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.
Australia Can Build Its Way Out of Trouble – WSJ.com
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.
Asia joins US stampede
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
Japan Korea
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.
Quote: equal outcome or equal opportunity
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
Little bounce in China
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
Brazil and South Africa
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
ASX trampled
The ASX 200 was trampled Monday by the stampeding herd, reaching its medium-term target of 4000* in 4 days. There are no signs of a retracement so far. This could even re-test the 2009 low of 3200 in the next few weeks.
* Target calculation: 4500 – ( 5000 – 4500 ) = 4000
US & Canada target levels
The Dow Jones Industrial Average broke primary support at 11800 but encountered buying Friday around the former primary level of 11500. We may witness retracement to test resistance at 11800, but this is expected to be overwhelmed by sellers. Medium-term target for the down-swing is 10800*.
* Target calculation: 11800 – ( 12800 – 11800 ) = 10800
The Nasdaq 100 fared better, recovering above primary support at 2180. But Twiggs Money Flow below zero, and the earlier bearish divergence, warn of strong selling pressure. Failure of support is likely and would offer a target of 1920*.
* Target calculation: 2180 – ( 2440 – 2180 ) = 1920
The TSX Composite Index was one of the first markets to enter a primary down-trend and has now confirmed with a break below the latest support level at 12750. Expect some support at the target of 12000* but the July 2010 low of 11000 beckons.
* Target calculation: 12750 – ( 13500 – 12750 ) = 12000
UK & Europe
The FTSE 100 continued on its downward path, approaching its calculated target at 5100*. Expect some retracement this week, but I would not place much reliance on support at 5100 — strongly suspecting that we will see a test of the June 2010 low at 4800.
* Target calculation: 5600 – ( 6600 – 5600 ) = 5100
The German DAX index has already passed its initial target of 6500 and is headed for a test of 5600.
* Target calculation: 6500 – ( 7600 – 6500 ) = 5400