Canada’s TSX 60 index broke resistance at 715 to signal a primary up-trend. Rising 13-week Twiggs Money Flow indicates buying pressure. Target for the initial advance is 785*.
* Target calculation: 715 + ( 715 – 645 ) = 785
Europe: UK and Germany signal bull market
The FTSE 100 broke through resistance at 5750 to signal a primary up-trend. Rising 13-week Twiggs Money Flow indicates medium-term buying pressure. Target for the initial advance is 6300*.
* Target calculation: 5700 + ( 5700 – 5100 ) = 6300
Germany’s DAX also signals a primary up-trend, with a target of 7400* for the initial advance.
* Target calculation: 6400 + ( 6400 – 5400 ) = 7400
Italy’s MIB index lags behind, but breakout above 17000 would give a similar signal, with a target of 20000*.
* Target calculation: 17000 + ( 17000 – 14000 ) = 20000
Bull market signaled as liquidity soars
Central banks are flooding the markets with liquidity, causing stocks to rise despite weak fundamentals. Large bearish divergences on 13-week Twiggs Money Flow for Dow Industrials and the Nasdaq 100 highlight the precarious nature of the current rally. But, as I said earlier, don’t bet on this ending before the November election.
Dow Jones Industrial Average broke resistance at 12800, joining the Nasdaq 100 above its 2011 high. All four major indices display a primary up-trend, collectively signaling a bull market. Rising 13-week Twiggs Money Flow indicates medium-term buying pressure on the Dow and target for the initial advance is 13400*.
* Target calculation: 12300 + ( 12300 – 11200 ) = 13400
The S&P 500 is a little way behind, but rising 13-week Twiggs Money Flow indicates buying pressure. Breakout above 1370 is likely to confirm an advance to 1450*.
* Target calculation: 1300 + ( 1300 – 1150 ) = 1450
The Nasdaq 100 index followed through above 2500, confirming the primary up-trend, while rising 13-week Twiggs Money Flow indicates medium-term buying pressure.
* Target calculation: 2400 + ( 2400 – 2150 ) = 2650
Dow Jones Transport Average is also in a primary up-trend; and headed for a test of resistance at 5600. New highs on 13-week Twiggs Money Flow indicate long-term buying pressure.
* Target calculation: 5000 + ( 5000 – 4500 ) = 5500
David Stockman on crony capitalism – Bill Moyers
Bill Moyers interviews investment banker and former Reagan budget director, David Stockman:
Crony capitalism: the revolving door between Washington and Wall Street. A 53-minute video, but worth the time.
Forex: EUR, GBP, AUD, CAD, JPY, ZAR
The euro remains in a strong primary down-trend. The current rally is testing resistance at $1.32, but 63 -day Twiggs Momentum continues to trend downwards. Breach of support at $1.26 would signal a down-swing to $1.20*.
* Target calculation: 1.26 – ( 1.32 – 1.26 ) = 1.20
Pound Sterling has breached its declining trendline against the greenback, warning that a bottom is forming. Breakout above $1.62 would complete a double bottom reversal, testing the 2011 high at $1.68.
* Target calculation: 1.62 + ( 1.62 – 1.53 ) = 1.71
Canada’s Loonie also signals that a bottom is forming. Breakout above $1.01 would indicate the start of a primary up-trend, with an initial target of $1.06*.
* Target calculation: 1.01 + ( 1.01 – 0.96 ) = 1.06
The Aussie is testing resistance at $1.08. Breakout would similarly signal a primary up-trend with an initial target of $1.18*.
* Target calculation: 1.08 + ( 1.08 – 0.98 ) = 1.18
The greenback is testing primary support at 76 against the Japanese yen. Breakout would offer a target of 72*. Recovery above the declining trendline, however, would suggest that a bottom is forming — confirming the large bullish divergence on 63-day Twiggs Momentum — while breakout above 80 would signal a primary up-trend.
* Target calculation: 76 – ( 80 – 76 ) = 72
The South African Rand is strengthening against the US Dollar, while encountering resistance at R8.50 against its Australian counterpart. Downward breakout from the ascending triangle would warn of a correction to test the long-term trendline at R7.50, while breakout above R8.50 would indicate another primary advance, with a target of R9.50*.
* Target calculation: 8.50 + ( 8.50 – 7.50 ) = 9.50
The Euro Crisis Makes Absolutely No Sense – Brett Arends (WSJ)
WSJ: Mean Street
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Brett Arends exposes flaws in Eurozone efforts to resolve the currency crisis.
The economy’s lousy but stocks still look good – Barry Ritholtz
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
Sellers still dominate Japan, South Korea
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 & Singapore retreat
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: Shanghai & Hang Seng
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