While German officials say they are open in principle to using the EFSF’s limited war chest “as efficiently as possible,” they say these ideas are unlikely to work well unless the ECB cooperates. So far, the ECB has rejected calls to team up with the bailout fund.
Political resistance to such a “leveraging” of the EFSF is high in Germany’s parliament, which would have to approve such a move. Ms. Merkel’s government has tried to reassure its lawmakers this week that it has no plans to make German taxpayers shoulder even bigger risks.
Dollar rise as euro falls
The euro is testing short-term support against the greenback at $1.35/1.34. 63-Day Momentum (declining below zero) reminds we are in a primary down-trend. Failure of support would signal a decline to $1.30*.
* Target calculation: 1.40 – ( 1.50 – 1.40 ) = 1.30
The dollar has benefited from safe haven demand, commencing a primary advance as the euro falls. 63-Day Twiggs Momentum crossed to above zero, confirming the primary up-trend. Further retracement to test the new support level at 76.00 is likely, but respect would demonstrate strong buying support.
* Target calculation: 76 + ( 76 – 73 ) = 79
It’s Man vs. Machine and Man Is Losing – WSJ
Since the recession ended, businesses had increased their real spending on equipment and software by a strong 26%, while they have added almost nothing to their payrolls.
via It’s Man vs. Machine and Man Is Losing – Real Time Economics – WSJ.
ICI – Exchange-Traded Fund Assets, August 2011
The combined assets of the nation’s exchange-traded funds ETFs were $1.041 trillion in August, according to ICI.
via ICI – Exchange-Traded Fund Assets, August 2011.
A fall of 4.1% from July 2011.
India & Singapore
India’s SENSEX index ran into resistance at 16500 today. 13-Week Twiggs Money Flow holding below zero warns of strong selling pressure. Expect another test of support at 16000. Failure would signal a down-swing to 14500.
* Target calculation: 16000 – ( 17500 – 16000 ) = 14500
The Straits Times Index weakened to 2700 today after yesterday’s sharp rally. 63-Day Twiggs Momentum declining below zero reminds that we are in a strong primary down-trend. Failure of support at 2700 would signal a decline to 2400*.
* Target calculation: 2650 – ( 2900 – 2650 ) = 2400
ASX 200 compressed spring
Narrow range and strong volume signals strong opposition to the current rally. Like the release of a compressed spring, reversal below 4000 would lead to a sharp fall.
* Target calculation: 4000 – ( 4500 – 4000 ) = 3500
China, Hong Kong continue down-trend
Dow Jones Shanghai Index continued a down-swing Wednesday to test the lower border of its downward trend channel. 21-Day Twiggs Money Flow declining below zero warns of strong selling pressure.
The Shanghai Composite index is headed for support at its target of 2350. 63-Day Twiggs Momentum declining below zero reminds that we are in a primary down-trend. Expect some retracement or consolidation at support. Failure would warn of a decline to 2000*.
* Target calculation: 2350 – ( 2700 – 2350 ) = 2000
Hang Seng Index found resistance at 18000 on Wednesday after rallying earlier in the week. The primary trend is down and 13-week Twiggs Money Flow (below zero) warns of selling pressure. Resistance at 19000 is expected to hold, followed by down-swing to 16000*.
* Target calculation: 17500 – ( 19000 – 17500 ) = 16000
S&P warns on Chinese property – macrobusiness.com.au
Chinese developers face an “increasingly severe” credit outlook, which may force them to cut prices and turn to costlier funding sources as sales weaken, Standard & Poor’s said.
A 30 percent decline in sales may leave many developers facing a liquidity squeeze, S&P said after conducting stress tests of the nation’s real estate companies…..
“The worst isn’t over for China’s real estate developers,” S&P analysts led by Frank Lu wrote in a report today. “Developers are bracing themselves for slower sales and lower property prices ahead.”
via S&P warns on Chinese property – macrobusiness.com.au | macrobusiness.com.au.
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*.
* 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.
* Target calculation: 1650 – ( 1900 – 1650 ) = 1400
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*.
* 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*.
* Target calculation: 5000 – ( 5600 – 5000 ) = 4400