Category: Fixed Income

Treasury, municipal and corporate bonds

Posted on

Asia rallies but ASX meets resistance

Japan’s Nikkei 225 broke resistance at 13500, indicating the correction is over. Expect a re-test of the May high at 16000. Reversal below 13500, however, would mean another test of 12500. A trough above the zero line on 21-day Twiggs Money Flow would indicate a healthy primary up-trend.

Nikkei 225 Index

Dow Jones Shanghai Index respected support at 250, the long tail on both the $DJSH and Shanghai Composite indicating strong buying pressure. Expect a rally to test resistance at 275 (2150 on the Shanghai Composite), but the primary trend remains downward and resistance at 275 (2150) is likely to hold.

Dow Jones Shanghai Index

India’s Sensex rallied off its rising trendline, suggesting that the primary up-trend will continue. Follow-through above 19500 would indicate a test of resistance at 20000/20200. Bearish divergence on 13-week Twiggs Money Flow continues to warn of a reversal and would only be refuted by a breakout above 20200 (or a rise above the May peak on TMF).

BSE Sensex Index

The ASX 200 respected its descending trendline at 4800 and is headed for another test of support at 4650. A peak below zero on 21-day Twiggs Money Flow would indicate a healthy down-trend. Breach of 4650 would test the key long-term support level of 4400, while respect would mean another test of 4900. In the longer term, respect of 4400 would be bullish, but failure of support would be a strong bear signal.

ASX 200 Index

The ASX Small Ordinaries, by contrast, exhibits a stronger bullish divergence on 21-day Twiggs Money Flow, indicating buying support. Breakout above 1960 would indicate the latest primary decline is over, while reversal below 1880 would offer a target of 1800. Small Caps have been badly mauled over the last two years and at some point will present an opportunity to value investors. Unfortunately that end is not yet in sight.
ASX Small Ordinaries Index

Posted on

S&P500 falters while TSX rises

The S&P 500 rally appears to be faltering. Reversal below 1600 would suggest another decline, with a target of 1500*. Breach of support at 1560 would confirm, while reversal of 21-day Twiggs Money Flow below zero would strengthen the signal.

S&P 500 Index

The June quarter ended with the S&P 500 above its new support level at 1550. Respect of the zero line by 13-week Twiggs Money Flow indicates a healthy up-trend, but the tall shadow (or wick as some call it) on the latest candle suggests otherwise. Reversal below 1500 would warn of a correction to the rising trendline, around 1400.

S&P 500 Index
Breakout of VIX above 25 would signal increased market risk.

S&P 500 Index

A false break below primary support on the TSX Composite index was followed by a rally above 12000.  Follow-through above the descending trendline would suggest that the correction is over, but a 21-day Twiggs Money Flow peak below zero would warn of selling pressure — and reversal below 11900 would confirm the primary down-trend.

Nikkei 225 Index

Posted on

S&P500 holds strong while Canada and Europe weaken

10-Year Treasury yields broke resistance at 2.50% as bond-holders offload their positions. Expect weak retracement to test the new support level at 2.00%, but recovery above 2.50% is likely and would signal a long-term advance to test resistance at 4.00%. Breakout above 4.00% would end the 31-year secular bear-trend. Rising yields reflect market expectations that the economy will recover, enabling the Fed to curtail further quantitative easing.

10-Year Treasury Yields

The S&P 500 broke support at 1600 and is undergoing a correction to test the long-term rising trendline at 1500. Twiggs Money Flow reflects moderate selling and the primary up-trend looks secure.

S&P 500 Index
My concern is: can the US withstand negative sentiment from global markets? The rising VIX is not yet cause for alarm, with the market shrugging off the last foray above 20, but a spike above 25 would warn of elevated risk.

VIX Index

The TSX Composite broke support at 11900/12000 to signal a primary down-trend. Falling 13-week Twiggs Money Flow continues to warn of selling pressure. Expect a test of the 2012 low at 11250.

TSX Composite Index

The FTSE 100 is testing the rising trendline and support at 6000. Bearish divergence on 13-week Twiggs Money Flow warns of a reversal. Failure of support at 6000 would strengthen the signal.

FTSE 100

Germany’s DAX is headed for a test of the long-term trendline and primary support at 7400/7500. Bearish divergence on 13-week Twiggs Money Flow continues to warn of selling pressure. Breach of 7400 would signal reversal to a primary down-trend.

DAX

Posted on

ASX and Asian selling pressure

Japan’s Nikkei 225 Index respected support at 12500 and its long-term rising trendline, but another test is likely in the week ahead.  Follow-through above 13500 would indicate the correction is over, suggesting a re-test of resistance at 16000. Breach of 12500, however, is more likely, with bearish divergence on 13-week Twiggs Money Flow warning of a reversal.

