China & HK Archives - Page 36 of 61

August 22, 2013

Global selling pressure

The S&P 500 Index broke medium-term support at 1650 and is headed for a test of the rising trendline. Respect would indicate the primary up-trend is intact, but bearish divergence on 13-week Twiggs Money Flow warns of selling pressure. This is also evidenced by the marginal new high in August. A test of primary support at 1560 is likely. Breach would offer a target of 1400*.

S&P 500 Index

* Target calculation: 1550 – ( 1700 – 1550 ) = 1400

Dow Jones Europe Index also displays marginal new highs in May and August. Penetration of the rising trendline indicates the up-trend is losing momentum — also indicated by bearish divergence on 13-week Twiggs Momentum. Reversal below support at 290 would strengthen the warning, but only failure of support at 270 would signal a trend reversal.

DJ Europe Index

China’s Shanghai Composite Index ran into strong resistance at 2100. Declining 13-week Twiggs Money Flow (below zero) warns of selling pressure. Reversal below 2050 would indicate another test of primary support at 1950, suggesting a decline to 1800*. Breakout above 2200 and the descending trendline is unlikely, but would signal that a bottom has formed.

Shanghai Composite Index

Japan’s Nikkei 225 broke medium-term support at 13500. Follow-through below 13250 would indicate a correction to primary support at 12500. Penetration of the rising trendline suggests that the primary up-trend is losing momentum. Earlier bearish divergence on 13-week Twiggs Money Flow also warns of a reversal. Recovery above the declining trendline is less likely, but would indicate the correction has ended.

Nikkei 225 Index

India’s Sensex broke primary support at 18500, following through below 18000 to remove any doubt. The primary trend has reversed after a triple top and now offers a target of 16500*. Declining 13-week Twiggs Money Flow confirms selling pressure. Recovery above 18500 is unlikely, but would warn of a bear trap.

BSE Sensex Index

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

The ASX 200 is consolidating in a broadening top around the 2010/2011 high of 5000. Correction to 4900 would be quite acceptable, garnering support for an advance to the upper border, but breach of 4900 would indicate a failed swing, warning of reversal to a primary down-trend. Failure of primary support at 4650 would confirm. Bearish divergence on 13-week Twiggs Money Flow indicates selling pressure; strengthened if the indicator reverses below zero. Respect of support at 5000 is less likely, despite the long tail on today’s candle, but would offer a target of 5300*.

ASX 200 Index

* Target calculation: 5150 + ( 5150 – 5000 ) = 5300

August 13, 2013

China rally spurs ASX advance

China’s Shanghai Composite Index rallied from support at 1950 to test medium-term resistance at 2100 on the weekly chart. Breakout would indicate a test of the descending trendline at 2200. The primary trend is down, but penetration of the trendline would suggest that a bottom has formed.

Shanghai Composite Index

The Shenzhen Composite Index has been in a primary up-trend since May, but displayed weakness with a second, shaky test of support at 900. Troughs above zero on 13-week Twiggs Money Flow indicate the primary up-trend is intact. Breakout above the last high at 1040 would confirm — a bullish sign for the Shanghai Composite.

Shenzhen Composite Index

Japan’s Nikkei 225 is testing medium-term support at 13500. Breach would indicate a correction to primary support at 12500, but respect of the zero line by 21-day Twiggs Money Flow would suggest the primary up-trend is intact. Recovery above 14500 would strengthen the signal.

Nikkei 225 Index

India’s Sensex respected primary support at 18500. Rising troughs on 13-week Twiggs Money Flow indicate moderate buying pressure. Expect another test of resistance at 20500 (i.e. a test of 20500 is likely). Breach of support, while unlikely, would warn of a primary down-trend — confirmed if there is follow-through below 18000.

BSE Sensex Index

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

The ASX 200 broke short-term resistance at 5120, signaling an advance to the May peak at 5250. Rising 21-day Twiggs Money Flow indicates buying pressure. Reversal below 5000 is unlikely, but would warn of a correction to at least 4850.

ASX 200 Index

Breakout above 5250 would indicate another advance, but high volatility, shown by the broadening formation of the last few months, will require further evidence to confirm this.

ASX 200 Index

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

August 12, 2013

China ‘hard landing’ could trigger Australia recession: Standard & Poor – The Economic Times

“Australia’s exposure to commodity demand from Asia, and China in particular, was a saving grace during the global recession of 2009. But by the same token it has become Australia’s Achilles’ heel,” the ratings giant [Standard & Poor’s] said.

