China & HK Archives - Page 42 of 61

December 24, 2012

Stocks: Outlook for 2013

Quarterly charts for the last two decades give a good idea of where stocks will be headed in 2013.

The S&P 500 is headed for a test of its 2000/2007 high at 1550. Declining 63-day Twiggs Momentum indicates that resistance is unlikely to be broken. While this does not mean another fall to 750, it does suggest a strong correction.

S&P 500 Index

Apple Inc. [AAPL] is no longer leading the advance but testing primary support at 500. Failure of support would confirm the primary down-trend indicated by a 63-day Twiggs Momentum peak below zero.

Apple

Germany’s DAX is also headed for a test of its 2000/2007 high, at 8200, but rising momentum indicates that breakout above resistance is likely.

DAX Index

The FTSE 100 is also advancing but is some way off its earlier high of 7000 and breakout appears unlikely.

FTSE 100 Index

India’s Sensex is more bullish and likely to break resistance at 21000.

BSE Sensex Index

The Shanghai Composite is headed in the opposite direction and likely to re-test long-term support at 1800/1750. Rising 63-day Twiggs Momentum (below zero) suggests that a bottom will form at this level.

Shanghai Composite Index

The ASX 200 is headed for a test of resistance at 5000, supported by rising 63-day Twiggs Momentum. Breakout would signal an advance to 6000, but weakness in China and the US may delay this for some time.

ASX 200 Index

Colin Twiggs

Colin Twiggs is a former investment banker with almost 40 years of experience in financial markets. He co-founded Incredible Charts and writes the popular Trading Diary and Patient Investor newsletters.

Using a top-down approach, Colin identifies key macro trends in the global economy before evaluating selected opportunities using a combination of fundamental and technical analysis.

Focusing on interest rates and financial market liquidity as primary drivers of the economic cycle, he warned of the 2008/2009 and 2020 bear markets well ahead of actual events.
He founded PVT Capital (AFSL No. 546090) in May 2023, which offers investment strategy and advice to wholesale clients.

December 17, 2012

Asia: China rally

China’s Shanghai Composite Index is testing resistance at 2150. While a large correction — signaled by breakout above 2150 — is not a reliable reversal signal, it does indicate that a bottom is forming. Bullish divergence on 63-day Twiggs Momentum also suggests a reversal. But only a higher trough followed by a new high on the index chart would confirm.

Shanghai Composite Index

India’s Sensex is consolidating in a narrow range below 19500. Breakout is likely and would indicate an advance to 20000*. Oscillation of 13-week Twiggs Money Flow above zero indicates long-term buying pressure, but bearish divergence warns of medium-term resistance. Reversal below 19000 is unlikely but would warn that the advance is losing momentum.

Sensex Index

* Target calculation: 19 + ( 19 – 18 ) = 20

Japan’s Nikkei 225 Index is advancing to resistance at 10000/10200*. Rising 63-day Twiggs Momentum indicates buying pressure; look for a trough above zero to confirm.

Nikkei 225 Index

* Target calculation: 9200 + ( 9200 – 8200 ) = 10200

Colin Twiggs

Using a top-down approach, Colin identifies key macro trends in the global economy before evaluating selected opportunities using a combination of fundamental and technical analysis.

December 12, 2012

WPR Article | Strategic Horizons: U.S. Must Change Its Thinking on Conflict in Asia

Steven Metz writes on China’s growing air-sea battle capability (or “high-intensity, regional military operations, including anti-access and area denial (A2AD) operations” in defense-analyst-speak):

Military capability is only part of the equation: China also has the motivation to use its growing military power. It has long-standing and unresolved territorial disputes with a number of Asia-Pacific nations. It remains dependent on imported energy and has shown a willingness to flex its muscle to protect access to its sources. And most of all, China seems determined to replace the United States as the dominant power in the Asia-Pacific region. To do this, it must negate U.S. military power and fill the ensuing vacuum with its own.

Colin Twiggs

Using a top-down approach, Colin identifies key macro trends in the global economy before evaluating selected opportunities using a combination of fundamental and technical analysis.

December 11, 2012

China: Shanghai resurgence

China’s Shanghai Composite Index threatens a bear trap on the weekly chart, reversing above former primary support at 2000, headed for a test of resistance at 2150. Bullish divergence on 63-day Twiggs Momentum suggests that a bottom is forming. Penetration of the descending trendline would strengthen the signal.

Shanghai Composite Index

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

Colin Twiggs

Using a top-down approach, Colin identifies key macro trends in the global economy before evaluating selected opportunities using a combination of fundamental and technical analysis.

December 10, 2012

What to do about the US currency war | Alan Kohler | Business Spectator

Alan Kohler writes about the Fed’s quantitative easing strategy which is effectively debasing the US dollar:

Because it is trying to reduce the world’s reserve currency, the Fed is effectively giving other countries two choices: either allow your currencies to appreciate against the US dollar and thus make your economies less competitive and crunch your export industries, or print money with us and risk (or perhaps guarantee) inflation.

It is a Hobson’s Choice, and like most other countries’ central banks, the Reserve Bank of Australia doesn’t quite know what to do.

