Canada’s TSX 60 continues towards its target of the 2008 high at 900. Rising troughs on 13-week Twiggs Money Flow signal strong buying pressure. Reversal below support at 845 remains unlikely.
Europe: Mild selling pressure
DAX again retraced to test support at 9750/9800. A small decline on 13-week Twiggs Money Flow indicates mild (medium-term) selling pressure. Failure of support would warn of a correction to the primary trendline. Respect is less likely, but would suggest a fresh advance; confirmed by breakout above 10000.
* Target calculation: 9750 + ( 9750 – 9000 ) = 10500
The Footsie shows similar selling pressure to the DAX, with a mild decline on 13-week Twiggs Money Flow. The long tail on last week’s candle suggests support at 6700 and the rising trendline. Recovery above 6900 would signal an advance to 7200*. But reversal below 6700 is as likely and would warn of a correction to primary support at 6400/6500.
* Target calculation: 6800 + ( 6800 – 6400 ) = 7200
ASX 200 selling pressure
The ASX 200 is once again testing support at 5380/5400. Declining 21-day Twiggs Money Flow below zero indicates medium-term selling pressure. Correction to 5300 is likely. The primary trend remains upward and this should prove a good entry point for long-term investors. Recovery above 5470 is unlikely at present, but would signal another primary advance.
* Target calculation: 5550 + ( 5550 – 5400 ) = 5700
ASX 200 VIX remains low, indicative of a bull market.
Japan and India test new support
Japan’s Nikkei 225 retraced to test its new support level around 15000. Respect would confirm a rally to 16000. Completion of a 13-week Twiggs Money Flow trough above zero indicates long-term buying pressure. Reversal below 14800 is unlikely, but would warn of another test of primary support at 14000.
* Target calculation: 16000 + ( 16000 – 14000 ) = 18000
India’s Sensex is far stronger — retracing to test its new support level at 25000. Bearish divergence on 13-week Twiggs Money Flow warns of medium-term selling pressure. Breach of support would warn of a correction to 24000. But the primary trend is upward and recovery above 25500 would signal another advance.
* Target calculation: 21000 + ( 21000 – 16000 ) = 26000
Asymmetrical warfare: Russia’s little green men are here to stay [podcast]
It’s been called hybrid warfare, asymmetrical warfare, and ambiguous warfare. But warfare it is, and Russia appears to have perfected using it to achieve its geopolitical aims.
The Little Green Men are probably here to stay. Is there any way to counter them?
http://www.rferl.org/audio/Audio/1166373.html
Desperately seeking moderate Syrian rebels | Threat Matrix
By Lisa Lundquist:
Following the news that the Obama administration, in a sudden about-face, is asking Congress for $500 million to train and equip “vetted” members of the “moderate” Syrian opposition, The Associated Press yesterday published a list, headlined “Syrian rebels likely to receive US aid.” The list raises more questions than it answers — two of the listed groups have been designated by the US as terrorist organizations….
Read more at Desperately seeking moderate Syrian rebels – Threat Matrix.
S&P 500 unfazed
Summary:
- S&P 500 continues a primary advance.
- China respects primary support.
- ASX 200 continues to signal weakness.
- Momentum investors need to hold positions.
The S&P 500 retraced to test its latest support level at 1950 after a downward GDP revision for the first quarter. Respect indicates medium-term buying pressure — also evidenced by rising 21-day Twiggs Money Flow. Follow-through above 1970 would confirm a test of 2000*. Reversal below 1950 is unlikely, but penetration of the secondary trendline would warn of a correction.
* Target calculation: 1900 + ( 1900 – 1800 ) = 2000
The CBOE Volatility Index (VIX) remains low, indicative of a bull market.
The Shanghai Composite Index respected primary support at 1990/2000. 21-Day Twiggs Money Flow oscillating above zero indicates buying support, but this may be due to the managed “soft landing”. What we do know is that a fall below zero would definitely signal selling pressure. Breach of support would signal a decline to 1850*. The primary trend is expected to continue its downward path, but further ranging between 2000 and 2150 is likely. An abrupt fall is a fairly remote possibility.
* Target calculation: 2000 – ( 2150 – 2000 ) = 1850
The ASX 200 made a false break above 5470, but 21-day Twiggs Money Flow below zero warns of medium-term selling pressure. Breach of support remains likely and would indicate a correction to 5300. The long-term trend, however, remains upward. Support at 5300/5400 would offer a great entry point for long-term investors. Recovery above 5470 is unlikely at present, but would signal a test of resistance at 5550.
* Target calculation: 5400 + ( 5400 – 5000 ) = 5800
I repeat my warning from last week: Momentum investors should not attempt to time secondary corrections and need to endure the present volatility in order to reach their intended investment goals.
Middle class is drowning in debt, hobbling the economy | Rex Nutting
From Rex Nutting at MarketWatch:
For decades, economic growth in America was driven by a powerful and sustainable force: increased consumption paid for by the rising incomes for middle-class and working-class Americans.
But somewhere around 1980, that model broke down. Wages flattened out, but consumption didn’t. Americans cut back on their savings, and took on more debt — mostly mortgage debt — to satisfy their needs and desires.
It’s not a sustainable model, but it did persist for nearly 30 years until the credit bubble burst in 2007. Millions of Americans lost their jobs, and millions lost their homes when the credit spigot was shut off, forcing average families to cut back on their consumption and live within their means once again.
And now, with the economy only partially healed, it seems we’re going back to the lend-and-spend economy that failed us before.For the past six or seven years, most of what the Federal Reserve has done to fix the problem has been focused on getting the credit spigot turned back on: cutting interest rates and hectoring banks to start lending again, even though demand for loans was weak….
Read more at Middle class is drowning in debt, hobbling the economy – Rex Nutting – MarketWatch.
Russell shake-up likely to drive heavy volume at Friday’s close | Reuters
From Reuters:
Investors can expect a surge in volume at the close of trading on Friday, when Russell Investments announces the annual rebalance of its series of indexes that will affect more than $5 trillion in assets…..Credit Suisse anticipates about $42 billion will trade on Friday as a result of the reconstitution, which will make it one of the biggest trading days of the year in terms of dollar volume.
Read more at Russell shake-up likely to drive heavy volume at Friday's close | Reuters.
Bank of England throws egg all over RBA, APRA | | MacroBusiness
Of all of the financial systems in the world, Australia’s is most similar to the UK. Of all of the restrictive housing planning systems in the world, Australia’s is most similar to the UK. Of all of the house price boom and bust cycles in the world, Australia’s is most similar to the UK. The Bank of England also practices inflation targeting though its cap is 2%. The UK and Australia share a similar economic model reliant upon external borrowing to fund consumption and low export-to-GDP ratios but the main difference is that the UK economy is a more diverse mix of value-adding sectors with a much higher contribution from manufacturing.
But today there is one very new difference. The UK has announced it will henceforth practice macroprudential regulation to control its housing cycles and prevent them from hollowing out the economy…..
Read more at Bank of England throws egg all over RBA, APRA | | MacroBusiness.