The NZX 50 Index broke through resistance at 3350 to signal an advance to 3450, with a long-term target of the 2011 high. 13-Week Twiggs Money Flow above zero indicates buying pressure.
* Target calculation: 3350 + ( 3350 – 3100 ) = 3600
ASX 200 trend channel
The ASX 200 index is testing its upper trend channel. Low volume is typical for a Monday — before US and European markets open for the week — but the low range indicates caution on the part of buyers. Reversal below 4100 would indicate a down-swing to the lower trend channel, while follow-through above 4200 would suggest a bear market rally to 4500. The primary trend remains down, however, and reversal below 4000 would warn of a decline to 3500*.
* Target calculation: 4000 – ( 4500 – 4000 ) = 3500
IMF stress tests China/Australia bust – macrobusiness.com.au
I don’t wish to be too alarming. These are stress tests and scenarios not yet reality. But, there is logic in the thought that we currently face the possibility of the final two scenarios happening simultaneously. That is, a Western recession triggered by European and US austerity (not to mention financial tumult) and a Chinese real estate pop.
via IMF stress tests China/Australia bust – macrobusiness.com.au | macrobusiness.com.au.
ASX 200 rally — but it’s still a bear market
Australia’s ASX 200 index rallied strongly Thursday and is headed for a test of the upper trend channel. 63-day Momentum declining below zero reminds that we are in a strong primary down-trend. Respect of the upper channel would warn of another decline — to test the lower channel border.
* Target calculation: 4000 – ( 4500 – 4000 ) = 3500
We are experiencing exceptional volatility at present and risk of false signals is high. It is important in such situations to look for strong confirmation. One step is to wait for signals on the weekly chart to confirm those on the daily chart. As you can see, this bear market is a long way from over.
Kiwi dollar
Apologies. I messed up the links at the bottom of the Trading Diary newsletter. For the correct link click here. Correct links are also available on the Trading Diary web page and under Recent Posts in the right margin of this page.
The Aussie dollar found support between $1.23 and $1.24 against its Kiwi counterpart. The trend channel has weakened and AUDNZD is now likely to range between $1.24 and $1.28. The primary trend remains down, however, and failure of support would offer a target of $1.20*.
* Target calculation: 1.24 – ( 1.28 – 1.24 ) = 1.20
Commodities drag Aussie Dollar and Loonie lower
Apologies. I messed up the links at the bottom of the Trading Diary newsletter. For the correct link click here. Correct links are also available on the Trading Diary web page and under Recent Posts in the right margin of this page.
Falling commodity prices have started a primary down-trend on both the Australian and Canadian dollar. The Aussie rallied off support at its target of $0.94, but respect of the (secondary) declining trendline would warn of further losses.
* Target calculation: 1.02 – ( 1.10 – 1.02 ) = 0.94
The Loonie also bounced of $0.94 and is testing the first line of resistance at $0.9650. Respect would again warn of further losses.
* Target calculation: 1.00 – ( 1.06 – 1.00 ) = 0.94
Australia: August retail sales up 0.6%
Westpac reported Australian retail sales posted another strong month with nominal sales up 0.6%mth in Aug following a similar gain in July. Through the year sales growth rose from a low of 1.4%yr in Jun to 2.1%yr in August, suggesting a modest 0.6%yr gain in per capital spending.
Talking to a mobile phone salesman yesterday, however, he said that state-wide they had a very quiet September. One has to be careful of seeking out evidence that supports your market view, but it occurred to me that mobile phone sales may be a good barometer of consumer sentiment.
ASX
The ASX 200 recovered slightly after a weak opening on Tuesday. Expect another test of 4000 but the index looks destined to continue in the lower half of its trend channel, with 21-day Twiggs Money Flow (holding below zero) warning of medium-term selling pressure. Target for the decline is 3500*.
* Target calculation: 4000 – ( 4500 – 4000 ) = 3500
NZX50
The NZX 50 index is testing resistance at 3350 after bullish divergence on 21-day Twiggs Money Flow. The index fell sharply at Tuesday’s open but had recovered all of its lost ground by the close. Breach of the declining trendline indicates that the primary trend is weakening. Breakout above 3350 would indicate another test of the May 2011 high at 3580. Reversal below 3250 is unlikely, but would re-test primary support at 3100.
Manufacturing is getting murdered – macrobusiness.com.au
The raging recession in Australian manufacturing is worsening. The PMI dropped to a new cycle low, having been in effective recession for over a year.
The internals of the survey are very nasty. 10 out of 12 sectors are shrinking…..
via Manufacturing is getting murdered – macrobusiness.com.au | macrobusiness.com.au.