Asian markets lift the ASX 200

Dow Jones Japan Index jumped today on Tokyo’s success in its bid for the 2020 Olympics. Follow-through above the descending trendline indicates the correction is over and a test of 81.50 likely. Upward breakout would signal continuation of the primary up-trend. Reversal below 73.50 is unlikely, but would warn of a test of primary support at 69.00.

Dow Jones Japan Index

China’s Shanghai Composite breached resistance at 2100, indicating a test of the descending trendline at 2200. Rising 13-week Twiggs Money Flow suggests medium-term buying pressure. The primary trend remains down, however, and reversal below the rising trendline would warn of another test of primary support at 1950. In the longer-term, breakout above the descending trendline is unlikely, but would suggest that the down-trend has ended.

Shanghai Composite Index

India’s Sensex rallied sharply after finding support at 18000/18500. Follow-through above 19500 would confirm another test of resistance at 20500.  Rising 13-week Twiggs Money Flow indicates medium-term buying pressure. Reversal below 18500 is unlikely, but would signal a primary down-trend.

BSE Sensex Index

Rising Asian markets, especially China, are lifting the ASX 200, but weakness on the Dow or S&P 500 could reverse this. Recovery above 5150 and respect of the rising trendline suggest another test of resistance at 5250. Rising 21-day Twiggs Money Flow indicates short/medium-term buying pressure. Breakout above 5250 would signal another primary advance. Respect of resistance remains as likely, however, and reversal below 5000 would warn of another test of primary support at 4650.

ASX 200 Index

* Target calculation: 5250 + ( 5250 – 4650 ) = 5850

FTSE & DAX face stubborn resistance

The FTSE 100 followed-through above initial resistance at 6500, indicating another test of 6700/6750. Breakout above 6750 would offer a target of 7500*, but bearish 13-week Twiggs Money Flow continues to warn of selling pressure. Reversal below 6400 would warn of a test of primary support at 6000.

FTSE 100 Index

* Target calculation: 6750 + ( 6750 – 6000 ) = 7500

Germany’s DAX respected support at 8000, indicating another test of stubborn resistance at 8500. Declining momentum suggests the primary up-trend is slowing. Reversal below support at 8000 would confirm, while breakout above 8500 would offer a long-term target of 9000*.

DAX Index

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

Canada: TSX buying pressure

Canada’s TSX Composite is testing resistance at 12900 on the weekly chart. Rising 13-week Twiggs Money Flow indicates medium-term buying pressure. Breakout (above 12900) would signal a primary advance, with a long-term target of 14000*. Respect of resistance is unlikely, but would test support at 12400. The wild card is the Dow Industrial Average: if it signals a reversal, all bets are off.

TSX Composite Index

* Target calculation: 12900 + ( 12900 – 11800 ) = 14000

Dow warns of reversal but S&P 500 hesitates

Dow Jones Industrial Average bearish divergence on 13-week Twiggs Money Flow warns of a reversal. Failure of primary support at 14500/14600 would confirm. Recovery above 15000 would defer the test of primary support, but strong selling pressure should not be ignored.

Dow Jones Industrial Average

Friday’s long-legged doji candle on the S&P 500 (daily chart) indicates hesitancy. Follow-through above the descending trendline would suggest that the correction is over, while a fall below the longer-term rising trendline would warn that momentum is slowing and another test of primary support at 1560 is likely.  Bearish divergence on 21-day Twiggs Money Flow indicates selling pressure. 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, however, continues to suggest a bull market.
VIX Index

Rising 13-week Twiggs Money Flow and consolidation above the preceding peak at 3040/3050 on the Nasdaq 100 also favors continuation of the primary up-trend.

Nasdaq 100 Index

Signals are mixed at present, but a stronger bear signal on the Dow, or an upward spike on the VIX, would tilt probabilities towards a reversal.

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

Europe: Improving but beware of The Joker

Monthly charts best reflect the state of play in Europe. Germany and France are improving but there are still pockets of weakness elsewhere that threaten to destabilize the monetary union.

