Canada’s TSX 60 index encountered strong resistance at 740 and is now testing short-term support at 725. Failure of support at 725 would indicate another test of primary support at 710. Bearish divergence on 13-week Twiggs Money Flow warns of a reversal. Breach of primary support would confirm.
TSX 60 VIX crossed to above 15, but remains in bull territory.
The S&P 500 broke support at the May high of 1675 and penetrated the (secondary) rising trendline, signaling a correction to primary support at 1625/1630. Recovery above 1700 is most unlikely at present, but would indicate another advance.
VIX crossed to above 20: no-man’s-land between low and high. Follow-through above 25 would warn of elevated market risk.
Dow Jones Industrial Average is testing primary support at 14750. Bearish divergence on 21-day (and 13-week) Twiggs Money Flow warns of a reversal. Breach of 14750 would strengthen the signal. Follow-through below 14500/14600 would confirm. Recovery above 15000 is unlikely, but would indicate a rally to 15700.
The September quarter-end often heralds a correction as fund managers re-balance their portfolios and shed under-performing stocks. Congressional gridlock raises the probability even higher.
Iran is preparing a package of proposals to halt production of near-weapons-grade nuclear fuel, a key demand of the U.S. and other global powers, according to officials briefed on diplomacy ahead of talks in Geneva next week.
Tehran in return will request that the U.S. and European Union begin scaling back sanctions that have left it largely frozen out of the international financial system and isolated its oil industry, the officials said.
Read more at Iran Readies | WSJ.com – Jay Solomon.
Dow Jones Shanghai Index penetrated its (secondary) descending trendline today, suggesting an up-swing to test resistance between 298 and 304 at the upper trend channel. Reversal below 282 and the lower trend channel is unlikely, but would warn of another test of primary support at 248.
The ASX 200, however, broke its rising trendline and short-term support at 5200, warning of a correction to primary support at 4650. Breach of medium-term support at 5000 would further strengthen the signal.
The September quarter-end often heralds a correction as fund managers re-balance their portfolios and shed under-performing stocks. Congressional gridlock raises the probability of a correction even higher.
The S&P 500 continues to test support at the May high of 1675 on the daily chart. Declining 21-day Twiggs Money Flow warns of medium-term selling pressure; reversal below its recent lows would further strengthen the signal. Breach of support and the (secondary) rising trendline would signal a correction to primary support at 1625/1630. Respect of the (secondary) trendline and recovery above 1700 is unlikely, but would indicate another advance.
VIX threatens to cross above 20, into no-man’s-land between low and high. Follow-through above 25 would warn of elevated market risk.
Dow Jones Industrial Average is heading for a test of primary support at 14800. Bearish divergence on 13-week Twiggs Money Flow warns of a reversal and breach of 14800 would strengthen the signal. Follow-through below 14500 would confirm. Recovery above 15660 is unlikely, but would indicate a fresh advance.
The Nasdaq 100, however, is surprisingly bullish. 13-Week Twiggs Money Flow troughs well above zero signal buying pressure, while the index advances toward its current target of 3300*. Breach of the rising trendline would warn of a correction to 3050.
* Target calculation: 3050 + ( 3050 – 2800 ) = 3300
Two of the busiest roads at the heart of London’s historic financial centre are to be pedestrianised under radical plans to transform the City.
Cramped medieval lanes and alleyways that run throughout the Square Mile will also be opened up with improved lighting, more greenery and clearer signage to encourage workers and visitors to make better use of them.
Read more at City of London to kick out the cars – FT.com.
From S&P’s historic downgrade of the US credit rating on August 5, 2011:
More broadly, the downgrade reflects our view that the effectiveness, stability, and predictability of American policymaking and political institutions have weakened at a time of ongoing fiscal and economic challenges to a degree more than we envisioned when we assigned a negative outlook to the rating on April 18, 2011.
Read more at Here's A Disturbingly Astute Line From When S&P Downgraded The US Credit Rating | Business Insider Australia.
Organizers submitted more than the 100,000 signatures needed to call a referendum on Friday……..Under Swiss law, citizens can organize popular initiatives that allow the channeling of public anger into direct political action. The country usually holds several referenda a year.
Read more at Swiss to vote on 2,500 franc basic income for every adult | Reuters.
The Euro respected support, on a brief retracement to $1.34/$1.3450, before following through above the last two week’s high — signaling a test of the February high at $1.37. Breakout would offer a long-term target of $1.46*. The trough above zero on 13-week Twiggs Momentum indicates a healthy up-trend. Respect of resistance is unlikely, but would warn of another correction.
* Target calculation: 1.37 + ( 1.37 – 1.28 ) = 1.46
The greenback is heading for a test of primary support at ¥96 after breaking short-term support at ¥98 on the daily chart. Failure of support would offer a target of ¥92*. Reversal of 13-week Twiggs Momentum below zero would also warn of a primary down-trend. Recovery above the descending trendline is unlikely at present, but would indicate a rally to ¥100.50.
* Target calculation: 96 – ( 100 – 96 ) = 92
The Aussie Dollar has so far respected support at $0.93 against the greenback. Follow-through above $0.94 would suggest an advance to $0.97; confirmed if resistance at $0.95 is broken. Reversal below $0.93, however, would warn of a correction to primary support at $0.89.
* Target calculations: 0.95 + ( 0.95 – 0.93 ) = 0.97
The Aussie continues to test support at $1.12 against its Kiwi neighbour. Tall shadows (wicks) for the last two weeks indicate selling pressure. Failure of support would offer a target of $1.08*. Recovery above the descending trendline is less likely, but would suggest an advance to $1.20; breakout above $1.16 would confirm, completing a double-bottom reversal.
* Target calculations: 1.12 – ( 1.16 – 1.12 ) = 1.08
China’s Shanghai Composite Index is testing support at 2150 and the lower trend channel. Recovery above the descending trendline would suggest another rally, while failure of support would warn of a correction to primary support at 1950. The index hints at long-term recovery but further confirmation is necessary.
The Harper Petersen Index, from ship brokers Harper Petersen & Co., indicates that shipping rates for container vessels remain depressed, suggesting a sluggish global trade in manufactured goods. Exporters like China would be severely affected.
The Baltic Dry Index — reflecting dry bulk shipping rates for commodities like iron ore and coal — jumped sharply, however, reflecting an upturn in demand for bulk commodities.
Bulk commodity prices remain depressed according to the RBA.
But export volumes are rising, in step with the Baltic Dry Index, reflecting strong demand from infrastructure development.
WSJ reports that monthly electricity consumption has reached a new high:
China on Tuesday posted an all-time record-high electricity output level of 498.7 billion kilowatt-hours in August, rising 13% from a year earlier.
Monthly fluctuations should largely be ignored because of weather variation — excessively hot months like August can boost electricity demand — but the rising long-term trend in electricity consumption (chart from IndexMundi) suggests a robust recovery. A recovery led primarily by infrastructure investment rather than manufactured exports may well prove unsustainable in the long-term, but should provide welcome relief to the resources sector in the next few years.
