Category: Countries & Regions

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George F. Kennan’s Prediction On NATO Expansion Was Right

Interesting argument against further expansion of NATO on Moon of Alabama:

George Kennan was the U.S. diplomat and Russia specialist who developed the cold war strategy of containment of the Soviet Union, though he later criticized its militaristic implementation. In 1998, when the Senate voted to extend NATO to include Poland, Hungary and the Czech Republic, Kennan was asked to comment. He responded:

“I think it is the beginning of a new cold war,” said Mr. Kennan from his Princeton home. “I think the Russians will gradually react quite adversely and it will affect their policies. I think it is a tragic mistake. There was no reason for this whatsoever.”

…..”It shows so little understanding of Russian history and Soviet history. Of course there is going to be a bad reaction from Russia, and then [the NATO expanders] will say that we always told you that is how the Russians are — but this is just wrong.”

Read a full report of the 1998 interview with George Kennan at NY Times: Foreign Affairs | Thomas L Friedman.

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Russia’s shrinking influence

Lorena O’Neil suggests that the number of Russian language speakers will halve from 300 million in 1990 to 150 million by 2025.

….countries that were traditionally bound to Russia by language, culture, energy and ethnicity are starting to gain independence, and relationships with other countries like China are increasing……..[Paul] Goble suggests that Putin will continue to engage in bombast with his neighbors because he’s playing an extremely weak hand that is getting weaker. “In a sense, the thuggishness that Putin is using (on) his neighbors is a product of the weakening of Russia’s cultural influence.”

Read more at Forgetting How to Speak Russian | Fast forward | OZY.

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Aussie Dollar resilient despite ASX correction

China is dragging the ASX lower despite a resilient US market. Breach of medium-term support at 5340 warns of a correction. Declining 21-day Twiggs Money Flow indicates selling pressure and reversal below zero would strengthen the signal. The primary trend remains upward, however, and only breach of support at 5050 would signal a reversal.

ASX 200

* Target calculation: 5400 + ( 5400 – 5000 ) = 5800

ASX 200 VIX retreated to 13, indicating low risk typical of a bull market.

ASX 200

The Aussie Dollar is also proving resilient, testing resistance at $0.91 and the descending trendline despite weakness on the ASX. Upward breakout would suggest the down-trend is weakening. Recovery of 13-week Twiggs Momentum above zero would go further, signaling a primary up-trend, though only breakout above $0.97 would confirm. Reversal below medium-term support at $0.89 remains more likely, however, and would warn of another decline. Breach of primary support at $0.87 would offer a target of $0.83*.

Aussie Dollar

* Target calculation: 0.87 – ( 0.91 – 0.87 ) = 0.83

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Shanghai threatens primary support

China’s Shanghai Composite Index is again testing primary support at 1990/2000. The triangle formation on 21-day Twiggs Money Flow indicates uncertainty. Breach of 1990 would warn of a primary decline to 1850. Respect is less likely, but would suggest a (bear) rally to 2080.

Shanghai Composite Index

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

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S&P 500 tests resistance

The S&P 500 found support at 1840 and is testing resistance at 1875/1880. Rising 21-day Twiggs Money Flow indicates short-term buying pressure. Breakout above 1880 would signal an advance to 1950*. Reversal below 1840 is less likely, but would warn of a secondary correction.

S&P 500

* Target calculation: 1850 + ( 1850 – 1750 ) = 1950

CBOE Volatility Index (VIX) below 20 continues to indicate low market risk.

VIX Index

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Dr Copper: China weakening

Falling copper prices reflect a weakening Chinese economy. Follow-through below $6600/tonne, after breaching primary support at $6800, signals a primary down-trend.

Copper

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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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Europe: Tensions rising

Moscow’s MICEX index plunged over the last two weeks as tensions rise over the fate of Crimea and the Ukraine.

MICEX

Countries neighboring Ukraine, such as Poland, have also suffered from increased uncertainty. The Warsaw WIG index is testing primary support at 50,000. Follow-through below 49,500 would signal a primary down-trend.

Warsaw WIG

Germany’s DAX is also testing primary support, at 9000. Failure would signal a primary down-trend. Bearish divergence on 13-week Twiggs Money Flow continues to warn of medium-term selling pressure.

DAX

Rising DAX Volatility, above 20, reflects moderate risk.

DAX

The Footsie is headed for another test of primary support (6400) after breaking 6700. Breach would signal a down-trend, but respect of support remains as likely.

FTSE 100

* Target calculation: 6800 + ( 6800 – 6400 ) = 7200

A monthly chart shows the Euro testing its long-term descending trendline at $1.39. Follow-through above $1.39 seems incongruous at present, but would signal an advance to $1.44*. Bearish divergence on 13-week Twiggs Momentum continues to warn of medium-term weakness, however, and reversal below $1.37 would indicate another correction.

Euro

* Target calculation: 1.36 + ( 1.36 – 1.28 ) = 1.44

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Canada: TSX 60 faces resistance

Canada’s TSX 60 faces resistance at 820. A sharp fall/divergence on 13-week Twiggs Money Flow warns of short-term selling pressure. Reversal below 810 would indicate a correction, while breakout above 820 would signal an advance to 840*.

TSX 60

* Target calculation: 805 + ( 805 – 770 ) = 840

TSX 60 VIX below 15 continues to reflect low risk typical of a bull market.

TSX 60 VIX

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