Category: China & HK

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Asia rallies while ASX smoulders

India’s Sensex found support at 20200 before rallying to test resistance at 21200. Breakout above its 2007 and 2010 highs at 21000 would confirm the primary advance, offering a target of 24000*. Rising 13-week Twiggs Money Flow suggests medium-term buying pressure. Reversal below 20200 is unlikely, but would warn of a correction to primary support at 18000.

Sensex

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

Japan’s Nikkei 225 broke through resistance at 15000, but bearish divergence on 13-week Twiggs Money Flow warns of selling pressure. Expect retracement to test the new support level. Respect of 15000 is unlikely, but would confirm the primary up-trend, with a long-term target of 17500*. Reversal below the rising trendline would test primary support at 13200, warning of trend weakness.

Nikkei 225

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

Singapore’s Straits Times Index respected support at 3000 on the monthly chart, but is struggling to make an impression on long-term resistance at 3300. 13-Week Twiggs Momentum below zero continues to warn of a primary down-trend. Breakout above 3300 is unlikely at present, but would signal a primary advance to 3600*.

Straits Times Index

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

China’s Shanghai Composite is testing resistance at its upper trend channel. Follow-through above 2200 would indicate the correction is over and a test of 2270 is likely. A down-swing to test the lower channel is just as likely, however, and would indicate continuation of the correction. Completion of a 21-day Twiggs Money Flow trough above zero (say > 15%) would signal medium-term buying pressure. Breakout above 2270 may be some way off but would signal a primary up-trend.

Shanghai Composite Index

Hong Kong’s Hang Seng broke resistance at 23500, signaling a primary up-trend. Follow-through above 24000 would confirm, offering a medium-term target of 24500 and a long-term target of 28000*. Rising 13-week Twiggs Money Flow indicates medium-term buying pressure. Reversal below 23500 is unlikely, but would warn of another test of 22500 or the primary trendline.

Hang Seng Index

* Target calculation: 24000 + ( 24000 – 20000 ) = 28000

The ASX 200 is testing medium-term support at 5300. Penetration of the rising trendline, would warn of a correction. Bearish divergence on 21-day Twiggs Money Flow suggests selling pressure.

ASX 200

The monthly chart shows a correction would be likely to test the secondary rising trendline around 5000. Recovery above 5400 is unlikely at present, but would signal an advance to 5600*.

ASX 200

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

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ASX at resistance as Asia consolidates

India’s Sensex retreated from its 2007 and 2010 highs at 21000 and is testing support at 20500. Respect would signal a primary advance with a target of 24000*. Rising 13-week Twiggs Money Flow suggests medium-term buying pressure. Reversal below 20500 is less likely, but would warn of a correction to 19500 and possibly primary support at 18000.

Sensex

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

Dow Jones Japan index is proving resilient, headed for another test of resistance at 82. Breakout would signal an advance to 90*. 13-Week Twiggs Momentum is declining, but has so far respected the zero line, suggesting the primary up-trend is intact. Completion of a trough above zero would strengthen the signal. Reversal below the rising trendline is unlikely but would warn of another test of primary support at 74.

Dow Jones Japan index

* Target calculation: 82 + ( 82 – 74 ) = 90

Dow Jones Shanghai Index is rallying to test resistance at 282 after finding support at 270. Respect of resistance is likely and breach of 270 would signal a test of primary support at 245/250. Twiggs Momentum oscillating around the zero line indicates uncertainty.

DJ Shanghai Index

The ASX 200 is consolidating in a narrow range below resistance at 5450 — a bullish sign. Upward breakout would signal an advance to 5600*. Bearish divergence on 13-week Twiggs Money Flow, however, continues to warn of selling pressure. Reversal below 5300, penetrating the rising trendline, would signal a correction.

ASX 200

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

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Asia: India breaks out, ASX near target

India’s Sensex broke out above its 2007 and 2010 highs at 21000. Expect retracement to test the new support level. Respect would signal a primary advance with a target of 24000*. Rising 13-week Twiggs Money Flow suggests medium-term buying pressure. Reversal below 20500 is unlikely, but would warn of a correction to primary support at 18000.

