Canada’s TSX 60 continues to test support at 865/870. Rising 13-week Twiggs Money Flow indicates strong buying pressure. Respect of the primary trendline would suggest another primary advance. Breakout above the 2008 high of 900 would confirm. Penetration of the rising trendline is unlikely, but would warn of trend weakness and a correction to 800/820.
Dow Jones Industrial Average continues to test medium-term support at the December high of 16500. Breach of support would warn of a correction to the primary trendline — at 16000 — while respect of support would indicate another attempt at 17000. Failure of primary support at 15400/15600 remains unlikely, but would warn of reversal to a down-trend. Completion of another 13-week Twiggs Money Flow trough above zero would suggest long-term buying pressure and another primary advance.
* Target calculation: 16500 + ( 16500 – 15500 ) = 17500
The S&P 500 found support at 1900. Recovery above 1950 would suggest another advance. Breach of primary support at 1750 remains unlikely. Completion of a higher trough on 13-week Twiggs Money Flow, with recovery above 32%, would indicate that buyers are back in control.
* Target calculation: 1500 + ( 1500 – 750 ) = 2250
The CBOE Volatility Index (VIX) retreated from its recent high, suggesting continuation of the bull market.
Nicholas Kristof writes in the New York Times:
ONE delusion common among America’s successful people is that they triumphed just because of hard work and intelligence. In fact, their big break came when they were conceived in middle-class American families who loved them, read them stories, and nurtured them with Little League sports, library cards and music lessons. They were programmed for success by the time they were zygotes.Yet many are oblivious of their own advantages, and of other people’s disadvantages.
….This crisis in working-class America doesn’t get the attention it deserves, perhaps because most of us in the chattering class aren’t a part of it.
There are steps that could help, including a higher minimum wage, early childhood programs, and a focus on education as an escalator to opportunity. But the essential starting point is empathy.
Read more at Is a Hard Life Inherited? – NYTimes.com.
Interesting view from Cullen Roche:
Most fixed income traders view long rates as a function of the economy and short rates as a function of the Fed’s views on the economy. So, when the Fed increases rates it means that the Fed thinks the economy is improving and needs some tightening so it doesn’t cause the Fed to create too much inflation and overheat the economy. But fixed income traders account for this and front-run the Fed’s thinking by trying to anticipate their views on the economy. Said more simply – long rates are a function of short rates for the most part. And the fact that long rates are remaining low means that fixed income traders increasingly believe that we’re in a permanent state of low interest rates.
Read more at Why is the Yield Curve Flattening? | PRAGMATIC CAPITALISM.
Summary:
Dow Jones Europe Index is testing the primary trendline and support at 315. 13-Week Twiggs Momentum below zero already warns of a primary down-trend. Breach of primary support at 315 would confirm. Respect of primary support and recovery above 330, however, would suggest that the primary trend is intact.
Germany’s DAX continues to test primary support at 9000. A long tail on Friday suggests short-term support. Failure of support would warn of a decline to 8000*, while respect would suggest another test of 10000.
* Target calculation: 9000 – ( 10000 – 9000 ) = 8000
The S&P 500 found support at 1900 and recovery above 1950 would indicate another advance. The latest decline on 13-week Twiggs Money Flow is relatively small and recovery above its July high would suggest that buyers have taken control. Failure of 1900, however, would warn that the primary trend is slowing.
* Target calculation: 1500 + ( 1500 – 750 ) = 2250
CBOE Volatility Index (VIX) spiked upwards, to between 16 and 17, but remains low by historical standards and continues to suggest a bull market.
China’s Shanghai Composite Index encountered selling pressure below resistance at 2250, with tall wicks/shadows on the last two weekly candles and a sharp fall in 13-week Twiggs Money Flow. Reversal below 2150 would warn of another test of primary support at 1990/2000. Follow-through above 2250, however, would confirm a primary up-trend.
* Target calculation: 2000 – ( 2150 – 2000 ) = 1850
The ASX 200 is heading for a test of support at 5350/5400 and the primary trendline. Direction will largely be influenced by the US and Chinese markets, but reversal of 13-week Twiggs Money Flow below zero — after long-term bearish divergence — would warn of strong selling pressure. Recovery above 5550 is unlikely at present, but would suggest another advance. Reversal below 5050 is also unlikely, but would signal a trend change.
