Countries & Regions Archives - Page 148 of 381

September 15, 2014

ASX selling pressure

The ASX 200 is falling sharply despite strong performance in China. Breach of the rising trendline (around 5400) would indicate a correction to test the primary trendline around 5000. The support level is indistinct because of frequent back-filling and could establish anywhere between 5300 and 5450. Reversal of 13-week Twiggs Money Flow below zero after a bearish divergence warns of strong selling pressure. Respect of support at the secondary trendline is therefore unlikely.

ASX 200

* Target calculation: 5650 + ( 5650 – 5450 ) = 5850

The ASX 200 VIX is rising, but low levels remain typical of a bull market.

ASX 200

Dow Jones Shanghai Index continues to make strong gains since commencing a primary up-trend, but expect further resistance between 310 and 315, at the 2013 high.

DJSH

September 14, 2014

Bad Has Never Looked So Good – Russia

Again from Energy Burrito at Oilprice.com:

…the Russian ruble has been gradually depreciating throughout this year amid rising geopolitical tension in Ukraine. It has now dropped 12% versus the US dollar in 2014.

Yet while a falling ruble hurts Russian imports as they become increasingly more expensive to buy, Russia reaps the rewards when it comes to exports. And it is seeing the greatest benefit from its largest export: oil. To the tune of 7 million barrels a day.

Hence, while crude prices in US dollars have dropped 12% in value since the beginning of July, crude oil in rubles has only dropped 3.4%. For Russian coffers, it is good for the ruble to be bad…

Read more at Bad Has Never Looked So Good.

September 14, 2014

Bad Has Never Looked So Good

Energy Burrito writes that gasoline prices have fallen nearly 30 cents from their Summer highs:

Why is this good? Because of the one-penny-to-one-billion spending rule. The rule of thumb is that a one-penny change in the price of gasoline leads to a $1 billion increase in household consumption on an annualized basis….gasoline accounts for $2,500 of household spending each year.

September 12, 2014

Gold & crude fall

Gold broke support at $1240/ounce to signal a primary down-trend. Declining 13-week Twiggs Momentum, below zero, strengthens the signal. Follow-through below $1200 would confirm. The sell-off is being driven by a rising Dollar.

Spot Gold

Crude oil is also falling, with Brent Crude testing its 18-month low. Nymex breach of $92/barrel would also signal a primary down-trend.

Nymex and Brent Crude

From Nick Cunningham at Oilprice.com:

The glut of supplies and weak demand is causing problems for OPEC, according to the cartel’s monthly report. OPEC lowered its demand projection for 2015 by 200,000 and in August, Saudi Arabia cut production by 400,000 bpd in an effort to stem oversupply.

It is probably no coincidence, but lower oil prices will hurt the Russian economy. As Nick points out:

Russia needs between $110 and $117 per barrel to finance its spending, which means the Kremlin can’t be happy as it watches Brent prices continue to drop. Combined with an already weak economy, Russia could see its $19 billion surplus become a deficit by the end of the year.

Falling oil prices will benefit the global economy in the medium-term. Subduing Russia’s territorial ambitions will be an added bonus.

September 12, 2014

Europe uneasy

Weekly highlights:

The Dollar is strengthening
Treasury yields (long-term) are rising
Gold and crude oil are falling
European stocks are bearish
US stocks remain bullish

The tenuous ceasefire in Eastern Ukraine appears to be holding, but Europe faces another challenge this week, with a Scottish referendum on independence. Predictions of financial mayhem in the event of a “Yes” vote are, I feel, exaggerated in an attempt to influence the outcome. The official position of the UK government is:

“If a majority of those who vote want Scotland to be independent then Scotland would become an independent country after a process of negotiations.”

The “process of negotiations” is likely to be comprehensive and would resolve most outstanding uncertainties in an orderly fashion. There has been much debate over economic issues, but it is no coincidence that the referendum is being held in the same year as the 700th anniversary of the Battle of Bannockburn, when Scots under Robert the Bruce defeated an English army led by Edward II to regain their independence.

