DJ Europe Index broke support at 225, signaling another down-swing to the 2010 low at 205. The calculated target is lower at 195.
* Target calculation: 230 – ( 265 – 230 ) = 195
India, Singapore weaken
Dow Jones India 30 Titans Index is headed for another test of support at 152. 21-Day Twiggs Money Flow holding below zero indicates selling pressure. Failure of support would warn of a down-swing to 136*.
* Target calculation: 152 – ( 168 – 152 ) = 136
Dow Jones Singapore Index is testing the band of support between 220 and 215. Low volume indicates weak support. Failure of 215 would offer a target of 200*.
* Target calculation: 220 – ( 240 – 220 ) = 200
TSX 60 retreats
The TSX 60 Index retreated to test its rising trendline at 705. Penetration would warn of a test of primary support at 665. And failure of support would signal another down-swing with a target of 600*.
* Target calculation: 665 – ( 735 – 665 ) = 595
ASX 200 tests key support level
The ASX 200 fell sharply, headed for a test of its key support level at 4000. Low volume indicates weak support and downward breakout would signal a primary down-swing to 3500*.
* Target calculation: 4000 – ( 4500 – 4000 ) = 3500
European indices warn of another down-swing
The German DAX Index broke support at 5500 to warn of a down-swing to 4500*. Declining 13-week Twiggs Money Flow below zero indicates strong selling pressure.
* Target calculation: 5500 – ( 6500 – 5500 ) = 4500
In France, the CAC-40 Index reversed below support at 3000, led by a sell-off in French banks. Expect support at the 2009 low of 2500, though the calculated target is even lower. 13-Week Twiggs Money Flow again signals strong selling pressure.
* Target calculation: 3000 – ( 3700 – 3000 ) = 2300
The FTSE 100 is consolidating above 5000, but is likely to be dragged lower if major European trading partners fall. Breach of support would offer a target of 4400*.
* Target calculation: 5000 – ( 5600 – 5000 ) = 4400
Treasury yields reflect market turmoil
10-Year Treasury yields fell to their lowest level in more than 50 years on Friday, responding to heightened uncertainty in Europe. The flight to safety warns of further stock market weakness in the week ahead.
Woes at French Banks Signal a Broader Crisis – WSJ.com
Greece will run out of money within weeks if it can’t end a standoff with the International Monetary Fund and the EU. In a last-ditch effort to overcome the impasse with its international lenders, Greece’s government said Sunday that it would impose a new property tax to cover a €2 billion shortfall in budget targets this year. Investors worry that if the dispute goes unresolved, Greece could suffer a messy default, with untold consequences for Europe’s banks.
French banks’ overall exposure to Greece is about €65 billion, according to the Bank of International Settlements.
Good time to buy gold
With Europe awash with stories of the imminent default of Greece, and German banks told to prepare for a 50% haircut on Greek bonds [Bloomberg], this would be a good time to buy gold. Any rupture in current bailout arrangements would cause a flight to safety, driving Treasury yields even lower and gold even higher. Breakout above $1900 would confirm a fresh advance, with a target of 2100*.
* Target calculation: 1900 + ( 1900 – 1700 ) = 2100
Added in response to question: Reversal below 1800 is unlikely but would warn that the ascending triangle formation has failed.
Europe on the Verge of a Political Breakdown – Barry Eichengreen – Project Syndicate
Europe doesn’t have months, much less years, to resolve its crisis. At this point, it has only days to avert the worst. It is critical that leaders distinguish what must be done now from what can be left for later.
The first urgent task is for Europe to bulletproof its banks. Doubts about their stability are at the center of the storm. It is no coincidence that bank stocks were hit hardest in the recent financial crash.
via Europe on the Verge of a Political Breakdown – Barry Eichengreen – Project Syndicate.
Dissecting the Lies in Obama’s $447 Billion ‘Shock-and-Awe’ Reelection Ploy | Mike Shedlock
Obama: And everything in this bill will be paid for. Everything.
Mish: That is lie number 3……. Obama’s stimulus plan is nothing but another spend now, make cuts later “sleight-of-hand” proposal.
Obama: The purpose of the American Jobs Act is simple: to put more people back to work and more money in the pockets of those who are working…….
Mish: That is lie number 4. The primary purpose of the American Jobs Act is simple: To keep one person (namely President Obama), in his job.