Canada’s TSX 60 found support at 750. Recovery above 780 would signal an advance to 810*. Another 13-week Twiggs Money Flow trough above zero would confirm strong buying pressure. Reversal below 740 remains unlikely, but would warn of a test of primary support at 675/680.
* Target calculation: 780 + ( 780 – 750 ) = 810
Low TSX 60 VIX readings suggest a bull market.
The S&P 500 found support at 1775, but declining 21-day Twiggs Money Flow warns the correction is not yet over. Breach of 1775 would indicate a test of the ascending trendline and medium-term support at 1730. Recovery above 1810 is less likely, but would suggest an accelerating up-trend — with sharper gains and shorter retracements.
* Target calculation: 1725 + ( 1725 – 1650 ) = 1800
CBOE Volatility Index (VIX) readings below 20 are indicative of a bull market.
Spot gold’s recovery above $1250/ounce suggests another bear rally. The primary trend remains down and breach of support at $1200/ounce would signal a decline to $1000*. The 63-day Twiggs Momentum peak below zero also warns of a down-trend, but a weaker dollar would boost gold prices.
* Target calculation: 1200 – ( 1400 – 1200 ) = 1000
The Dollar Index broke support at 80.50, signaling another test of primary support at 79.00. Twiggs Momentum declining (below zero) warns of a primary down-trend. Breach of primary support would confirm. Recovery above 80.50 is less likely, but would suggest a primary advance — confirmed if resistance at 81.50 is broken.
* Target calculation: 81.5 + ( 81.5 – 79 ) = 84
The S&P 500 is again testing support at 1780; breakout would warn of a correction. Initial support is at 1710, with primary support and the long-term trendline at 1630. Bearish divergence on 13-week Twiggs Money Flow indicates medium-term selling pressure. Recovery above 1810 is now unlikely.
* Target calculation: 1725 + ( 1725 – 1650 ) = 1800
The ASX 200 is already undergoing a correction after breaking support at 5300. Failure of support between 4900 and 5000 would warn of a test of primary support at 4650. Bearish divergence on 13-week Twiggs Money Flow indicates far more severe selling pressure. A fall below zero would suggest reversal to a primary down-trend, but only breach of 4650 would confirm.
From Houses & Holes
at 9:01am on December 10, 2013:
While the nation continues to debate whether we should let this business go or bail out that business, the real issue continues to be ignored. Indeed it is so far off the radar that cheap shot commentators like Michael Pascoe can make wise cracks about it while the economy burns.
But it’s not funny. It’s not even a little bit amusing. Australians are being slaughtered by emerging markets; gutted by the Japanese; truncated by the Americans and butchered by the Europeans.
I am talking about the global currency war that we are comprehensively losing while having our backs turned.
Qantas, Graincorp, Holden, Electrolux. These are all iconic Australian businesses that have absolutely no reason to fail. Two are virtual monopolies that should be making money on a conveyor belt. The third and fourth are high tech industries that should be tailor made for a smart, developed economy.
But instead all four are failing because they can’t compete with leaner and meaner foreign operations.
Qantas can’t get cheap enough finance and has no access to cheap fuel the way Middle Eastern airlines do. Graincorp is saddled with out-dated infrastructure and can’t seem to raise the capital to renovate itself despite a supposed “dining boom”. Detroit has confessed that Holden is being pulled out owing to a structurally higher dollar and labour costs. Electrolux is the same.
Metals refining, surely an area in which we should have a distinct advantage, is also failing, with last week’s Gove refinery the latest casualty. Processed food exports haven’t grown since 2005 while raw agricultural foodstuffs have jumped. We’ve already lost half of our petrol refining capacity. The Productivity Commission nails all three for dragging down productivity growth owing to high wages, low investment and idle capacity (read the dollar):
As these various businesses pack up their kits, our manufacturing sector is headed for an unbelievable 5% of GDP, by far the lowest in the OECD (making Luxembourg look like an industrial powerhouse) and approaching or past a point at which the inability to produce material for ourselves is also a strategic risk.
Most disconcerting of all is that this is transpiring as we head into a great reckoning in the wider economy. The mining boom is ending, its fabulous capital wave is subsiding, its huge ramp up in employment is ebbing, and over the next three years it will recede as fast as any business investment correction in the last one hundred years. We’ve plenty more gas but are too expensive to extract it. Perth’s Magnolia LNG is headed to Louisiana to produce gas there instead.
