The ASX 200 is testing resistance at 5380. Rising 21-day Twiggs Money Flow indicates medium-term buying pressure. Follow-through above 5400 would suggest another advance. Respect of 5380 is unlikely, but would warn of another correction.
* Target calculation: 5350 + ( 5350 – 5050 ) = 5650
ASX 200 VIX below 15 indicates low market risk.
Singapore’s Straits Times Index recovered above primary support at 3000. Reversal below 3000 would signal a primary decline. 13-Week Twiggs Momentum holding below zero continues to suggest a down-trend. Breakout above 3180 is unlikely at present, but would signal a primary advance to 3300*.
* Target calculation: 3150 + ( 3150 – 3000 ) = 3300
India’s Sensex continues to test primary support at 20000. Recovery above 20500 would indicate another test of 21500. A 13-week Twiggs Money Flow trough above zero would strengthen the signal. Failure of support, however, would warn of a primary down-trend.
* Target calculation: 21000 + ( 21000 – 20000 ) = 22000
A weakening Dollar/Yen exchange rate is hurting Japanese stocks. The Nikkei 225 is testing support at 14000 after breach of the rising trendline indicated weak momentum. Reversal of 13-week Twiggs Money Flow below zero warns of a primary down-trend. Failure of 14000 would strengthen the signal, while breach of 13200 would confirm. Recovery above 15000 is unlikely, but would suggest another advance.
* Target calculation: 16000 + ( 16000 – 14000 ) = 18000
China’s Shanghai Composite Index recovered above 2100, suggesting another test of 2250. 13-Week Twiggs Money Flow oscillating around zero reflects indecision typical of a broad consolidation. Breakout above 2250 would complete a reversal, but breach of 1950 remains as likely and would warn of a decline to the 2008 low of 1700*.
* Target calculation: 1950 – ( 2200 – 1950 ) = 1700
Hong Kong’s Hang Seng Index displays a large bullish ascending triangle on the monthly chart. Breakout above 24000 is more likely and would signal a primary advance, but reversal below the rising trendline would warn of a decline to 20000.
The FTSE 100 is headed for another test of 6850 after recovering above 6600. Completion of a higher trough above zero on 13-week Twiggs Money Flow would flag buying pressure. Failure of primary support at 6400 is unlikely, but would warn of a primary down-trend.
* Target calculation: 6800 + ( 6800 – 6400 ) = 7200
Germany’s DAX paints a similar picture to Dow Jones Euro Stoxx 50. Recovery above 9600 suggests an advance to 10600*. Breakout above 9800 would confirm. Completion of another 13-week Twiggs Money Flow trough high above zero would signal strong long-term buying pressure. Reversal below the latest rising trendline is unlikely, but would warn of a test of primary support at 9000.
* Target calculation: 9800 + ( 9800 – 9000 ) = 10600
DAX Volatility below 20 suggests a bull market.
Both the Euro and Dow Jones Euro Stoxx 50 Index are bullish.
Euro recovery above $1.37, the high of February 2013, suggests another advance. Breakout above $1.38 would confirm. Breach of the (secondary) rising trendline and declining Twiggs Momentum, however, warn of a weak trend. Reversal below $1.35 would test primary support at $1.33.
* Target calculation: 1.38 + ( 1.38 – 1.33 ) = 1.43
Dow Jones Euro Stoxx 50 is stronger, recovering above 3100 to indicate an advance to 3350*. Follow-through above 3180 would confirm. 13-Week Twiggs Momentum oscillating above zero reflects a healthy up-trend. Breach of the secondary trendline is unlikely, but would warn of another test of primary support at 2920.
* Target calculation: 3150 + ( 3150 – 2950 ) = 3350
Sober Look highlights the sharply declining ratio of commercial bank loans and leases to bank deposits.
Its only when we examine the detail, however, that we note cash reserves have ballooned in the last 10 years. And most of those cash reserves are deposits at the Fed which now (post-GFC) earn interest. Adjust total deposits at commercial banks, for the excess reserves deposited back with the Fed, and the current ratio of 1:1 looks a lot healthier.
As I pointed out in November, most new money created by the Fed QE program is being deposited straight back with the Fed as excess reserves. We need to adjust bank deposits for this effect to obtain a true reflection of bank lending activity.
Canada’s TSX 60 is testing the January high at 806. Higher troughs on 13-week Twiggs Money Flow suggest strong buying pressure. Breach of the rising trendline is unlikely, but would warn of another test of primary support at 770. Expect long-term resistance at the 2011 high of 820*.
* Target calculation: 780 + ( 780 – 740 ) = 820
New lows on the TSX 60 VIX flag a strong bull market.
