Canada’s TSX 60 Index is falling sharply, headed for medium-term support at 665, but long-term support at 650 is just below. Breakout below 650 would warn of another down-swing, with a target of 580*.
* Target calculation: 650 – ( 720 – 650 ) = 580
Nasdaq breaks support
The Nasdaq 100 broke support at 2050, warning of a down-swing to 1900*. Follow-through below last week’s low of 2040 would confirm. The latest peak on 21-day Twiggs Money Flow, barely breaking the zero line, indicates strong medium-term selling pressure.
* Target calculation: 2050 – ( 2200 – 2050 ) = 1900
The Dow is headed for a similar test: follow-through below 10600 would confirm a down-swing to 9600*. Higher volumes indicate the presence of buyers and failure of support would prove seller’s dominance.
* Target calculation: 10800 – ( 12000 – 10800 ) = 9600
The S&P 500 is testing support at 1100 on the weekly chart. Failure would signal a test of 1000. 13-Week Twiggs Money Flow below zero warns of further selling pressure.
* Target calculation: 1125 – ( 1250 – 1125 ) = 1000
Whack-a-Mole: IMF Not Impressed With China Bubble Management – WSJ
[IMF China mission chief Nigel] Chalk argues that China faces a potent cocktail of ingredients pushing house prices up:
- High domestic savings, and limited opportunities to take cash offshore
- Limited domestic savings options and bank deposit rates below the rate of inflation
- No property tax or capital gains tax, which makes it cheap to buy and hold property
- Rapid growth, high wages and urbanization, which mean real demand continues to grow
The government’s crackdown on high housing prices has had some success. But Chalk believes that the restrictions on speculators introduced so far treat the symptoms, not the causes, of the malaise.
via Whack-a-Mole: IMF Not Impressed With China Bubble Management – China Real Time Report – WSJ.
ICI – Long-Term Mutual Fund Flows, August 17, 2011
Total estimated outflows from long-term mutual funds were $40.29 billion for the week ended Wednesday, August 10, the Investment Company Institute reported today.
New Economic Perspectives: ARE WE APPROACHING THE ENDGAME FOR THE EURO?
[The] core problem at the heart of the euro zone is NOT a problem of “Mediterranean profligacy”. Many people, particularly in Germany, express the view that the Italian, Greek or Portuguese governments (and by association their people) are to blame for this crisis – accessing cheap loans from Northern European banks, not paying enough taxes, not working hard enough, etc…..
One thing is clear from the remarks that continue to emanate from Europe’s main policy makers. They do not understand basic accounting identities.
…….The European Monetary Union bloc as a whole runs an approximately balanced current account with the rest of the world. Hence, within Euroland it is a zero-sum game: one nation’s current account surplus is offset by a deficit run by a neighbor. And given triple constraints — an inability to devalue the euro, a global downturn, and the most dominant partner within the bloc, Germany, committed to running its own trade surpluses — it seems quite unlikely that poor, suffering nations like Greece or Ireland could move toward a current account surplus and thereby help to reduce its own government “profligacy”.
via New Economic Perspectives: ARE WE APPROACHING THE ENDGAME FOR THE EURO?.
In Praise of Timely, Blatant Incompetence | Mike Shedlock | Safehaven.com
Many are in shock that the S&P downgraded debt of the US from AAA. Not me. It was long overdue.
However, the S&P proved it was incompetent in the way it made the downgrade. Pray tell how can a rating agency make a $2 trillion error? The answer is obvious: sheer incompetence.
The irony is Moody’s and Fitch proved they are incompetent by not downgrading U.S. debt.
via In Praise of Timely, Blatant Incompetence | Mike Shedlock | Safehaven.com.
30-Yr. Mortgage Rate: New Low
The average rate on a 30-year fixed mortgage has fallen to its lowest level on records dating to 1971. The rate on the most popular mortgage dipped to 4.15 percent from 4.32 percent a week ago, Freddie Mac said Thursday. Its previous low of 4.17 percent was reached in November.
The last time long-term rates were lower was in the 1950s, when 30-year loans weren’t widely available. Most long-term home loans lasted 20 or 25 years.
Europe’s Fiscal Overkill – Telegraph Blogs
For the advanced economies, there is an unmistakable need to restore fiscal sustainability through credible consolidation plans.
At the same time we know that slamming on the brakes too quickly will hurt the recovery and worsen job prospects. So fiscal adjustment must resolve the conundrum of being neither too fast nor too slow.
via Europe’s Fiscal Overkill – Ambrose Evans-Pritchard Telegraph Blogs.
In Defence of PIGS – Telegraph Blogs
The ECB can hold the line for now by purchasing €20bn of Spanish and Italian bonds each week. But once the ECB nears €150bn or so, the markets will brace for the next crisis.
via In Defence of PIGS – Ambrose Evans-Pritchard Telegraph Blogs.
Dow threatens support
The Dow Jones Industrial Average fell sharply on Thursday, accompanied by strong volume. Failure of support at 10700 would complete the dead cat bounce, offering a target of the 2010 low at 9600*.
* Target calculation: 10800 – ( 12000 – 10800 ) = 9600