Australia’s ASX 200 index broke medium-term support at 4175/4180, warning of another test of primary support at 4000. Respect of the zero line (from below) by 63-Day Twiggs Momentum indicates continuation of the primary down-trend. The broad band of support between 3800 and 4000 is likely to hold, but failure would signal a decline to 3500*.
* Target calculation: 3900 – ( 4300 – 3900 ) = 3500
I set up a stock screen for strong Momentum stocks on Incredible Charts Shared tab (#49419) to run every weekend. Here is a list of the most promising:
![Arctic Cat [ACAT]](https://i0.wp.com/www.incrediblecharts.com/images/2012/2012-03-06-acat-us.png?w=1140&ssl=1)
![DXP Enterprises [DXPE]](https://i0.wp.com/www.incrediblecharts.com/images/2012/2012-03-06-dxpe-us.png?w=1140&ssl=1)
![Healthstream [HSTM]](https://i0.wp.com/www.incrediblecharts.com/images/2012/2012-03-06-hstm-us.png?w=1140&ssl=1)
Bear in mind that the market is starting a correction and suitable entry opportunities may only present themselves in 3 to 6 weeks, but I have added them to my watchlist and will re-visit weekly.
Jeffrey Hirsch of the Stock Trader’s Almanac predicted that we would see an adjustment in the second half of the month. It looks like it may have started a few days early.
Failure of short-term support at 1350 on the S&P 500 index indicates retracement to test medium-term support at 1300. Declining 21-day Twiggs Money Flow indicates medium-term selling pressure but this is not mirrored on the long-term (13-week) indicator. Respect of support at 1300 would confirm the primary up-trend — presenting a buying opportunity. Target for the advance is 1450*.
* Target calculation: 1300 + ( 1300 – 1150 ) = 1450
Canada’s TSX60 index is headed for another test of support at 700. Respect of support would present a buying opportunity, with confirmation from recovery above 720.
* Target calculation: 720 + ( 720 – 650 ) = 790
Jeffrey Hirsch, president of the Hirsch Organization and editor of the “Stock Trader’s Almanac,” sees “more of the same” for U.S. stocks markets, with solid performance for the year. But first expect an adjustment (of 5 to 15 percent) starting in the second half of March because of:
That should present buying opportunities for investors.
The outlook for 2013 is not as good. The first two years of a new presidential term are when bear markets are prevalent. They try to do the hard stuff in the first two years and then prime the pump in the two years leading up to the next election.
“For some time, our call has been that the Federal Reserve will undertake additional balance-sheet action in the first half of 2012,” writes Vincent Reinhart, an economist with the bank and a former top-level Fed staffer.
He argues it’s most likely the Fed will act to expand its balance sheet via Treasury and mortgage bond buying — in market parlance, QE3 — at either the April or June Federal Open Market Committee, and that the ultimate size of the program could tack on $500 billion to $700 billion onto what is currently a $2.9 trillion balance sheet. There’s also a chance they will put in place a modified version of the current effort to sell short-dated bonds to buy longer-dated securities.
Why act? Reinhart says the second half of the year will box the Fed in politically. Officials won’t wish to be seen starting a high-profile action in the thick of the presidential campaign. Also, he reckons growth will still be too weak, and inflation will be falling short of the Fed’s 2% target.
via Morgan Stanley Still Expects QE3 This Year – Real Time Economics – WSJ.
WASHINGTON (Reuters) — Manufacturing slowed in February and consumer spending was flat for a third straight month in January, new economic data showed on Thursday, suggesting the economy lost more momentum than expected early this year.
……the spending and factory data cut into the optimism generated by a recent decline in the unemployment rate, and suggested rising energy prices were taking a toll.
For the first time in eight years, the Chinese government’s annual growth target has been lowered, to 7.5 per cent GDP growth for all of 2012…..
The new number represents Beijing’s recognition that the investment-driven, export-dependent growth model that has propelled it from an impoverished backwater to the world’s second-largest economy in just three decades is running out of steam……
The goal is to shift growth away from investment in polluting, energy-intensive, unsustainable industries and towards domestic consumption, particularly of services and “green goods”, such as energy-efficient vehicles and environmentally friendly building materials.
“We will move faster to set up a permanent mechanism for boosting consumption,” Wen Jiabao, the premier, said at the opening session of China’s rubber stamp parliament on Monday. “We will vigorously adjust income distribution, increase the incomes of low- and middle-income groups and enhance people’s ability to consume.”
via China’s growth model running out of steam – FT.com.
Comment:~ The trap China faces is that raising wages in order to promote domestic consumption will reduce competitiveness in export markets and harm its current export-driven growth model. Not only are exports likely to fall but, with a high propensity to save, there is no guarantee that Chinese consumption will rise as fast as wages.
Marc Chandler: The new fiscal compact had just been signed last week, which includes somewhat more rigorous fiscal rule and enforcement, when Spain’s PM Rajoy revealed that this year’s deficit would come in around 5.8 percent of GDP rather the 4.4 percent target. This of course follows last year’s 8.5 percent overshoot of the 6 percent target.
The problem that for Spain is that the 4.4 percent target was based on forecasts for more than 2 percent growth this year. However, in late February, the EU cuts its forecast to a 1 percent contraction. This still seems optimistic. The IMF forecasts a 1.7 percent contraction, which the Spanish government now accepts.
This will be the third year in 5 that the Spanish economy contracts. Unemployment stands at an EU-high of 23.5 percent in February. The strong export growth seen in recent years, the best growth in the euro area, is stalling. Domestic demand has been hit by rising unemployment and government austerity…..
Bullish:
New Zealand Energy: Reversal above support at $3.00.
Rio Alto Mining: Respected support at $4.25.
Roxgold: Strong recovery above $1.90/$2.00 support band.
Watch for breakout:
Tri-Oil Resources A: Narrow consolidation suggests upward breakout.
Argonaut Gold: Bearish divergence on 21-day Twiggs Money Flow indicates selling pressure at $10.00, but narrow consolidation suggests upward breakout.
Atna Resources: Narrow consolidation below $1.50 suggests upward breakout.
Northern Graphite: Bearish divergence (21-day Twiggs Money Flow) indicates selling pressure at $2.00, but respect of $1.80/breakout above $2.20 would signal another advance.
Watch:
Pretium Resources: Short candles suggest more resistance at $18.00.
Negative watch:
Silvercrest Mines: Strong bearish divergence on 21-day Twiggs Money Flow suggests reversal.
Madalena Ventures: Breach of rising trendline and bearish divergence on 21-day Twiggs Money Flow suggest another test of $1.00.
