Each generation has its own Berlin Wall | Gary Kasparov

Garry Kasparov is Atlas Network’s 2014 Templeton Leadership Fellow and spoke at the closing ceremonies of Atlas Network’s 2014 Liberty Forum & Freedom Dinner.

November 13, 2014 – New York City

Usually saying “thank you for having me here” is a perfunctory opening, but for me, especially on this occasion, it has a very sincere and personal meaning. The kind of brave people in this room, and a few actual people in this room, share some of the credit for my freedom and the freedom of hundreds of millions of people like me who were born behind the Iron Curtain. I thank you and we all thank you for your efforts and your belief that the right to individual liberty should not be based on where you are born.

Unfortunately, that attitude seems to have fallen along with the Berlin Wall. If people like Obama and Cameron had been in charge instead of Ronald Reagan and Margaret Thatcher in the 1980s I would still be playing chess for the Soviet Union!

But instead, I am truly very happy to be here. If only my die-hard Communist grandfather could see me now!

November 9, 1989, was one of the most glorious days in the known history of the world. Hundreds of millions of people were released from totalitarian Communism after generations of darkness.

There is no shortage of scholarship and opinions about why the Wall came down when it did. I am happy to engage in those endless discussions, but we must recognize that looking for a specific cause at a specific moment misses the point. We do know that without the unity of the free world against a common enemy, without a strong stand based on refusing to negotiate over the value of individual freedom, that the Wall would still be standing today.

Yes, there were alliances and rivalries and realpolitik for decades. Yes, individuals played a part on both sides, from Ronald Reagan and Margaret Thatcher to Lech Walesa and Pope John Paul II, to Mikhail Gorbachev unleashing forces he could not control. The critical theme was as simple as it was true: the Cold War was about good versus evil, and, just as importantly, that this was not just a matter of philosophy, but a real battle worth fighting. Society supported the efforts of those great leaders, society supported the fight and the principles behind it. But as Milton Friedman wrote in 1980, “Society doesn’t have values. People have values.” So we must talk to people about these principles of freedom. We must spread this message far and wide.

In today’s era of globalization and false equivalence it can be hard for many of us to recall that most Cold War leaders had seen true evil up close during World War II. They had no illusions about what dictators were capable of if given the chance. They had witnessed existential threats with their own eyes, seen the horror of the concentration camps and the use of nuclear weapons in war. In some ways it is a shame that today the names of Adolf Hitler and Josef Stalin have become caricatures, as if they are mythological beasts representing an ancient evil that was vanquished long ago.

But evil does not die, just as history does not end. Like a weed, evil can be cut back but almost never entirely uprooted. It waits for its chance to spread through the cracks in our vigilance. It takes root in the fertile soil of our complacency. Like the dragon of Greek myth, whose teeth sprouted from the ground as soldiers, the Berlin Wall fell to pieces, and many of those pieces contained the seeds of evil.

Nor did Communism disappear when the Wall fell. Nearly 1.5 billion human beings still live in Communist dictatorships today. And another billion live in unfree states of different stripes, including, of course, much of the former Soviet Union. The desire of men to exploit and to rule over others by diktat, and by force, did not disappear. What did disappear, or, at least, what faded dramatically, was the willingness of the free world to take a firm stand in support of the oppressed.

The Wall fell and the world exhaled. The long war of generations was over. The threat of nuclear annihilation that hung over all our heads was ending. Victories, however, even great victories, come at a cost.

I have written about what I call “the gravity of past success” in chess. Winning feels great, but it can also inhibit your development. The loser knows that he made a mistake, and that something went wrong, and he will work hard to improve. The happy winner, on the other hand, often assumes he won simply because he is great. It takes tremendous discipline to learn lessons from a victory.

The natural response, the human response, in the aftermath of the Cold War was to embrace the former enemy. Clinton and Yeltsin smiling and laughing. The European Union and NATO welcoming the former Soviet Bloc nations with open arms. The principle was to lead by example, to offer the newly free countries incentives to join as a full partner, with democracy and free market economies. This principle of engagement was a great success in Eastern Europe, despite the bumpy road for many. But this expansive method was also applied in places where the forces of oppression had not been rooted out. They were invited into the club with few demands, with little reciprocity. The prevailing attitude in the West was, “It’s okay, they will come around eventually. Their time has passed. We just have to keep engaging with them and wait.” But the forces of history do not win wars.