Nikkei 225 Index

Shanghai Composite Index is falling sharply. So far the down-trend has been gradual, with the PBOC looking to manufacture a soft landing. But 13-week Twiggs Money Flow crossing below zero warns of rising selling pressure. Breach of support at 1950 would offer a target of 1600*.

Shanghai Composite Index

* Target calculation: 2000 – ( 2400 – 2000 ) = 1600

India’s Sensex breached its rising trendline, warning that the primary up-trend is weakening. Failure of support at 18000 would signal a primary down-trend. Declining 13-week Twiggs Money Flow indicates trend reversal is likely. Recovery above 19000 is unlikely, but would suggest a fresh primary advance.

BSE Sensex Index

Apart from Japan, the outlook for Asia is bearish.

The ASX 200 is headed for a test of support at 4400, bearish divergence on 13-week Twiggs Money Flow having warned of a reversal. Failure of support at 4400 would re-test the 2011 lows, while respect would be bullish — suggesting another attempt at 5000.

ASX 200 Index

Posted on

Gold falls while Treasury yields rise

Gold is testing primary support at $1340/ounce. Breach of support would signal another primary decline, while follow-through below $1320 would confirm.

Spot Gold
Declining 13-week Twiggs Momentum below zero indicates a healthy primary down-trend. Breach of primary support would offer a target of $1100*.
Spot Gold

* Target calculation: 1300 – ( 1500 – 1300 ) = 1100

Silver displays a similar down-trend on the monthly chart, offering a target of $16/ounce*.
Spot Silver

* Target calculation: 26 – ( 36 – 26 ) = 16

Dollar Index

The Dollar Index respected its primary trendline at 80.50 on the weekly chart. Recovery above 81.50 would indicate another test of 84. Declining peaks on 13-week Twiggs Momentum, however, suggest a weak up-trend. Failure of support at 80.50 would warn of another test of primary support at 79.

Dollar Index

Treasuries

Treasuries fell, with yields rising sharply after today’s FOMC announcement. Target for the advance of 10-year Treasury Yields is 2.60%*.

10-Year Treasury Yields

* Target calculation: 2.10 + ( 2.10 – 1.60 ) = 2.60

Crude Oil

Crude is rising despite the stronger dollar, with Nymex WTI breaking resistance at $98/barrel and Brent testing resistance at $106. The spread between the two has narrowed to around $8 and is likely to close further as the US economy recovers faster than Europe. Follow-through of Nymex crude above $100/barrel would confirm a primary up-trend, reflecting a stronger US economy — if the dollar is strengthening.

Brent Crude and Nymex Crude

Commodities

The Dow Jones/UBS Commodity Index, assisted by crude oil, found support at 130 on the weekly chart. Expect a test of the declining trendline at 134, but the primary trend is down and, with China weakening, a test of  primary support at 125/126 remains likely.

Dow Jones UBS Commodities Index

Posted on

Europe: Broad selling pressure

The FTSE 100 encountered selling pressure at 6750, indicated by bearish divergence on 13-week Twiggs Money Flow, and is correcting towards the rising trendline and support at 6000 on the monthly chart. Respect would signal a healthy primary up-trend.

FTSE 100 Index

Germany’s DAX is experiencing strong selling pressure. Medium-term support at 8000 is unlikely to hold, but respect of support at 7500, and the rising trendline, would still signal a healthy up-trend.
DAX Index

Spain’s Madrid General Index also displays selling pressure, with bearish divergence on 13-week Twiggs Money Flow. Reversal below 800 would warn of another test of the 2012 low at 600, confirmed if 750 is broken.
FTSE 100 Index
Italy’s MIB Index found support at 16000 on the daily chart and there is an absence of selling pressure, but the weight of other European markets may drag the index lower. Penetration of the rising trendline would signal a test of primary support at 15000. Recovery above 17000, however, would suggest another primary advance.
FTSE 100 Index

Posted on

S&P500 up-trend despite test of support at 1600

A monthly chart shows 10-year Treasury yields continue to respect support at 2.00%, confirming the primary up-trend. Expect resistance at 2.50%, but the long-term (multi-year) target is 4.00%, where the 2009 high coincides with a descending trendline from the 31-year secular bear-trend. Rising yields reflect market expectations that the economy is recovering and the Fed will curtail further quantitative easing.

10-Year Treasury Yields

The S&P 500 is headed for a re-test of support at 1600, but recovery above 1650 would signal another advance — testing the upper channel around 1700. Declining 21-day Twiggs Money Flow continues to signal selling pressure.

