US & Canada Archives - Page 97 of 175

September 3, 2013

Global markets bearish but ASX, India find support

US markets are closed for Labor Day. The S&P 500 ended last week testing its rising trendline and support at 1630. Breach would reinforce the bearish divergence on 21-day Twiggs Money Flow, indicating a test of primary support at 1560. Recovery above the descending trendline is unlikely at present, but would warn the correction is ending. In the long-term, failure of primary support would offer a target of 1400*.

S&P 500 Index

* Target calculation: 1550 – ( 1700 – 1550 ) = 1400

VIX below 20 suggests a bull market.
S&P 500 Index

The FTSE 100 closed above initial resistance at 6500. Follow-through would suggest the correction is over and another attempt at 6750 likely. Strong bearish divergence on 13-week Twiggs Money Flow, however, warns of selling pressure and breakout above 6750 is unlikely. Reversal below 6400 would warn of a test of primary support at 6000.

FTSE 100 Index

Germany’s DAX encountered stubborn resistance at 8500. Reversal below 8000 would test primary support at 7600, while breakout above 8500 would offer a target of 9000*.

DAX Index

* Target calculation: 8400 + ( 8400 – 7800 ) = 9000

Japan’s Nikkei 225 recovered above 13500 and follow-through above the descending trendline would suggest the correction is over and another test of resistance at 15000 is likely. Reversal below 13200, however, would indicate a test of primary support at 12500. Earlier bearish divergence on 13-week Twiggs Money Flow warns of long-term selling pressure.

Nikkei 225 Index

China’s Shanghai Composite is testing resistance at 2100/2120. Bearish divergence on 13-week Twiggs Money Flow warns of selling pressure. Reversal below 2050 would indicate another test of primary support at 1950. Breakout above 2200 and the descending trendline is unlikely, but would suggest that the down-trend is ending.

Shanghai Composite Index

India’s Sensex encountered strong support at 18000/18500, evidenced by the long tails on the weekly candles and rising 13-week Twiggs Money Flow. Expect another test of resistance at 20500. Follow-through above 19000 would strengthen the signal.

BSE Sensex Index

The ASX 200 is headed for a test of 5250 after breaking resistance at 5150. Rising 13-week Twiggs Money Flow indicates medium-term buying pressure. Breakout above 5250 would be a welcome sign, suggesting another primary advance, but respect of resistance and a lower peak on Twiggs Money Flow would warn of a reversal.

ASX 200 Index

* Target calculation: 5250 + ( 5250 – 4750 ) = 5750

August 31, 2013

John Mauldin: Effect of the taper

The last two times the Fed has ended a period of quantitative easing, the air has come out of the market balloon. Has this coming move been so telegraphed that the reaction will be different than in the past, or will we see the same result? Want to bet your bonus on it? Or your retirement?

~ John Mauldin

See graph at Mauldin Economics

August 29, 2013

The Qatar Problem – By Jeremy Shapiro | The Middle East Channel

Jeremy Shapiro at Foreign Policy discusses the role played by Qatar in the Middle East, their expansion of Al-Jazeera into the US, and their support for the Muslim Brotherhood:

On the face of it, Qatar has been one of the United States’s most valuable allies in the Middle East over the last decade. Qatar hosts a large U.S. Air Force base in the Persian Gulf and has often provided political and financial support for U.S. initiatives in the Middle East. Indeed, Washington has often encouraged Qatari activism to legitimize U.S. diplomacy, including its political support at the Arab League of a potential U.S. strike against Syria.

But Qatar’s role in the United States’s Middle East policy is far more problematic than is commonly recognized. The tiny yet ambitious Gulf emirate has sought to use its immense hydrocarbon wealth to finance and arm civil wars in Libya and Syria, to support Hamas in Gaza, and to mediate disputes in Sudan and Lebanon. Its interest sometimes align with the United States’s — but too often, they do not. The launch of Al-Jazeera America, the news network its government owns, should redirect attention to Doha’s goals and means……

August 29, 2013

The true cost of drones: Unending war?