Sensex

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

Japan’s Nikkei 225 again respected resistance at 15000. Declining 13-week Twiggs Money Flow suggests medium-term selling pressure. Breakout above 15000 would signal an advance to 17500*, but reversal below the October low is more likely and would test primary support at 13200, penetration of the rising trendline warning of trend weakness.

Nikkei 225

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

Singapore’s Straits Times Index is heading for another test of long-term resistance at 3300. Breakout would signal a primary advance to 3600*. But 13-week Twiggs Momentum below zero warns of a primary down-trend and reversal below the rising trendline would strengthen the signal. Breach of support at 3000 would confirm a primary down-trend.

Straits Times Index

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

China’s Shanghai Composite is consolidating below resistance at 2150/2160. Breakout below 2100 would signal a correction to primary support at 1950, while recovery above the upper trend channel at 2200 would suggest another advance; follow-through above 2250 confirming a primary up-trend. Declining 21-day Twiggs Money Flow indicates medium-term selling pressure, but respect of the zero line would suggest long-term support.

Shanghai Composite Index

Hong Kong’s Hang Seng is again testing resistance at 23500 on the weekly chart. Breakout would signal a primary advance, with a medium-term target of 24500 and a long-term target of 28000*. Follow-through above 24000 would confirm. Rising 13-week Twiggs Money Flow suggests medium-term buying pressure; a trough above zero would strengthen the signal. Reversal below 22500 is unlikely, but would warn of a correction to 21500 or the primary trendline.

Hang Seng Index

* Target calculation: 24000 + ( 24000 – 20000 ) = 28000

The ASX 200 found short-term support at 5390, short retracement suggesting buying pressure. Penetration of the descending trendline on 21-day Twiggs Money Flow, after a mild bearish divergence, would confirm this. Breakout above 5450 would test 5500, exceeding the target for the current advance. Respect of resistance remains as likely, however, and would warn of a correction to 5250/5300; confirmed if support at 5390 is broken. In the longer term, another Twiggs Money Flow trough above zero would suggest a healthy primary up-trend.

ASX 200

* Target calculation: 5300 + ( 5300 – 5150 ) = 5450

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Will dollar support stem gold & silver rise?

The Dollar Index found support at the 2012 low of 79 and is likely to test resistance at 80.50. Respect would confirm the primary down-trend, with a medium-term target of 77.50*. Breakout above 80.50 is unlikely, but would indicate strong support. The falling dollar is expected to boost gold and commodity prices.

Dollar Index

* Target calculation: 79 – ( 80.5 – 79 ) = 77.5

The yield on ten-year Treasury Notes found support at 2.50 percent and is expected to rally to test the descending trendline at 2.60 percent. Respect would signal a decline to 2.40 percent. Falling yields depress the dollar while lowering the opportunity cost of holding precious metals; both increasing upward pressure on gold. Respect of primary support at 2.40, however, would warn of an advance to 3.60 percent.

10-Year Treasury Yields

* Target calculation: 3.00 + ( 3.00 – 2.40 ) = 3.60

Gold

Spot gold is testing resistance at $1350/ounce. Breakout would indicate a primary advance to $1600*, while follow-through above $1425 would confirm. Respect of resistance is less likely, but would warn of another test of primary support at $1250.

Spot Gold

* Target calculation: 1425 + ( 1425 – 1250 ) = 1600

Silver is similarly testing resistance at $22.50/ounce. Follow-through above $23 would indicate a primary advance — confirmed if resistance at $25 is broken — while a fall below $22 would re-test primary support.

Spot Silver

Crude Oil

Nymex crude below medium-term support at $98/barrel and 13-week Twiggs Momentum crossing to below zero both warn of reversal to a primary down-trend. But recovery above resistance at $103 would negate this. Divergence of Brent crude reflects both a strengthening European recovery and continued supply threats in the Middle East.

Brent Crude and Nymex Crude

Commodity Prices

China, a primary driver of commodity prices, continues to offer mixed signals. The Shanghai Composite Index recovered above medium-term support at 2150, suggesting another test of the upper trend channel. A failed swing, or downward breakout from the trend channel, would warn of correction to test primary support at $1950; a bearish sign for commodity prices.

Shanghai Composite Index

Dow Jones-UBS Commodity Index continues to test medium-term support at 126. Breach would indicate a test of the primary level at 124. Recovery above 130 still seems more likely — and would signal a primary up-trend. A 13-week Twiggs Momentum peak below zero, however, would warn of a continuing down-trend.

