ECRI’s Lakshman Achuthan says the economy is slowing:
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NGC turned up in my Momentum Stock Scan, but bearish divergence on 21-day Twiggs Money Flow warns of short/medium-term selling pressure.
But respect of the bottom trend channel (at $1.80) and recovery above $2.00 would mean all’s forgiven and we can expect another advance.
New orders for durable goods fell 4.0% in January. And bookings for nondefense capital goods excluding aircraft — a measure of future business spending on equipment — dropped 4.5%. Although the declines were larger than expected, they shouldn’t raise alarm bells. That’s because much of the weakness traces to special factors.
The first is the end of a tax credit that allowed 100% deduction for equipment bought last year. Not surprisingly, businesses front-loaded their purchases early in 2011.
The second reason is a quirk in the very volatile orders series: New bookings tend to fall in the first month of a quarter, then rebound in the second or third months. The pattern is especially acute in the first quarter.
via Equipment Demand Hasn’t Dropped Out, Just Taking a Breather – Real Time Economics – WSJ.
Comment:~ Accelerated tax write-offs stimulate new capital investment by the private sector, as companies bring forward or initiate expenditure in order to take advantage of the tax deduction. But there is bound to be a (partial) offset when the accelerated write-offs are removed.
Hudson Bay Minerals [HBM_ca] follow through above 12.50 would confirm a primary up-trend.
21-Day Twiggs Money Flow holding above zero indicates buying pressure, while recovery of 63-day Twiggs Momentum above zero suggests a primary up-trend.
Most interesting of the stocks on my Potential Breakouts screen (Incredible Charts #48895):
Interesting new stocks on my Top Momentum stock screen (Incredible Charts #48894):
Northern Graphite (daily chart)
Atna Resources (weekly chart)
Connacher Oil & Gas (weekly)
Imperial Metals (weekly)
The TSX 60 broke through resistance at 720, signaling a primary up-trend. Recovery of 63-day Twiggs Momentum above zero strengthens the signal. Expect retracement to test the new support level, but target for the advance is 790*.
* Target calculation: 720 + ( 720 – 650 ) = 790
Nasdaq 100 index is approaching its target of 2650*. Expect retracement to test the new support level at 2400. Respect would confirm a strong up-trend despite the lower high (bearish divergence) on 13-week Twiggs Money Flow.
* Target calculation: 2400 + ( 2400 – 2150 ) = 2650
The S&P 500 encountered short-term resistance at 1370, indicated by declining 21-day Twiggs Money Flow, but the primary up-trend appears healthy. Retracement that respects support at 1300 would signal trend strength — even better if we have a narrow consolidation below the resistance level.
* Target calculation: 1300 + ( 1300 – 1150 ) = 1450
OTTAWA—Increased household debt in Canada, underpinned by rising house prices and low interest rates, poses a key domestic risk to financial stability, the Bank of Canada said on Thursday.
The finding, contained in the central bank’s quarterly economic review, was the latest in a series of warnings from economists and Canadian officials that high consumer borrowing has emerged as one of the economy’s biggest risks. Household debt stood at over 150% of personal disposable income as of the third quarter of last year, the report noted.
The Aussie Dollar is testing short-term support at $1.06, the lower peak at $1.08 warning of selling pressure. Breach of the secondary rising trendline (and support at $1.06) would warn of a correction to the long-term trendline around $1.02. Recovery above $1.08, however, would signal a fresh primary advance with a long-term target of $1.20*.
* Target calculation: 1.08 + ( 1.08 – 0.96 ) = 1.20
Canada’s Loonie continues to consolidate below $1.01 on the weekly chart, while 63-day Twiggs Momentum crossed to above zero, indicating a primary up-trend. Breakout above $1.01 would confirm, offering an initial target of $1.06*.
* Target calculation: 1.01 + ( 1.01 – 0.96 ) = 1.06
Both the Aussie and the Loonie are strongly influenced by commodity prices. If the CRB Commodities Index breaks resistance, expect both currencies to follow — though Canada will benefit more from higher oil prices.
