Japan’s Nikkei 225 Index respected support at 12500 and its long-term rising trendline, but another test is likely in the week ahead. Follow-through above 13500 would indicate the correction is over, suggesting a re-test of resistance at 16000. Breach of 12500, however, is more likely, with bearish divergence on 13-week Twiggs Money Flow warning of a reversal.
Shanghai Composite Index is falling sharply. So far the down-trend has been gradual, with the PBOC looking to manufacture a soft landing. But 13-week Twiggs Money Flow crossing below zero warns of rising selling pressure. Breach of support at 1950 would offer a target of 1600*.
* Target calculation: 2000 – ( 2400 – 2000 ) = 1600
India’s Sensex breached its rising trendline, warning that the primary up-trend is weakening. Failure of support at 18000 would signal a primary down-trend. Declining 13-week Twiggs Money Flow indicates trend reversal is likely. Recovery above 19000 is unlikely, but would suggest a fresh primary advance.
Apart from Japan, the outlook for Asia is bearish.
The ASX 200 is headed for a test of support at 4400, bearish divergence on 13-week Twiggs Money Flow having warned of a reversal. Failure of support at 4400 would re-test the 2011 lows, while respect would be bullish — suggesting another attempt at 5000.
maybe no one knows what’s going on…..
On 31 May 2012 you said;
The monthly chart of the ASX 200 displays a downward breakout from the ascending triangle, forming since September 2011, offering a target of the 2008 low at 3200*. Reversal of 63-Day Twiggs Momentum below zero also suggests continuation of the primary down-trend.
On 12 June 2012 you said;
The ASX 200 is consolidating above primary support — between 4000 and 4150 — while the sharp fall of 13-week Twiggs Money Flow below zero warns of strong selling pressure. Failure of primary support would indicate a decline to 3600*. Recovery above 4150 is unlikely but would suggest another test of 4450.
On 26 June 2012 you said;
A monthly chart of the ASX 200 shows how the index tends to peak ahead of the CRB Commodities Index and Australian Dollar but then fall in step with them from there on. The ASX 200 was first to reverse direction in 2011 but commodities now lead the way. Expect Australian stocks — and the Aussie Dollar — to follow commodities lower. Breach of primary support at 3850 would offer a target of 3200*.
however, June 2012 was the low of the market before a significant rally…
Big please , for the sake of rationality , stop even attempting to predict the future. Just exit when the trend changes down – implying – correctly – that shorter-term trades are by definition of the market purely randomly associated with success. It is foolhardy/irresponsible/misreprrsentative to implicitly convey otherwise ; ask any gambler.
Thank you PAS1968.
The ASX 200 failed to break 4000 in June and recovered above 4150 before the end of July — going on to break out above 4450/4500 on the second attempt in December 2012.
Twiggs , “Thank you pas1968” ???.
PAS1968 reflects your incorrect prediction at the bottom of the short-term decline in June 2012 of : “Expect Australian stocks and the Aussie dollar to follow commodities lower”.
Hence pas1968 correct bemusement in his last sentence: “however, june was the low of the market before a significant rally”
Theoretical strategy utterances can differ immensely from actual implementation in relation to predictions and risk probability assessments. Thanks.
I can’t speak for Colin, but I’ve found his analysis top notch. I’m pretty sure from memory Colin actually stated the correction to be over in around August 2012 and the market has done quite well since.
However, when looking at charts while there are trends there are also things that happen in the macro environment that cause trends to change. Around the middle of last year the ECB made the comment they would do whatever it takes which largely gave more confidence about Europe. Also rumours would have been circling about QE3 however, the actual program wasn’t announced until later.
Interestingly, my indicators that I use on my charts actually show the DUBS commodity index and asx200 to be a sell in June and then becoming a buy in July and August respectively. However the DUBS became a sell for me in November 2012 and has kept that way and the ASX200 was a sell in November 2012 but a buy in early December 2012 and a sell around 20 May 2013. I’m still learning though.
I am with Graham !
From My Strategy: “…The market can go up or down at any time — it is only the probability (of each move) that varies.”
I do not try to predict. Merely assess the probabilities.
http://www.incrediblecharts.com/technical/trading_strategy.php
XAO now back above 200ma and 20ema.
Also back above the trendline from May 2012.
Moneyflow & Momentum looking similar to this time last year.
Bear bounce or is the low in?
July & August should be telling.
If 3052 to 5069 was A,
& 5069 to 3829 was B,
if A=C, then C = 3829 + 2017 = 5846
Does anyone see this as a possibility?
If first move 3000 to 5000, a second equal leg would run from 4000 to 6000. Gives the same result as a target calculation of 5000 + (5000 – 4000) = 6000. Lovely symmetry.
The index will inevitably get there, but the million-dollar question is WHEN? What probability would you attach to the ASX200 reaching 6000 by the end of 2013?
What probability would you attach to the ASX200 reaching 6000 by the end of 2013?
zero I think!
I would attach a low probability for the ASX200 reaching 6000 in the next 6 months, but 12 months would be a lot higher — especially if the index recovers above 5000 in the next quarter.
Do me a favor Graham. Read My Strategy before you bang on about predictions. It goes against my entire philosophy of the market. At times probabilities of a move may be high, but they are never certain:
I did expect Aussie stocks and the dollar to follow commodities lower in mid 2012. The primary trend was down, after the ASX 200 had earlier broken support at 4200, and falling commodity prices are a strong bearish influence on Australian stocks (they still are); so the probability was high. But other forces counteracted this and the index did not break primary support at 3850 (or 4000). There was no confirmation and when the index recovered above 4150 all bets were off — the probabilities changed significantly.
Twiggs, I read your strategy prior to my posts. “Expect” is a prediction – hence the last sentence of my 28 June post. If you do not understand what I am referring to please via email for your sake.Thanks
That was not my intention — as would have been clear from My Strategy and from the second sentence:
Definition of “Expect” from the Online Dictionary: Regard (something) as likely to happen.