The plan to build more unproductive houses to fill the void is a classic kick of the can, adding to capex briefly but adding nothing to productive capacity. In the mean time it keeps our wages and interest rate structure temporarily high and makes the underlying problem worse.
The prospects for productive Australian industry are waning daily. Yet the dollar is still sitting at 90 cents, boosted by the same countries’ central banks that are feasting on our production, and pouring Dutch disease into our ears while we sit back and debate which business is worth saving.
The issue is not who do we bail out. It is how do we reverse the trend of uncompetitiveness that is sweeping everything offshore that is not buried in, or cemented into, the ground. The currency must be actively lowered or it will only drop when the economy does, leaving us bereft of a rebound.
Australian disease is entering its terminal phase, and boy, is it going to be one for the text books.
Reproduced with permission from Macrobusiness.com.au
Dow Jones Euro Stoxx 50 retreated below the first line of support at 3000, warning of a correction to the rising trendline. 13-Week Twiggs Momentum above zero continues to suggest a primary up-trend. A trough above zero would strengthen the signal. Recovery above 3100 is now unlikely, but would signal an advance to 3500*.
* Target calculation: 3000 + ( 3000 – 2500 ) = 3500
Germany’s DAX continues a primary advance with a long-term target of 10000*. Rising 13-week Twiggs Money Flow indicates strong buying pressure. Reversal below 9000, however, would warn of a correction.
* Target calculation: 7500 + ( 7500 – 5000 ) = 10000
France’s CAC-40 also displays long-term buying pressure, with rising 13-week Twiggs Money Flow, but retreat below the new support level at 4200 warns of a correction. Recovery above 4200 is now unlikely, but would indicate an advance to 4400*.
* Target calculation: 4000 + ( 4000 – 3600 ) = 4400
Bearish divergence on the FTSE 100, 13-week Twiggs Money Flow, indicates selling pressure and breach of support at 6600 signals a correction. Follow-through below the lower border of the flag formation (6500) would confirm. Failure of primary support at 6400 and breach of the rising trendline would warn of reversal to a primary down-trend.
* Target calculation: 6700 + ( 6700 – 6400 ) = 7000
Despite bullish signs in Japan, China and the US, the ASX 200 is undergoing a correction. Bearish divergence on 13-week Twiggs Money Flow warns of selling pressure. Breach of medium-term support between 4900 and 5000 would indicate a test of primary support at 4650. Respect of medium-term support seems as likely, however, and would signal a healthy primary up-trend — as would a Twiggs Money Flow trough above zero.
The ASX 200 VIX index recovered above 15, but continues to indicate low market risk.
The S&P 500 has reached its target of 1800 for the current advance, suggesting the market is due for a correction. But there is no sign of selling pressure on 13-week Twiggs Money Flow. Follow-through above 1820 would suggest an accelerating up-trend — with sharper gains and shorter retracements. Reversal below short-term support at 1780 is less likely, but would warn of a correction.
* Target calculation: 1725 + ( 1725 – 1650 ) = 1800
CBOE Volatility Index (VIX) continues to indicate a bull market, with readings below 15.
Japan’s Nikkei 225 is retracing to test its new support level around 15000. 21-Day Twiggs Money Flow holding above zero indicates buying pressure. Respect of support would confirm a primary advance, with a long-term target of 17500*. Reversal below the rising trendline is unlikely, but would warn of a correction to the base of the formation at 12500.
* Target calculation: 15000 + ( 15000 – 12500 ) = 17500
China’s Shanghai Composite is testing resistance at 2250. Breakout would signal a primary advance to 2450. 21-Day Twiggs Money Flow holding above zero indicates buying pressure. Reversal below the rising trendline is unlikely, but would warn of trend weakness.
Hong Kong’s Hang Seng index retreated from resistance at 24000. Expect short-term support at 23500. Bearish divergence on 21-day Twiggs Money Flow warns of selling pressure. Breach of the rising trendline would warn of a correction. Breakout above 24000 is less likely, but would signal a primary advance to 24500, with a long-term target of 25500*.
* Target calculation: 23500 + ( 23500 – 21500 ) = 25500
India’s Sensex also warns of selling pressure, with a bearish divergence on 21-day Twiggs Money Flow. Respect of resistance at 21000/21200 would strengthen the warning. And reversal below 20200 would signal a correction. Breakout above 21200 is less likely, but would confirm the primary advance, offering a target of 24000*.
* Target calculation: 21000 + ( 21000 – 18000 ) = 24000
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