Analysis of major stock markets around the world.
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
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
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
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
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).
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.
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.
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
Germany’s DAX Index shows a strong key reversal [R] on the weekly chart. Expect a rally, but we are in a bear market and resistance at 6500 is likely to hold. Reversal below 5400 would warn of another down-swing.
* Target calculation: 5500 – ( 6500 – 5500 ) = 4500
The FTSE 100 fell at Monday’s open, but the weekly chart displays a particularly volatile consolidation edging higher. Breakout above 5400 would indicate a test of 5600/5700. Again, we are in a bear market; respect of resistance is likely and would warn of another test of 4800.
* Target calculation: 5000 – ( 5600 – 5000 ) = 4400
A narrow range with large volume often acts like a compressed spring — absorbing buying pressure before launching a sharp move in the opposite direction. The spike in volume [W] on Dow Jones Industrial Average was due to triple-witching hour on Friday, but we should nevertheless be wary of a fall below 11400, which would indicate another test of 10600.
* Target calculation: 11000 – ( 12000 – 11000 ) = 10000
The weekly chart of S&P 500 shows a similar bear rally. Expect a test of 1250/1260. But 63-day Momentum below zero reminds that the index is in a primary down-trend; a peak below the zero line would warn of another down-swing.
* Target calculation: 1125 – ( 1250 – 1125 ) = 1000
NASDAQ 100 Index displays a particularly strong rally, but this remains a bear market. Expect strong resistance at 2400. Failure of support would offer a target of 1700*.
* Target calculation: 2050 – ( 2400 – 2050 ) = 1700