It is amazing how quickly the lessons of the Cold War victory were forgotten and abandoned! The strong moral stance and the isolation of evil were rapidly discarded. At the moment of greatest ascendancy of the forces of democracy, they stopped pressing the advantage. With overwhelming military, economic, and moral power on their side, the West changed strategies entirely.

This shift represented the public’s desire to end the tension and the decades of standoffs. Bill Clinton epitomized the mindset that it was time to move beyond the harsh Manichean worldview of the Cold War. Meanwhile, the dragon’s teeth were growing. Belorussian dictator Lukashenko began his lifetime tenure in 1994. His Central Asian dictator colleagues, Nazarbayev and Karimov, will soon celebrate their 25th anniversaries in power. It is no coincidence that the two countries from the former Soviet Union with the greatest potential to break free of this orbit, outside of the Baltics, Georgia and Ukraine, were both attacked by Russia and partially occupied.

There were no truth commissions for Communism, no trials or punishments for the epic crimes of these regimes. The KGB changed its name but it did not change its stripes. And just nine years after the statue of KGB founder Felix Dzerzhinsky was torn down in Moscow, a KGB lieutenant colonel named Vladimir Putin became president of Russia. It was one of many warning signs that went ignored by the free world.

Western soft power had reached its limits and there was no will to bring back the policies of containment. Human rights were treated as an internal issue, especially in places where profitable deals were available.

Engagement cuts both ways, it turns out. Former Soviet nations used money from globalization and their newfound market access to buy companies, politicians, and influence. Having abandoned our standards, we are being dragged down to the lowest common denominator. While destroying civil society in Russia, Putin could hire former Chancellors to lobby for Gazprom, buy the Olympic Games, and beam a global propaganda network into billions of homes around the world. The West boycotted the Moscow Olympic Games over the invasion of Afghanistan. No such threats are made today about the World Cup despite the ongoing Russian invasion of a European country.

Today’s dictatorships have what the Soviets could scarcely dream of: easy access to global markets to fund repression at home. Not just the petro-states like Russia, Iran, and Venezuela, but the manufacturing states as well. The idea that free world would use engagement for leverage against dictators on human rights has been countered by the authoritarian states because they are willing to exploit it without hesitation, while there is no similar will in the free world.

Engagement has provided dictatorships with much more than consumers of the oil they extract and the iPhones they assemble. They have their IPOs and mansions in London and New York; they use Interpol to persecute dissidents abroad; they write op-eds in the New York Times full of hypocritical calls for peace and harmony. And all of this while cracking down harder than ever at home. This is engagement as a one-way street. This is engagement as appeasement. This is a failure of leadership on a tragic scale.

Even the greatest ideals and traditions can lose focus after a radical change in the landscape. Symbols help us find that focus, leaving us vulnerable when those symbols disappear.

America going to the moon was not so remarkable because there was anything of value there. John F. Kennedy understood that it would become a symbol of American progress, of challenge, of difficulty, and of superiority over the USSR. A generation of new technology was developed thanks to the space race, technology that would power American industrial might into the computer age. But not long after this incredible feat was achieved, the space race fizzled significantly. The symbol was gone and no man has walked on the moon since Eugene Cernan in December, 1972. The symbol of challenge, the symbol of progress, was confused with the challenge itself. When the moon was reached, the great quest it represented was quickly forgotten. As with Hitler and Stalin, a man traveling to the moon is mostly remembered today as mythology.

The Berlin Wall was more than a symbol, of course. It literally divided a city and represented the divide between the free and unfree worlds. When it fell, it was easy to forget that those two worlds, the free and the unfree, still existed even though the Wall did not. The symbol was gone and so what it represented was forgotten. Suddenly, evil no longer had a familiar form. As 9/11 taught us, the dangers are real even though the battle lines are hazy. Allies of convenience have replaced alliances based on history and values. This is the natural result of over twenty years of treating everyone like a potential friend, a practice that emboldens enemies and confuses true allies.

But enemies do exist, whether we admit it or not. They are the enemies of what America and the rest of the free world stand for. Whether it is Putin or ISIS, these forces cannot be defeated with engagement. No, to defeat them will require the unity and the resolve and the principles that won the Cold War. In chess terms, our great predecessors left us with a winning position 25 years ago. They gave us the tools to bring down dictators and showed us how to use them. But we have abandoned these tools and forgotten the lessons. It is past time to relearn them.

