Category: US & Canada

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Canada: TSX good to go

Shallow retracement of the TSX Composite below resistance is a bullish sign. Rising troughs on 13-week Twiggs Money Flow indicate strong buying pressure. Breakout above 12900 would confirm a primary advance. Immediate target would be 13500*, with a long-term target of the 2011 high at 14300.

TSX Composite Index

* Target calculation: 13000 + ( 13000 – 12500 ) = 13500

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S&P 500 tests 2007 high

Dow Jones Industrial Average has broken through its previous high at 14,000. Long-term (13-week) Twiggs Money Flow oscillating above zero indicates strong buying pressure.
S&P 500 Index
Bellwether transport stock Fedex breakout above $100 signals rising economic activity.
Fedex

The S&P 500 is testing its 2007 high at 1550. Rising 13-week Twiggs Money Flow indicates strong buying pressure. Reversal below the latest trendline is unlikely at present but would warn of a correction. Target for the current advance is 1600*.

S&P 500 Index

* Target calculation: 1475 + ( 1475 – 1350 ) = 1600

VIX Volatility Index is headed for its 2005 lows at 0.10. While this coincided with the start of a ($SPX) bull market in 1995, it also occurred just before the peak in 2007; so does not offer much reassurance. Breakout above the quarterly high at 0.20 would be a warning sign.
VIX Index
The Nasdaq 100 broke resistance at 2800 despite bearish divergences on both 13-week Twiggs Momentum and 13-week Twiggs Money Flow. Reversal below the latest rising trendline would warn of a correction, while follow-through above 2900 would signal an advance to 3300*. Only breach of primary support at 2500 would signal a reversal.
Nasdaq 100 Index

* Target calculation: 2900 + ( 2900 – 2500 ) = 3300

Rising debt indicates consumers are once again spending. While there are still structural flaws in the US economy, the market is gaining momentum and the current advance shows no signs of ending.

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Investing: Growth and the markets | The Economist

Buttonwood of The Economist quotes Elroy Dimson, Paul Marsh and Mike Staunton of the London Business School:

….take the records of 83 countries from 1972 to 2009 (the most comprehensive set available) and rank them by GDP growth over the previous five years. Investing each year in the countries with the highest economic growth over the preceding five years earned an annual return of 18.4%, but investing in the lowest-growth countries returned 25.1%.

Read more at Investing: Growth and the markets | The Economist.

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Forex: Aussie consolidates above primary support while Euro weakens

The euro is testing medium-term support at $1.30. Breach of the rising trendline against the greenback already warns of trend weakness; failure of $1.30 would test primary support at $1.25. Reversal of 63-day Twiggs Momentum below zero would warn of a primary down-trend, while a trough above zero would suggest another advance, with a target of $1.42*.
Aussie Dollar/USD

* Target calculation: 1.36 + ( 1.36 – 1.30 ) = 1.42

Pound sterling broke long-term support at $1.53 against the greenback, offering a target of $1.43*. Fall of 63-day Twiggs Momentum below 2011 lows strengthens the signal.
Aussie Dollar/USD

* Target calculation: 1.53 – ( 1.63 – 1.53 ) = 1.43

The Aussie Dollar is consolidating between $1.02 and $1.03 after respecting primary support at $1.015. Breakout above $1.03 and the declining trendline would suggest a rally to $1.06. Reversal below $1.02 would warn that primary support is again under threat. Narrow fluctuation of 63-day Twiggs Momentum around zero suggests a ranging market.

Aussie Dollar/USD

The Canadian Loonie is headed for a test of primary support at $0.96. Breach of support would offer a long-term target of $0.90*, but respect is just as likely and would signal a rally to $1.06.
Aussie Dollar/USD

* Target calculation: 0.96 – ( 1.02 – 0.96 ) = 0.90

The US dollar has broken its long-term declining trendline against the Japanese Yen, suggesting that the 30-year decline is over and the greenback likely to appreciate for some time. Advance to ¥100 is likely to be followed by a correction to test new support at ¥90 before breakout to test the 2007 high around ¥120*.
Aussie Dollar/USD

* Target calculation: 100 – ( 100 – 80 ) = 120

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Volcker: Wall Street Kills Regs By Running Out the Clock

Josh Boak at Fiscal Times writes:

…..So when Volcker declared on Monday that the financial regulation system is broken, it’s time to sound the alarm. The gist of his complaint is that Dodd-Frank was passed in the middle of 2010, yet many of its biggest regulations have not been finalized and there is no end in sight.

“I know it’s a complicated bill. I know the markets are complicated,” Volcker said at a conference for the National Association for Business Economics. “Two-and-a-half years later you can’t have a regulatory apparatus that’s devised by the most important piece of legislation in recent years? That suggests something is rather wrong. Something is dysfunctional.”