“Particularly while mining investment remains such a large share of the Australian economy, and other sectors continue to lack growth momentum, Australia remains highly sensitive to a sharp correction in China’s economic growth.”

August 8, 2013

S&P 500 and Europe cause ASX 200 to hesitate

Mildly bearish sentiment in the US and Europe is causing hesitancy on the ASX 200, while China continues to consolidate above long-term support.

The S&P 500 retreated below resistance at 1700, indicating a test of support at 1675. Longish tails on the last two candles are indicative of buying. Recovery above 1700 would signal continuation of the advance to 1800*. Bearish divergence on 21-day Twiggs Money Flow, however, reflects selling pressure and breach of 1675 is more likely, testing the stronger support level at 1650. Primary support is some way off at 1560.

S&P 500 Index

* Target calculation: 1680 + ( 1680 – 1560 ) = 1800

Recovery of Dow Jones Europe Index above 290 indicates an advance to 310*. Follow-through above 295 strengthens the signal, but divergence on 13-week Twiggs Momentum suggests that a top may be forming. Reversal of TMO below zero would strengthen the warning.

Dow Jones Europe Index

* Target calculation: 290+ ( 290 – 270 ) = 310

China’s Shanghai Index holds steady above long-term support at 1950. Breakout above 2100 would suggest a rally to the downward trendline, but declining 13-week Twiggs Money Flow warns of selling pressure and breach of support at 1950 would offer a target of 1750*.

Shanghai Index

* Target calculation: 1950 – ( 2150 – 1950 ) = 1750

Australia’s ASX 200 found support at 5000 after falling sharply on Wednesday. Recovery above 5100 would indicate another test of 5250. Oscillation of 21-day Twiggs Money Flow close to zero suggests hesitancy. Breach of 5000 is as likely, and would test the stronger support level of 4850, providing a more robust foundation for further advances.

ASX 200 Index

July 31, 2013

China exports

Shipping rates for container vessels remain at depressed levels, close to the lows of 2009, according to the The Harper Petersen Index from ship brokers Harper Petersen & Co. This reflects the depressed level of global trade in manufactured goods. Major exporters like China are the most severely affected.

Harper Petersen Index

July 29, 2013

Asia retreats but ASX 200 soldiers on

Japan opened sharply lower on Monday, with Dow Jones Japan Index testing its long-term rising trendline at 75. Failure of support at 69 would signal a primary down-trend.

Dow Jones Japan Index

The Nikkei 225 is similarly testing its rising trendline. Declining peaks on 13-week Twiggs Money Flow indicate selling pressure. Failure of support at 12500 would signal a primary down-trend. Recovery above 15000 is unlikely but would test 16000.

Nikkei 225 Index

China’s Shanghai Composite Index continues to test long-term support at 1950. Breakout would signal a primary decline, with a target of the 2008 low at 1660. Reversal of 13-week Twiggs Money Flow below zero warns of selling pressure. Respect of 1950 is unlikely, but would indicate a rally to 2150.

Shanghai Composite Index

India’s Sensex found resistance at 20200, retreating toward its rising trendline. Penetration of the trendline would warn the trend is weakening, while failure of support at 18500 would signal a primary down-trend. Rising troughs on 13-week Twiggs Money Flow, however, indicate moderate buying pressure. Respect of support at 19000 would suggest another primary advance; confirmed if resistance at 20200 is broken.

BSE Sensex Index

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

The ASX 200 is consolidating in a narrow flag above the new support level at 5000. Upward breakout is likely and would signal a test of the May peak at 5250. Oscillation of 21-day Twiggs Money Flow around zero indicates hesitancy. Reversal below 4850 is unlikely, but would warn of another test of primary support at 4650.

ASX 200 Index

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

The ASX 200 Volatility Index below 15 also indicates low market risk — a bullish sign.
ASX Volatility Index

July 28, 2013

How urban Chinese workers helped cause the great recession | Quartz

Hillary Rosner describes how the inflow of savings from China contributed to the US sub-prime crisis:

“The foreign reserve holdings of U.S. Dollars,” the researchers write, “which had been at less than 11% of U.S. GDP prior to 2000, grew rapidly after 2002; in fact they almost doubled over the 5-year period from 2002 to 2007.”