Each generation has its own Berlin Wall, its own challenges to meet. Without a clear symbol to focus our energies, strong leadership is required.

America, in Margaret Thatcher’s famous phrase, is the only nation built on an idea, the idea of liberty. That idea must now build a global coalition to defend liberty against its enemies, a coalition that is based on principles, not on borders or language or culture.

In a few weeks I will be in Ukraine, and what message can I bring? That it is Ukraine’s poor luck to be so close to Russia? That the destiny of 45 million human beings is to be a besieged buffer state because it is difficult to confront Vladimir Putin? Really? More difficult than Truman standing up to Stalin and protecting West Berlin in 1948? More dangerous than for JFK during the Cuban Missile Crisis in 1962? No. But will the threat Putin represents continue to grow if left unchallenged? History tells us yes. History tells us that no dictator stops until he is stopped.

Soviet propaganda worked hard to portray Communism and the USSR as the side of good, as representing a utopian future. Putin has no interest in this. His propaganda today is all about national superiority and destiny, the fascist messaging so familiar from the Nazi build-up in the 1930s. Putin’s threat grows because the free world is letting it grow. Too many leaders still want to believe that evil was defeated for good on November 9, 1989. What could be called optimism and wishful thinking twenty years ago must now be called out as dangerous delusions.

The world needs a new alliance based on a new Magna Carta, a declaration of rights and practices that all member nations must recognize. Nations that value democracy and individual liberty now control the greater part of the world’s resources as well as its military power. If we band together and refuse to coddle the rogue regimes and sponsors of terror, our authority will be irresistible. Our combined wealth can also fund new technologies to cure our fossil fuel addiction, which currently empowers a majority of the terrorists and dictators.

The goal should not be to build new walls to isolate the millions of people living under authoritarian rule, but to come to their aid. The so-called leaders of the free world talk about promoting democracy while treating the leaders of the world’s most autocratic regimes as equals. A global Magna Carta would forbid this hypocrisy and provide a powerful inducement for reform. The policies of engagement with dictators have failed on every level. It is time to recognize this failure.

As Ronald Reagan said fifty years ago, in 1964, this is not a choice between peace and war, only between fight or surrender. We must choose. We must fight. And it must be a global fight. America must lead, yes, but it is obsolete today to speak only of American values, or even of Western values. Japan and South Korea must act, Australia and Brazil, India and South Africa, and every country that values democracy and liberty. We have every advantage in this fight for freedom. We know it can be done because it has been done before. We must find the courage to do it again. Thank you.

To hear Kasparov’s interview on Voice of America – Russian, click here. (In Russian)

Reproduced with kind permission from the Atlas Network. Atlas Network is a nonprofit organization connecting a global network of more than 400 free-market organizations in over 80 countries to the ideas and resources needed to advance the cause of liberty.

ASX under pressure

The S&P 500 continues to test resistance at 2050, the upper bound of the broadening wedge. Rising 13-week Twiggs Money Flow suggests buying pressure. Breakout would offer a target of 2250*. Reversal below 2000 is less likely, but would warn of another correction.

S&P 500

* Target calculation: 2050 + ( 2050 – 1850 ) = 2250

The CBOE Volatility Index (VIX) indicates low risk typical of a bull market.

S&P 500 VIX

Dow Jones Euro Stoxx 50 is testing resistance at 3140. Breakout would indicate an advance to 3300. 13-Week Twiggs Money Flow oscillating around zero suggests indecision. Respect of 3140 would test primary support at 3000.

Dow Jones Euro Stoxx 50

The Shanghai Composite Index retraced to test support at 2440, while declining 13-week Twiggs Money Flow indicates medium-term selling pressure. Reversal below the rising trendline at 2400 would warn of a correction, while respect would suggest trend strength.

Shanghai Composite

Hong Kong’s Hang Seng Index is weaker. Reversal below 23000 would warn of a test of primary support at 21200/21500. Twiggs Money Flow (13-week) reversal below zero would also be a strong bear signal.

HSI

The ASX 200 is undergoing another correction. Respect of support at 5250/5300 would indicate reasonable trend strength, but declining 21-day Twiggs Money Flow suggests medium-term selling pressure. With both Energy and Metals & Mining sectors under pressure, a test of primary support at 5120/5150 is likely.

ASX 200

The Aussie Dollar is also falling, having reversed below primary support at $0.8650 to signal a decline to $0.80*.

