Category: Countries & Regions

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Japan & South Korea

Bullish divergence on Japan’s Nikkei 225 index (13-week Twiggs Money Flow) warns of a bear market rally. Breakout above the upper channel of the broadening wedge pattern would confirm. The primary trend, however, remains downward; breakout below the lower channel at 8400 would warn of a down-swing to 7800*.

Nikkei 225 Index

* Target calculation: 8400 – ( 9000 – 8400 ) = 7800

The Seoul Composite is weaker on Wednesday after a sharp rally earlier in the week. 13-Week Twiggs Money Flow continues to threaten a break below zero. Breakout below the lower border of the broadening wedge formation would signal another primary decline.

Seoul Composite Index

* Target calculation: 1650 – ( 1900 – 1650 ) = 1400

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Europe: DAX and Footsie jump on bailout hopes

Germany’s DAX Index gapped above its secondary trend channel (or large flag) on hopes that the EFSF bailout rumor will materialize. The index is due for a secondary reaction, with bullish divergence on 21-day Twiggs Money Flow indicating medium-term buying pressure. Expect resistance at 6100. The bear market continues, however, and reversal below 5000 would offer a target of 4000*.

DAX Index

* Target calculation: 5000 – ( 6000 – 5000 ) = 4000

The FTSE 100 continues its narrow line between 5000 and 5450, with divergence on 21-day Twiggs Money Flow indicating (medium-term) buying pressure. Again, the bear market is likely to continue and failure of support at 5000 would signal another down-swing — with a target of 4400*.

FTSE 100 Index

* Target calculation: 5000 – ( 5600 – 5000 ) = 4400

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Iron forward market softens – Phat Dragon | Westpac

The iron ore market is beginning to exhibit some signs of modest
unease, with 3mth forwards giving up significant ground while spot
has moved about 5% lower. From an export profitability perspective,
falls in the Australian dollar and Brazilian real have more than
covered the US dollar spot decline. Even so, to Phat Dragon’s eye
a cyclical correction in the ferrous metals sphere appears to be
underway and price expectations should be ratcheting downwards.

Excerpt from Westpac’s Phat Dragon weekly chronicle of the Chinese economy

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US rally encounters resistance

Dow Jones Industrial Average tall shadow (or wick) on the latest candlestick [R] indicates rising selling pressure. With excitement about a European bailout deal fading, expect a test of support at 10600. Failure would indicate another down-swing, with a target of 10000*.

Dow Jones Industrial Average

* Target calculation: 11000 – ( 12000 – 11000 ) = 10000

S&P 500 Index shows continued consolidation between 1120 and 1220 on the weekly chart. 13-Week Twiggs Money Flow below zero indicates selling pressure. Failure of support at 1120 would test the 2010 low at 1020*/1000.

S&P 500 Index

* Target calculation: 1120 – ( 1220 – 1120 ) = 1020

NASDAQ 100 Index shows an evening star reversal warning, completed if price reverses below 2200. 63-Day Twiggs Momentum holding below zero reminds that we are in a primary down-trend. Breach of the lower trend channel would warn of another down-swing, with a target of 1750*.

NASDAQ 100 Index

* Target calculation: 2050 – ( 2350 – 2050 ) = 1750

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EU Super-Bailout Option Slips Away – WSJ

Financial markets rallied around the globe Monday as investors saw the first glimpse of real hope for containing the European debt crisis. Problem was that the lead advocates of the deal, the IMF’s Christine Lagarde and the European Commission’s Olli Rehn, are bureaucrats who don’t have to answer to electorates every few years.

Decidedly not on board were the actual governments of the 17 euro-zone nations. Euro-zone finance ministers came home from Washington doubting they could sell more risk to voters already grumbling at past and present tax money being put behind insolvent state treasuries in Greece, Portugal and Ireland.

via EU Super-Bailout Option Slips Away – The Source – WSJ.

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Housing Takes Baby Steps Towards Better Balance – WSJ

Supply of new and existing homes for sale stood at 8.4 months at August’s selling rates, down from a large supply of about 11 months a year ago. Equally important, fewer homes are waiting to go on the market. This so-called “shadow inventory” consists of homes in foreclosures, those already repossessed by the lender or homes with a mortgage delinquent for 90 days or more. Mortgage-data provider CoreLogic estimates the shadow inventory totaled 1.6 million in July, down from 1.9 million a year ago.

via Housing Takes Baby Steps Towards Better Balance – Real Time Economics – WSJ.

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European Crisis Primer: Where Things Stand – WSJ

The crucial talks between the European Union-European Central Bank-International Monetary Fund “Troika” with the Greek government remain on hold as Greece pulls together another six billion euros in cuts and taxes to hit its promised 2011 target. At stake is the next eight-billion-euro bailout payment, without which Greece goes broke within weeks.

via European Crisis Primer: Where Things Stand – Real Time Economics – WSJ.

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