Even Europe is showing signs of life, with Dow Jones Europe Index breaking medium-term resistance at 240 to signal a test of 260. Breach of the descending trendline would suggest a bottom is forming. Recovery of 63-day Twiggs Momentum above zero would strengthen the signal. In the long-term, breakout above 260 would complete a double-bottom reversal with a target of 310*.
* Target calculation: 260 + ( 260 – 210 ) = 310
Australia’s ASX 200 index is lagging other resources markets, but penetration of the descending trendline on Monday suggests that a bottom is forming. Breakout above 4400 would signal a primary up-trend, with an initial target of 4800*.
* Target calculation: 4400 + ( 4400 – 4000 ) = 4800
Japan’s Nikkei 225 is headed for a test of 9100, but still has some way to go. Cross-over of 63-day Twiggs Momentum above zero would be a bullish sign.
Dow Jones South Korea Index is testing resistance at 420. Respect of the zero line by 13-week Twiggs Money Flow indicates buying pressure. Breakout above 420 would complete a higher trough, signaling a primary up-trend. Target for the initial advance would be 460*.
* Target calculation: 420 + ( 420 – 380 ) = 460
Resources markets are recovering, with Canada’s TSX 60 index testing resistance at 715 after breaching the descending trendline. Breakout would complete a higher trough, signaling a primary up-trend. Target for the initial advance would be 800*. Rising 13-week Twiggs Money Flow indicates buying pressure.
* Target calculation: 720 + ( 720 – 640 ) = 800
Brazil’s Bovespa broke through 60000, signaling a primary up-trend with an initial target of 65000*.
* Target calculation: 60 + ( 60 – 55 ) = 65
South Africa’s JSE Overall Index broke clear of 33000, signaling a primary up-trend. Bullish divergence on 13-week Twiggs Money Flow strengthens the signal. Initial target for the advance is 35000*, with a long-term mark of 37000.
* Target calculation: 33 + ( 33 – 31 ) = 35
The S&P 500 breakout above 1300 suggests a primary advance to 1450*. Rising 13-week Twiggs Money Flow indicates buying pressure.
* Target calculation: 1300 + ( 1300 – 1150 ) = 1450
The signal was confirmed by similar breakouts on Dow Industrials and the Nasdaq 100, the latter offering a target of 2750*.
* Target calculation: 2400 + ( 2400 – 2050 ) = 2750
Dow Transportation Index has also completed a higher trough, signaling a primary up-trend. 63-day Twiggs Momentum recovery above zero strengthens the signal.
* Target calculation: 5050 + ( 5050 – 4550 ) = 5550
10-Year Treasury yields remain weak. Look for recovery above 2.40 percent to confirm the primary up-trend in stocks.
The S&P 500 index followed through to confirm the breakout above resistance at 1300, signaling the start of a primary up-trend. Rising 13-week Twiggs Money Flow indicates selling pressure. Target for the advance is 1440*.
* Target calculation: 1300 + ( 1300 – 1160 ) = 1440
Nasdaq 100 shows a stronger breakout above 2400, with similar buying pressure reflected on 13-week Twiggs Money Flow. Initial target for the primary advance is 2600*.
* Target calculation: 2400 + ( 2400 – 2200 ) = 2600
Bellwether transport stocks, Fedex and UPS, reinforce the S&P and Nasdaq signal with new highs signaling a primary up-trend.
Always bear in mind that the primary up-trend rests on unstable foundations (private sector deleveraging offset by deep government sector deficits) and may not last much longer than the November elections.
At Citi, retail-banking loans rose 15% from a year ago to $133 billion, as the New York bank lent more to individuals and local businesses. At San Francisco-based Wells, commercial and industrial loans rose 11% from a year earlier to $167 billion at Dec. 31, amid what Chief Financial Officer Tim Sloan called broad-based growth.
All told, loans outstanding at the companies and J.P. Morgan rose by $41 billion from a year ago in the fourth quarter, to $2.14 trillion. That’s the first increase for the three giant lenders since 2008…
via Banks Point to a Pickup in Lending – WSJ.com.
Comment: ~ Private sector deleveraging is slowing and new capital investment improving, but this may prove a temporary respite as purchases were brought forward to take advantage of accelerated tax depreciation in 2011. The 100% write-off of new capital investment (in the year of purchase) will expire in 2012 if not extended by Congress.
Given the bearish outlook for US economic growth, the Fed can be expected to engage in another round of quantitative easing. But the Fed also faces political constraints, and will do too little, and move too late, to help the economy significantly. Moreover, a vocal minority on the Fed’s rate-setting Federal Open Market Committee is against further easing. In any case, monetary policy cannot address only liquidity problems – and banks are flush with excess reserves.
Most importantly, the US – and many other advanced economies – remains in the early stages of a deleveraging cycle. A recession caused by too much debt and leverage (first in the private sector, and then on public balance sheets) will require a long period of spending less and saving more. This year will be no different, as public-sector deleveraging has barely started.
via EconoMonitor : Nouriel Roubini’s Global EconoMonitor » The Straits of America.
Singapore’s Straits Times Index is establishing a base between 2600 and 2900. Rising 63-day Twiggs Momentum warns that the down-trend is weakening. Breakout above 2900 would signal a primary advance to 3200*.
* Target calculation: 2900 + ( 2900 – 2600 ) = 3200
South Korea’s Seoul Composite Index is headed for a test of resistance at 1920. Breakout would signal a primary advance to 2150*, but bearish divergence warns of medium-term selling pressure. It advisable to wait for retracement to respect the new support level, confirming the breakout.
* Target calculation: 1900 + ( 1900 – 1650 ) = 2150
South Africa’s JSE Overall Index broke resistance at 33000 to signal a primary advance. Target for the initial advance is 35000*. Bearish divergence on 13-week Twiggs Money Flow, however, warns of medium-term selling pressure; we should wait for confirmation from a retracement that respects the new support level. The indicator is rising in the long-term, however, indicating buying support.
* Target calculation: 33 + ( 33 – 31 ) = 35
Brazil’s Bovespa index is testing resistance at 60000. Breakout would confirm a primary up-trend, but bearish divergence on 13-week Twiggs Money Flow warns of selling pressure. Again, we need to wait for retracement to confirm the breakout.
* Target calculation: 60 + ( 60 – 55 ) = 65