Aussie Dollar

* Target calculation: 0.87 – ( 0.94 – 0.87 ) = 0.80

A quiet week in the markets

  • US stocks continue their bull-trend
  • European stocks strengthen
  • China likewise
  • ASX retraces to test support

The S&P 500 is testing the upper border of a broadening wedge formation. Retracement that respects support at 2000 would enhance the bull signal and offer a target of 2280*. Rising 13-week Twiggs Money Flow indicates buyers are in control. Reversal below 2000 and the rising trendline is unlikely, but would signal another correction.

S&P 500 Index

* Target calculation: 2040 + ( 2040 – 1820 ) = 2280

Dow Jones Industrial Average has already broken above a similar broadening wedge formation, offering a long-term target of 19000*.

Dow Jones Industrial Average

* Target calculation: 17500 + ( 17500 – 16000 ) = 19000

CBOE Volatility Index (VIX) continues to reflect low risk typical of a bull market.

S&P 500 VIX

Germany’s DAX is testing resistance at 9400/9500, but 13-week Twiggs Money Flow remains weak. Reversal of TMF below zero would warn of another correction. Reversal below 9000 would confirm a primary down-trend. Follow-through above 9500 is less likely, but would suggest another test of 10000.

DAX

* Target calculation: 9000 – ( 10000 – 9000 ) = 8000

The Footsie proved more robust, breaking resistance, at 6500/6560 to signal a test of 6900. 13-Week Twiggs Money Flow is rising strongly, signaling buyers are in control.

FTSE 100

China’s Shanghai Composite Index broke resistance at its 2013 high of 2440, signaling an advance. 13-Week Twiggs Money Flow reversal below its rising trendline, however, would warn of (medium-term) selling pressure.

Shanghai Composite Index

* Target calculation: 2400 + ( 2400 – 2300 ) = 2500

The ASX 200 retraced to test support at 5440/5450. Respect would signal another test of the August high at 5650/5660. Failure of support would indicate a test of 5250/5300 and a weaker up-trend. Reversal below 5250 remains unlikely, but would warn of another test of primary support. A 21-day Twiggs Money Flow trough above zero would signal long-term buying pressure.

ASX 200

* Target calculation: 5650 + ( 5650 – 5300 ) = 6000

In Praise of Global Imbalances by Sanjeev Sanyal – Project Syndicate

Sanjeev Sanyal, Deutsche Bank’s Global Strategist, writes:

….according to International Monetary Fund data, the current overall global investment rate, at 24.5% of world GDP, is near the top of its long-term range. The issue is not a lack of overall investment, but the fact that a disproportionate share of it comes from China. China’s share of world investment has soared from 4.3% in 1995 to an estimated 25.8% this year. By contrast, the United States’ share, which peaked at 36% in 1985, has fallen to less than 18%. The decline in Japan’s share has been more dramatic, from a peak of 22% in 1993 to just 5.7% in 2013…

Read more at In Praise of Global Imbalances by Sanjeev Sanyal – Project Syndicate.

S&P 500 bullish but Europe and China encounter resistance

Retracement of the S&P 500 respected its new support level at 2000, confirming a primary advance with a target of 2150*. Recovery of 13-week Twiggs Money Flow above the declining trendline indicates buyers are back in control. Reversal below 2000 and the rising trendline is unlikely, but would signal another correction.

S&P 500 Index

* Target calculation: 2000 + ( 2000 – 1850 ) = 2150

CBOE Volatility Index (VIX) at 13 indicates low risk typical of a bull market.

S&P 500 VIX

Germany’s DAX found resistance at 9400 and retracement to test support at 9000 is likely. Failure of the former primary support level at 8900/9000 would confirm a primary down-trend. Reversal of 13-week Twiggs Money Flow below zero would also indicate that sellers dominate.

DAX

* Target calculation: 9000 – ( 10000 – 9000 ) = 8000

The Footsie also encountered resistance, at 6500/6560. Respect of this level would warn of a primary down-trend, but rising 13-week Twiggs Money Flow suggests medium-term buying pressure.

FTSE 100

China’s Shanghai Composite Index is testing its 2013 high of 2440. Declining 13-week Twiggs Money Flow warns of (medium-term) resistance.

