The JSE Overall Index retreated below the former primary support level of 30000, strong volume [R] warning of selling pressure. Breach of the rising trendline would indicate another test of support at 28400. Failure of support would offer a target of 26000*, but this is not yet a foregone conclusion, with an up-tick in volume [S] indicating some buying support.
* Target calculation: 28.5 – ( 31 – 28.5 ) = 26
The Brazilian Bovespa Index encountered strong resistance at 58000, the spike in volume [R] warning of selling pressure. Breach of the rising trendline would warn that the rally is fading and another test of support at 48000 is likely. Failure of support would offer a target of 38000*.
* Target calculation: 48 – ( 58 – 48 ) = 38
Australians face rising electricity bills, fuel prices and mortgage rates, and the increasing cost of living has been exacting a toll on the economy.
Neither consumers nor businesses are in the mood to borrow in a major way. Veda’s quarterly Consumer Credit Demand Index, released Monday, showed consumer credit demand has dropped 5.1% since March. Business credit growth was flat in July, after having not posted growth for four straight months, St. George Bank economist Janu Chan said. In the year to July, business credit contracted 1.9%. “Lackluster growth in business credit is consistent with softening business confidence, and adds to evidence that certain sectors of the economy are doing it tough,” Ms. Chan said in a note.
via Australia Investor Confidence at Lowest Level Since 2009 – WSJ.com.
Australia is a large net borrower from the rest of the world. A large deficit in a capital account along with a deficit in the balance of trade while the currency is rising are all strong evidence that Australia has a problem with currency speculation.
Currency speculation, sometimes called “hot money” , needs to be controlled because it can cause some serious imbalances in the local economy both on the way in, and on the way out. There are a number of well-known symptoms for hot money in-flows, these include:
• Asset bubbles
• Currency appreciation
• Inflation
via Fighting Australia’s “hot money” problem – macrobusiness.com.au.
The euro broke its medium-term trendline against the dollar at [TX] and is headed for another test of primary support at $1.40. Failure of support would offer a target of $1.30*.
* Target calculation: 1.40 – ( 1.50 – 1.40 ) = 1.30
Dow Jones Germany Index broke support at 210/205 Monday, warning of another sharp fall as the ECB ramps up bond purchases and German participation in the bailout program is challenged in their High Court. Plunging 13-week Twiggs Money Flow indicates strong selling pressure. Target for the fall is the 2009 low of 150*.
* Target calculation: 200 – ( 250 – 200 ) = 150
The DAX Index similarly broke support at 5500, offering a target of 4500*.
* Target calculation: 5500 – ( 6500 – 5500 ) = 4500
After the ECB just announced that it had monetized a whopping E13.3 billion in the past week, nearly double expectations, and a total of E134 billion since the SMP program’s inception, the market took one quick look at just how effective this program has been, shuddered, and plunged realizing that neither ECB intervention, nor the shorting halt is doing anything at all.
Dow Jones Shanghai Index breached support at 320, confirming the earlier signal at failure of 330. Reversal of 13-week Twiggs Money Flow below zero warns of rising selling pressure.
* Target calculation: 330 – ( 390 – 330 ) = 270
DJ Japan Index is headed for another test of support at 49.50. 21-Day Twiggs Money Flow peaking below zero warns of strong selling pressure. Breach of support would offer a target of 45.50*.
* Target calculation: 49.50- ( 53.50 – 49.50 ) = 45.50
DJ South Korea also displays a strong primary down-trend. Breach of support at 365 would offer a target of 300*.
* Target calculation: 365 – ( 430 – 365 ) = 300
The DJ India 30 Titans Index displays strong selling pressure, with 13-week Twiggs Money Flow falling below zero. Reversal below support at 152 would offer a target of 136*.
* Target calculation: 152 – ( 168 – 152 ) = 136
