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
Portugal has little choice but to take tough steps. The country sought international help in April after failing to convince investors it was doing enough to shore up its shaky finances. In exchange for a €78 billion, three-year loan, Lisbon promised the European Union and the International Monetary Fund that it would slash its deficit and make structural changes to spur growth in key sectors.
The problem is these efforts are expected to prolong the economic slump at least two years and drive up unemployment, already at 12%.
The DJ Total Stock Market (formerly DJ Wilshire) Index for India ($DWIN) gapped down on Monday’s open but closed with a long tail. Short-term buying is unlikely to withstand concerted selling pressure, signaled by 13-week Twiggs Money Flow below zero.
* Target calculation: 1820 – ( 1980 – 1820 ) = 1660
DJ Singapore also closed with a long tail, indicating short-term buying support — confirmed by higher volume. Again this is unlikely to withstand long-term selling pressure for more than a few days.
* Target calculation: 220 – ( 240 – 220 ) = 200
The Dow Jones Shanghai Index reversed below primary support at 328, confirming the primary down-trend signal from the Shanghai Composite Index. The 21-day Momentum peak barely above zero strengthens the bear signal.
* Target calculation: 330 – ( 360 – 330 ) = 300
Dow Jones HongKong Index broke short-term support at 415, indicating a down-swing to its 2010 low at 365. The longer-term 63-day Momentum below zero strengthens the bear signal.
* Target calculation: 415 – ( 445 – 415 ) = 385
The Dow Jones Japan Index closed Monday below last weeks low, indicating a down-swing to 46*. The 21-Day Twiggs Money Flow peak deep below zero warns of strong selling pressure.
* Target calculation: 50 – ( 54 – 50 ) = 46
Dow Jones South Korea Index has already broken short-term support at 380 and is headed for the 2010 low at 330*. 13-Week Twiggs Money Flow below zero confirms strong selling pressure.
* Target calculation: 380 – ( 430 – 380 ) = 330
Dow Jones Taiwan Index has also broken support, at 177, and will test the 2010 low at 168. 13-Week Twiggs Money Flow below zero again warns of strong selling pressure.
* Target calculation: 180 – ( 195 – 180 ) = 165
The bear rally on the Brazilian Bovespa Index has run out of steam and we can expect another test of support at 48000. 13-Week Twiggs Money Flow below zero signals continued selling pressure. Failure would offer a target of 38000*.
* Target calculation: 48000 – ( 58000 – 48000 ) = 38000
The JSE bear rally respected resistance at 30000. Money Flow is stronger, but reversal below 28000 would offer a target of 26000*.
* Target calculation: 28000 – ( 30000 – 28000 ) = 26000
The ASX 200 Index is headed for another test of support at 4000. Volumes are far lower than the previous week, indicating a scarcity of buyers. Unless there is a significant upsurge on Tuesday, we are likely to see a downward breakout, offering a target of 3500*.
* Target calculation: 4000 – ( 4500 – 4000 ) = 3500