July 23, 2013

EconoMonitor » Beijing’s New Leaders Are Right to Hold Back

Michael Pettis argues that China cannot stimulate its economy out of trouble:

There are still bulls out there who insist that China is out of the woods and making a strong recovery, for example former Deputy Governor of the Reserve Bank of Australia, Stephen Grenville, who argues in his article strangely titled China doomsayers run out of arguments:

“The missing element from the low growth narrative is that unemployment would rise, provoking a stimulatory policy response. China would extend the transition and put up with low-return investment recall that when unemployment was the issue, Keynes was prepared to put people to work digging holes and filling them in rather than have unemployment rise sharply. To be convincing, the low-growth scenario needs to explain why this policy response will not be effective.”

It seems to me that the reason why simply “provoking a stimulatory policy response” won’t help China has been explained many times, even recently by former China bulls. Of course more stimulus will indeed cause GDP growth to pick up, as Grenville notes, but it will do so by exacerbating the gap between the growth in debt and the growth in debt-servicing capacity. Because too much debt and a huge amount of overvalued assets is precisely the problem facing China, it is hard to believe that spending more borrowed money on increasing already excessive capacity can possibly be a useful resolution of slower Chinese growth.

July 22, 2013

ASX 200 finds resistance, China tests support

China’s Shanghai Composite Index continues to test long-term support at 1950. Breakout would signal a primary decline, with a target of the 2008 low at 1660. Reversal of 13-week Twiggs Money Flow below zero warns of rising selling pressure. Respect of 1950 is unlikely, but would indicate a rally to 2150.

Shanghai Composite Index

Japan’s Nikkei 225 found resistance at 15000, but the primary trend is upward and retracement that respects the rising trendline would suggest another advance. Declining peaks on 13-week Twiggs Money Flow would indicate selling pressure. Follow-through above 15000 would test the earlier high at 16000.

Nikkei 225 Index

India’s Sensex is testing resistance at 20200. Breakout would signal an advance to 22000*. Recovery of 13-week Twiggs Money Flow above its May peak indicates buying pressure. Respect of resistance at 20200 is unlikely, but would re-test the rising trendline.

BSE Sensex Index

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

The ASX 200 is consolidating in a narrow band below resistance at 5000 — a bullish sign suggesting a test of the May peak at 5250. Highs of 5000 in 2010 and 2011 give this level additional significance and breakout would indicate an advance to 5850*. Follow-through above 5250 would confirm. Reversal of 21-day Twiggs Money Flow below zero merely indicates short-term selling pressure. Reversal below 4850 is unlikely, but would warn of another test of primary support at 4650.

ASX 200 Index

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

July 15, 2013April 18, 2024

ASX 200 consolidates while Asia rallies

China’s Shanghai Composite Index continued its rally on Monday, headed for a test of 2150. Last week’s tall shadow (or candlewick) indicates selling pressure. Respect of resistance is likely and reversal below 1950 would signal a primary decline, with a target of the 2008 low at 1700. Reversal of 13-week Twiggs Money Flow below zero would strengthen the bear signal.

Dow Jones Shanghai Index

Last week’s dragonfly doji on Japan’s Nikkei 225 also indicates selling pressure, but the higher close hints this may have been resolved. Monday’s open is flat and reversal below last week’s low would warn of another test of primary support at 12500. Penetration of the rising trendline or a lower peak on 13-week Twiggs Money Flow would warn of trend weakness, while breach of primary support at 12500 would signal reversal. But that is some way off and follow-through above 15000 would suggest another advance; confirmed if resistance at 16000 is broken.

Nikkei 225 Index

India’s Sensex is headed for another test of resistance at 20200. Breakout would signal an advance to 22000*. Recovery of 13-week Twiggs Money Flow above its May peak would indicate healthy buying pressure. Respect of resistance at 20200 is unlikely, but would re-test the rising trendline.

BSE Sensex Index

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

The ASX 200 is consolidating below resistance at 5000. Narrow consolidation is a bullish sign, but reversal below 4850 would warn of another test of primary support at 4650. Breakout above 5000 remains likely and would indicate an advance to 5850* — confirmed if resistance at 5250 is broken. Breach of primary support is unlikely, but would signal a primary down-trend. Oscillation of 21-day Twiggs Money Flow above zero would indicate healthy buying pressure.

ASX 200 Index

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