The Aussie dollar displays a similar long tail to the ASX 200, indicating that buying support on the Australian stock market came from international, not local, buyers. Dolphin tells us that institutional buyers moved in when AUD fell below parity against the greenback.
The ASX 200 closed in positive territory for the day, accompanied by strong volumes indicative of today’s institutional buying across the Asia-Pacific region. Expect a dead cat bounce — a rally to re-test resistance levels — but the bear market is not miraculously over and may take several months to resolve.
What appears to be strong institutional buying caused a strong bounce across a slew of Asia-Pacific markets. Long tails and a sharp spike in volume indicate buying support and a rally to test resistance (at 410 on $KRDOW).
The Dow Jones Taiwan Index shows an even stronger open-close reversal signal accompanied by big volume.
This is stronger than shorts taking profits or a few hooray Henrys snapping up bargains. The large volumes are indicative of institutions with deep pockets. Expect a decent rally, but it is likely to eventually fail. Not even Asian tigers are immune from a dead cat bounce — and bear markets take months to resolve, not just a few days.
So the euro zone still doesn’t look like it has a coherent plan for bringing the crisis to an end, which at this late stage would require a massive increase in the funds available to the EFSF (European Financial Stability Facility) or a willingness to guarantee all euro-zone government bond issuance as a single bloc.
In a recent report, ANZ estimates that Australia needs to spend about 600 billion Australian dollars (US$626 billion), or the equivalent of 8% of GDP, over the next five years to bring its infrastructure “up to acceptable standards.” It argues that the country needs to invest around 1% of GDP annually just to improve its road network over the medium term.
The Singapore Straits Times Index closed at 2900 Monday, confirming a primary down-trend. Initial target for the down-swing is 2800*.
* Target calculation: 3000 – ( 3200 – 3000 ) = 2800
The Indian Sensex Index broke support at 17500, testing 17000 Monday before the close. Target for the down-swing is 16000*.
* Target calculation: 17500 – ( 19000 – 17500 ) = 16000
The Nikkei 225 followed through below 9400 Monday, closing at 9100. Target for the breakout is 8600*.
* Target calculation: 9400 – ( 10200 – 9400 ) = 8600
The South Korean market is one of the few to show some resilience, with the KOSPI falling more than 7 percent to 1806 before recovering about half of its losses to close at 1876.
What I’ve seen is a real divergence in world views between the President and his party and where most of us as conservatives are……. If you hear them speak it’s always about everyone must pay their fair share and I think the difference is we believe everyone should have a fair shot. It really is a difference between whether you think government is in place to ensure equal outcomes or whether we should as elected officials try to promote the situation where everyone has equal opportunity to go and earn the outcome.
~ House majority leader Eric Cantor
The Shanghai Composite Index followed through below 2620 Monday, after breaking primary support at 2650 Friday, to confirm a primary down-trend. The index fell to 2500 before recovering weakly to 2527 by the close. HongKong fared slightly better, with the Hang Seng Index initially falling to 20000 but recovering to test 20500 by the close. Target for the down-swing is the 2010 low of 19000*.
* Target calculation: 22000 – ( 25000 – 22000 ) = 19000
Similarly, the Dow Jones HongKong Index broke support at 445 to signal a primary down-trend. Target for the down-swing is the 2010 low of 365.
* Target calculation: 445 – ( 510 – 445 ) = 380
The Brazilian Bovespa Index broke support at the 2010 low of 58000. The strong primary down-trend brushed aside expected support at 55000, offering a long-term target of 44000*. 13-Week Twiggs Money Flow below zero confirms strong selling pressure.
* Target calculation: 58000 – ( 72000 – 58000 ) = 44000
The South African JSE Overall Index broke through 30000 to indicate a primary down-trend. Expect retracement to test the new resistance level but 13-week Twiggs Money Flow below zero warns of selling pressure. Support at 29000 is not likely to hold and, with the calculated target at 27000*, the next major support level is 26000.
* Target calculation: 30000 – ( 33000 – 30000 ) = 27000