Stock markets

Dow Jones Euro Stoxx 50 remains hesitant, retreating from resistance at 3300. Consolidation above 3200 would be a bullish sign, while breach of 3100 would threaten primary support at 3000. Another 13-week Twiggs Money Flow trough above zero would indicate buying pressure, but reversal below zero would warn of a down-trend.

* Target calculation: 3300 + ( 3300 – 3000 ) = 3600

The S&P 500 is edging lower and follow-through below 1980 would indicate another correction. Respect of support at 1950, however, would suggest that the up-trend is intact. Sideways movement on 21-day Twiggs Money Flow, reflects further consolidation.

S&P 500

* Target calculation: 2000 + ( 2000 – 1900 ) = 2100

CBOE Volatility Index (VIX) below 20 is typical of a bull market.

S&P 500 VIX

China’s Shanghai Composite Index breakout above 2250 signals a primary up-trend. The monthly chart, however, reflects further resistance at 2450/2500*. Rising 13-week Twiggs Money Flow indicates accelerating buying pressure. Reversal below 2250 is most unlikely, but would suggest further consolidation between 2000 and 2250.

Shanghai Composite Index

* Target calculation: 2250 + ( 2250 – 2000 ) = 2500

The ASX 200 broke support at 5540/5560, warning of a correction. Bearish divergence on 21-day Twiggs Money Flow indicates medium-term selling pressure. Respect of support at 5440/5460 would indicate that the primary up-trend is intact, while a fall below 5360 would warn of a down-trend.

ASX 200

* Target calculation: 5650 + ( 5650 – 5450 ) = 5850

September 11, 2014

European resistance

Germany’s DAX found resistance at 9700/9800. Recovery of 13-week Twiggs Money Flow above zero indicates short-term buying pressure, but the long-term signal remains bearish. Reversal below 9300 would warn of another test of primary support at 9000.

DAX

Dow Jones Euro Stoxx 50 is testing resistance at the recent high of 3300. But declining 13-week Twiggs Money Flow again warns of long-term selling pressure. Breakout above 3300 is unlikely but would suggest another advance, while reversal below 3200 — or Twiggs Money Flow below zero — would warn of another correction.

Dow Jones Euro Stoxx 50

The Footsie appears unfazed by threats of Scottish independence, testing long-term resistance at 6850/6900. 13-Week Twiggs Money Flow troughs above zero indicate healthy buying pressure, but there is a major psychological barrier at the 1999 high of 6900/7000. Narrow consolidation below this level would be a bullish sign, while a correction to test primary support at 6500 would suggest further hesitancy.

FTSE 100

* Target calculation: 7000 + ( 7000 – 6000 ) = 8000

September 11, 2014

Asian stocks pause

Hong Kong’s Hang Seng Index continues to encounter resistance at 25000, but respect of support at 24000 and rising 13-week Twiggs Money Flow indicate sustained buying pressure. Breakout would offer a target of 27000*.

Hang Seng Index

* Long-term target calculation: 24000 + ( 24000 – 21000 ) = 27000

China’s Shanghai Composite Index is consolidating after breaking resistance at 2250. Rising 13-week Twiggs Money Flow reflects medium-term buying pressure. The primary trend is up, but expect retracement to test the new support level at 2250.

Shanghai Composite Index

* Target calculation: 2250 + ( 2250 – 2000 ) = 2500

India’s Sensex has reached its long-term target of 27000*, shown here on a quarterly chart. Bearish divergence on 13-week Twiggs Money Flow continues to warn of long-term selling pressure. Respect of the zero line appears likely and would suggest a further advance, but a fall below zero would warn of a decline to test the rising trendline.

Sensex

* Target calculation: 21000 + ( 21000 – 15000 ) = 27000

Japan’s Nikkei 225 index continues its advance towards 16300. Rising 13-week Twiggs Money Flow indicates medium-term buying pressure. Reversal below 15500 is unlikely, but would warn of a test of 14800.

