US & Canada Archives - Page 84 of 176

May 7, 2014

Selling pressure rises

S&P 500 displays little direction while bearish divergence on 13-week Twiggs Money Flow continues to signal selling pressure. Reversal below 1850 would warn of a correction to test primary support at 1750. Breakout above 1900, however would signal an advance to 1950.

S&P 500

* Target calculation: 1850 + ( 1850 – 1750 ) = 1950

The primary trend remains upward and CBOE Volatility Index (VIX) below 14 continues to indicate low risk typical of a bull market.

VIX Index

The Nasdaq 100 is struggling to break 3600 and reversal below 3400 would warn of a down-swing to the primary trendline. 13-Week Twiggs Money Flow below zero warns of selling pressure, but breakthrough above 3600 would suggest another advance.

Nasdaq 100

* Target calculation: 3700 + ( 3700 – 3400 ) = 4000

The Russell 2000 is testing primary support at 11.00. Follow-through below 10.80 would confirm. Small caps outstripped large caps over the last 18 months, but now appear to be faltering. A 13-week Twiggs Momentum cross below zero would also warn of small cap reversal to a down-trend. A small cap down-trend would not necessarily mean large caps will follow: large caps significantly outperformed small caps for more than 3 years leading up to the 2000 Dotcom crash.

Russell 2000

Canada’s TSX 60 is retracing, but unlikely to break support at 820 and the rising trendline. Rising 13-week Twiggs Money Flow, with troughs above zero, indicates long-term buying pressure. Respect of support would suggest an advance to the 2008 high of 900.

TSX 60

May 2, 2014

Gold faces conflicting forces

Treasury yields are falling
The Dollar is weakening
Inflation expectations are falling
Gold and silver are testing support

Interest Rates and the Dollar

The yield on ten-year Treasury Notes closed below support at 2.60 percent, warning of another decline. Follow-through below 2.50 percent would signal a primary down-trend, with an immediate target of 2.00 percent*. Reversal of 13-week Twiggs Momentum below zero also suggests weakness. Recovery above 2.80 is unlikely at present, but would indicate another advance.

10-Year Treasury Yields

* Target calculation: 2.50 – ( 3.00 – 2.50 ) = 2.00

The Dollar Index is heading for a test of primary support at 79.00. Peaks below the zero line on 13-week Twiggs Momentum signal a primary down-trend. Breach of primary support at 79.00 would confirm, offering a target of 76.50*. Recovery above 80.50 is unlikely, but would signal that the index has bottomed.

Dollar Index

* Target calculation: 79.0 – ( 81.5 – 79.0 ) = 76.5

Gold and Silver

Gold faces conflicting forces: low inflation reduces demand for precious metals, but low interest rates and a weaker Dollar increase demand.

Spot gold continues to test support at $1300/$1280 per ounce. Failure of support would indicate a test of primary support at $1200, but long tails and 13-week Twiggs Momentum recovery above zero indicate that another test of $1400 remains as likely.

Spot Gold

Silver is more bearish and failure of primary support at $19/ounce would offer a target of $16*. Respect of the zero line (from below) by 13-week Twiggs Momentum suggests continuation of the primary down-trend. A down-swing on silver would be likely to be followed by gold. Recovery above $22/ounce is less likely, but would signal a primary up-trend.

Spot Silver

* Target calculation: 19 – ( 22 – 19 ) = 16

April 30, 2014

TSX 60 targets 900

Canada’s TSX 60 followed through above 825/830, signaling an advance to the 2008 high of 900. Rising 13-week Twiggs Money Flow, above zero, indicates long-term buying pressure. Reversal below 825 is unlikely, but would warn of a correction to 770.

TSX 60

April 30, 2014

S&P 500 follows through

S&P 500 follow-through above short-term resistance at 1880 strengthens the case for an advance to 1950. Breakout above 1900 would confirm. A 13-week Twiggs Money Flow above zero would signal long-term buying pressure. Reversal below 1850 is unlikely, but would warn of a test of primary support at 1750.

S&P 500

* Target calculation: 1850 + ( 1850 – 1750 ) = 1950

CBOE Volatility Index (VIX) below 14 indicates low risk typical of a bull market.

VIX Index

Nasdaq 100 breakout above 3600 would suggest a fresh advance. Follow-through above 3750 would confirm, offering a target of 4000*. Recovery of 13-week Twiggs Money Flow above zero would also be a bullish sign, while respect of resistance at 3600 would be bearish.

Nasdaq 100

* Target calculation: 3700 + ( 3700 – 3400 ) = 4000

The primary trend is upward and none of our market filters indicate elevated risk.

April 28, 2014

Medium-term selling pressure but long term bullish

Summary:

Medium-term selling pressure is strong, warning of a secondary correction
But the primary trend is up and VIX remains low
Long-term prospects remain bullish

The S&P 500 continues to encounter resistance at 1880 and bearish divergence on 13-week Twiggs Money warns of medium-term selling pressure. Breakout above 1900 would signal a primary advance, but a secondary correction is more likely. The primary trend, however, remains upward.

