Category: Japan & Korea

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Asia: India bullish while China finds support

India’s Sensex retraced after encountering sellers at 22000, but Monday’s engulfing candle indicates support. Breakout above 22000 would signal an advance to 23000*. Reversal below 21300 is unlikely, but would warn of another correction. Momentum troughs above zero suggest a healthy primary up-trend.

Sensex

* Target calculation: 21500 + ( 21500 – 20000 ) = 23000

Japan’s Nikkei 225 is headed for another test of 14000 after a false break above 15000. Breach of support would signal a primary down-trend. Bearish divergence on 13-week Twiggs Money Flow continues to warn of selling pressure; reversal below zero would also indicate a primary down-trend.

Nikkei 225

* Target calculation: 14000 – ( 15000 – 14000 ) = 13000

China’s Shanghai Composite Index found support at 1990/2000. Follow-through above the rising trendline would indicate another bear rally. Bullish divergence on 21-day Twiggs Money Flow suggests medium-term buying pressure. Reversal below 1990 is unlikely at present, but would warn of a decline to 1850.

Shanghai Composite Index

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

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Japan: Hesitant recovery

The Nikkei 225 recovered above 15000, signaling another attempt at 16000. Retracement that respects the new support level would strengthen the signal. Completion of a 13-week Twiggs Money Flow trough above zero would indicate buying pressure, but bearish divergence flags long-term selling pressure and reversal below zero would warn of a primary down-trend — confirmed if support at 14000 is breached.

Nikkei 225

* Target calculation: 16000 + ( 16000 – 14000 ) = 18000

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Nikkei finds Yen support

The US Dollar found solid support at ¥101 against the Yen. Recovery above ¥103 would suggest an advance to ¥111*. Breakout above ¥106 would confirm. Recovery above the December 2013 high on 13-week Twiggs Momentum would strengthen the signal. Breach of support at ¥101 is unlikely, but would warn of a correction to primary support at ¥96.

Nikkei 225

* Target calculation: 106 + ( 106 – 101 ) = 111

The Nikkei 225 found support at 14000. Recovery above 15000 would indicate another attempt at 16000. Completion of a 13-week Twiggs Money Flow trough above zero would strengthen the signal.

Nikkei 225

* Target calculation: 16000 + ( 16000 – 14000 ) = 18000

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Nikkei warning

A weakening Dollar/Yen exchange rate is hurting Japanese stocks. The Nikkei 225 is testing support at 14000 after breach of the rising trendline indicated weak momentum. Reversal of 13-week Twiggs Money Flow below zero warns of a primary down-trend. Failure of 14000 would strengthen the signal, while breach of 13200 would confirm. Recovery above 15000 is unlikely, but would suggest another advance.

Nikkei 225

* Target calculation: 16000 + ( 16000 – 14000 ) = 18000

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Japan: Dollar supports Nikkei

The US Dollar found support at ¥101 against the Yen. Recovery above the May high at ¥104 would suggest a healthy up-trend, while breakout above ¥106 would offer a target of ¥110*. Divergence on 13-week Twiggs Momentum remains bearish, but another trough above zero would reverse this. Breach of support at ¥101 now seems unlikely, but would warn of trend weakness.

Nikkei 225

* Target calculation: 106 + ( 106 – 102 ) = 110

A rising Dollar/Yen exchange rate would assist Japanese stocks. The Nikkei 225 found support at 14000 on the monthly chart. Recovery above 15000 would suggest another advance, while breakout above 16000 would confirm. Reversal of 13-week Twiggs Money Flow below zero, however, would warn of a primary down-trend.

Nikkei 225

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Japan: Nikkei falls as Dollar weakens

The US Dollar is testing support at ¥102 to ¥103 against the Yen. Breach of the rising trendline would strengthen the warning from a bearish divergence on 13-week Twiggs Momentum. Reversal of Momentum below zero would suggest a primary down-trend. Recovery above ¥104 is less likely, but would offer a target of ¥110*.

Nikkei 225

* Target calculation: 106 + ( 106 – 102 ) = 110

A rising Dollar/Yen exchange rate would assist Japanese stocks. The Nikkei 225 is testing support at 15000 after penetrating its rising trendline. Bearish divergence on 13-week Twiggs Money Flow warns of selling pressure. Reversal below 15000 would indicate a strong correction, while a Twiggs Money Flow cross below zero would warn of a primary down-trend.

Nikkei 225

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Weakening yen boosts Japanese stocks

The US Dollar retreated to test new support at ¥102 to ¥103. Respect is likely and would signal an advance to ¥110*. A rising Dollar/Yen exchange rate will assist Japanese stocks.

Nikkei 225

* Target calculation: 106 + ( 106 – 102 ) = 110

The Nikkei 225 retreated below its new support level at 16000, but respect of the rising trendline would confirm a healthy up-trend. 13-week Twiggs Money Flow holding above zero suggests healthy buying pressure. Reversal below 15000 is unlikely but would indicate a strong correction.

Nikkei 225

* Target calculation: 16000 + ( 16000 – 15000 ) = 17000

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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

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Nikkei 225 retreats as Yen falls

Japan’s Nikkei 225 retreated below support at 16000 and is testing the long-term trendline. Breach of support at 15000 would warn of a test of primary support at 13200, while recovery above 16000 would suggest a primary advance to 17500*. A rising Dollar/Yen exchange rate would strengthen the bull signal.

Nikkei 225

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

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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

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