markets. He founded PVT Capital (AFSL number 546090), which provides income and growth strategies to wholesale clients.

Colin also co-founded Incredible Charts and writes the popular Patient Investor newsletter.

Using a top-down approach, Colin identifies macro trends in the global economy and then combines fundamental and technical analysis to evaluate opportunities in sectors that stand to benefit.

Focusing on interest rates and financial market liquidity as primary drivers of the economic cycle, he warned of the 2008/2009 and 2020 bear markets well ahead of actual events.