“Down for sure, but in what stages? Without a Lehman failure there may not be the impetus for a dramatic plunge towards the end.”
The S&P 500 is testing primary support at 1850/1870. Decline of 6-month Twiggs Momentum below zero warns of a primary down-trend. I am a great believer in chart symmetry and breach of 1870 would most likely result in a decline to 1500, the next major support level.
This could still prove to be a false alarm — as in 1998, 2010 and 2011 — but charts like bellwether transport stock Fedex suggest otherwise.
Also the 10% year-on-year declining profit margins for Q3 2015. A 20% year-on-year fall for Q4 2015 would confirm.
Bellwether transport stock Fedex, in a primary down-trend, warns of slowing economic activity in the US. The 6-month Twiggs Momentum peak below zero flags a strong down-trend. Breach of support at 130.00 would warn of another decline — and worsening economic climate.
European equivalent Deutsche Post AG (DPW.DE), owner of DHL, also warns of declining economic activity. Breach of support at 23.00 would warn of another decline.
The ASX wagon is clearly hitched to the Chinese growth engine. When China slows and commodity prices fall, the ASX is sure to follow.
The Shanghai Composite Index is simply a barometer of the main show, which is Chinese real estate and infrastructure investment. Chinese stocks are again falling, with the index headed for a test of primary support at 3000. Rate rises in the US are likely to increase capital outflows from China. The PBOC’s massive foreign currency reserves act as a buffer but have already been depleted by half a trillion Dollars. Loosening the peg against the Dollar may soften the immediate impact on reserves. But a falling Yuan is likely to further encourage capital outflows.
The ASX 200 broke primary support at 5000. Reversal of 6-month Twiggs Momentum below zero signals a primary down-trend. Follow through below 4900 would confirm the decline, with long-term support at 4000*.
On the question of whether the majors are done and dusted on capital raising, investors need go no further than CBA’s chief credit strategist, Scott Rundell, and CBA’s head of fixed-income strategy, Adam Donaldson, who on Thursday published a report arguing the big four are short $32 billion of CET1 capital.
“Capitalisation [is] likely to be a source of credit strength for banks as they build toward meeting APRA’s expected ‘unquestionably strong’ capital requirements,” Rundell and Donaldson said. The authors reiterated previous analysis that suggested the majors’ target CET1 ratios will settle at “around 10 per cent to 10.5 per cent”, which “would put the majors at the bottom of the top quartile” of global competitors.
I would have expected a gold rally in response to the falling Dollar but the response is so far muted.
The Euro leapt 3.08% last Thursday, December 3rd, in response to a weaker-than-expected stimulus package from the European Central Bank.
The Dollar Index, with a 57.6% weighting against the Euro, fell 2.26%.
Other factors also weaken the Dollar. The Peoples Bank of China is selling off reserves to support the falling Yuan. This is likely to continue as capital outflows from China maintain pressure on the currency.
A weaker Dollar would boost US exports and accelerate domestic growth. Strong bearish divergence between 13-week Twiggs Momentum and the Dollar Index warns of a reversal. Breach of support at 98 would indicate a test of primary support at 93. Failure of primary support remains unlikely, but reversal of 13-week Twiggs Momentum below zero would strengthen the warning.
Interest Rates
Long-term interest rates remain soft despite the anticipated Fed rate hike. 10-Year Treasury yields respected support at 2.0 percent. Breakout above 2.50 percent would indicate a test of 3.00 percent.
Gold
Gold is headed for a test of support at $1000/ounce* after breaching $1100. 13-Week Twiggs Momentum peaks below zero confirm a strong primary down-trend. A weaker Dollar would increase support for gold but there is no sign of this yet.
Vladimir Putin’s worst nightmare — a trucker-Maidan.
Dmytro Homon writes:
First, the protest is spontaneous and is not coordinated from a single center. For that reason, the police have been unable to shut it down because other drivers immediately take the place of the ones detained.
Second, the protestors are not the usual “fifth column” opposition by intellectuals. These are, for the most part, Putin’s voters — tough guys who in elections vote for stability…….
Third, all Russians clearly understand the complaints of the truck drivers. They boil down to the fact that greedy authorities are trying to take the shirt off the back of simple workers…..
For these reasons the usual methods of Russian propaganda are not very effective. The postings of the Olgino trolls (professional commentators from the “troll factory” in the Olgino district of St. Petersburg — Ed.) that these protests are organized by the opposition look ridiculous. Attempts by mass media to ignore the truckers completely are equally ineffective because they have become a major topic in social networks……
Meanwhile, more and more trucks have been arriving to Moscow. What will happen next is a question with no answer yet. In fact, even the truckers themselves do not know what to do after the blockade.
If the Russian authorities use brute force, this risks repeating the fate of Yanukovych. Putin, however, has nowhere to flee from the Kremlin. Well, perhaps to Syria…..
A surprisingly even-handed documentary of the battle for Donetsk Airport. The overwhelming hardship and sacrifice endured by both sides merely underlines this stark message:
There are no victors in this conflict. Only victims.
The war should not have happened. It was instigated by a cynical politician 1000 kilometers away (in Moscow) to stoke nationalist fervor and shore up dwindling public support. His callous disregard for the sacrifice of Russian and Ukrainian lives, and the economic hardship endured by his fellow citizens — a price he considers worth paying to extend his presidency — highlights what the world faces.
He considers the West weak and vacillating. The sooner we face down this threat, the safer our world will be. These words from William Shakespeare (King John, Act 5, Scene 1) still apply today:
Be great in act, as you have been in thought;
Let not the world see fear and sad distrust
Govern the motion of a kingly eye:
Be stirring as the time; be fire with fire;
Threaten the threatener and outface the brow
Of bragging horror: so shall inferior eyes,
That borrow their behaviors from the great,
Grow great by your example and put on
The dauntless spirit of resolution.
….What, shall they seek the lion in his den,
And fright him there? and make him tremble there?
O, let it not be said: forage, and run
To meet displeasure farther from the doors,
And grapple with him ere he comes so nigh.
Hilary Benn, Labour’s shadow foreign secretary’s speech in support of air strikes in Syria reduced MPs to tears and drew applause from members on all sides of the House of Commons.