S&P 500 Index
Breach of support at 1600 would warn of a correction to test the long-term rising trendline at 1500, but that would not alter the healthy primary up-trend.
S&P 500 Index
The VIX is rising, but remains in the green zone, below 20, suggesting a healthy up-trend.

S&P 500 Index

Posted on

Gold and Dollar fall

Gold retreated below support at $1400, indicating the end of the bear rally. Expect a test of primary support at $1320/$1340. Yesterday’s long tail is evidence of short-term buying pressure, so breach of primary support is not a certainty. Respect would suggest another test of $1400.

Spot Gold

* Target calculation: 1350 – ( 1500 – 1350 ) = 1200

Dollar Index

The Dollar Index is retreating after a false break above 84 on the monthly chart. Breach of support at 79 would complete a double top, signaling reversal to a down-trend. Fall of 13-week Twiggs Momentum below zero would strengthen the bear signal. Respect of the rising trendline remains as likely, however, and would signal a long-term advance to 89/90.

Dollar Index

Crude Oil

Crude is consolidating, with Brent likely to continue the down-trend after breaking support at $100/barrel. Respect of resistance at $106 would strengthen the signal. Nymex WTI, however,  is headed for resistance at $98. Breakout would signal an advance, but reversal below $90 is as likely and would test support at $85/barrel. The spread between the two is likely to narrow as the European economy under-performs the US.

Brent Crude and Nymex Crude

Commodities

A weakening Shanghai Composite Index is being followed lower by the Dow Jones/UBS Commodity Index. Breach of medium-term support at 130 would signal a test of  primary support at 125/126. Commodities remain in a primary down-trend and are likely to stay there unless China resumes major infrastructure investment. Not good news for Australian resources stocks.

Dow Jones UBS Commodities Index

Posted on

Europe & Asia: Widespread selling pressure

Germany’s DAX respected support at 8000 on its recent retracement. Follow-through above 8500 would confirm a fresh primary advance. Bearish divergence on 13-week Twiggs Money Flow, however, warns of strong selling pressure. Retreat below 8000 would test the rising trendline around 7500.
DAX Index

The FTSE 100 also encountered resistance at its 2007 high, bearish divergence on 13-week Twiggs Money Flow signaling selling pressure. Expect a test of support at 6000. Recovery above 6750 is unlikely but would signal a fresh primary advance.

DJ Europe Index

The Nikkei 225 found support at 12500. Reversal below this level would warn of a decline to 10000. Bearish divergence on 13-week Twiggs Money Flow warns of strong selling pressure. I was interested to read that George Soros was buying Japanese stocks. To me it seems premature.

Nikkei 225 Index

India’s Sensex is headed for a test of medium-term support at 19000. Breach would test primary support at 18000. Respect would indicate another advance, but bearish divergence on 13-week Twiggs Money Flow continues to warn of reversal to a primary down-trend. Failure of primary support at 18000 would confirm.

BSE Sensex Index

Singapore’s Straits Times Index reversed below its new support level at 3300, warning of a bull trap. Follow-through below last week’s low would indicate a test of the long-term trendline around 3000.

Straits Times Index

The Shanghai Composite Index retreated sharply last week and is headed for another test of support at 2150. Breach would signal a fall to 1950. Declining 13-week Twiggs Money Flow warns of selling pressure. A weakening Shanghai Index is bearish for Australian resources stocks.

Shanghai Composite Index

The ASX 200 found support at 4750, while bearish divergence on 13-week Twiggs Money Flow warns of strong selling pressure. The falling Aussie Dollar is forcing a retreat of offshore investors from the market, but the eventual boost to export earnings is likely to present a buying opportunity later. Expect a weak rally followed by decline to 4500.

ASX 200 Index

Posted on

S&P500 recovers as bond yields rise, but TSX weakens

10-Year Treasury yields respected support at 2.00%, confirming the primary up-trend. Only breakout above 4.00% would end the 31-year secular bear-trend, but a rise to there would result in an almost 50% loss for bondholders. Rising yields reflect market expectations that the economy will recover and the Fed will curtail further quantitative easing.

10-Year Treasury Yields

The S&P 500 respected support at 1600 and is headed for a test of the upper channel around 1700. Reversal below support at 1600 is now unlikely, but would warn of a correction.

S&P 500 Index
The VIX is rising, but remains in the green zone, below 20.

S&P 500 Index

The TSX Composite reversed below support at 12500, indicating weakness. Follow-through below last week’s low would suggest a test of primary support at 11900/12000. Bearish divergence on 13-week Twiggs Money Flow warns of selling pressure.

Nikkei 225 Index

Powered by WordPress / WordPress Maintenance Service By Website Helper