ColinTwiggs, Author at the patient investor

January 19, 2014

Weakening yen boosts Japanese stocks

The US Dollar retreated to test new support at ¥102 to ¥103. Respect is likely and would signal an advance to ¥110*. A rising Dollar/Yen exchange rate will assist Japanese stocks.

Nikkei 225

* Target calculation: 106 + ( 106 – 102 ) = 110

The Nikkei 225 retreated below its new support level at 16000, but respect of the rising trendline would confirm a healthy up-trend. 13-week Twiggs Money Flow holding above zero suggests healthy buying pressure. Reversal below 15000 is unlikely but would indicate a strong correction.

Nikkei 225

* Target calculation: 16000 + ( 16000 – 15000 ) = 17000

January 19, 2014

Footsie breaks out

The FTSE 100 broke resistance at 6800, indicating a test of long-term resistance at 6950/7000. Completion of another 13-week Twiggs Money Flow trough above zero would signal long-term buying pressure. Retracement to test the new support level at 6800 is likely. Respect would strengthen the bull signal. Reversal below 6700 is unlikely, but would warn of a correction.

FTSE 100

* Target calculation: 6700 + ( 6700 – 6400 ) = 7000

January 19, 2014

DAX heading for 10000

Germany’s DAX broke resistance at 9600, heading for the psychological barrier of 10000. Reversal below the secondary trendline is unlikely, but would warn of a correction. Completion of another 13-week Twiggs Money Flow high above zero would signal strong long-term buying pressure.

DAX

* Target calculation: 9400 + ( 9400 – 9000 ) = 9800

Low DAX Volatility suggests a bull market.

DAX

January 19, 2014

European markets bullish despite weak euro

The Euro penetrated its rising trendline, warning of a correction. Breach of primary support at $1.33 is unlikely, but would signal a reversal.

Euro

* Target calculation: 1.38 + ( 1.38 – 1.33 ) = 1.43

Dow Jones Euro Stoxx 50 appears undeterred, following through above resistance at 3100 to signal an advance to 3350*. 13-week Twiggs Momentum oscillating above zero suggests a healthy up-trend. Breach of the secondary trendline is unlikely, but would warn of a correction.

Dow Jones Euro Stoxx 50

* Target calculation: 3100 + ( 3100 – 2850 ) = 3350

January 19, 2014

Canada: Bull market

Canada’s TSX 60 is heading for a test of resistance at the 2011 high of 820* after successfully testing its new support level at 780. Rising 13-week Twiggs Money Flow suggests strong buying pressure. Breach of the rising trendline is unlikely, but would warn of a correction.

TSX 60

* Target calculation: 780 + ( 780 – 740 ) = 820

Declining TSX 60 VIX, below 20, flags a bull market.

TSX 60 VIX

January 19, 2014

Bull market but correction overdue

Both the S&P 500 and Nasdaq 100 have exceeded their targets. Absence of a significant correction for several months indicates extreme bullishness, but makes the advance more precarious as buyer/seller imbalances grow.

The S&P 500 is testing medium-term resistance at 1850. Breakout would confirm a target of 1900*. Respect is less likely, but would warn of a correction if followed by reversal below 1810. Rising 21-day Twiggs Money Flow suggests (short-term) buying pressure, but reversal below the rising trendline would warn of medium-term bearishness.

S&P 500

* Target calculation: 1850 + ( 1850 – 1800 ) = 1900

Declining CBOE Volatility Index (VIX) readings for the S&P 500 continue to indicate a bull market.

VIX Index

The Nasdaq 100 is similarly testing resistance at 3600. Twiggs Money Flow troughs high above the zero line indicate strong buying pressure. Absence of a significant correction makes the advance more precarious, but the imbalance can endure for several months.

Nasdaq 100

* Target calculation: 3600 + ( 3600 – 3500 ) = 3700

January 16, 2014

Desperately Seeking Demand | Patrick Chovanec

I have followed Patrick Chovanec on Twitter for several years and really enjoy his insights. His latest Quarterly Report for Silvercrest Asset Management is no exception.

For the past several decades, the U.S. has served as the world’s consumer of last resort. That allowed developing countries – namely Japan, and later China – to turbo-charge growth by producing more than they consumed, confident in the knowledge that Americans would provide the demand by consuming more than they produced. (A parallel pattern emerged within the EU, with Germany playing net producer and the rest of Europe net consumer). The surplus countries kept the game going by taking their export proceeds and lending them back to their customers so the deficit countries could keep buying. This is the global growth model we all became comfortable with……

Listen to most market commentators: while they may say that the financial crisis showed us the error of our ways, their every word belies a tacit wish to return to the world we knew before 2008. “When,” they ask, “will the U.S. consumer start spending again? When will Chinese output get back on track?” Europe, they dare to hope, will turn out okay as long as more countries learn to imitate Germany. Maybe a cheaper Yen will give a renewed boost to Japan’s exports.

These hopes are misplaced. We’re not going back to the past. The old growth model is broken. Here’s what will replace it…..

Read Patrick’s outlook at SILVERCREST ASSET MANAGEMENT GROUP LLC 1Q 2014: Desperately Seeking Demand

Hat tip to Leith van Onselen at Macrobusiness.com.au

January 15, 2014

ASX selling pressure

The ASX 200 found short-term support at 5200. Recovery above 5400 would signal another advance, but failure is more likely and would indicate another test of primary support at 5000. Declining 13-week Twiggs Money Flow warns of medium-term selling pressure.

ASX 200

* Target calculation: 5450 + ( 5450 – 5050 ) = 5850

The ASX 200 VIX below 20, however, continues to reflect low market risk.

ASX 200

January 15, 2014

India ascending

India’s Sensex displays a bullish ascending triangle above long-term support at 20200. Breakout above resistance at 21200 would signal an advance to 22000*. Declining 13-week Twiggs Money Flow indicates medium-term selling pressure typical of a consolidation. Completion of a trough above zero would indicate long-term selling pressure.

Sensex

* Target calculation: 21000 + ( 21000 – 20000 ) = 22000

January 15, 2014

China weakens

China’s Shanghai Composite is headed for 1950 after breaking support at 2080 to confirm a primary down-trend. Twiggs Money Flow below zero indicates selling pressure.

Shanghai Composite Index

* Target calculation: 2100 – ( 2250 – 2100 ) = 1950