Nikkei 225

September 10, 2014

Big banks may need $41b more capital, UBS says

From Chris Joye at AFR:

UBS’s more likely scenario of a 3 per cent TBTF capital buffer combined with an increase in the average mortgage risk weight to 25 per cent gives a total capital shortfall of $41.1 billion for the majors.

Risk-weightings, especially for residential mortgages are coming under increased scrutiny. The big four banks have a major advantage in this area, employing risk-weightings as low as 15% to 20% based on their historical record of low defaults. But that history includes a credit boom lasting more than 2 decades which fueled an unprecedented rise in housing prices and is unlikely to be repeated in the future.

APRA alluded to this problem in its second FSI submission:

..APRA also highlighted the problem with the major banks’ predicting their own probabilities of defaults on home loans in the absence of a recession in 23 years and the much lower levels of housing leverage in 1991.“The Basel Committee is currently reviewing the validity and reliability of risk weights generated under the IRB approach [used by the majors] in response to studies showing that the variability … is much greater than could be explained by differences in underlying risks,” APRA said.

Only when the tide goes out do you discover who’s been swimming naked. ~ Warren Buffett

September 10, 2014

Aussie Dollar & Yen break support

Dollar strength is affecting not only gold and commodities, but even the strongest of the currency crosses.

The Aussie Dollar broke support at $0.92 against the greenback, warning of a correction. Expect support at $0.89. Reversal of 13-week Twiggs Momentum below zero, however, suggests a primary down-trend — confirmed if primary support at $0.87 is penetrated. Recovery above $0.925 is unlikely, but would indicate a false break.

Aussie Dollar

The greenback similarly broke through resistance at ¥105.50 against the Japanese Yen. Rising 13-week Twiggs Momentum above zero signals a primary up-trend. Reversal below ¥105 is unlikely, but would warn of another test of ¥104.

USD/JPY

* Target calculation: 105.5 + ( 105.5 – 101 ) = 110

The Euro is already in a primary down-trend against the Dollar. Declining 13-week Twiggs Momentum, below zero, confirms a strong down-trend. Expect support at $1.2750/$1.2800, but a rally is unlikely to break the descending trendline and resistance at $1.31.

Euro/USD

* Target calculation: 1.35 – ( 1.40 – 1.35 ) = 1.30

September 10, 2014

How Russia Is Revolutionizing Information Warfare | Defense One

From Peter Pomerantsev:

In today’s Russia, by contrast, the idea of truth is irrelevant. On Russian ‘news’ broadcasts, the borders between fact and fiction have become utterly blurred. Russian current-affairs programs feature apparent actors posing as refugees from eastern Ukraine, crying for the cameras about invented threats from imagined fascist gangs. During one Russian news broadcast, a woman related how Ukrainian nationalists had crucified a child in the eastern Ukrainian city of Sloviansk. When Alexei Volin, Russia’s deputy minister of communications, was confronted with the fact that the crucifixion story was a fabrication, he showed no embarrassment, instead suggesting that all that mattered were ratings. “The public likes how our main TV channels present material, the tone of our programs,” he said. “The share of viewers for news programs on Russian TV has doubled over the last two months.”

…..The point of this new propaganda is not to persuade anyone, but to keep the viewer hooked and distracted—to disrupt Western narratives rather than provide a counternarrative. It is the perfect genre for conspiracy theories, which are all over Russian TV. When the Kremlin and its affiliated media outlets spat out outlandish stories about the downing of Malaysia Airlines Flight 17 over eastern Ukraine in July—reports that characterized the crash as everything from an assault by Ukrainian fighter jets following U.S. instructions, to an attempted NATO attack on Putin’s private jet—they were trying not so much to convince viewers of any one version of events, but rather to leave them confused, paranoid, and passive—living in a Kremlin-controlled virtual reality that can no longer be mediated or debated by any appeal to ‘truth.’