Stock Markets Archives - Page 117 of 170

May 27, 2013April 18, 2024

Shanghai rising but Nikkei, ASX selling pressure

Germany’s DAX is retracing to test the new support level at 8000. Respect would confirm a primary advance, but bearish divergence on 13-week Twiggs Money Flow warns of selling pressure — a fall below zero would warn of a reversal. Breach of 8000 would test the rising trendline around 7500.
DAX Index

Dow Jones Europe encountered strong resistance at 290, but remains in a primary up-trend. Penetration of the rising trendline would warn that the trend is losing momentum, while failure of support at 270 would signal a reversal.

DJ Europe Index

The Nikkei 225 ran into massive selling between 15000 and 16000. The gravestone on the monthly chart, supported by bearish divergence on 13-week Twiggs Money Flow, warns of a reversal.

Nikkei 225 Index

India’s Sensex is headed for a test of long-term resistance at 21000, but bearish divergence on 13-week Twiggs Money Flow warns of selling pressure. Respect of resistance would indicate another test of primary support at 18000.

BSE Sensex Index

The Shanghai Composite Index respected support at 2150 and is headed for another test of resistance at 2500. Breakout above 2500 would complete an inverted head and shoulders reversal (as indicated by orange + green arrows), signaling a primary up-trend. That is still some way off but would be good news for Australia’s beleaguered resources stocks.

Shanghai Composite Index

The ASX 200 is headed for a test of primary support at 4900. Breach would also penetrate the rising trendline, indicating reversal to a primary down-trend. Bearish divergence on 13-week Twiggs Money Flow has been warning of strong selling pressure. The falling Aussie Dollar is forcing a retreat of offshore investors from the market, but the boost to export earnings is likely to present a buying opportunity for Australian investors when the correction is over.

ASX 200 Index

May 22, 2013

ASX 200 & All Ords selling pressure

The ASX 200 is testing medium-term support at 5150. Breakout would indicate a correction to 4900. Reversal of 21-day Twiggs Money Flow below zero — and the longer-term bearish divergence — warn of selling pressure.
ASX 200 Index

* Target calculation: 5150 + ( 5150 – 4900 ) = 5400

The All Ordinaries weekly chart displays a longer-term bearish divergence on 13-week Twiggs Money Flow. Expect a test of the rising trendline at 4900.
ASX All Ordinaries Index
The Large Cap ASX 50 rising faster than the ASX Small Ords confirms this is not a typical bull market. There is a high degree of risk aversion and sentiment of retail (mom+pop) investors is more accurately captured by the Small Caps index which represents the ASX 300 excluding ASX 100 stocks.
ASX 50 Index

May 22, 2013

China hints at bottom while S&P 500 reverses

10-Year Treasury yields are testing resistance at 2.05/2.10%. Breakout above 2.10% would signal a primary up-trend and possible test of 4.00% in the next few years. Only breakout above 4.00%, however, would end the 31-year secular bear-trend.

10-Year Treasury Yields

The S&P 500 completed a key reversal (or outside reversal), indicating selling pressure. Expect a test of the lower trend channel at 1600.

S&P 500 Index
There is no great movement in the VIX and this so far looks like a normal retracement. A June quarter-end below 1500 looks unlikely, but would present a long-term bear signal.

S&P 500 Index

The UK’s FTSE 100 Index is headed for a test of its year 2000 high at 7000. Expect a correction or consolidation below this level. Breakout remains doubtful but would signal a long-term primary advance.

Penetration of its descending trendline indicates correction on the Shanghai Composite Index has ended and we can expect another test of resistance at 2500. Breakout above 2500 would complete an inverted head and shoulders reversal (as indicated by orange + green arrows), signaling a primary up-trend. That would be good news for Australia’s beleaguered resources stocks.

Shanghai Composite Index

As traders we follow the trend, but in times like this it is important to remain vigilant.

May 20, 2013

VIX low S&P 500 high

The VIX CBOE Volatility Index is below 15%, indicating investor confidence.
VIX
But the risk premium on Baa-grade bonds (Moody’s lowest investment grade, compared to the 10-year Treasury yield) remains elevated. Corporate bond investors are still wary.
Baa Risk Premium
10-Year Treasury yields are headed for a test of resistance at 2.00%/2.10%. There is no sign of inflationary pressure, so outflow from Treasuries is more likely indicative of their extremely overbought position — with yields near record lows — and suggestions from FOMC minutes that quantitative easing may be scaled back later in the year. Breakout above 2.10% would signal a primary up-trend with an initial target of 2.40%.
10-Year Treasury Yields
The S&P 500 is advancing strongly. 6-Monthly Twiggs Money Flow rising strongly indicates a healthy primary up-trend. The index is overdue for a correction, but this is likely to be mild.

S&P 500 Index

* Target calculation: 1475 + ( 1475 – 1350 ) = 1600

Nasdaq 100 also signals a healthy up-trend, advancing towards a target of 3400*.
Nasdaq 100 Index

* Target calculation: 2900 + ( 2900 – 2500 ) = 3400

Bellwether transport stock Fedex respected support at $90. Recovery above $100 would confirm the primary up-trend is intact. A bullish sign for the economy.
Fedex

Follow the trend but keep an eye on risk measures like the VIX and Baa risk premium. These are uncertain times.

