Category: Stock Markets

Analysis of major stock markets around the world.

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One down five to go

I say this rather flippantly as we are in the middle of a bear market, and I do not believe we are ready, but a reader asked what it would take to signal a bull market. My answer: three decent blue candles on the weekly chart followed by a correction of at least two red candles that respects the preceding low. The weekly chart of the S&P 500 index displays a blue candle with a long tail, signaling buying support. That would qualify as candle #1.

S&P 500 Index

* Target calculation: 1100 – ( 1250 – 1100 ) = 950

There is no supporting divergence on 13-week Twiggs Money Flow to signal a change in the underlying selling pressure. Reversal to an up-trend is unlikely but would take a rally of at least 3 blue candles to break resistance at 1250 followed by a correction that finishes above 1100 — and re-crosses 1250. What is more likely is a failed attempt or false break at 1250 followed by penetration of support at 1100, signaling a decline to 1000/950*.

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Is the SP 500 on the Verge of a Rally? | JW Jones | Safehaven.com

After the nasty downside probe today, there are layers of buy stops above current price levels. If price worked high enough, the stops would be triggered and an all out rally could play out. Anything coming out of the Eurozone that appears to be either stimulative or that appears to push an ultimatum out on the time spectrum will be viewed as positive.

Often news and price action play out together at key support/resistance levels and it would make sense that some form of announcement will be made when the S&P 500 price is sitting right at a long term support level.

via Is the SP 500 on the Verge of a Rally? | JW Jones | Safehaven.com.

That would be a bear market rally rather than a reversal.

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Bull versus bear is dead – macrobusiness.com.au

As the S&P500 rocketed into the close this morning on yet another European bailout rumour, it occurred to me just how broken the equity market is right now. We are trapped in bear market dynamics of grinding sell-offs punctuated by explosive short-covering rallies with no end in sight.

….. Days like today are not some romantic struggle between bulls and bears, they are a reminder that in periods of structural risk that volatility reigns. Anyone that tells you otherwise is a fool or trying to sell you something.

via Bull versus bear is dead – macrobusiness.com.au | macrobusiness.com.au.

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TSX 60 breaks support

Canada’s TSX 60 index broke support at 650, while declining 13-week Twiggs Money Flow signals rising selling pressure. Expect another down-swing with a target of 580*.

TSX 60 Index

* Target calculation: 650 – ( 720 – 650 ) = 580

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Footsie and DAX test support

The FTSE 100 is testing support at 5000. Failure would warn of a down-swing to 4400*, but long tails and rising 21-day Twiggs Money Flow indicate medium-term buying pressure. Respect of support is likely and would continue the line between 5000 and 5450.

FTSE 100 Index

* Target calculation: 5000 – ( 5600 – 5000 ) = 4400

Germany’s DAX index displays similar medium-term buying pressure on 21-day Twiggs Money Flow. Respect of support at 5000 is likely and recovery above 5700 would indicate another bear rally.

DAX Index

* Target calculation: 5000 – ( 6000 – 5000 ) = 4000

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Fedex heads South

Transport bellwether Fedex respected resistance at $70, signaling a down-swing to $55*. 13-week Twiggs Money Flow declining below zero indicates a strong primary down-trend. UPS (lime green) is also in a primary down-trend; reversal below its August low would confirm the Fedex bear signal. Declining transport stocks warn of shrinking activity levels in the overall economy.

Fedex and UPS

* Target calculation: 70 – ( 85 – 70 ) = 55

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Dow threatens decline to 10000

Dow Jones Industrial Average is testing the band of support between 10600 and 10800. An up-tick in volume indicates some buying support but this appears insufficient to withstand downward pressure. Failure of support at 10600 is likely and would signal a primary decline to 10000*.

Dow Jones Industrial Average

* Target calculation: 11000 – (12000 – 11000 ) = 10000

The S&P 500 index is similarly testing support at 1100, while 21-day Twiggs Money Flow declining below zero warns of selling pressure. Breach of 1100 would signal a primary decline to 950*.

S&P 500 Index

* Target calculation: 1100 – ( 1250 – 1100 ) = 950

The NASDAQ 100 is headed for a test of support at 2040. Reversal  of 13-week Twiggs Money Flow below zero warns of a primary down-trend. Breach of support would signal another decline with a target of 1700*.

NASDAQ 100 Index

* Target calculation: 2000 – ( 2300 – 2000 ) = 1700

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