Japan’s Nikkei 225 Index broke its 2010 high of 11500, indicating continuation of the primary advance to 12000*. Bearish divergence on 13-week Twiggs Money Flow warns of selling pressure. Expect a correction to test the new support levels at 11000, possibly 10000.
* Target calculation: 10000 + ( 10000 – 8000 ) = 12000
India’s Sensex broke support at 19000, warning of a correction to the primary trendline at 18000. The sharp fall on 13-week Twiggs Money Flow, following a bearish divergence, confirms strong selling pressure.
* Target calculation: 19 + ( 19 – 18 ) = 20
Singapore’s Straits Times Index retreated from resistance at 3300. Expect support at 3200; failure would warn of a correction. Another trough above zero on 13-week Twiggs Momentum would suggest that the primary up-trend is intact. Breakout above 3300 would offer a target of the 2007 high at 3900*.
* Target calculation: 3300 + ( 3300 – 2700 ) = 3900
Hong Kong’s Hang Seng Index correction is headed for a test of secondary support at 22000 but is still some way above the primary trendline — and support — at 21000. A 13-week Twiggs Momentum trough above zero would suggest a healthy primary up-trend.
* Target calculation: 22 + ( 22 – 18 ) = 26
China’s Shanghai Composite is also on the retreat, testing secondary support at 2250. Failure would indicate a down-swing to primary support at 1950/2000. Reversal of 13-week Twiggs Momentum trough below zero would warn of another primary decline, with a long-term target of 1500*.
* Target calculation: 2000 – ( 2500 – 2000 ) = 1500
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.