Category: Countries & Regions

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Australia: ASX 200 Index

The ASX 200 Index is forming a bottom between 4000 and 4400 after breaching its descending trendline. Breakout above 4400 would signal the start of a new up-trend, but that may be some way off. Recovery of 63-day Twiggs Momentum above zero would strengthen the signal. For the present we continue in a narrow consolidation below 4300. Upward breakout would test 4400, while breach of the rising trendline would warn of another test of primary support at 4000.

ASX 200 Index

* Target calculation: 4400 + ( 4400 – 4000 ) = 4800

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China & Hong Kong

The Shanghai Composite Index rallied strongly above 2300 after breaking out of its downward trend channel. 13-Week Twiggs Money Flow rising strongly indicates good buying pressure. Expect resistance at 2550. Breakout above this level would offer a weak (primary) reversal signal. Stronger confirmation would come if retracement successfully tests support at 2300.

Shanghai Composite Index

Hong Kong’s Hang Seng Index has already started a primary up-trend, with an initial target of 22,500*. Reversal below 21,000 would signal retracement to test the new support level at 20,000, but 13-Week Twiggs Money Flow again indicates buying pressure and we can expect the primary up-trend to continue.

Hang Seng Index

* Target calculation: 20,000 + ( 20,000 – 17,500 ) = 22,500

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Japan rising

Japan’s Nikkei 225 Index is headed for a test of 10,000 after breaking resistance at 9,000 three weeks ago. 13-Week Twiggs Money Flow rising strongly indicates good buying pressure. Expect some retracement or consolidation at 10,000, but the primary trend is up and breakout above 10,000 would offer a target of 11,000*.

Nikkei 225 Index

* Target calculation: 10,000 + ( 10,000 – 9,000 ) = 11,000

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Singapore & Korea

Singapore’s Straits Times Index is in a primary up-trend. Breakout above medium-term resistance at 3000 would confirm the advance to 3200*. Any retracement is likely to encounter support at 2900.

Singapore Straits Times Index

* Target calculation: 2900 + ( 2900 – 2600 ) = 3200

The Seoul Composite Index shows a similar pattern, running into medium-term resistance between 2000 and 2050. Expect good support at 1950. Breakout above 2050 would confirm the advance to 2200.

Seoul Composite Index

* Target calculation: 1950 + (1950 – 1750 ) = 2150

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India retraces

The Sensex Index is retracing to test its new support level. Respect of 17200 would indicate that the up-trend is intact, while failure would warn of another test of primary support at 15000. Long-term buying pressure remains healthy if 13-week Twiggs Money Flow forms a trough above the zero line.

BSE Sensex Index

* Target calculation: 18000 + ( 18000 – 15000 ) = 21000

The Nifty Index is similarly testing support at 5200. Recovery above 5600 would confirm the primary up-trend. 63-Day Twiggs Momentum above zero suggests a healthy up-trend.

NSE Nifty Index

* Target calculation: 5400 + ( 5400 – 4600 ) = 6200

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UK & Europe: Italy threatens breakout

Italy’s MIB Index is testing resistance at 17,000 after several weeks narrow consolidation — signaling continuation of the up-trend. Rising 13-week Twiggs Money Flow indicates buying pressure.

MIB Index

* Target calculation: 17,000 + ( 17,000 – 14,000 ) = 20,000

Germany’s DAX is testing medium-term resistance at 7000. Upward breakout is likely and would indicate a test of 7500*.

DAX Index

* Target calculation: 6500 + ( 6500 – 5500 ) = 7500

The FTSE 100 Index also encountered resistance — as indicated by short candles below 6000 over the past four weeks and the triangle pattern on 13-week Twiggs Money Flow. Breakout above 6100 would signal a fresh primary advance, while reversal below the rising trendline would warn of a correction to primary support at 5000.

FTSE 100 Index

* Long-term target calculation: 6000 + ( 6000 – 5000 ) = 7000

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US stocks bullish

Dow Jones Industrial Average consolidating in a narrow range below resistance at 13,000 suggests an upward breakout and continuation of the primary up-trend. Strong values on 21-day Twiggs Money Flow indicate buying pressure.

Dow Jones Industrial Average

* Target calculation: 12200 + ( 12200 – 11200 ) = 13200

The S&P 500 displays a strong primary up-trend on 63-day Twiggs Momentum. Breakout above 1370 would complete the picture, offering a medium-term target of 1450*.

S&P 500 Index

* Target calculation: 1300 + ( 1300 – 1150 ) = 1450

The Nasdaq 100 is building up a head of froth and is due for a correction to test support at 2400. Breach of the secondary rising trendline would give an early warning. Bearish divergence on 13-week Twiggs Money Flow continues to warn of long-term weakness.
Nasdaq 100 Index

* Target calculation: 2400 + ( 2400 – 2150 ) = 2650

Bellwether transport stock Fedex continues in a primary up-trend, though rising oil prices could spoil the party. Respect of the rising trendline would reinforce the up-trend.

Fedex

Bear in mind that we are experiencing a lot of window-dressing ahead of the November election. The Fed is suppressing long-term interest rates, making stocks a more attractive alternative (the lesser of two evils). While ECRI’s Lakshman Achuthan points out that retail sales, the true driver of economic recovery, remain soft. There are some positive signs, however, so follow the rally by all means — but with caution. This is not another massive bull market like the 1990s. Not without a strong rise in debt levels — which is most unlikely. Markets will remain risk-averse for most of this decade — as long as it takes to clean up the mess.

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Canada: TSX 60 tests support

The TSX 60 Index is testing the new support level at 720 on the weekly chart. Failure would indicate a test of 700, while respect would confirm the primary up-trend. Breach of 700 is unlikely but would warn of a correction to primary support at 650. 63-Day Twiggs Momentum above zero continues to favor a primary up-trend.

TSX 60 Index

* Target calculation: 720 + ( 720 – 650 ) = 790

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US Housing Still Drowning in Underwater Mortgages – WSJ

According to mortgage-data firm CoreLogic, 11.1 million of homeowners had an underwater mortgage in the fourth quarter, representing a large 22.8% of all residential properties with a mortgage. The share has not come down much since the recovery started in 2009. Of those underwater borrowers, 6.7 million have only a primary mortgage, with an average negative equity of $51,000. Of the 4.4 million with first and second liens, the average amount is $84,000. According to CoreLogic, an estimated $715.3 billion in negative equity is floating throughout the housing market.

via Housing Still Drowning in Underwater Mortgages – Real Time Economics – WSJ.

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