James R. Holmes at The Naval Diplomat describes how the function of drones has evolved from artillery spotting to armed UAVs capable of waging war without direct human intervention. Whether armed, or merely used for surveillance and accurate delivery of independently-launched (naval, aerial or land-based) weapons, the low cost of drone warfare raises the prospect of an unending conflict:

…..Two, Clausewitz urges senior leaders to let the value of the political object determine how many national resources they expend to obtain that object, and how long they expend those resources for. Professor Byman appears to define success — again, whether drones work — partly in terms of how much drones cost the United States and its allies. Drone warfare is cheap relative to keeping expeditionary forces on the ground, projecting force inland from the sea, or otherwise prosecuting operations via traditional, resource-intensive methods. But flip the relationship around. By Clausewitzian cost/benefit logic, holding down the magnitude of the effort may let Washington continue with drone strikes more or less indefinitely, even if U.S. leaders are only tepidly committed to the endeavor. A forever war, even an inexpensive one, is an unsettling prospect.

August 26, 2013

S&P 500 correction but Nasdaq and TSX advance

The S&P 500 rallied off support at 1640/1650, but the correction is still underway. Respect of resistance at 1675 would confirm. Bearish divergence on 21-day Twiggs Money Flow warns of long-term selling pressure and reversal below zero would indicate continuation. Only a breach of primary support at 1560, however, would signal reversal to a down-trend.

S&P 500 Index

* Target calculation: 1680 + ( 1680 – 1560 ) = 1800

VIX reversal below 15 indicates low market risk, favoring a primary up-trend.

VIX Index

The tech-laden Nasdaq 100 Index holding above its preceding peak at 3050 reflects a healthy up-trend.

Nasdaq 100 Index

The TSX Composite Index respected its rising trendline, suggesting a healthy up-trend. Rising troughs above zero on 21-day Twiggs Money Flow reflect strong buying pressure. Breakout above 12800 would offer a target of 13200*, but expect some resistance at 12900/13000.

* Target calculation: 12800 + ( 12800 – 12400 ) = 13200

August 22, 2013

Global selling pressure

The S&P 500 Index broke medium-term support at 1650 and is headed for a test of the rising trendline. Respect would indicate the primary up-trend is intact, but bearish divergence on 13-week Twiggs Money Flow warns of selling pressure. This is also evidenced by the marginal new high in August. A test of primary support at 1560 is likely. Breach would offer a target of 1400*.

S&P 500 Index

* Target calculation: 1550 – ( 1700 – 1550 ) = 1400

Dow Jones Europe Index also displays marginal new highs in May and August. Penetration of the rising trendline indicates the up-trend is losing momentum — also indicated by bearish divergence on 13-week Twiggs Momentum. Reversal below support at 290 would strengthen the warning, but only failure of support at 270 would signal a trend reversal.

DJ Europe Index

China’s Shanghai Composite Index ran into strong resistance at 2100. Declining 13-week Twiggs Money Flow (below zero) warns of selling pressure. Reversal below 2050 would indicate another test of primary support at 1950, suggesting a decline to 1800*. Breakout above 2200 and the descending trendline is unlikely, but would signal that a bottom has formed.

Shanghai Composite Index

Japan’s Nikkei 225 broke medium-term support at 13500. Follow-through below 13250 would indicate a correction to primary support at 12500. Penetration of the rising trendline suggests that the primary up-trend is losing momentum. Earlier bearish divergence on 13-week Twiggs Money Flow also warns of a reversal. Recovery above the declining trendline is less likely, but would indicate the correction has ended.

Nikkei 225 Index

India’s Sensex broke primary support at 18500, following through below 18000 to remove any doubt. The primary trend has reversed after a triple top and now offers a target of 16500*. Declining 13-week Twiggs Money Flow confirms selling pressure. Recovery above 18500 is unlikely, but would warn of a bear trap.

