The PBOC is dousing the flames with gasoline, adding further credit to prevent a slow-down. The longer this goes on, the more precarious their situation will become.
China June credit shatters forecast – 1.9 trillion CNY Vs 1.4 trillion CNY in May. Growth now Beijing's top priority. pic.twitter.com/ue2WXL65AH
— Tom Orlik (@TomOrlik) July 15, 2014
Shanghai Composite Index lifted above 2060/2065, indicating continuation of the rally to 2090. Rising 21-day Twiggs Money Flow troughs above zero signal strong medium-term buying pressure. Breakout above 2090/2100 would suggest another test of 2150. Failure of primary support at 1990/2000 is unlikely, but would warn of a decline to 1850*.
* Target calculation: 2000 – ( 2150 – 2000 ) = 1850
India’s Sensex retraced to test support at 25000 after reaching its target of 26000. Respect would signal continuation of the advance, but 21-day Twiggs Money Flow below zero warns of selling pressure. Breach of support would warn of a correction to the primary trendline, around 23000.
* Target calculation: 21000 + ( 21000 – 16000 ) = 26000
The weekly chart of Japan’s Nikkei 225 (21-day Twiggs Money Flow) shows the index consolidating below 15500. 13-Week Twiggs Money Flow holding above zero signals long-term buying pressure. Breakout above 15500 would test the December 2013 high at 16300. Reversal below 15000 is less likely, but would warn of another test of primary support at 14000.
* Target calculation: 15000 + ( 15000 – 14000 ) = 16000