Shanghai Composite Index

* Target calculation: 2400 + ( 2400 – 2300 ) = 2500

Hong Kong’s Hang Seng Index also found resistance, at 24000. Reversal below 23000 would confirm a primary down-trend. Reversal of 13-week Twiggs Money Flow below zero would strengthen the bear signal.

Hang Seng Index

The ASX 200, influenced by both the US and China, is testing resistance at 5550. Rising 13-week Twiggs Money Flow (above zero) indicates medium-term buying pressure. Expect a test of 5650/5660. Reversal below 5380/5400 is less likely, but would warn that sellers have resumed control. I have lowered the target to 6000* because of constant back-filling in recent months.

ASX 200

* Target calculation: 5650 + ( 5650 – 5300 ) = 6000

Asia: Governor Kuroda bets on QE

Aggressive asset purchases by the Bank of Japan shows Governor Kuroda’s willingness to back his QE policy to the hilt. The Yen has weakened significantly against the Dollar over the last two years and this trend is likely to continue.

USDJPY

The Nikkei 225 surged through 16300, signaling a fresh advance. The long-term target is 18000*. Reversal below 16000 is unlikely, but would warn of another correction. Recovery of 13-week Twiggs Money Flow above zero indicates medium-term buying pressure.

Nikkei 225

* Target calculation: 16000 + ( 16000 – 14000 ) = 18000

Hong Kong’s Hang Seng Index is testing resistance at 24000. Reversal below 23000 would warn of a primary down-trend. Breach of 21200 would confirm. Reversal of 13-week Twiggs Money Flow below zero would strengthen the bear signal. Follow-through above 25000 is unlikely, but would signal another primary advance.

Hang Seng Index

China’s Shanghai Composite Index respected support at 2250, strengthening the bull signal. Follow-through above 2450 would confirm a primary up-trend. 13-Week Twiggs Money Flow remains in an up-trend, signaling medium-term buying pressure. Reversal below 2250 is unlikely, but would warn of trend weakness.

Shanghai Composite Index

* Target calculation: 2250 + ( 2250 – 2000 ) = 2500

India’s Sensex continues in a primary up-trend, testing resistance at 28000. Troughs above zero on 13-week Twiggs Money Flow indicate buying pressure. Short retracements rather than stronger corrections also suggest buying pressure. Breakout above 28000 would indicate an advance to 29000. The index is becoming over-extended, but may remain so for some time. Reversal below 27000 and the secondary trendline is less likely, but would indicate a correction to the primary trendline around 25000.

Sensex

* Target calculation: 27000 + ( 27000 – 26000 ) = 28000

Dow and S&P 500 make new highs

  • US stocks have reaffirmed their bull market
  • European stocks are recovering
  • China and Japan signal up-trends
  • ASX is rising

The new reporting season is under way and fund managers are now looking for opportunities rather than selling off under-performers.

Dow Jones Industrial Average made a new high, above 17300, signaling a primary advance. Reversal below 17000 and the rising trendline is most unlikely, but would warn of another correction. Target for the advance is 18000*.

Dow Jones Industrial Average

* Target calculation: 17000 + ( 17000 – 16000 ) = 18000

The S&P 500 similarly made a new high, signaling a fresh advance. Rising 13-week Twiggs Money Flow (above zero) indicates medium-term buying pressure. Target for the advance is 2150*. Reversal below 2000 and the rising trendline is unlikely, but would signal another correction.

S&P 500 Index

* Target calculation: 2000 + ( 2000 – 1850 ) = 2150

CBOE Volatility Index (VIX) at 14 indicates low risk typical of a bull market.

S&P 500 VIX

Dow Jones Euro Stoxx 50 continues to advance above its former primary support level at 3000. Long tails on the weekly candlesticks and recovery of 13-week Twiggs Money Flow above zero indicate buying pressure. Expect another test of 3300. Reversal below 3000 is less likely, but would signal a primary down-trend.

Dow Jones Euro Stoxx 50

* Target calculation: 3000 – ( 3300 – 3000 ) = 2700

China’s Shanghai Composite Index rallied above its recent high at 2400, confirming a primary up-trend. Target for the new advance is 2500*. and the rising trendline, warning of a correction. Rising 13-week Twiggs Money Flow trough (above zero) indicates medium-term buying pressure; completion of a trough high above zero would signal trend strength.

Shanghai Composite Index

* Target calculation: 2400 + ( 2400 – 2300 ) = 2500

Japan’s Nikkei 225 Index broke resistance at 16300, signaling an advance with a long-term target of 18000*. Reversal below 16000 is unlikely, but would warn of another correction.

