China & HK Archives - Page 33 of 61

January 19, 2014

Shanghai selling pressure

A sharp fall below zero on 13-week Twiggs Money Flow warns of selling pressure on China’s Shanghai Composite Index. Breach of support at 1950 is likely and would offer a target of 1800*.

Shanghai Composite Index

* Target calculation: 1950 – ( 2100 – 1950 ) = 1800

Michael Pettis summarizes the four challenges facing China:

China is over-reliant on credit to generate growth;
Attempts to boost consumption will reverse the long-standing subsidy of new investment;
Attempts to resolve excess capacity also slow growth; and
Unrecognized bad debt on bank balance sheets mean that growth is overstated.

January 16, 2014

Desperately Seeking Demand | Patrick Chovanec

I have followed Patrick Chovanec on Twitter for several years and really enjoy his insights. His latest Quarterly Report for Silvercrest Asset Management is no exception.

For the past several decades, the U.S. has served as the world’s consumer of last resort. That allowed developing countries – namely Japan, and later China – to turbo-charge growth by producing more than they consumed, confident in the knowledge that Americans would provide the demand by consuming more than they produced. (A parallel pattern emerged within the EU, with Germany playing net producer and the rest of Europe net consumer). The surplus countries kept the game going by taking their export proceeds and lending them back to their customers so the deficit countries could keep buying. This is the global growth model we all became comfortable with……

Listen to most market commentators: while they may say that the financial crisis showed us the error of our ways, their every word belies a tacit wish to return to the world we knew before 2008. “When,” they ask, “will the U.S. consumer start spending again? When will Chinese output get back on track?” Europe, they dare to hope, will turn out okay as long as more countries learn to imitate Germany. Maybe a cheaper Yen will give a renewed boost to Japan’s exports.

These hopes are misplaced. We’re not going back to the past. The old growth model is broken. Here’s what will replace it…..

Read Patrick’s outlook at SILVERCREST ASSET MANAGEMENT GROUP LLC 1Q 2014: Desperately Seeking Demand

Hat tip to Leith van Onselen at Macrobusiness.com.au

January 15, 2014

China weakens

China’s Shanghai Composite is headed for 1950 after breaking support at 2080 to confirm a primary down-trend. Twiggs Money Flow below zero indicates selling pressure.

Shanghai Composite Index

* Target calculation: 2100 – ( 2250 – 2100 ) = 1950

January 9, 2014

Japan bullish, but India & China reflect selling pressure

Japan’s Nikkei 225 is retracing to test its latest support level at 16000. Rising 13-week Twiggs Money Flow after a trough above zero indicates buying pressure. Respect of support would confirm a primary advance, with a long-term target of 17500*. A rising Dollar/Yen exchange rate would strengthen the signal. Breach of the rising trendline is unlikely, but would warn of another correction.

Nikkei 225

* Target calculation: 15000 + ( 15000 – 12500 ) = 17500

China’s Shanghai Composite breached support at 2080, confirming the primary down-trend. Expect support at 1950: the low of December 2012 and respected in 2013. Twiggs Money Flow below zero indicates selling pressure. Recovery above 2080 is unlikely but would warn of a bear trap.

Shanghai Composite Index

India’s Sensex encountered strong resistance at 21200 and declining 13-week Twiggs Money Flow warns of medium-term selling pressure. Expect another test of support at 20200. Failure would warn of a primary down-trend. Breakout above 21200 is unlikely in the next few weeks, but would suggest a primary advance to 22000*.

Sensex

* Target calculation: 21000 + ( 21000 – 20000 ) = 22000

December 29, 2013

Bullish lead-in to the New Year

The S&P 500 broke resistance at 1810, signaling an advance to 1910*. Troughs high above zero on 13-week Twiggs Money Flow indicate strong buying pressure.

S&P 500

* Target calculation: 1810 + ( 1810 – 1710 ) = 1910

The FTSE 100 completed its correction with a break above the descending trendline. Troughs above zero on 13-week Twiggs Money Flow indicate buying pressure. Breakout above 6800 would offer a target of 7200*, but expect strong resistance at the 1999 high of 6950/7000.

