European banks in recent years dramatically boosted lending to emerging markets and were among the biggest cross-border lenders in these countries. Their retreat has tightened credit in industries—from aircraft to media to mining — squeezing economies already feeling the effects of reduced demand from the developed world for their exports….”We’re in a very vulnerable position that’s definitely impacting global growth,” Gail Kelly, chief executive of Australia’s Westpac Bank said at The Wall Street Journal CEO Council last week. “It’s certainly impacting in my country and in Asia.”
India & Singapore
The BSE Sensex is headed for a test of primary support at 16000/15800. Reversal of 13-week Twiggs Money Flow below zero warns of further selling pressure. Failure of primary support would offer a target of 14000*.
* Target calculation: 16 – ( 18 − 16 ) = 14
Westpac’s monthly Fearful Symmetry chronicle on the Indian economy makes an interesting point:
“The reality is that while India is an internally focused and investment-led economy — thus producing a low-beta response to swings in global growth — the financing of investment, at the margin, must come from abroad, so it is highly vulnerable to downswings that incorporate or are driven by negative financial shocks. Put simply, in India a slowdown in the global economy is felt principally through the hardening of its external financing constraint. That is in contrast to the majority of its East Asian (surplus) neighbours, where global shocks are primarily transmitted via an export-led deceleration in aggregate demand, or its non-China BRIC peers, where swings in commodity prices are the key variable.”
Given that almost half of foreign bank funding is sourced from Europe, expect a significant tightening of external finance and hence domestic investment.
Singapore’s Straits Times Index is headed for medium-term support at 2700. Failure of 2700 would indicate a test of primary support at 2500. Reversal of 63-day Twiggs Momentum deep below zero warns of a strong primary down-trend.
* Target calculation: 2500 – ( 2900 − 2500 ) = 2100
India & Singapore
The BSE Sensex found support at 17000, rallying to 17300 Monday. Breakout above 18000 would offer a target of 19000 — and breach of the descending trendline would warn that the primary down-trend is weakening. Reversal below 17000 remains as likely, however, and would test primary support at 16000. Twiggs Money Flow oscillating close to zero indicates uncertainty.
* Target calculation: 18 + ( 18 – 17 ) = 19
Singapore’s Straits Times Index found medium-term support at 2750 last week before rallying to 2840 Monday. 63-Day Twiggs Momentum deep below zero continues to indicate a primary down-trend. Failure of support at 2750 would test primary support at 2500, while breakout above 2900 would offer a target of 3200*.
* Target calculation: 2900 + ( 2900 – 2600 ) = 3200
India Singapore
The weekly chart of India’s Sensex shows the index testing resistance at 18000 — which coincides with the descending trendline. Upward breakout would indicate that the primary down-trend is weakening, while respect would test primary support at 16000. 13-Week Twiggs Money Flow remains weak, despite earlier bullish divergence, and reversal below zero would warn of renewed selling pressure.
* Target calculation: 16 – ( 18 – 16 ) = 14
Singapore’s Straits Times Index is testing resistance at 2900. Respect would signal another test of primary support at 2500. Declining 63-day Twiggs Momentum continues to signal a primary down-trend.
* Target calculation: 2500 – ( 2900 – 2500 ) = 2100
India, Singapore and China
India’s Sensex index retraced to test the new support level at 17500. The primary trend remains downward but respect of support at 17500 would confirm a rally to the descending trendline. Bullish divergence followed by a cross to above zero on 13-week Twiggs Money Flow indicates buying support.
* Target calculation: 17 + ( 17 – 16 ) = 18
The Singapore Straits Times Index is testing the band of resistance at 2900/2950. Respect would indicate another test of primary support at 2500, while breakout would offer a target of 3300*. 63-Day Twiggs Momentum below zero indicates that the index is still in a primary down-trend.
* Target calculation: 2900 +( 2900 – 2500 ) = 3300
Dow Jones Shanghai Index is advancing to resistance at 330 and the descending trendline. Respect would indicate another primary decline, with a target of 250*, while breakout would signal that a bottom is forming.