Dow Jones UBS Commodities Index

* Target calculation: 130 + ( 130 – 125 ) = 135

Copper prices, bellwether for the global economy, tested 2011 lows at $6800/tonne over the last few months. Prices are now rallying to test resistance — and the descending trendline — at $7500/tonne. Breakout would signal a primary up-trend, as would recovery of 13-week Twiggs Momentum above zero; a bullish sign for the global economy.

Copper

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Shanghai weakens, ASX unaffected

China’s Shanghai Composite index broke support at 2150, signaling a correction to test primary support at 1950. Declining 13-week Twiggs Money Flow indicates selling pressure. Follow-through below 2100 would confirm. Recovery above 2150 is less likely, but would suggest a bear trap.

Shanghai Composite Index

Japan’s Nikkei 225 respected resistance at 15000. Declining 13-week Twiggs Money Flow suggests medium-term selling pressure. Monday has so far posted gains and breakout above 15000 would signal an advance to 17500*, but reversal below the October low is as likely and would test primary support at 13200. Penetration of the rising trendline would warn of trend weakness.

Nikkei 225

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

India’s Sensex respected its 2007 and 2010 highs at 21000, retracing to test support at 20500. Rising 13-week Twiggs Money Flow indicates buying pressure and breakout above 21000 would offer a long-term target of 24000*. Reversal below 20500 is unlikely, but would warn of another test of primary support at 18000.

Sensex

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

The ASX 200 posted a strong blue candle on Monday, but mild bearish divergence on 21-day Twiggs Money Flow warns the index is nearing its target and is due for retracement to test support at 5250/5300. In the longer term, however, troughs above zero reflect a healthy primary up-trend.

ASX 200

* Target calculation: 5300 + ( 5300 – 5150 ) = 5450

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Asian recovery bullish for ASX

India’s Sensex is testing long-term resistance at its all-time high of 21000. Expect retracement to test the new support level at 20500. Rising 13-week Twiggs Money Flow indicates buying pressure and breakout above 21000 would offer a long-term target of 24000*. Reversal below 20500 is unlikely, but would warn of another test of primary support at 18000.

Sensex

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

Rising troughs on Japan’s Nikkei 225 weekly chart suggest buying pressure; 13-week Twiggs Money Flow above 30% would strengthen the signal. Breakout above 15000 would signal an advance to 17500*. Reversal below 14000 is unlikely, but would warn of a bull trap.

Nikkei 225

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

China’s Shanghai Composite is consolidating below resistance at 2250. Reversal below the lower channel border at 2180, however, would warn that the trend is slowing and breach of support at 2150 would signal another correction. Declining 21-day Twiggs Money Flow indicates short-term selling pressure, but oscillation above the zero line indicates buyers are dominant in the longer term.

Shanghai Composite Index

Hong Kong’s Hang Seng is testing resistance at 23500 on the weekly chart. Breakout would be a strong bull signal, offering a target of 25500*. Follow-through above 24000 would confirm the advance. Rising 13-week Twiggs Money Flow suggests medium-term buying pressure. Reversal below 22750 is unlikely, but would indicate a correction to 21500.

Hang Seng Index

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

Rising Asian markets are bullish for the ASX. The ASX 200 index followed through above 5300, confirming an advance to 5850*. Expect retracement to test the new support level at 5250/5300. Failure of support is unlikely, but would warn of another correction.

ASX 200

* Target calculation: 5250 + ( 5250 – 4650 ) = 5850

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India, ASX breakout

India’s Sensex is retracing to test its new support level after breaking resistance at 20500 Friday, signaling a primary advance to 22000*. A 13-week Twiggs Money Flow trough above zero indicates buying pressure. Reversal below 19500 is unlikely, but would warn of another test of primary support at 18000.

Sensex

* Target calculation: 20000 + ( 20000 – 18000 ) = 22000

Japan’s Nikkei 225 is testing the rising trendline on its weekly chart. Penetration would warn that momentum is slowing, while breach of 13000 would signal a primary down-trend. Breakout above 15000 is as likely, despite the earlier bearish divergence on 13-week Twiggs Money Flow, and would signal an advance to 17500*.