Read more at Volcker: Wall Street Kills Regs By Running Out the Clock.

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Canada: TSX buying pressure

Long tails on the TSX Composite weekly chart indicate medium-term buying pressure. Breakout above 12800 would signal a fresh advance, while follow-through above 12900 would confirm. Reversal below 12600 is unlikely but would warn of a correction. Rising troughs on 13-week Twiggs Money Flow indicate long-term buying pressure and a primary advance. The long-term target would be 15000*.

TSX Composite Index

* Target calculation: 13000 + ( 13000 – 11000 ) = 15000

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S&P 500 and Nasdaq selling pressure

The S&P 500 is oscillating between 1485 and 1530. I avoided using the word “consolidating” because that implies a degree of calm. Far from it. Bearish divergence on 21-day Twiggs Money Flow continues to warn of medium-term selling pressure. Reversal below 1485 and the rising trendline would indicate a correction. Breakout above 1530 is less likely but would offer a target of 1575*.

S&P 500 Index

* Target calculation: 1530 + ( 1530 – 1485 ) = 1575

On the monthly chart we can see that a correction below the secondary trendline would target primary support and the primary trendline between 1350 and 1400. A 63-day Twiggs Momentum trough above zero would indicate continuation of the up-trend, while retreat below zero would suggest a primary reversal.
S&P 500 Index
The VIX Volatility Index remains close to recent lows at 0.15. This does not provide much long-term reassurance: the VIX was at similar levels in May 2008. Breakout above the recent high at 0.20 would be a warning sign.
VIX Index
The Nasdaq 100 displays a bearish divergence on both 63-day Twiggs Momentum and long-term (13-week) Twiggs Money Flow. Reversal below the rising trendline would strengthen the signal. While breach of primary support at 2500 would signal a reversal.
Nasdaq 100 Index

* Target calculation: 2500 – ( 2900 – 2500 ) = 2100

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John Howard interview: Assault weapons are a public safety issue not a left/right issue [video]

http://youtu.be/_CbkKYdWiS0

John Howard, the conservative former prime minister of Australia, says that pro-gun advocates in the United States are wrong to oppose an assault weapons ban like the one he pushed for after a 1996 mass shooting because public safety is not a “liberal/conservative issue.”

Howard told CNN’s Fareed Zakaria that he felt “horror and shock” after a gunman killed 35 people in Tasmania on April 28, 1996.

Many within his own party opposed the newly-elected PM when he proposed a ban on private ownership of assault weapons in Australia. But statistics since then have proved him right. According to CNN, in the 18 years leading up to 1996 there were 13 gun massacres in Australia; since 1996 when the law was passed there has not been a single incident.

Published on 17 Feb 2013

P.S. Gun ownership is an emotive issue in the US. We encourage open considered debate but believe that nothing is gained by people “shouting” at each other. Any emotive posts of that ilk will end up in the trash can.

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Matt Busigin On Peak Capitalism | Business Insider

Joe Weisenthal presents the following two charts to illustrate how government is coping with falling manufacturing wages:

You’ve probably seen this chart many times, which shows wages declining as a percent of GDP over the last few decades.

Wages as a share of GDP

But things look a tad different when you look at wages PLUS government transfer payments (predominantly entitlement programs) as a share of GDP.

Wages plus entitlements as a share of GDP

What the writer fails to recognize is that lifting government welfare payments is not a solution. It is part of the problem. Increasing transfer payments encourages welfare dependancy and hinders the adaptive process that allows capitalism to adjust to new challenges.

Eventually the tail begins to wag the dog, with welfare dependents voting themselves increases. Economic stagnation evolves into economic deterioration, hindering new capital formation with excessive red tape and a rising welfare burden.

…..The road to hell is paved with good intentions.
via Matt Busigin On Peak Capitalism – Business Insider.

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Number for the month is 178,171

The number of containers (TEUs) that arrived loaded but were returned empty from the Port of Los Angeles during January 2013 is 178171*. That is 53 percent of all inbound containers are returned empty.

As I have said before, those containers are not really empty:

Shippers attempt to fill containers on their return journey, even at super-low rates, in order to offset the cost of completing the round-trip. Empty containers indicate failure to locate manufactured goods that can compete in these export markets. This affects not only the shipper, but the entire economy. Those containers leaving the West Coast are not really empty. They contain something far more valuable than the goods being imported. They contain manufacturing jobs — and the infrastructure, skills and know-how to support them.

In 2011, when President Obama announced his jobs program, empty outbound containers were running at 48 percent.

* 337,428 loaded inbound minus 159,257 loaded outbound

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