* Target calculation: 290 – ( 330 – 290 ) = 250
Asia monthly charts
Monthly charts help fit the current market action into a long-term perspective. The Nikkei 225 index broke support at 9000 and is likely to test the 2009 low of 7000*. 63-Day Twiggs Momentum respecting the zero line (from below) confirms the primary down-trend.
* Target calculation: 9000 – ( 11000 – 9000 ) = 7000
The Seoul Composite found (primary) support at 1650/1700, followed by a reaction to 1900. Declining 13-week Twiggs Money Flow warns of selling pressure. Respect of resistance at 1900 is likely, which would indicate another test of primary support.
* Target calculation: 1700 – ( 1900 – 1700 ) = 1500
The Shanghai Composite index is testing support at 2400. Failure would confirm the strong primary down-trend signaled by declining 63-day Twiggs Momentum.
* Target calculation: 2500 – ( 3500 – 2500 ) = 1500
The Hang Seng index is retracing to test resistance at 20000. Declining 13-week Twiggs Money Flow warns of selling pressure. Respect of resistance, would indicate another test of 16000.
* Target calculation: 16 – ( 20 – 16 ) = 12
India’s SENSEX is headed for a test of resistance at 17500/18000 after a small bullish divergence on 13-week Twiggs Money Flow indicated buying pressure. Respect of 18000 would warn of another test of 16000.
* Target calculation: 16 – ( 18 – 16 ) = 14
Singapore’s Straits Times Index is in a similar position. Respect of resistance at 2900 would signal another test of 2500. Failure of support would confirm the strong primary down-trend signaled by declining 63-day Twiggs Momentum.
* Target calculation: 2500 – ( 2900 – 2500 ) = 2100
India & Singapore
The BSE Sensex is testing resistance at 17000. Breakout would signal a bear market rally to test the descending trendline. Rising 13-week Twiggs Money Flow indicates medium-term buying support.
* Target calculation: 16 – ( 17.5 – 16 ) = 14.5
The Singapore Straits Times Index also reflects a bear market rally. Respect of resistance at 2900 would warn of another down-swing — as would a 63-day Twiggs Momentum peak below the zero line.
* Target calculation: 2500 – ( 2900 – 2500 ) = 2100
India Sensex and Singapore STI
Bullish divergence on India’s SENSEX 13-week Twiggs Money Flow suggests a double bottom reversal. Breakout above 17200 would confirm, signaling a bear market rally with a target of 18600*. Note that the primary down-trend would remain downward.
* Target calculation: 17200 + ( 17200 – 15800 ) = 18600
Singapore’s Straits Times Index recovered above short-term resistance at 2650 after a sharp fall over several weeks. We could see a bear market rally to 2900, but the primary trend, as signaled by declining 63-day Twiggs Momentum, remains in a strong down-trend.
* Target calculation: 2700 – ( 2900 – 2700 ) = 2500
DJ Asia update
Dow Jones India 30 Titans index displays a bullish divergence on 13-week Twiggs Money Flow, suggesting reversal to an up-trend. Breakout above 166 would complete a double bottom.
Dow Jones Singapore Index advanced cautiously towards the first line of resistance at 218. 21-Day Twiggs Money Flow holding below zero indicates medium-term selling pressure. Expect the primary down-trend to continue. Reversal below 202 would confirm.
Japan is closed but South Korean buyers also displayed caution with narrow gains while 21-day Twiggs Money Flow again holds below zero.
Dow Jones Shanghai index edged lower after resuming trading Monday. Declining 13-week Twiggs Money Flow indicates strong selling pressure.
Dow Jones HongKong index formed a doji star indicating hesitancy. Reversal below 340 would warn of a down-swing to 300. 63-Day Momentum declining below zero suggests a strong down-trend.
India Singapore weak
The SENSEX is headed for another test of support at 16000. 13-Week Twiggs Money Flow holding below zero indicates a strong primary down-trend. Failure of support is likely and would indicate a down-swing to 14500*.
* Target calculation: 16000 – ( 17500 – 16000 ) = 14500
Singapore’s Straits Times Index has already broken support at 2650, warning of a down-swing to 2300*. 63-Day Momentum declining while below zero also confirms a strong primary down-trend.
* Target calculation: 2600 – ( 2900 – 2600 ) = 2300