BSE Sensex Index

* Target calculation: 18500 – ( 20500 – 18500 ) = 16500

The ASX 200 is consolidating in a broadening top around the 2010/2011 high of 5000. Correction to 4900 would be quite acceptable, garnering support for an advance to the upper border, but breach of 4900 would indicate a failed swing, warning of reversal to a primary down-trend. Failure of primary support at 4650 would confirm. Bearish divergence on 13-week Twiggs Money Flow indicates selling pressure; strengthened if the indicator reverses below zero. Respect of support at 5000 is less likely, despite the long tail on today’s candle, but would offer a target of 5300*.

ASX 200 Index

* Target calculation: 5150 + ( 5150 – 5000 ) = 5300

August 21, 2013

Forex: Euro and Aussie retreat

The Euro retreated after a false break above resistance at $1.34, suggesting a test of $1.32. Downward breakout would signal a test of primary support at $1.28, while recovery above $1.34 would indicate a primary advance to $1.40*. Momentum predominantly above zero favors an up-trend.

Euro/USD

* Target calculation: 1.34 + ( 1.34 – 1.28 ) = 1.40

The greenback is testing the upper border of its downward channel against the Yen. Breakout above ¥98.50 would suggest the correction is over and another test of ¥101.50 likely. Respect of resistance, however, would indicate a test of primary support at ¥94; breach of support at ¥96 would confirm.

USD/JPY

* Target calculation: 102 + ( 102 – 96 ) = 108; 94 – ( 102 – 94 ) = 86;

The Aussie Dollar retreated below $0.90 against the greenback, respect of the descending trendline suggesting another down-swing. Breach of support at $0.8850* would offer a medium-term target of $0.86*, but the long-term target remains at $0.80*.

Aussie Dollar

* Target calculations: 0.89 – ( 0.92 – 0.89 ) = 0.86; 0.95 – ( 1.10 – 0.95 ) = 0.80

August 19, 2013

Auto Makers Run Factories Full-Bore to Avoid New Investments | WSJ.com

Christina Rogers reports how more flexible union agreements have allowed automakers to wring additional production out of existing plants.

Nearly 40% of car factories in North America now operate on work schedules that push production well past 80 hours a week, compared with 11% in 2008, said Ron Harbour, a senior partner with the Oliver Wyman Inc. management consulting firm.

“There has never been a time in the U.S. industry that we’ve had this high a level of capacity utilization,” he said.

August 19, 2013

U.S. Manufacturers Gain Ground | WSJ.com

James R. Hagerty reports:

….Boston Consulting Group — a leading proponent of the idea that U.S. manufacturing will come roaring back — predicts a surge in U.S. exports, partly helped by lower energy costs and stagnating wages. In a report for release Tuesday, BCG says rising exports and “reshoring” of production to the U.S. from China “could create 2.5 million to five million American factory and service jobs associated with increased manufacturing” by 2020. That, BCG says, could reduce the unemployment rate, currently 7.4%, by as much as two to three percentage points.

August 18, 2013

S&P 500 breaks support

The S&P 500 broke support at 1675 and is testing 1650. Bearish divergence on 21-day Twiggs Money Flow warns of selling pressure. Breach of 1650 would test the rising trendline around 1625. Respect (of the trendline) would indicate a healthy up-trend, while failure would test primary support at 1560.

S&P 500 Index

* Target calculation: 1680 + ( 1680 – 1560 ) = 1800

There is a lower trendline, however, on the monthly chart. Breach of support at 1560 would indicate a test of the (super) trendline.
S&P 500 Index

The VIX below 15 continues to indicate low market risk, favoring a primary up-trend. We need to watch this closely, however, as a spike above 0.20 may warn that something is amiss.

VIX Index

The TSX Composite Index rallied off support at 12400, indicating a test of resistance at 12900/13000. Rising 13-week Twiggs Money Flow above zero indicates medium-term buying pressure. Respect of resistance would suggest another down-swing to 12000/11750, but breakout above 12900/13000 is as likely and would offer a long-term target of 14000*.
TSX Composite Index

* Target calculation: 13000 + ( 13000 – 12000 ) = 14000