S&P 500

VIX below 15 continues to indicate low risk typical of a bull market.

S&P 500 VIX

The Nasdaq 100 displays stronger selling pressure on 13-week Twiggs Money Flow. Respect of resistance at 3600/3650 would be cause for concern, breach of support at 3400 completing a head and shoulders reversal with a target of 3100* at the primary trendline. Recovery above 3750 is unlikely at present, but would offer a target of 4000.

ASX 200

* Target calculation: 3400 + ( 3700 – 3400 ) = 3100

April 26, 2014

Fractional reserve banking: ‘the chief loose screw’ | House of Debt

By Atif Mian and Amir Sufi quote from The Chicago Plan (1933-1939) of which Irving Fisher was a strong supporter:

“A chief loose screw in our present American money and banking system is the requirement of only fractional reserves behind demand deposits. Fractional reserves give our thousands of commercial banks power to increase or decrease the volume of our circulating medium [money] by increasing or decreasing bank loans and investments. The banks thus exercise what has always, and justly, been considered a prerogative of sovereign power. As each bank exercises this power independently without any centralized control, the resulting changes in the volume of the circulating medium are largely haphazard. This situation is a most important factor in booms and depressions.”

April 23, 2014

S&P 500 and Nasdaq selling pressure

The S&P 500 is testing resistance at 1880 and follow-through above 1900 would signal another primary advance. Bearish divergence on 13-week Twiggs Money, however, continues to warn of selling pressure and another secondary correction remains likely. But the primary trend is up.

S&P 500

VIX below 14 suggests low risk typical of a bull market.

S&P 500 VIX

The Nasdaq 100 is testing resistance at 3600/3650. Breakout would suggest another advance, while respect would be cause for concern. Reversal below 3400 would complete a head and shoulders reversal with a target of 3100* at the primary trendline. 13-Week Twiggs Money Flow below zero indicates strong selling pressure.

ASX 200

* Target calculation: 3400 + ( 3700 – 3400 ) = 3100

I would suggest that even a Nasdaq fall to 3100 would not disrupt the bull market. Penetration of the primary trendline at 3100, however, would be cause for concern.

April 16, 2014

S&P 500 recovery

The S&P 500 recovered above 1850, suggesting an advance to 1950. Breakout above 1900 would confirm. Recovery of 21-day Twiggs Money Flow above its descending trendline indicates that selling pressure is easing. Reversal below 1840 is less likely, but would warn of a test of primary support at 1750.

S&P 500

* Target calculation: 1850 + ( 1850 – 1750 ) = 1950

CBOE Volatility Index (VIX) retreated to 14, indicating low risk typical of a bull market.

VIX Index

The Nasdaq 100 found strong support at 3400 on the weekly chart. Recovery above 3600 would suggest an advance. Breakout above 3700 would confirm, offering a target of 4000*. Recovery of 13-week Twiggs Money Flow above zero would be a bullish sign. Respect of resistance at 3600 would be bearish.

Nasdaq 100

* Target calculation: 3700 + ( 3700 – 3400 ) = 4000

The primary trend continues upward and none of our market filters indicate elevated risk.

April 11, 2014

Markets warn of correction

Before we examine the US and Australian markets, please take a look at the two charts below and tell me whether the trend is up or down. If you have a five-year old or six-year old handy, try asking them.

S&P 500

And the second one:

ASX 200

The trend on both is clear. If we invert the charts, you will recognize the S&P 500:

S&P 500

The S&P 500 breach of support at 1840 warns of a secondary correction and a sharp fall on 13-week Twiggs Money suggests selling pressure similar to the correction in late 2012. But the primary trend is up.

Likewise the ASX 200. The index retreated from 5500 and follow-through below 5380 would warn of a secondary correction. But 13-week Twiggs Money Flow oscillating above zero indicates buying pressure and the primary trend remains upward.

ASX 200

Momentum stocks are experiencing a sell-off, but our strategy is to hold existing positions. Attempting to time entries and exits in secondary corrections erodes performance. None of our market filters indicate elevated risk and we are confident that this is a bull market.

April 9, 2014

Are we in a bull market?

A simple reflection of the weekly trend on major markets using Ichimoku Cloud. Candles above the cloud indicate an up-trend, below the cloud indicates a down-trend, while in the cloud reflects uncertainty. From West to East:
S&P 500
S&P 500
Footsie
FTSE 100
DAX
DAX
ASX 200
ASX 200
Nikkei 225 is testing primary support at 14000 and looks a bit weaker

While China is holding above primary support at 1950/2000 but shows no clear trend
Shanghai Composite

Overall, there is a strong case for a bull market.