The strategy is also debasing the more than $2 trillion of US Treasuries held by China and Japan, placing these Asian exporters in an awkward position. Repatriating their investments would send the dollar plummeting against the yuan and the yen, reversing their export advantage maintained over the last two decades through capital account inflows into US Treasuries. Capital inflows were used to offset the current account outflows and prevented the yen and yuan from appreciating against the dollar. If the flows reverse, the US will enjoy an unfair trade advantage from an under-valued dollar.

Methinks those who predict a globally dominant China with continued growth rates of 7% to 8% are a mite premature. …….Possibly a century or two.

Colin Twiggs

Using a top-down approach, Colin identifies key macro trends in the global economy before evaluating selected opportunities using a combination of fundamental and technical analysis.

December 10, 2012

Pettis: Australia should be pessimistic | MacroBusiness

Michael Pettis writes about the latest Australian government White Paper Australia in the Asian Century that projects an average 7% GDP growth rate for China between 2012 and 2025:

This seems to put the Australian government among the most optimistic in the market when it comes to long-term growth expectations for China. I have always assumed that government projections should generally be on the pessimistic side to prepare for unexpected negative shocks (positive shocks can take care of themselves), but apparently not. I am glad to say that my own conversations with Australian government officials lead me to believe that this White Paper may represent the official view of the government, but it does not represent the private views of all Australian government officials…….

Colin Twiggs

Using a top-down approach, Colin identifies key macro trends in the global economy before evaluating selected opportunities using a combination of fundamental and technical analysis.

December 9, 2012

China is now heading toward Japan-style economic paralysis if it doesnt change course | Quartz

Jack Rodman, president of Global Distressed Solutions LLC, spent 1999 to 2011 living in Japan and China, packaging and disposing of nonperforming loans and distressed assets. He writes on the problems facing China:

At the end of 1989, Japan’s bubble economy burst and its economic miracle came to an abrupt end. The Nikkei exchange fell from nearly 40,000 to its current 10,000 range. Over the course of 20 years, what appeared to be “unstoppable” economic growth proved to be anything but.

Today, China, in some ways, appears to be closer to following Japan than to sustaining its own economic miracle. China’s Shanghai Index (stocks) has fallen from a high of 7,000 in 2007 to a low of 2,000 for the past few years, and Chinese domestic investors have little confidence in their domestic stock market. The Japanese bubble, and its aftermath, was the result of a series of domestic financial and economic imbalances, many of which China faces today—to varying if not greater degrees….

Colin Twiggs

Using a top-down approach, Colin identifies key macro trends in the global economy before evaluating selected opportunities using a combination of fundamental and technical analysis.

December 7, 2012

China regulator frets over confidence crisis after investment product fails | Reuters

Hongmei Zhao and Lucy Hornby report:

Investors rushed to [Hua Xia Bank Co Ltd]’s Jiading branch in a suburb of Shanghai after one of four wealth management products issued by the Zhongding Wealth Investment Center failed to pay out as scheduled on November 26.

via China regulator frets over confidence crisis after investment product fails | Reuters.

Colin Twiggs

Using a top-down approach, Colin identifies key macro trends in the global economy before evaluating selected opportunities using a combination of fundamental and technical analysis.

December 4, 2012

Australia: ASX 200 retreats

The ASX 200 found resistance at 4540 after a strong rally. Reversal below 4500 would indicate retracement to test support at 4450. Breach of the falling trendline indicates the correction is over. Respect of 4450 would confirm. A 21-day Twiggs Money Flow trough above zero would signal medium-term buying pressure. Breakout above 4580 would indicate a primary advance to 4800*.

ASX 200 Index

* Target calculation: 4580 + ( 4580 – 4350 ) = 4810

Colin Twiggs

Using a top-down approach, Colin identifies key macro trends in the global economy before evaluating selected opportunities using a combination of fundamental and technical analysis.

December 4, 2012

China: Controlled descent

China’s Shanghai Composite Index monthly chart displays controlled descent rather than free-fall, declining in layers of roughly 200 points since early 2010. After breaking support at 2000, expect a decline to 1800*. Oscillation of 63-day Twiggs Momentum below zero reflects the primary down-trend. Recovery above 2000 is most unlikely but would suggest a bear trap.

Shanghai Composite Index

* Target calculation: 2000 – ( 2200 – 2000 ) = 1800

The Shenzhen Composite Index offers a target of 600* after breaking support at 800 on the monthly chart. 13-Week Twiggs Money Flow below zero indicates selling pressure.

Shenzhen Composite Index

* Target calculation: 800 – ( 1000 – 800 ) = 600

Hong Kong’s Hang Seng Index respected resistance at 22000. Bearish divergence on 13-week Twiggs Money Flow warns of medium-term selling pressure. Reversal below 21000 would indicate a test of the rising trendline at 20000. Recovery above 22000 is unlikely at present but would signal an advance to 24000*

Hang Seng Index

* Target calculation: 22 + ( 22 – 20 ) = 24

Colin Twiggs

Using a top-down approach, Colin identifies key macro trends in the global economy before evaluating selected opportunities using a combination of fundamental and technical analysis.