China’s official manufacturing PMI fell to a nine-month low in August, below 50 at 49.2; steel prices are at their lowest level since 2009 and rail cargo volumes have experienced their sharpest fall since 2008. In the circumstances, stocks have held up surprisingly well, with a gradual rather than vertical descent. The Shenzhen Composite index is headed for a test of support at 800 and declining 63-day Twiggs Momentum below zero indicates a primary down-trend, but the index is still a long way above its 2008 low of 450.
* Target calculation: 800 – ( 1000 – 800 ) = 600
The Shanghai Composite is a lot closer to its 2008 low of 1660. 13-Week Twiggs Money Flow below zero indicates selling pressure and follow-through below 2100 offers a target of 1800*.
* Target calculation: 2150 – ( 2500 – 2150 ) = 1800
Hong Kong’s Hang Seng is drifting sideways, approaching the apex of its large triangle, but failure of 63-day Twiggs Momentum to cross above zero warns of downside risk. Breach of primary support at 18000 would signal a decline to 16000*.
* Target calculation: 18 – ( 20 – 18 ) = 16
India’s Sensex retreated below its new support level at 17500, warning of a false break. Penetration of the rising trendline would suggest a bull trap, while respect would test 18500*. Reversal of 13-week Twiggs Money Flow below zero would indicate selling pressure.
* Target calculation: 17.5 + ( 17.5 – 16.5 ) = 18.5
The NSE Nifty Index also retreated below its new support level and 63-day Twiggs Momentum is above zero. Respect of the rising trendline would indicate a test of 5600, while penetration would warn of a bull trap.
Singapore’s Straits Times Index is retracing to test support at 3000. The up-trend appears weak and failure of support would signal a test of the lower trend channel. It is unclear whether 63-day Twiggs Momentum will oscillate around zero, indicating a ranging market, or above zero, indicating a healthy up-trend. The next trough should clarify this: respect of zero indicating a primary up-trend.
Japan’s Nikkei 225 index retreated below 9000, indicating a false breakout. Matching peaks below zero on 63-day Twiggs Momentum and 13-Week Twiggs Money Flow warn of a strong down-trend. Failure of primary support at 8200 would confirm.
South Korea’s Seoul Composite index retraced to test support after breakout above 1900. Declining peaks on 13-Week Twiggs Money Flow depict rising selling pressure. Failure of support at 1900 would suggest another test of primary support at 1750.
China has been visited many times on my Incredible Charts. The steady downward trend has been so firm and it is hard to see an end for quite some time. Brian M
U r so wrong !! you are such a pessimistic creature!!!
We will be happy to be proved wrong. Please provide evidence to support your assertion.
Mr. Twiggs
I have noted that you use 100% weekly charts in you trading diary. However there is constant variations of time between charts, i.e 13 and 63 weeks, in your money flow. Why? Changing the time factors will obviously change what the indicator is broadcasting. On the whole I find these variantions confusing without an explaination-can we get one?
P.M.Wicher
63 days and 13 weeks are both roughly equivalent to 1 quarter. I use 63-days for Momentum but using 63-days for Money Flow, instead of 13-weeks, would produce a different result because it compares the close to the daily/weekly range.