Nikkei 225

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

China’s Shanghai Composite is rallying to test resistance — and the upper trend channel — at 2330. The 21-day Twiggs Money Flow trough above zero indicates growing buying pressure. Reversal below 2150 is unlikely, but would indicate another test of primary support at 1950.

Shanghai Composite Index

Hong Kong’s Hang Seng is testing resistance at 23500 on the weekly chart. Breakout would signal a primary advance to 25500*; follow-through above 24000 would confirm. Rising 13-week Twiggs Money Flow indicates medium-term buying pressure. Respect of 23000 is unlikely, but would suggest another test of support at 21500.

Hang Seng Index

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

Singapore’s Straits Times Index appears to be preparing for another test of long-term resistance at 3300. Breakout would signal a primary advance to 3600*. A 13-week Twiggs Momentum peak below zero would warn of a primary down-trend, but sentiment is bullish across a wide range of markets and upward breakout is as likely.

Straits Times Index

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

The ASX 200 recovered above resistance at the May high of 5250, the false break suggesting a bear trap. Follow-through above 5300 would confirm an advance to 5850*. Reversal below 5100 is unlikely, but would warn of a correction.

ASX 200

* Target calculation: 5250 + ( 5250 – 4650 ) = 5850

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China & India bouyant, Japan weakens

Japan’s Nikkei 225 broke short-term support at 14300, indicating a correction to 13000. Penetration of the rising trendline would warn that momentum is slowing, while breach of 13000 would signal a primary down-trend. Earlier bearish divergence on 13-week Twiggs Money Flow warned of a reversal; decline below recent lows at 15% would strengthen the signal.

Nikkei 225

China’s Shanghai Composite followed through today above the (secondary) declining trendline, suggesting a rally to test resistance — and the upper trend channel — at 2330. A 21-day Twiggs Money Flow trough above zero would indicate medium-term buying pressure. Reversal below 2150 is unlikely, but would indicate another test of primary support at 1950.

Shanghai Composite Index

India’s Sensex is consolidating below resistance at 20400 — a bullish sign. Breakout above 20400 would signal another primary advance, but reversal below 19400 is as likely, and would warn of another test of 18000. A 13-week Twiggs Money Flow trough above zero would indicate long-term buying pressure.

Sensex

* Target calculation: 18500 – ( 20500 – 18500 ) = 16500

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ASX signals correction despite Shanghai rally

Dow Jones Shanghai Index penetrated its (secondary) descending trendline today, suggesting an up-swing to test resistance between 298 and 304 at the upper trend channel. Reversal below 282 and the lower trend channel is unlikely, but would warn of another test of primary support at 248.

DJ Shanghai Index

The ASX 200, however, broke its rising trendline and short-term support at 5200, warning of a correction to primary support at 4650. Breach of medium-term support at 5000 would further strengthen the signal.

ASX 200

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China recovery

China’s Shanghai Composite Index is testing support at 2150 and the lower trend channel. Recovery above the descending trendline would suggest another rally, while failure of support would warn of a correction to primary support at 1950. The index hints at long-term recovery but further confirmation is necessary.
Shanghai Composite Index

The Harper Petersen Index, from ship brokers Harper Petersen & Co., indicates that shipping rates for container vessels remain depressed, suggesting a sluggish global trade in manufactured goods. Exporters like China would be severely affected.

Harper Petersen Index

The Baltic Dry Index — reflecting dry bulk shipping rates for commodities like iron ore and coal — jumped sharply, however, reflecting an upturn in demand for bulk commodities.
Baltic Dry Index

Bulk commodity prices remain depressed according to the RBA.
RBA Bulk Commodity Prices
But export volumes are rising, in step with the Baltic Dry Index, reflecting strong demand from infrastructure development.
RBA Bulk Commodity Exports

WSJ reports that monthly electricity consumption has reached a new high:

China on Tuesday posted an all-time record-high electricity output level of 498.7 billion kilowatt-hours in August, rising 13% from a year earlier.

Monthly fluctuations should largely be ignored because of weather variation — excessively hot months like August can boost electricity demand — but the rising long-term trend in electricity consumption (chart from IndexMundi) suggests a robust recovery. A recovery led primarily by infrastructure investment rather than manufactured exports may well prove unsustainable in the long-term, but should provide welcome relief to the resources sector in the next few years.
Electricity Consumption

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