Sam Ro quotes Gerard Minack in Business Insider:
To summarize: 1) we’ve seen this before, 2) we think the slowdown is temporary, 3) we think significant weakness will trigger stimulus, and 4) we think fiscal austerity is now less likely.
Still, Minack is pretty sure this resilience can’t hold for too much longer.
Read more at Why The Stock Market Has Been Bulletproof To The Bad Economic News | Business Insider Australia.
Singapore’s Straits Times Index broke long-term resistance at 3300, signaling an advance to the 2007 high of 3900*. Troughs above zero on 13-week Twiggs Momentum strengthen the signal.
* Target calculation: 3300 + ( 3300 – 2700 ) = 3900
India’s Sensex followed through above resistance at 19000. Breach of the descending trendline would indicate a primary advance to 22000*. 13-week Twiggs Money Flow below zero, however, signals selling pressure and reversal below 19000 would warn of another test of primary support at 18000.
* Target calculation: 20000 + ( 20000 – 18000 ) = 22000
China’s Shanghai Composite is again testing medium-term support at 2150. Failure of support would warn of a decline to test primary support at 1950/2000. Reversal above 2250, however, would penetrate the descending trendline, indicating another test of 2500.
Japan’s Nikkei 225 continues to climb, with a steeply rising 13-week Twiggs Money Flow indicating strong buying pressure. Target for the advance is 15000*.
* Target calculation: 11500 + ( 11500 – 8000 ) = 15000
The ASX 200 is testing resistance at 5150. Breakout would offer a target of 5400*, but bearish divergence on 13-week Twiggs Money Flow warns of selling pressure. Failure of support at 4900 would signal a reversal.
* Target calculation: 5150 + ( 5150 – 4900 ) = 5400
Michael McLaren from 2GB speaks with Benjamin Herscovitch, Policy Analyst at The Centre for Independent Studies, who discusses the dangerous growth of the welfare state in Australia.
The CIS has launched a TARGET 30 campaign to restrict government spending — currently 35 percent of GDP — to 30 percent.
The euro is consolidating between $1.30 and $1.32. Upward breakout is more likely and would test the high of $1.37. Reversal below $1.30 would warn of another decline, to around $1.24*. In the long-term, breakout above $1.37 would signal a primary advance to $1.50. A 13-week Twiggs Momentum trough at the zero line would reinforce this.
* Target calculation: 1.28 – ( 1.32 – 1.28 ) = 1.24
Pound sterling surprised with a reversal above resistance at $1.53. Follow-through above $1.54 would suggest an advance to around $1.58, while retreat below $1.52 would signal a down-swing to $1.43*. Declining 13-week Twiggs Momentum, below its 2011 lows, strengthens the bear signal.
* Target calculation: 1.53 – ( 1.63 – 1.53 ) = 1.43
The Aussie Dollar rallied off primary support at $1.015. Narrow fluctuation of 63-day Twiggs Momentum around zero suggests a ranging market. Respect of support suggests another test of $1.06.
Canada’s Loonie found support above $0.97 against the greenback, suggesting another test of $0.99. Breach of the rising trendline, however, would indicate another down-swing.
The greenback is testing resistance at ¥100 against the Japanese Yen. The 30-year down-trend of the dollar is over. Breakout above ¥100 is likely, and would suggest an advance to the 2007 high at ¥125*.
* Target calculation: 100 – ( 100 – 75 ) = 125
The Fed, ECB and BOJ are all printing money and debasing their currencies. The US dollar, although taking on water, is viewed as the safest — because it is sinking slower than the others. There are signs the Fed is likely to slow quantitative easing in the next 6 to 12 months.
The ASX 200 rallied strongly after breaking resistance at 5020. Breach of the March high at 5150 is likely and would signal an advance to 5400*. A 21-day Twiggs Money Flow peak below zero would warn of strong selling pressure.
* Target calculation: 5150 + ( 5150 – 4900 ) = 5400
The monthly chart offers a long-term target of 6000*.
* Target calculation: 5000 + ( 5000 – 4000 ) = 6000
Respect of support at 1540 and the bottom trend channel indicates a S&P 500 rally to test 1600 and the upper channel line. Failure to break resistance at 1600 would warn of a correction as signaled by mild bearish divergence on 21-day Twiggs Money Flow.
* Target calculation: 1350 + ( 1350 – 1100 ) = 1600
The FTSE 100 also respected support, at 6220, but a tall shadow on Monday warns of selling pressure. Reversal of 21-day Twiggs Money Flow below zero would strengthen the signal and breach of support (6220) would signal a test of the primary trendline at 6000.
* Target calculation: 6220 – ( 6420 – 6220 ) = 6020
Germany’s DAX broke medium-term support at 7500. A 21-day Twiggs Money Flow peak at zero warns of selling pressure. Follow-through below 7400 would signal a test of primary support at 7000. Recovery above 7600 is unlikely, but would test the descending trendline at 7700.
* Target calculation: 7500 – ( 8000 – 7500 ) = 7000
India’s Sensex broke resistance at 19000. Respect of support at 18000 and the rising trendline indicates the primary trend is intact. Mild bullish divergence on 21-day Twiggs Money Flow signals buying pressure. Expect consolidation or short retracement, but follow-through above the descending trendline at 19200 would indicate an advance to 20000.