Germany’s DAX recovered above its 2007 high at 8200. Reversal below 8000 would indicate hesitancy, with another test of primary support (and rising trendline) at 7600. But the up-trend is intact and follow-through above 8500 would offer a long-term target of 9500*. Momentum is slowing but 13-week Twiggs Momentum holding above zero suggests continuation of the up-trend.
DAX Index

* Target calculation: 8500 + ( 8500 – 7500 ) = 9500

The FTSE 100 fell through support at 6500 but the long tail indicates buying pressure. Reversal below 6400 would confirm a correction to the rising trendline. Breakout above 6750 would signal an advance to the 1999 high of 7000, but strong bearish divergence on 13-week Twiggs Money Flow warns of a correction. Breach of primary support at 6000 would signal a reversal.
FTSE 100 Index
France’s CAC-40 is headed for another test of its 2011 high at 4200. Breakout would offer a long-term target of 4800*. Reversal below 3600 is unlikely but would signal a primary down-trend.
CAC-40 Index

* Target calculation: 4200 + ( 4200 – 3600 ) = 4800

Italy’s MIB Index is testing resistance at 18000. Momentum is weakening so one needs to be prepared for another correction. But breakout would offer a target of 21000*.
MIB Index

* Target calculation: 18000 + ( 18000 – 15000 ) = 21000

Adam Taylor at Business Insider quotes Tim Parks from New York Review of Books:

If Nixon had refused to accept impeachment and had tried somehow to hang on to power, he would have been summarily removed. The same goes for any leader in Europe’s main democracies. Most will step down at the first sign of a serious criminal charge against them, aware that their parties will not support someone who damages their cause. The truly disquieting aspect of the present situation in Italy is not so much Berlusconi’s brazenness, but that his blackmail is possible and credible, that he has such complete control over such a large political party, and that he still commands considerable popular support. Astonishing as it may seem to those not familiar with the country, even serious newspapers and respectable commentators seem reluctant to insist on the enforcement of law, rarely mentioning the details of his crimes and actually giving credence to the argument that removing Berlusconi from the political scene would amount to disenfranchising the millions of voters who supported him at the previous election, as if there was no autonomous party in parliament to represent their views, as if they were not free to choose another leader before the next election.

The Joker may still have the last laugh.
Silvio Berlusconi as The Joker

Reproduced with thanks to Vincos on Flickr.com.

Spain’s Madrid General Index is testing resistance at 900. Momentum is weakening so, again, be prepared for another correction. But breakout above 900 would indicate an advance to 1050*.
Madrid General Index

* Target calculation: 900 + ( 900 – 750 ) = 1050

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.
TSX Composite Index

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

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

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

China rally spurs ASX advance

China’s Shanghai Composite Index rallied from support at 1950 to test medium-term resistance at 2100 on the weekly chart. Breakout would indicate a test of the descending trendline at 2200. The primary trend is down, but penetration of the trendline would suggest that a bottom has formed.

Shanghai Composite Index

The Shenzhen Composite Index has been in a primary up-trend since May, but displayed weakness with a second, shaky test of support at 900. Troughs above zero on 13-week Twiggs Money Flow indicate the primary up-trend is intact. Breakout above the last high at 1040 would confirm — a bullish sign for the Shanghai Composite.

Shenzhen Composite Index

Japan’s Nikkei 225 is testing medium-term support at 13500. Breach would indicate a correction to primary support at 12500, but respect of the zero line by 21-day Twiggs Money Flow would suggest the primary up-trend is intact. Recovery above 14500 would strengthen the signal.

Nikkei 225 Index

India’s Sensex respected primary support at 18500. Rising troughs on 13-week Twiggs Money Flow indicate moderate buying pressure. Expect another test of resistance at 20500 (i.e. a test of 20500 is likely). Breach of support, while unlikely, would warn of a primary down-trend — confirmed if there is follow-through below 18000.

BSE Sensex Index

* Target calculation: 20000 + ( 20000 – 18000 ) = 22000

The ASX 200 broke short-term resistance at 5120, signaling an advance to the May peak at 5250. Rising 21-day Twiggs Money Flow indicates buying pressure. Reversal below 5000 is unlikely, but would warn of a correction to at least 4850.

ASX 200 Index

Breakout above 5250 would indicate another advance, but high volatility, shown by the broadening formation of the last few months, will require further evidence to confirm this.

ASX 200 Index

* Target calculation: 5250 + ( 5250 – 4650 ) = 5850