A long-term chart shows the dramatic fall of the greenback against the yen over the last three decades. The bear trend continues with breakout below ¥80 signaling further decline to around ¥60* over the next few years. Quantitative easing by the Fed would accelerate the process.
* Target calculation: 80 – ( 100 – 80 ) = 60
The Aussie Dollar continues to consolidate between $1.03 and $1.06 against the greenback. Failure of support at $1.03 would test parity, while breakout above $1.06 would target resistance at $1.10. In the long term, declining commodity prices are likely to drag the Aussie lower — unless the Fed starts printing money again.
* Target calculation: 1.03 – ( 1.06 – 1.03 ) = 1.00
The Aussie Dollar is testing the upper border of the declining trend channel against its Kiwi counterpart. Reversal below short-term support at $1.255 would indicate respect of the upper channel and a down-swing to around $1.20*. Breakout above $1.28 is unlikely but would warn that the down-trend is weakening.
* Target calculation: 1.24 – ( 1.28 – 1.24 ) = 1.20
The Candian Loonie is consolidating in a narrow band above parity, warning of selling pressure. Earlier penetration of the long-term rising trendline indicates the up-trend has weakened. Breach of support would confirm a primary down-trend, with an initial target of $0.94 against the greenback.
* Target calculation: 1.00 – ( 1.06 – 1.00 ) = 0.94
Equity funds had estimated inflows of $1.48 billion for the week, compared to estimated outflows of $30.01 billion in the previous week.
via $1.1B Comes Back into Mutual Funds Investing in U.S. Stocks.
In the week ending August 10, $40.3 billion was pulled out of long-term mutual funds of all types, the Investment Company Institute reported.
New Zealand is one of the few markets that is bucking the trend — its agriculture-based economy fairly insulated from the global down-turn. ENZL, the MSCI New Zealand ETF, recovered above its former primary support level at 31.50 after strong bullish divergence on 13-week Twiggs Money Flow. While technically still a bear market, retracement that respects the new support level of 31.50 would confirm a test of 34.
The Dow Jones Industrial Average rallied Tuesday on fairly light volume. Expect resistance at 11500. This is a bear market, with reactions to good news likely to be short — and declines from bad news severe. Target for the next decline is 10000*.
* Target calculation: 11000 – ( 12000 – 11000 ) = 10000
Bullish divergence on 21-day Twiggs Money Flow on the NZ50 Index signals buying support. Breakout above 3300 is possible, but the primary down-trend is unlikely to change, given the state of global markets.
* Target calculation: 3100 – ( 3300 – 3100 ) = 2900
The Shanghai Composite Index respected resistance at 2650, confirming the primary down-trend. Expect a test of 2350. 13-Week Twiggs Money Flow reversal below zero would warn of rising selling pressure. In the long term, failure of support at 2350 would offer a target of 1600*.
* Target calculation: 2400 – ( 3200 – 2400 ) = 1600
Monday’s long tail on the Hang Seng Index and higher volume indicate short-term support at 19000. Expect a rally to test the recent high at 20500.
* Target calculation: 19000 – ( 22000 – 19000 ) = 16000
The Sensex rallied Monday but on light volume. The sharp fall on 21-day Twiggs Money Flow below zero warns of strong medium-term selling pressure and support at 16000 is not expected to hold.
* Target calculation: 16500 – ( 17500 – 16500 ) = 15500
Monday’s long tail on the Straits Times Index also indicates short-term buying support. The sharp fall on 21-day Twiggs Momentum indicates a strong down-trend and support at 2700 is expected to fail.
* Target calculation: 2800 – ( 3000 – 2800 ) = 2600
