Reuters reports that support for Mario Monti’s centrist coalition is fading.
Opinion polls give the centre-left coalition led by the veteran former industry minister Pier Luigi Bersani a narrow lead but the race has been thrown open by the prospect of a huge protest vote against austerity policies imposed by Monti and rage at a wave of corporate and political scandals.
Without a strong government, resolution of Italy’s current crisis is unlikely. The Italian MIB Index retreated below new support at 17000 and last week penetrated the rising trendline, warning of a primary reversal. Breach of support at 16000 would strengthen the signal — as would reversal of 63-day Twiggs Momentum below zero. Confirmation, however would only come from a lower peak followed by failure of primary support at 15000.
The FTSE 100 continues its advance toward long-term resistance at 6750. Failed down-swings within the recent reverse pennant (broadening wedge) suggest continuation of the advance. Upward breakout would offer a target of 6750, strengthened if 21-day Twiggs Money Flow recovers above 20% to form another trough above zero.
* Target calculation: 6000 + ( 6000 – 5250 ) = 6750
Germany’s DAX continues to test support at 7500. Bearish divergence on 13-week Twiggs Money Flow warns of selling pressure. Failure of 7500 would indicate a correction to test the rising trendline — and support at 7000.
* Target calculation: 7500 + ( 7500 – 7000 ) = 8000