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
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.