FTSE 100

* Target calculation: 6800 + ( 6800 – 6400 ) = 7200

The Dow Jones Euro Stoxx 50 broke resistance at 3100, signaling an advance to 3350*. Troughs above zero on 13-week Twiggs Momentum indicate a healthy up-trend. Retracement to test the new support level is likely; respect would strengthen the bull signal.

Dow Jones Euro Stoxx 50

* Target calculation: 3100 + ( 3100 – 2850 ) = 3350

Germany’s DAX similarly broke resistance at 9400, offering a target of 10200*. Troughs high above zero on 13-week Twiggs Money Flow indicate strong buying pressure.

DAX

* Target calculation: 9400 + ( 9400 – 8600 ) = 10200

India’s SENSEX is testing resistance at 21200 after a correction that respected support at 20200. Breakout would signal an advance to 22200*. A 13-week Twiggs Money Flow trough above zero would indicate buying pressure and a healthy up-trend.

BSE Sensex

* Target calculation: 21200 + ( 21200 – 20200 ) = 22200

Japan’s Nikkei 225 broke resistance at 16000, supported by a strong rise in the Dollar/Yen exchange rate. Breakout signals a primary advance with a long-term target of 19000*. Completion of a 13-week Twiggs Money Flow trough above zero suggests buying pressure and a healthy up-trend.

Nikkei 225

* Target calculation: 16000 + ( 16000- 13000 ) = 19000

A single cloud on the horizon, the Shanghai Composite Index is testing primary support at 2080. Failure of support would signal a primary down-trend with an immediate target of 1900*. Bearish divergence on 21-day Twiggs Money Flow indicates medium-term selling pressure, but recovery above zero would suggest support.

Shanghai Composite

* Target calculation: 2080 – ( 2260 – 2080 ) = 1900

The ASX 200 is lagging other markets because of negative influence from China. Bearish divergence on 13-week Twiggs Money Flow indicates selling pressure. Respect of resistance at 5450 would be cause for concern if followed by reversal below 5300. Breakout above 5450 and completion of a trough above zero on 13-week Twiggs Money Flow, however, would signal another primary advance, with a target of 5900*.

ASX 200

* Target calculation: 5450 + ( 5450 – 5000 ) = 5900

December 23, 2013

Russia 1998 crisis haunts Deutsche Bank analyst seeing China bust | Livemint

When the Deutsche Bank AG equity strategist [John-Paul Smith] looks at the country [China], he says he detects some of the same signs of a financial meltdown that led him to predict Russia’s 1998 stock market crash months in advance. China’s expansion is being fueled by soaring corporate borrowing, a high-risk model that needs to be replaced by the kind of free-market measures and budget cuts that fed Russia’s growth in the aftermath of the country’s default and subsequent 44% monthly tumble in the Micex Index, Smith said.

There is potential for a debt trap in industrial companies which can trigger an economy-wide financial crisis as early as next year, Smith said in an interview from London on 12 December, a day after he issued a report predicting China’s slowdown will lead to a 10% decline in emerging-market stocks next year. “If I am wrong on China, I am wrong on everything.”

December 17, 2013

China and Hong Kong retreat

China’s Shanghai Composite retreated from resistance at 2260 on the daily chart, breach of short-term support at 2180 signaling a correction. Reversal of 21-Day Twiggs Money Flow holding below zero would signal selling pressure, while respect of the zero line would reflect a healthy (primary) up-trend.

Shanghai Composite Index

Hong Kong’s Hang Seng Index retreated to 23000 on the weekly chart. Penetration of the rising trendline suggests a correction to primary support at 22500. Recovery above 23500 is unlikely, but would signal an advance to 24500*.

Hang Seng Index

* Target calculation: 23500 + ( 23500 – 22500 ) = 24500

December 8, 2013

Asia: China buying pressure but HK retreats

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.

Nikkei 225

* 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.

Shanghai Composite Index

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*.

Hang Seng Index

* 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*.

