The S&P 500 broke through resistance at 1700/1710, indicating a primary advance to 1790/1800*. Troughs close to zero on 21-day Twiggs Money Flow suggest buying pressure. Reversal below 1675 is unlikely at present, but would warn of a test of primary support at 1630.
* Target calculation: 1710 + ( 1710 – 1630 ) = 1790
Canada’s TSX 60 continues to test resistance at 740. Follow-through above 745 would indicate a long-term advance to 800*. A trough above zero on 13-week Twiggs Money Flow would signal strong buying pressure. Reversal below 725 is unlikely, but would warn of another correction.
* Target calculation: 740 + ( 740 – 680 ) = 800
TSX 60 VIX below 15 remains in bull territory.
The September quarter-end often heralds a correction as fund managers re-balance their portfolios and shed under-performing stocks. Congressional gridlock raised the probability even higher, but the market has brushed this aside, reflecting bullish long-term sentiment.
The S&P 500 rallied sharply off support at 1650. Follow-through above 1710 would indicate an advance to 1790/1800*. A 21-day Twiggs Money Flow trough close to zero indicates buying pressure. Reversal below 1675 is unlikely at present, but would warn of a test of primary support at 1630.
* Target calculation: 1710 + ( 1710 – 1630 ) = 1790
VIX retreated below 20, signaling low/moderate market risk.
Dow Jones Industrial Average rose more than 300 points, ending its test of primary support at 14750. One swallow doesn’t make a summer, but this is a good start. S&P 500 breakout above 1710 would signal a fresh primary advance.
All this mishigas is happening in part because the United States is in fact very secure, which leads many people to think it doesn\’t need a strong central state. They are therefore willing to countenance steps that they would not consider if the country were really facing a serious external danger.
~ Stephen M. Walt
Read more at The Surest Cure for America's Political Insanity | Stephen M. Walt.
The Euro continues to test its new support level at $1.34/$1.3450. Respect is likely and would signal a test of the February high at $1.37. Breakout above $1.37 would offer a long-term target of $1.47*. A trough above zero on 13-week Twiggs Momentum indicates a healthy up-trend. Failure of support — and penetration of the rising trendline — is unlikely, but would warn of another correction.
* Target calculation: 1.37 + ( 1.37 – 1.27 ) = 1.47
Sterling faltered after breaking resistance at €1.19. Reversal below €1.18 would warn of another test of primary support at €1.14. Follow-through above €1.20 is less likely, but would signal an advance to €1.24*.
* Target calculation: 1.19 + ( 1.19 – 1.14 ) = 1.24
The greenback is testing primary support at ¥96 against the Yen. Reversal of 13-week Twiggs Momentum below zero would warn of a primary down-trend. Follow-through below ¥94 would confirm. Recovery above ¥101 is less likely, but would indicate another advance.
* Target calculation: 96 – ( 100 – 96 ) = 92
Canada’s Loonie respected its descending trendline and is testing support at $0.96. Failure (of support) would signal another test of the primary level at $0.9450. Bullish divergence on 13-week Twiggs Momentum continues to favor a primary up-trend. Breakout above $0.9750 is presently unlikely, but would complete a double-bottom reversal with a target of parity*.
* Target calculation: 97.5 + ( 97.5 – 94.5 ) = 100.5
The Aussie Dollar is retracing to test its new support level at $0.94 against the greenback. Respect would indicate a test of resistance at $0.95, but failure is as likely and would warn of another test of medium-term support at $0.93. Breach of $0.93 would be more serious, warning of a correction to primary support at $0.89.
* Target calculations: 0.95 + ( 0.95 – 0.93 ) = 0.97
The Aussie continues to test primary support at $1.12 against its Kiwi neighbour. Recovery above $1.14 — and the descending trendline — would indicate a test of primary resistance at $1.16. Breakout above $1.16 would complete a double-bottom reversal with a target of $1.20*. Breach of primary support remains as likely, however, and would offer a target of $1.08*.
* Target calculations: 1.12 – ( 1.16 – 1.12 ) = 1.08
Barry Ritholz highlights the alarming debt to income ratio for Canada compared to the USA:
How does Australia compare?
Australian household debt to income is similar to Canada’s. There has been discussion recently about whether Australia is in a housing bubble. As Anna Schwartz (joint author of A Monetary History of the United States, 1867-1960 with Milton Friedman) pointed out: there is only one kind of bubble and that is a debt bubble. It may manifest through rising real estate, stock or other asset prices, but the underlying driver is the same: a rapid expansion of the money supply through easy credit.
Canada’s TSX 60 index encountered strong resistance at 740 and is now testing short-term support at 725. Failure of support at 725 would indicate another test of primary support at 710. Bearish divergence on 13-week Twiggs Money Flow warns of a reversal. Breach of primary support would confirm.
TSX 60 VIX crossed to above 15, but remains in bull territory.
The S&P 500 broke support at the May high of 1675 and penetrated the (secondary) rising trendline, signaling a correction to primary support at 1625/1630. Recovery above 1700 is most unlikely at present, but would indicate another advance.
VIX crossed to above 20: no-man’s-land between low and high. Follow-through above 25 would warn of elevated market risk.
Dow Jones Industrial Average is testing primary support at 14750. Bearish divergence on 21-day (and 13-week) Twiggs Money Flow warns of a reversal. Breach of 14750 would strengthen the signal. Follow-through below 14500/14600 would confirm. Recovery above 15000 is unlikely, but would indicate a rally to 15700.
The September quarter-end often heralds a correction as fund managers re-balance their portfolios and shed under-performing stocks. Congressional gridlock raises the probability even higher.
The September quarter-end often heralds a correction as fund managers re-balance their portfolios and shed under-performing stocks. Congressional gridlock raises the probability of a correction even higher.
The S&P 500 continues to test support at the May high of 1675 on the daily chart. Declining 21-day Twiggs Money Flow warns of medium-term selling pressure; reversal below its recent lows would further strengthen the signal. Breach of support and the (secondary) rising trendline would signal a correction to primary support at 1625/1630. Respect of the (secondary) trendline and recovery above 1700 is unlikely, but would indicate another advance.
VIX threatens to cross above 20, into no-man’s-land between low and high. Follow-through above 25 would warn of elevated market risk.
Dow Jones Industrial Average is heading for a test of primary support at 14800. Bearish divergence on 13-week Twiggs Money Flow warns of a reversal and breach of 14800 would strengthen the signal. Follow-through below 14500 would confirm. Recovery above 15660 is unlikely, but would indicate a fresh advance.
The Nasdaq 100, however, is surprisingly bullish. 13-Week Twiggs Money Flow troughs well above zero signal buying pressure, while the index advances toward its current target of 3300*. Breach of the rising trendline would warn of a correction to 3050.
* Target calculation: 3050 + ( 3050 – 2800 ) = 3300