Nikkei 225 Index

* Target calculation: 16000 + ( 16000 – 14000 ) = 18000

The ASX 200 is headed for a test of resistance at 5660. Brief retracement at 5440 and rising 21-day Twiggs Money Flow (above zero) both indicate medium-term buying pressure. Reversal below 5440 is unlikely, but would indicate a test of 5250. I have lowered the target to 6000* because of constant back-filling in recent months.

ASX 200

* Target calculation: 5650 + ( 5650 – 5300 ) = 6000

Should Beijing raise subway fares? | Michael Pettis

Michael Pettis’ argues that not only are SOEs “destroying value in the aggregate on a huge scale” but misallocated investment is endemic in China.

I have to confess that the reason I started saying in 2006-07 that China was eventually going to replace 1980s Japan as the global archetype of investment misallocation was not because I had a lot of data proving my case. Overinvestment is almost impossible to prove until after the fact, especially when you consider the circularity of the data – the growth assumptions feed into the valuation of the investment, which then feeds back into the growth assumptions.

My reasons were much more “systemic”. I did not believe it was possible for any country not to experience significant wasted investment after so many years – more than a decade in this case – of the highest investment growth rate in the world funded by massive credit expansion at such incredibly low lending rates roughly one-third the nominal GDP growth rate, and 1-3 percentage points below the GDP deflator. Add more spicy ingredients to the stew – first, the very limited experience of Chinese bankers and regulators, and most of that in a one-way market, second, widespread moral hazard, third, weak corporate governance, fourth, very fuzzy data, and finally, no enforced system of accountability – and I found it impossible to doubt that investment was being dangerously misallocated.

He also dispels the counter-argument that “Western” models don’t apply to China and that “a very poor, low-capital-stock country far from the technological frontier like China” is able to absorb higher levels of investment.

In 2008 (Red Star) I compared China to a red star in astronomy:

Students of astronomy will tell you that a red star, far from indicating heat, is cooling appreciably. While its diameter may expand, its core is contracting and its temperature falling. Eventually it will either explode or shrink to become a dwarf star….

My warning of an imminent collapse may have been premature, but no economy can survive such high levels of investment misallocation without major upheaval. China risks following the boom-bust growth path of Japan and the Asian tigers in the 1980s and 1990s.

Read more at Should Beijing raise subway fares? | Michael Pettis' CHINA FINANCIAL MARKETS.

China Advisory Body Boots Hong Kong Lawmaker James Tien – WSJ – WSJ

From Isabella Steger and Fiona Law in Hong Kong and
Chun Han Wong in Beijing:

A leading Hong Kong politician was stripped of his seat on China’s main advisory body after contradicting Beijing’s views, in another step to quiet dissent during month-long protests in the former British colony.

The Chinese People’s Political Consultative Conference voted Wednesday to boot Hong Kong lawmaker and businessman James Tien, who last week called on the city’s chief executive to resign over his handling of demonstrations seeking freer elections.

Mr. Tien, the head of Hong Kong’s pro-business Liberal Party, was removed over “improper remarks,” according to China’s state-run Xinhua News Agency.

A telltale sign of a leader about to crash and burn: when they sack advisers who speak out and question the official party line.

Read more at China Advisory Body Boots Hong Kong Lawmaker James Tien – WSJ – WSJ.

Hong Kong weighs on China

Hong Kong’s Hang Seng Index is testing support at 23000. Narrow consolidation warns of continuation to test primary support at 21200. Reversal of 13-week Twiggs Money Flow below zero suggests a primary down-trend. Breach of support at 21200 would confirm.

Hang Seng Index

China’s Shanghai Composite Index is retracing after penetration of its secondary trendline, but at this stage it’s no more than a secondary correction. Hong Kong could weigh on the index, however. Reversal of 13-week Twiggs Money Flow below zero would warn of a primary down-trend.

Shanghai Composite Index

* Target calculation: 2250 + ( 2250 – 2000 ) = 2500

India’s Sensex broke clear of its recent flag formation and is again testing resistance at 27000. Bearish divergence on 13-week Twiggs Money Flow remains a concern, but breakout above 27000 would indicate an advance to 28000*. Reversal below 26000 would signal a correction to the primary trendline.

Sensex

* Target calculation: 27000 + ( 27000 – 26000 ) = 28000