Sensex

* Target calculation: 21000 + ( 21000 – 18000 ) = 24000

December 3, 2013

ASX correction despite Asian bulls

Japan’s Nikkei 225 is likely to retrace to test its new support level at 15000. Respect would negate the bearish divergence on 13-week Twiggs Money Flow and confirm the long-term target of 17500*. Reversal below the rising trendline, however, would warn of a correction to 13000.

Nikkei 225

* Target calculation: 15000 + ( 15000 – 12500 ) = 17500

China’s Shanghai Composite is consolidating between 2100 and 2250. Upward breakout would suggest a test of the descending trendline at 2450 on the monthly chart. Momentum remains weak and reversal below 2100 is as likely, which would test primary support at 1950.

Shanghai Composite Index

Hong Kong’s Hang Seng is testing this year’s high of 24000. Rising 13-week Twiggs Money Flow indicates medium-term buying pressure. Breakout above 24000 is likely and would signal a primary advance to 24500, with a long-term target of 25500*. Reversal below 23500 is unlikely, but would warn of another test of 22500.

Hang Seng Index

* Target calculation: 23500 + ( 23500 – 21500 ) = 25500

India’s Sensex is headed for a test of 21200 after respecting support at 20200. Breakout above its 2007/2010 highs at 21000 would confirm the primary advance, offering a target of 24000*. Another 13-week Twiggs Money Flow trough above zero would strengthen the signal. Reversal below 20200 is unlikely, but would warn of a correction to primary support at 18000.

Sensex

* Target calculation: 21000 + ( 21000 – 18000 ) = 24000

The ASX 200 is undergoing a correction after breaching the rising trendline and support at 5290/5300. Bearish divergence on 13-week Twiggs Money Flow warns of selling pressure, but a trough above zero would indicate a healthy (primary) up-trend. There are plenty of support levels evident on the chart, but I would expect strongest support around 4900 and the 2009/2011 highs of 5000.

ASX 200

The ASX 200 VIX index, below 15, continues to indicate low market risk.

ASX 200

November 26, 2013

Muted ASX response to Asian bulls

Nikkei 225

* Target calculation: 15000 + ( 15000 – 12500 ) = 17500

Narrow consolidation at China’s Shanghai Composite upper trend channel suggests continuation of the rally. Follow-through above 2210 would signal a test of 2270. Reversal below 2180 is less likely, but would indicate a down-swing to the lower channel. The 21-day Twiggs Money Flow trough above zero suggests medium-term buying pressure. Breakout above 2270 would signal a primary up-trend.

Shanghai Composite Index

Hong Kong’s Hang Seng is likely to retrace to test the new support level at 23500. Respect would confirm an advance to 25500*, signaling a primary up-trend. Follow-through above 24000 would confirm. Rising 13-week Twiggs Money Flow indicates medium-term buying pressure. Reversal below 23500 is unlikely, but would warn of another test of 22500.

Hang Seng Index

* Target calculation: 23500 + ( 23500 – 21500 ) = 25500

India’s Sensex is again rallying after testing support at 20200. Breakout above its 2007/2010 highs at 21000 would confirm the primary advance, offering a target of 24000*. Another 13-week Twiggs Money Flow trough above zero would strengthen the signal. Reversal below 20200 is unlikely, but would warn of a correction to the rising trendline and primary support at 18000.

Sensex

* Target calculation: 21000 + ( 21000 – 18000 ) = 24000

Singapore’s Straits Times Index is struggling with resistance at 3250/3300. 13-Week Twiggs Money Flow below zero continues to warn of selling pressure. Breakout above 3300 is unlikely at present, but would signal a primary advance to 3600*. Reversal below 3120 would warn of another correction to primary support at 3000.

Straits Times Index

* Target calculation: 3300 + ( 3300 – 3000 ) = 3600

The ASX 200 continues to encounter selling pressure, with 21-day Twiggs Money Flow below zero. Reversal below the rising trendline and short-term support at 5290 would signal a correction. Breakout above 5400 is less likely, but would suggest an advance to 5600*. Follow-through above 5450 would confirm.

ASX 200

* Target calculation: 5450 + ( 5450 – 5300 ) = 5600

Readings on the ASX 200 VIX index are more bullish, suggesting relatively low market risk.

ASX 200