The TSX 60 index is headed for a test of the descending trendline and resistance at 720 on the weekly chart. Upward breakout would signal a primary advance to 790* and the end of the bear market. Respect of zero by 13-week Twiggs Money Flow would strengthen the signal, indicating strong buying pressure.
* Target calculation: 720 + ( 720 – 650 ) = 790
We are not out of the woods yet, but the S&P 500 weekly chart is starting to diverge from its mid-2008 pattern. Headed for a test of the descending trendline and resistance at 1300, an index breakout would signal a primary advance to 1450* and the end of the bear market. Recovery of 63-day Twiggs Momentum above zero would support this.
* Target calculation: 1300 + ( 1300 – 1150 ) = 1450
Dow Jones Industrial Average, however, displays short-term resistance between 12000 and 12300 on the daily chart. Reversal of 21-day Twiggs Money Flow below zero would warn of rising selling pressure.
* Target calculation: 12300 + ( 12300 – 11200 ) = 13400
Nasdaq 100 Index is headed for resistance at 2400. Upward breakout would offer a target of 2750*. Bearish divergence on 13-week Twiggs Money Flow warns of selling pressure, but breakout above the descending trendline would negate this.
* Target calculation: 2400 + ( 2400 – 2050 ) = 2750
US unemployment fell to 8.6 percent in November, the lowest level in more than 2 years. But let’s take a look at the real figures — without the spin. The unemployment rate only includes those who have actively looked for work in the prior 4 weeks. That excludes anyone who has abandoned hope of finding a job and is no longer seeking work. The Jobless Rate below paints a far bleaker picture, reflecting all unemployed, either full-time or part-time, whether or not they are seeking work. The chart is restricted to males aged 25 to 54 in order to minimize demographic factors that could cause wider variations among females, youth under the age of 25, or 55 or older.
There is a visible improvement, with a fall below 18 percent, but we are a long way from the lows of 12 percent recorded in the last boom. Apart from the massive spike in 2008, what is also evident is the long-term up-trend: the jobless rate has increased steadily over the last 60 years — from a low of just 3.6 percent in 1953. We are a long way from being able to congratulate ourselves on the recovery.
[ ECB chief Mario Draghi] seemed to hint at a possible way out of the downward spiral, saying that the ECB could be prepared to take additional steps to halt the crisis. First, however, Europe needed to move quickly toward greater economic integration.
“Other elements might follow,” he said, in reference to the coordinated central banks’ action taken on Wednesday. “But the sequencing matters.” He added that “a new fiscal compact would be the most important signal from euro-area governments for embarking on a path of comprehensive deepening of economic integration.”
In the midst of the European debt crisis, lingering instability in the oil-rich Middle East and concerns about a Chinese economic slowdown, the American unemployment rate unexpectedly dropped last month to 8.6 percent, its lowest level in two and a half years.
The Labor Department also said that the nation’s employers added 120,000 jobs in November and that job growth for the previous two months was better than initially reported.
via Jobless Rate Dips to Lowest Level in More Than 2 Years – NYTimes.com.
China’s official manufacturing purchasing managers index PMI dipped below 50 for the first time since the recovery yesterday. The headline PMI declined to 49, below consensus of 49.8. Looking into the components probably provides an even gloomier picture. New exports order declined further to 45.6 from 48.6, indicating continued deterioration of global demand.
via Inside China’s ugly PMI – macrobusiness.com.au | macrobusiness.com.au.
The two overriding features on the USD/Yen chart are the strong primary down-trend — as indicated by the descending trendline — and a strong bullish divergence on 63-day Twiggs Momentum warning of a reversal. Recovery above resistance at ¥80 would confirm the reversal.
The euro respected primary support at $1.32. Recovery above $1.36 would signal another attempt at $1.42. But the primary trend, as indicated by 63-day Twiggs Momentum below zero, is downward and breakout below $1.32 would signal a decline to $1.22*.
* Target calculation: 1.32 – ( 1.42 – 1.32 ) = 1.22
The Pound also rallied but again 63-day Twiggs Momentum is weak. Follow-through above $1.57 would suggest another attempt at $1.615. But the primary trend remains downward and failure of primary support at $1.53 is more likely, offering a target of $1.45*.
* Target calculation: 1.53 – ( 1.61 – 1.53 ) = 1.45
Canada’s Loonie also responded to rising commodity prices with a rally to test resistance at $1.01. Breakout remains unlikely, but would offer a long-term target of $1.07. The probability would increase if 63-day Twiggs Momentum recovers above zero.
* Target calculation: 1.01 + ( 1.01 – 0.95 ) = 1.07
Liquidity is an immediate issue for the banking system, but the long term issue is solvency caused by the imbalances that have grown, and continue to grow, within the European economy. Deflationary policies that have been pushed onto the periphery are making that worse….
via Europe solves the wrong problem – macrobusiness.com.au | macrobusiness.com.au.