* Target calculation: 5400 + ( 5400 – 5000 ) = 5800
From Ambrose Evans-Pritchard:
European officials calculate that Mr Putin will not dare to cut off energy supplies, since to do so would bring the Russian state to its knees within months. But even if he tried – as a shock tactic – it would not achieve much. Oil can be obtained anywhere.
Europe’s gas inventories have risen to 81pc of capacity, up from 46pc in March. Britain is at 94pc……Japan has just given the go-ahead for two nuclear reactors to restart in October, with seven likely by the end of the year. Koreans are also firing up closed nuclear reactors. All this frees up LNG.
Whether this is fruit of a co-ordinated strategy, the net effect is that inventories and spare LNG could cover a Russian cut-off for a long time, probably through the winter with rationing. Areas of eastern Europe have no pipeline supply from the West, but “regas” ships could plug some gaps in an emergency. The gas weapon is not what it seems.
The Kremlin is counting on acquiescence from the BRICS quintet as it confronts the West, and counting on capital from China to offset the loss of Western money. This is a pipedream. China’s Xi Jinping drove a brutal bargain in May on a future Gazprom pipeline, securing a price near $350 per 1,000 cubic metres that is barely above Russia’s production costs….
Read more at Vladimir Putin's pointless conflict with Europe leaves it a vassal of China – Telegraph.
Crude oil prices are falling sharply. Nymex Light Crude broke support at $98/barrel and Brent Crude is testing support at $104. Breach of that support level would confirm a primary down-trend.
The theory has been bandied about that lower crude prices are a Barack Obama strategy to deter Vladimir Putin in East Ukraine. But there are signs of an economic slow-down in Europe, especially Italy, that would hurt demand for Brent Crude. And the Baltic Dry Index, which reflects bulk commodity shipping rates, indicates global trade is at a low ebb. Whichever is correct, low crude prices are welcome — good for the medium-term outlook of the global economy.
Canada’s TSX 60 retreated from its 2008 high at 900 and is testing short-term support at 870. Rising 13-week Twiggs Momentum indicates a strong primary up-trend. Respect of the primary trendline would suggest another primary advance, while penetration of the line would warn of trend weakness — and a correction to 800/820.
Dow Jones Industrial Average is testing medium-term support at the December high of 16500. Respect of this line would indicate a healthy up-trend, while breach would warn of a correction to the primary trendline. Failure of primary support at 15400/15600 remains unlikely, but would warn of reversal to a down-trend. Completion of a 13-week Twiggs Money Flow trough above zero would suggest long-term buying pressure and another primary advance.
* Target calculation: 16500 + ( 16500 – 15500 ) = 17500
The CBOE Volatility Index (VIX) remains below 20, suggesting continuation of the bull market.
Bellwether transport stock Fedex is also testing support at its December high ($144/$145). Respect would confirm a healthy up-trend — for both the stock and the economy. Likewise, a 13-week Twiggs Money Flow trough above zero would suggest long-term buying pressure and another primary advance. Breach of support is unlikely, but would warn of a test of primary support at $129/$130.
* Target calculation: 145 + ( 145 – 130 ) = 160
Putin appears to have taken a decisive ideological turn. Listen to the @PowerVertical podcast: http://t.co/GIOmQSCLY0
— RFE/RL (@RFERL) August 2, 2014
Vladimir Putin has long shown himself to be ruthless and cynical. But also pragmatic and rational.
In his third term in the Kremlin, however, and particularly in the Ukraine crisis, Putin appears to have taken a decisive ideological turn.
As pressure mounts from Western sanctions and Russia becomes more isolated, speculation has intensified about whether Putin will seek an exit strategy from the Ukraine crisis, or whether he will escalate yet again.
The answer largely depends on which Putin — the pragmatist or the ideologue — the West is dealing with.
On the latest “Power Vertical Podcast” Brian Whitmore discusses the issue with co-host Mark Galeotti, a professor at NYU, an expert on Russia’s security services, and author of the blog “In Moscow’s Shadows”; and Kremlin-watcher Ben Judah, author of the book “Fragile Empire: How Russia Fell Out Of Love With Vladimir Putin.”
Also on the podcast, Mark, Ben, and Brian discuss how attitudes in Europe about Russia are changing — and changing dramatically.