May 16, 2013

ASX 200 selling pressure builds as Aussie Dollar falls

The ASX 200 broke resistance at 5200, but bearish divergence on 13-week Twiggs Money Flow continues to warn of selling pressure.
ASX 200 Index

The daily chart also shows a bearish divergence, suggesting a test of support at 5100/5120. Failure would indicate a correction, while respect would confirm an advance to 5400*.
ASX 200 Index

* Target calculation: 5150 + ( 5150 – 4900 ) = 5400

Bipolar behavior of the market is highlighted by comparison of the ASX 50 Large Caps to the ASX Small Ords (ASX 300 – ASX 100). Small Caps tend to outperform Large Caps during a bull market, as can be seen from 2003 to 2007. But the current “bull market” gives out mixed signals, with Large Caps powering ahead while Small Caps remain in a down-trend. Demand for Large Caps seems to have been inflated by international capital flows.
ASX 50 Index
And the falling Aussie Dollar, with a target of $0.96* against the greenback, is likely to lead to retreat of the ASX 50 and ASX 200 indices.

* Target calculation: 1.01 – ( 1.06 – 1.01 ) = 0.96

May 13, 2013

Canada: TSX Composite recovery

The TSX Composite followed through above 12500, indicating another test of resistance at 12800/13000. Expect retracement to test the new medium-term support level at 12500, but respect is likely. Recovery of 13-week Twiggs Momentum above zero suggests continuation of the primary up-trend. Breakout above 13000 still appears some way off, but would offer a target of the 2011 high at 14300.
TSX Composite Index

May 9, 2013

ASX 200 meets resistance

The ASX 200 is testing resistance at 5200. Breakout would signal an advance to 5400*. Reversal below 5100 is unlikely but would warn of a bull trap. As would reversal of 21-day Twiggs Money Flow below zero.
ASX 200 Index

* Target calculation: 5150 + ( 5150 – 4900 ) = 5400

The Energy Sector XEJ recently completed an inverted head and shoulders reversal over six weeks, signaling an advance to 137. Bullish divergence on 13-week Twiggs Money Flow indicates long-term buying pressure. Breakout above 137 would offer a long-term target around 150*.
ASX 50 Index

* Target calculation: 135 + ( 135 – 120 ) = 150

May 5, 2013

S&P 500 and Treasury yields surge

10-Year Treasury yields rallied sharply on Friday, breaking the new resistance level at 1.70%. Follow-through above 1.80% would confirm the decline is over, signaling another test of resistance at 2.00%/2.10%.

On the monthly chart we can see that breakout above resistance at 2.00%/2.10% would signal a primary up-trend and possible test of 4.00% in the next few years. Only a breakout above 4.00%, however, would end the secular bear-trend of the last three decades.
10-Year Treasury Yields

Last week Treasury yields were falling while stocks were rising. That changed on Friday, with the S&P 500 breaking through resistance at 1600, suggesting an advance to 1650. The index has exceeded its target of 1600* and seems overdue for a correction, but bullish sentiment is rising and the market can stay irrational longer than you can stay solvent (attributed to John Maynard Keynes). Oscillation above zero on 13-week Twiggs Money Flow indicates a healthy primary up-trend. A June quarter-end below 1500 now looks unlikely, but would present a long-term bear signal.

S&P 500 Index

* Target calculation: 1475 + ( 1475 – 1350 ) = 1600

Bellwether transport stock Fedex is testing support at $90. Respect of the rising trendline would signal the primary up-trend is intact. Recovery above $100 would confirm.
Fedex

Structural flaws in the US economy have not been addressed and uncertainty remains high, despite low values on the VIX. House prices are rising, largely due to institutional buying, but the overhang of shadow inventory is expected to delay recovery of housing construction. Mamta Badkar at Business Insider reports:

Shadow inventory fell 18 per cent year-over-year in January to 2.2 million units, according to CoreLogic’s latest report. This represents nine months’ supply.
…..down 28 per cent from its 2010 peak of 3 million units.

As traders we have to follow the trend, but in times like this it is important to remain vigilant.

May 2, 2013

Australia: Why The Stock Market Has Been Bulletproof To Bad Economic News | Business Insider

Sam Ro quotes Gerard Minack in Business Insider:

To summarize: 1) we’ve seen this before, 2) we think the slowdown is temporary, 3) we think significant weakness will trigger stimulus, and 4) we think fiscal austerity is now less likely.

Still, Minack is pretty sure this resilience can’t hold for too much longer.

April 29, 2013

Asia: Singapore breakout, ASX 200 selling pressure

Singapore’s Straits Times Index broke long-term resistance at 3300, signaling an advance to the 2007 high of 3900*. Troughs above zero on 13-week Twiggs Momentum strengthen the signal.
DJ Shanghai Index

* Target calculation: 3300 + ( 3300 – 2700 ) = 3900

India’s Sensex followed through above resistance at 19000. Breach of the descending trendline would indicate a primary advance to 22000*. 13-week Twiggs Money Flow below zero, however, signals selling pressure and reversal below 19000 would warn of another test of primary support at 18000.
BSE Sensex Index

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

China’s Shanghai Composite is again testing medium-term support at 2150. Failure of support would warn of a decline to test primary support at 1950/2000. Reversal above 2250, however, would penetrate the descending trendline, indicating another test of 2500.
Shanghai Composite Index

Japan’s Nikkei 225 continues to climb, with a steeply rising 13-week Twiggs Money Flow indicating strong buying pressure. Target for the advance is 15000*.
Nikkei 225 Index

* Target calculation: 11500 + ( 11500 – 8000 ) = 15000

The ASX 200 is testing resistance at 5150. Breakout would offer a target of 5400*, but bearish divergence on 13-week Twiggs Money Flow warns of selling pressure. Failure of support at 4900 would signal a reversal.
ASX 200 Index

* Target calculation: 5150 + ( 5150 – 4900 ) = 5400