Central banks are flooding the market with liquidity. It is hard for stocks not to go up, despite lousy economic data.
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Barry Ritholz on Yahoo.com
Japan’s Nikkei 225 is headed for a test of resistance at 9000, but 13-week Twiggs Money Flow trends downwards — indicating that sellers are dominant. Respect of resistance would warn of another test of primary support at 8000.
South Korea’s Seoul Composite index retreated from resistance at 1960. Again we have down-trending 13-week Twiggs Money Flow, warning that sellers dominate the market. Breakout above 1960 is unlikely, while respect would suggest another test of primary support at 1750.
* Target calculation: 1950 + ( 1950 – 1750 ) = 2150
India’s NIFTY index encountered resistance at 5200. Respect of the upper trend channel — and 63-day Twiggs Momentum respecting the zero line (from below) — would suggest a down-swing to test the lower trend channel.
The BSE Sensex also retreated from its upper trend channel but rising 13-week Twiggs Money indicates buying pressure. Follow-through above the recent high at 17250 would signal declining momentum — and that a base is forming.
Singapore’s Straits Times Index also retreated, but from resistance at 2900. Follow-through above the recent high would confirm the higher trough and the start of a primary up-trend. Target for the initial advance is 3200*. Respect of resistance is less likely, but would warn of another test of primary support at 2600.
* Target calculation: 2900 + ( 2900 – 2600 ) = 3200
China’s Shanghai Composite index retreated below resistance at 2300, from the 2010 low. Expect a down-swing to test the lower trend channel at 2000*. 63-day Twiggs Momentum oscillating below zero indicates a strong primary down-trend.
* Target calculation: 2150 – ( 2300 – 2150 ) = 2000
Hong Kong’s Hang Seng index is more bullish, but retreat below the new support level at 20000 would indicate hesitancy. And breach of the rising (green) trendline would warn of a bull trap — as would respect of the zero line (from below) by 63-day Twiggs Momentum.
* Target calculation: 20 + ( 20 – 18 ) = 22
The ASX 200 is headed for a test of resistance at 4400. Rising 13-week Twiggs Money Flow indicates buying pressure. Breakout above 4400 would complete a higher trough, signaling the start of a primary up-trend, but selling pressure in US and Chinese markets may prevent this.
* Target calculation: 4400 + ( 4400 – 4000 ) = 4800
Canada’s TSX 60 index is stronger,with rising 13-week Twiggs Money Flow indicating buying pressure. Breakout above resistance at 715 would complete a higher trough, signaling a primary up-trend. Target for the initial advance would be 770*.
* Target calculation: 710 + ( 710 – 650 ) = 770
Dow Jones UK index retreated below support/resistance (the lighter shaded candle reflects an incomplete week) at the October 2011 high, suggesting a bull trap. Bearish divergence on 13-week Twiggs Money Flow warns of strong selling pressure.
The FTSE 100 shows a similar bearish divergence on 13-week Twiggs Money Flow. Reversal of 63-day Twiggs Momentum below the zero line would strengthen the bull trap signal.
Dow Jones Europe index is testing medium-term support at 240. Breach of the green ascending trendline would warn of another test of primary support at 210 — as would 63-day Twiggs Momentum respecting the zero line.
Dow Jones Industrial Average is already in a primary up-trend, having completed a higher trough late last year, and is now testing the 2011 high of 12800. Retracement to 12300 and the rising trendline is likely. Respect would confirm the new up-trend, but a large bearish divergence on 13-week Twiggs Money Flow warns of failure and a cross below zero would indicate reversal to a primary down-trend.
The Nasdaq 100 displays a similar bearish divergence on 13-week Twiggs Money Flow, warning of strong selling pressure. Retreat below 2400 would indicate a bull trap.
* Target calculation: 2400 + ( 2400 – 2150 ) = 2650
The S&P 500 has not yet reached its 2011 highs but retreat of 13-week Twiggs Money Flow below zero would warn of strong selling pressure and a primary trend reversal.
The Baltic Dry Index has fallen by more than 60 percent in the last 3 months, headed for a test of its 2008 low at 600. The index reflects bulk international shipping rates and is dominated by Capesize iron ore and coal shipments to China. Its fall coincides with a 23 percent drop in iron ore spot prices over the last quarter of 2011. Falling demand for raw materials from China warns that economic activity is slowing rapidly and there may not be a soft landing.
Australia and other resource-rich economies will need to brace themselves for a sharp fall in exports over the year ahead.
Bill Moyers talks with former Citigroup Chairman John Reed and former Senator Byron Dorgan to explore a momentous instance: how the mid-90’s merger of Citicorp and Travelers Group — with help from Alan Greenspan, Robert Rubin and Bill Clinton — brought down the Glass-Steagall Act and sowed the seeds of the GFC.
