Category: Stock Markets

Analysis of major stock markets around the world.

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US: Good week for Nasdaq and S&P 500

The Nasdaq 100 rallied strongly this last week, closing on its revised target of 2750*. Steeply rising 13-week Twiggs Money Flow indicates strong buying pressure. Extension of the rally above the target would be risky and we are likely to see retracement to test the new support level and (long-term) rising trendline at 2400.

Nasdaq 100 Index

* Target calculation: 2400 + ( 2400 – 2050 ) = 2750

The S&P 500 followed through after its breakout above 1370, signaling continuation of the primary up-trend. Expect retracement to confirm support at 1350 before an advance to our target of 1450.

S&P 500 Index

* Target calculation: 1300 + ( 1300 – 1150 ) = 1450

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The Power of Cheap Money | Puru Saxena | Safehaven.com

Mr. Bernanke is intentionally suppressing the nominal risk free rate of return and he is forcing investors to search for yield. By keeping interest rates artificially low and well below the rate of inflation, the Federal Reserve has engineered this impressive rally in American stocks.

Figure 2 captures the real US Treasury Yield Curve [after deducting inflation] across various maturities. As you can see, the real yields of the entire US Treasury Yield Curve (except the 30-Year US Treasury Bond) are currently negative.

Real US Treasury Yields

via The Power of Cheap Money | Puru Saxena | Safehaven.com.

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Australia: Hourly ASX 200

The ASX 200 Hourly chart shows a sharp rally and we can expect a test of 4300/4320 tomorrow. Breakout would signal an advance to 4450*. Reversal below the trend channel is unlikely, but breach of support at 4250 would warn of another correction.

ASX 200 Index Hourly Chart

* Target calculation: 4300 + ( 4300 – 4150 ) = 4450

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Treasury yields surge

The yield on 10-year US Treasury Notes has surged to test resistance at 2.40 percent. Breakout would indicate a rally to the long-term trendline at 3.00 percent on the Monthly chart. Rising treasury yields signal that investors are migrating out of bonds and into stocks, especially when the Fed is attempting to suppress long-term rates.

10-Year Treasury Yields

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S&P 500 and Nasdaq

An Hourly chart shows the S&P 500 Index consolidating below 1400. Breakout above the narrow flag would signal an advance to 1450*. Reversal below the trend channel is unlikely but would warn of retracement to 1340.

S&P 500 Index

* Target calculation: 1300 + ( 1300 – 1150 ) = 1450

The Nasdaq 100 exceeded its initial target of 2650, now revised to 2750, and is due for a correction. Bearish divergence on 21-day Twiggs Money Flow indicates medium-term selling pressure. Expect a test of support at 2400.

Nasdaq 100 Index

* Target calculation: 2400 + ( 2400 – 2050 ) = 2750

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Hong Kong & Shanghai

Hong Kong’s Hang Seng Index retreated Wednesday in response to a sharp fall in Shanghai. Bearish divergence on 21-day Twiggs Money Flow warns of a correction, but as long as the lower trend channel at 20,000 is respected the primary up-trend remains intact.

Hang Seng Index

* Target calculation: 20000 + ( 20000 – 17500 ) = 22500

Dow Jones Shanghai Index fell sharply to test support at 295. Failure of support would warn of a correction.

Dow Jones Shanghai Index

Shanghai Composite Index shows a similar fall. Follow-through below 2380 would signal a correction to primary support at 2150.

Shanghai Composite Index

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Singapore: Straits Times Index

Singapore’s Straits Times Index gapped above resistance at 3000 today, confirming the primary up-trend, and is currently trading near 3020. Target for the initial advance is 3200*.

Singapore Straits Times Index

* Target calculation: 2900 + ( 2900 – 2600 ) = 3200

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Australia: ASX 200

The ASX 200 Index continues to signal medium-term selling pressure with 21-day Twiggs Money Flow respecting the zero line (from below). Reversal below 4180 would suggest (and below 4150 confirm) a correction to test primary support at 4000.

ASX 200 Index

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Canada: TSX 60

Canada’s TSX 60 index found support at 700. 13-Week Twiggs Money Flow, holding above zero, continues to indicate buying pressure. Recovery above 720 would signal a primary advance to 790*.

TSX 60 Index

* Target calculation: 720 + ( 720 – 650 ) = 790

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Europe: Signs of a revival

Europe shows signs of a revival. Dow Jones Europe Index is testing resistance at 260. Breakout would signal a primary up-trend. Respect of the zero line by 13-week Twiggs Money Flow indicates long-term buying pressure. Target for the advance would be 310*.

Dow Jones Europe Index

* Target calculation: 260 + ( 260 – 210 ) = 310

FTSE 100 Index shows even stronger buying pressure on 13-week Twiggs Money Flow. Expect the correction to respect support at 5600, followed by an advance to 6100.

FTSE 100 Index

* Target calculation: 5700 + ( 5700 – 5200 ) = 6200

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