Germany’s DAX is consolidating between 10200 and 10800. Declining Twiggs Money Flow has leveled off above zero. Recovery above 10800 would signal a primary advance with a target of 11500*.
* Target calculation: 10500 + ( 10500 – 9500 ) = 11500
China breakout is likely
Hong Kong’s Hang Seng Index is consolidating between 23000 and 24000. Decline of Twiggs Money Flow has slowed and a trough above zero would indicate long-term buying pressure. Breakout above 24000 would signal a fresh advance. Breach of support at 23000 is less likely but would warn of a correction to test the long-term rising trendline.
The Shanghai Composite Index made a flat saucer-shaped correction before again testing resistance at 3100. Breakout is now likely and would signal a fresh advance.
India: Sensex correction likely
India’s Sensex is consolidating above support at 27600 after breaking below its trend channel. Bearish divergence on Twiggs Money Flow warns of long-term selling pressure. Breach of 27600 is likely and would signal a correction to 26000.
Gold selling pressure continues
Selling pressure on gold continues, with the SPDR Gold [GLD] ETF consolidating in a bearish narrow band above support at 119. Twiggs Money Flow below zero warns of long-term selling pressure. Continuation of the down-trend is likely and breach of 119 would signal another decline.
Spot gold displays a similar narrow consolidation at $1250/ounce. Continuation is likely and would test primary support at $1200.
The ASX All Ordinaries Gold Index recovered above resistance at 4500 but has so far respected the descending trendline. Respect is likely and reversal below 4300 would signal a decline to 4000.
Australia: Infrastructure spending nosedives
From Andrew Hanlan at Westpac:
Total real infrastructure activity contracted by almost 10% in the June quarter 2016, to be 26% below the level of a year ago. That was the fourth year of contraction…..
Infrastructure construction work is declining rapidly. First, we had the end of the mining boom as existing projects reached completion while demand, mainly from China, contracted. This was followed by falling demand in the oil & gas sector, ending the development boom in that sector. If you think the apartment boom — driven by investor demand from China — is going to fill the hole, think again.
Weekly Investment Commentary from Bob Doll | Nuveen
From Bob Doll:
Equities may struggle until corporate earnings improve.
For the past 18 months, equities have been able to make modest gains despite declining corporate profits. This has largely been due to highly accommodative monetary policy and central banks’ willingness to engage in new easing measures. Additionally, investors have been willing to look past the earnings recession since we have not seen a corresponding economic recession. Looking ahead, we believe earnings must advance for equity markets to make meaningful gains. It is early in the third quarter reporting season, but so far the news hasn’t been favorable.
It may take another quarter before corporate earnings accelerate.
At present, consensus expectations are that earnings will decline 3% in the third quarter while revenues rise 3%. Excluding energy, earnings would be up 1% with revenues advancing 4%. Conditions should improve in the fourth quarter, with consensus expectations pointing to a 6% earnings increase…..
Financial Stability Snapshot | RBA
Financial Stability Snapshot 14 October 2016
Download the complete Snapshot 174KB Financial Stability Snapshot
China: Hang Seng retreats
Steep decline on Twiggs Money Flow warns of strong selling pressure on Hong Kong’s Hang Seng Index. Breach of support at 23000 would warn of a correction to test the long-term rising trendline.
The Shanghai Composite Index continues to consolidate between 2800 and 3100.
Footsie runs into strong resistance
The FTSE 100 has run into stubborn long-term resistance at 7000/7100. Declining Twiggs Money warns of selling pressure. Follow-through below the last two weeks’ lows would warn of a correction to test 6500.
DAX support at 10500
Germany’s DAX is testing support at 10500. Declining Twiggs Money Flow warns of selling pressure. Follow-through below recent lows would warn of a correction to the rising long-term trendline.
* Target calculation: 10500 + ( 10500 – 9500 ) = 11500