* Target calculation: 19000 + ( 19000 – 18000 ) = 20000
China’s Shanghai Composite is testing medium-term resistance at 2250. Breakout would penetrate the descending trendline, indicating the correction is over.
Unfortunately the Dow Jones Shanghai Index respected the descending trendline Tuesday, indicating another down-swing to the lower trend channel.
Japan’s Nikkei 225 is the star performer, when measured in Yen. Sharp rallies, with frequent gaps, followed by short retracements indicates a strong up-trend. As does 21-day Twiggs Money Flow oscillating clear above the zero line.
The ASX 200 met some resistance at 5020, but rising 21-day Twiggs Money Flow indicates buying pressure and breakout would signal a test of 5150.
* Target calculation: 5025 + ( 5025 – 4900 ) = 5150
Benjamin Herscovitch writes:
It seems many of us have been taken in by the conceit that the welfare state can offer never-ending free lunches. We expect governments to offer more social security payments, health care, education, etc., all the while assuming that we will not have to pay for it. It is time to let go of the delusion of a magic pudding welfare state and get our expectations for social services in line with our willingness to pay for them.
Read more at The magic pudding state – The Drum Opinion (Australian Broadcasting Corporation).
The euro respected primary support at $1.26 on the monthly chart. Follow-through above $1.32 would indicate another test of $1.37, while breakout above $1.37 would signal a primary advance to $1.50. A trough above zero on 13-week Twiggs Momentum would reinforce this. Reversal below $1.26, however, would signal a down-swing to $1.20.
* Target calculation: 1.35 + ( 1.35 – 1.20 ) = 1.50
Pound sterling respected resistance at $1.53 against the dollar, confirming a down-swing to $1.43*. Declining 13-week Twiggs Momentum, below its 2011 lows, strengthens the signal.
* Target calculation: 1.53 – ( 1.63 – 1.53 ) = 1.43
The Aussie Dollar fell sharply, headed or a test of primary support at $1.015. Narrow fluctuation of 63-day Twiggs Momentum around zero suggests a ranging market. Respect of support would suggest another rally to test $1.06.
Canada’s Loonie respected resistance at $0.99 against the greenback. The primary trend is down and breakout below $0.97 would indicate another decline, while breach of $0.96 would strengthen the signal. Respect of $0.96, however, would suggest an advance back to the 2012 high of $1.03; strengthened if resistance at $0.99 is broken.
The greenback is testing resistance at ¥100 against the Japanese Yen. The 30-year down-trend of the dollar is over. Breakout above ¥100 is likely, after brief consolidation/retracement, and would suggest an advance to the 2007 high at ¥125*.
* Target calculation: 100 – ( 100 – 75 ) = 125
The Fed, ECB and BOJ are all printing money and debasing their currencies. It is a case of which boat is sinking the fastest, and the US dollar, although taking on water, being viewed as relatively safe. The fall of gold reveals the market view that the Fed is likely to tail off quantitative easing in the next 6 to 12 months.
The ASX 200 opened sharply lower following a steep fall on US markets overnight. Respect of resistance at the 5000 level confirms the correction signaled earlier. A 21-day Twiggs Money Flow peak below zero would warn of strong selling pressure.
The ASX 50 monthly chart shows that even correction back to 4500 would not disrupt the primary up-trend and may present a buying opportunity for investors. Breach of support at 5000 would confirm the correction, but a trough above zero on 13-week Twiggs Money flow (and above 4500 on the index) would signal the primary trend is intact.
Gabriele Steinhauser at WSJ writes:
A group of key crisis managers believes cleaning up weak banks is the only way to get Europe’s economy to grow again, after superlow interest rates and large-scale liquidity injections from the ECB have failed to produce the desired results. These officials see continued doubts over the health of many lenders as the main reason banks are reluctant to lend to companies, especially in the continent’s weaker countries.
“We’ve been stuck in this rubbish for five years, because we’ve been doing everything to prevent the banks from being recapitalized properly and the stress tests from being stringent enough,” said a senior EU official. “If we don’t do this, we will stay in this trap until 2020.”
The time has come to clear up the mess from the GFC and strengthen bank balance sheets — not only in Europe — so that a similar financial crisis is unlikely to ever happen again. Moves are also afoot in the US where Senators Sherrod Brown (D-Ohio) and David Vitter (R-La.) are working on a bipartisan bill to end too-big-to-fail banks. The bill does not attempt to break up big banks but focuses on improving bank capital ratios. Risk-weighted capital ratios as suggested by Basel III disguise banks’ true leverage and encourage risk-taking. Australian banks are particularly exposed to low risk-weighting of residential mortgages. Eliminating risk-weighting would force banks to strengthen their underlying capital base and discourage risk concentration in low risk-weighted areas.
The biggest obstacle to change, however, is the banks who benefit from an implicit taxpayer-funded guarantee in the event of failure. Being able to rely on a bailout enables them them to take bigger bets than their balance sheets would otherwise allow. Columbia University’s Charles Calomiris points out that the banks are able to get away with this because they are supported by populist democratic governments who trade off banking instability in return for political (and financial) support.
Read more at New Drive for Tougher Testing of European Banks – WSJ.com.
