Summary:
- A good week for US markets.
- China continues to threaten further down-side.
- The ASX 200, pulled in opposite directions, is range bound for the present.
- Momentum strategies require persistence.
The S&P 500 broke through 1950 and is expected to test the next resistance level at 2000*. Rising 21-day Twiggs Money Flow signals medium-term buying pressure. Reversal below 1925 is unlikely at present but would warn of a correction.
* Target calculation: 1900 + ( 1900 – 1800 ) = 2000
The CBOE Volatility Index (VIX) continues its downward path, indicating low risk typical of a bull market.
The Shanghai Composite Index rebounded Friday after a tough week and continues to test primary support at 1990/2000. Breach of support would signal a decline to 1850*. 21-Day Twiggs Money Flow oscillating above zero indicates buying support; a fall below zero would suggest selling pressure. The primary trend is expected to continue its downward path, but this is a managed descent and an abrupt fall seems unlikely.
* Target calculation: 2000 – ( 2150 – 2000 ) = 1850
After a strong surge on Thursday the ASX 200 retreated below 5450 on Friday, suggesting another test of support at 5400. Reversal of 21-day Twiggs Money Flow below zero indicates medium-term selling pressure. Breach of support is likely and would indicate a correction to 5300. Recovery above 5500 is unlikely at present, but the long-term trend remains upward.
* Target calculation: 5400 + ( 5400 – 5000 ) = 5800