- DAX and FTSE break support, signaling a down-trend
- China is bullish, but rest of Asia is bearish
- US stocks are correcting, but continue to indicate a bull market
- ASX testing primary support
The quarter-end sell-off has been exacerbated by weakness in Europe.
Germany’s DAX broke primary support at 8900/9000, signaling a (primary) down-trend. Reversal of 13-week Twiggs Money Flow below zero strengthens the bear signal. Target for the decline is 8000*. Recovery above 9000 is unlikely, but would warn of a bear trap.
* Target calculation: 9000 – ( 10000 – 9000 ) = 8000
The Footsie displays similar weakness, breaching primary support at 6400/6500. Target for the decline is 6000*. Recovery above 6500 is unlikely, but would warn of a bear trap.
* Target calculation: 6400 – ( 6800 – 6400 ) = 6000
China’s Shanghai Composite Index is holding above its new support at 2340/2350, but expect retracement to at least 2250 in response to US/European weakness.
Japan’s Nikkei 225 Index broke medium-term support at 15500 and the rising trendline to warn of a correction. Reversal of 13-week Twiggs Money Flow below zero would strengthen the signal. Breach of 14800 would indicate a test of primary support at 14000.
The S&P 500 is testing primary support at 1900. Declining 13-week Twiggs Money Flow warns of selling pressure. Reversal below zero would indicate a down-trend, offering a target of 1800*.
* Target calculation: 1900 – ( 2000 – 1900 ) = 1800
CBOE Volatility Index (VIX) rose to above 20, indicating moderate risk, but nowhere near the levels typical of a bear market.
The ASX 200 broke support at 5250/5300, suggesting a test of long-term support at 5000. Declining 13-week Twiggs Money Flow below zero indicates strong selling pressure. Recovery above 5350 is unlikely, but would suggest that the correction is over.
* Target calculation: 5350 – ( 5700 – 5350 ) = 5000
the vix made a new high than the one early feb. looks like more down for stocks in October.
I feel tough times for October,as expected. Lets hope it doesn’t last too long. Volatility has been warned keep as close an eye on it as you can, nobody really know’s We have seen this before. – Bugger!
Just my 2c worth. This is a comment from Thomas Bulkowski. I enjoy reading his stuff and I believe him to be in a similar mould with Colin.
” I show a picture of the Dow industrials on the 5-minute scale.
The slide of the last week or two has been a surprise or even a shock to me. I still expect that the indices will rebound by November 1, but it’s possible they could continue lower. Clearly the markets are skittish over what I consider trivial things. The world economy is not going into recession. The US won’t be overrun with Ebola cases, and so on. The market is using those excuses to increase volatility and scare the little guy out of his positions. It’s becoming a buying opportunity for solid companies knocked down.
So let’s talk about the Dow. The picture shows a descending triangle outlined in red at A. A measured move down chart pattern appears at BCDE.
That measured move pattern is key, I believe, to tomorrow’s price movement. I think the index will recover to the corrective phase (CD). That means a 200 point up move. It might not hold that throughout the day, but that is the minimum move I expect.”
… from Tom’s “Daily Blog”
The take away for me is the last sentence of para 2 – “… scare the little guy out of his positions”. I believe we see this repeatedly – just look at msm headlines and the preponderance of doom merchants and prophets and “insurance” product advertising.
Sorry I am not clever enough to capture his chart for inclusion here but Tom’s website is :
http://thepatternsite.com
Go to The Pattern Site: Daily Blog for the chart.