The combined assets of the nation’s exchange-traded funds ETFs were $1.041 trillion in August, according to ICI.
via ICI – Exchange-Traded Fund Assets, August 2011.
A fall of 4.1% from July 2011.
Europe: DAX and Footsie jump on bailout hopes
Germany’s DAX Index gapped above its secondary trend channel (or large flag) on hopes that the EFSF bailout rumor will materialize. The index is due for a secondary reaction, with bullish divergence on 21-day Twiggs Money Flow indicating medium-term buying pressure. Expect resistance at 6100. The bear market continues, however, and reversal below 5000 would offer a target of 4000*.
* Target calculation: 5000 – ( 6000 – 5000 ) = 4000
The FTSE 100 continues its narrow line between 5000 and 5450, with divergence on 21-day Twiggs Money Flow indicating (medium-term) buying pressure. Again, the bear market is likely to continue and failure of support at 5000 would signal another down-swing — with a target of 4400*.
* Target calculation: 5000 – ( 5600 – 5000 ) = 4400
Canada: TSX 60 bull trap
TSX 60 Index also displays an evening star warning. Reversal below 660 would complete a bull trap, indicating a down-swing to 590*. 21-Day Twiggs Money Flow below zero warns of (medium-term) selling pressure.
* Target calculation: 660 – ( 730 – 660 ) = 590
US rally encounters resistance
Dow Jones Industrial Average tall shadow (or wick) on the latest candlestick [R] indicates rising selling pressure. With excitement about a European bailout deal fading, expect a test of support at 10600. Failure would indicate another down-swing, with a target of 10000*.
* Target calculation: 11000 – ( 12000 – 11000 ) = 10000
S&P 500 Index shows continued consolidation between 1120 and 1220 on the weekly chart. 13-Week Twiggs Money Flow below zero indicates selling pressure. Failure of support at 1120 would test the 2010 low at 1020*/1000.
* Target calculation: 1120 – ( 1220 – 1120 ) = 1020
NASDAQ 100 Index shows an evening star reversal warning, completed if price reverses below 2200. 63-Day Twiggs Momentum holding below zero reminds that we are in a primary down-trend. Breach of the lower trend channel would warn of another down-swing, with a target of 1750*.
* Target calculation: 2050 – ( 2350 – 2050 ) = 1750
The Dow tests key support at 10600
Dow Jones Industrial Average is testing support at 10600; failure would add final confirmation of the bear market signaled by 63-day Twiggs Momentum (holding below zero).
* Target calculation: 11000 – ( 12000 – 11000 ) = 10000
Europe falls heavily at open
Dow Jones Europe Index collapsed at the open of European markets, breakout below 225 signaling another down-swing with a target of 185*. 63-Day Twiggs Momentum declining below zero indicates a strong primary down-trend.
* Target calculation: 225 – ( 265 – 225 ) = 185
The Next Selling Wave Is About to Begin | Toby Connor | Safehaven.com
As the stock market moves down into the next daily cycle low and the selling pressure intensifies, this should drive the dollar index much higher. It remains to be seen if gold can reverse this pattern of weakness in the face of dollar strength, especially since the dollar will almost certainly be rallying violently during the intense selling pressure that is coming in the stock market.
via The Next Selling Wave Is About to Begin | Toby Connor | Safehaven.com.
When the dollar strengthens, gold normally falls. Except in times of high uncertainty (like the present), when demand for gold as a safe haven overcomes downward pressure from a stronger dollar. Buying gold at current prices is a bet that either Greece will default — a pretty safe bet — or that the Fed is again forced to use its printing press (not quite as certain).
IMF Urges European Banks to Raise Capital – WSJ.com
European banks face about €300 billion about $409 billion in potential losses from the euro-zone debt crisis, the International Monetary Fund said Wednesday as it urged banks to raise capital to protect the global economy from more turmoil.The fund said fiscal strains emanating from weaker euro zone members have had a direct impact of about €200 billion on banks in the European Union since its debt crisis started last year. In addition to the holdings of government debt, lower bank asset prices raised credit risks between banks for an overall hit of €300 billion.
The Beggar-Thy-Neighbor Correlation – David Merkel
There are many reasons proffered for the increase in global equity market correlations — I would like to offer one more: competitive devaluation of currencies, a.k.a., the race to the bottom. Almost all nations are looking to cheapen their currencies in order to encourage exports.
Canada: TSX 60
The weekly TSX 60 chart respected resistance at 730 and is retreating to test support at 650/660. Decline of 13-week Twiggs Money Flow below zero warns of further selling pressure. Failure of support would offer a target of 590*.
* Target calculation: 660 – ( 730 – 660 ) = 590