Dow Jones Germany Index broke support at 210/205 Monday, warning of another sharp fall as the ECB ramps up bond purchases and German participation in the bailout program is challenged in their High Court. Plunging 13-week Twiggs Money Flow indicates strong selling pressure. Target for the fall is the 2009 low of 150*.
* Target calculation: 200 – ( 250 – 200 ) = 150
The DAX Index similarly broke support at 5500, offering a target of 4500*.
* Target calculation: 5500 – ( 6500 – 5500 ) = 4500
After the ECB just announced that it had monetized a whopping E13.3 billion in the past week, nearly double expectations, and a total of E134 billion since the SMP program’s inception, the market took one quick look at just how effective this program has been, shuddered, and plunged realizing that neither ECB intervention, nor the shorting halt is doing anything at all.
Dow Jones Shanghai Index breached support at 320, confirming the earlier signal at failure of 330. Reversal of 13-week Twiggs Money Flow below zero warns of rising selling pressure.
* Target calculation: 330 – ( 390 – 330 ) = 270
DJ Japan Index is headed for another test of support at 49.50. 21-Day Twiggs Money Flow peaking below zero warns of strong selling pressure. Breach of support would offer a target of 45.50*.
* Target calculation: 49.50- ( 53.50 – 49.50 ) = 45.50
DJ South Korea also displays a strong primary down-trend. Breach of support at 365 would offer a target of 300*.
* Target calculation: 365 – ( 430 – 365 ) = 300
The DJ India 30 Titans Index displays strong selling pressure, with 13-week Twiggs Money Flow falling below zero. Reversal below support at 152 would offer a target of 136*.
* Target calculation: 152 – ( 168 – 152 ) = 136
Declining volume and strong red candles at the recent ASX 200 reversal warn of another test of 4000. Support at 4000 is unlikely to hold unless there is a strong spike in volume, similar to that in early August. Failure would offer a target of 3500*.
* Target calculation: 4000 – ( 4500 -4000 ) = 3500
A longer-term view of the All Ordinaries Index shows declining 13-week Twiggs Money Flow below zero, warning of selling pressure.
* Target calculation: 4000 – ( 4500 – 4000 ) = 3500
The FTSE 100 index is meeting selling pressure in its rally to test resistance at 5600, evidenced by tall shadows on the last two candles. Reversal of 13-week Twiggs Money Flow below zero would strengthen the signal. Failure of support at 4800 would offer a target of 4000*.
* Target calculation: 4800 – ( 5600 – 4800 ) = 4000
The DAX Index also displays tall shadows on the last two weekly candles. The rally to test 6400 is particularly weak, with decline of 13-week Twiggs Money Flow below zero warning of strong selling pressure. Reversal below 5400 would offer a target of 4400*.
* Target calculation: 5400 – ( 6400 – 5400 ) = 4400
The CAC-40 displays similar selling pressure. Breakout below 2900 would offer a target of 2500*.
* Target calculation: 2900 – ( 3300 – 2900 ) = 2500
TSX 60 Index is testing resistance at 725/735. 13-Week Twiggs Money Flow oscillating around zero indicates hesitancy. Resistance is likely to hold and reversal below the week’s low at 700 would warn of another test of support at 650/660. In the medium term, failure of support would offer a target of 580*.
* Target calculation: 650 – ( 720 – 650 ) = 580
My main concern is that frighteningly, the RBA, and probably much of the government, sees Australia’s future as a single bet on mining, and is willing to sacrifice much of the remaining economy for this to happen……. Remember, the minerals will be in the ground if we don’t mine them now, but the decades of production chains elsewhere in the economy are easily destroyed and slow to rebuild.
I acknowledge that the RBA has a single tool in its toolbox, but surely the message we should be hearing is that a strong and stable economy is a diverse economy. Quarry Australia is a very volatile and risky place to want to be.
via The Rolex economy – macrobusiness.com.au | macrobusiness.com.au.
Bellwether transport stocks Fedex and UPS are both in a primary down-trend, warning of a decline in economic activity.
* Target calculation: 85 – ( 100 – 85 ) = 70
Deutsche Post-DHL shows a similar drop of about 30% from its 2010 peak, indicating that European and international shipping are unlikely to fare any better.
* Target calculation: 12 – ( 14 – 12 ) = 10
