The ASX 200 broke medium-term support at 4950, signaling the start of a correction for Australian stocks. Reversal of 21-day Twiggs Money Flow below zero confirms medium-term selling pressure.
Initial target for a correction is the rising trendline around 4700. Even correction back to 4500 does not disrupt the primary up-trend and would present buying opportunities for investors.
* Target calculation: 5000 + ( 5000 – 4500 ) = 5500
The ASX 200 rallied above 5000 at Monday’s opening but gradually retreated to close at 4990. While failure to hold above the short-term support level is disappointing, an early break above 5000 on Tuesday would suggest a rally to 5150.
The weekly chart shows the importance of medium-term support at 4950. Failure would signal a correction to test the rising trendline around 4700. Slight bearish divergence on 13-week Twiggs Money Flow warns of mild medium-term selling pressure. The index remains in a strong primary up-trend and only a breach of the rising trendline would threaten this.
* Target calculation: 5000 + ( 5000 – 4500 ) = 5500
The ASX 200 weakened towards the close and is testing medium-term support at 5000. Breakout below 4980 would warn of a correction. Declining 21-day Twiggs Money Flow, indicating medium-term selling pressure, makes this likely. The index is in a strong primary up-trend and a 5 or 10 percent correction would not alter this. It is merely a case of one step back then two steps forward.
* Target calculation: 5000 + ( 5000 – 4500 ) = 5500
The ASX 200 retreated more than 2.0% Monday after the Cyprus deposit grab unsettled financial markets. Expect another test of support at 4980. Breakout would warn of a correction, while recovery above 5150 would signal an advance to 5500*. Declining 21-day Twiggs Money Flow indicates medium-term selling pressure.
* Target calculation: 5000 + ( 5000 – 4500 ) = 5500
Dow Jones Japan Index dropped about 1.5%. Follow through below short-term support would indicate no more than retracement to the rising trendline.
Dow Jones Hong Kong Index has fallen about 2.0% so far. Breach of support at 472 signals a correction.
Dow Jones Singapore Index has fallen 1.0% in the morning and we can expect further weakness in the p.m.
European markets are likely to open lower. If the US follows and finishes the day with a weak close, negative sentiment could start to feed on itself, tipping global markets into a correction. Overall, the primary trend in the US and Australia remains positive.
The ASX 200 is retracing for another test of support at 4980/5000. Breakout would warn of a correction, while recovery above 5100 would signal an advance to 5500*. Declining 21-day Twiggs Money Flow indicates medium-term selling pressure.
* Target calculation: 5000 + ( 5000 – 4500 ) = 5500
A monthly chart of the ASX 50 [$XFL] puts the retracement into perspective. Rising 13-week Twiggs Money Flow indicates buying pressure. Respect of support at 5000 is likely, but even a stronger correction would not disrupt the primary up-trend: respect of 4500 would present a buying opportunity.
The ASX 200 broke resistance at 5000 on the strength of strong buying pressure, signaled by rising 13-week Twiggs Money Flow. Retracement that respects the new support level would confirm an advance to 5500*.
* Target calculation: 5000 + ( 5000 – 4500 ) = 5500
On the daily chart, mild bearish divergence on 21-day Twiggs Money Flow warns of retracement to test the new support level at 5000. Reversal below 4980 is unlikely but would warn of a correction.
ASX small-caps ($XSO – ASX Small Ords) continue to under-perform the ASX 50 [$XFL]. The opposite of what one would expect in a bull market: treat it as a caution. The current $XSO down-swing should test the lower channel at 2300, presenting a buy opportunity for swing traders.
The ASX 200 continues to test support at 4980/5000 on the weekly chart. Breakout above 5100 would offer a medium-term target of 5500*. Rising 13-week Twiggs Money Flow indicates strong buying pressure. Reversal below 4980 is unlikely but would warn of a correction.
* Target calculation: 5000 + ( 5000 – 4500 ) = 5500
ASX small-caps are still doing badly, with the ASX 50 [$XFL] out-performing the $XSO (ASX Small Ords) by a substantial margin. The opposite of what one would expect in a bull market: treat it as a caution. The current $XSO down-swing should test the lower channel at 2300, presenting a buy opportunity for swing traders.
The ASX 200 is headed for another test of resistance at 5100 on the hourly chart. Breakout would signal continuation of the primary advance. Reversal below 5050, however, would indicate another test of 5000.
The monthly chart shows strong momentum but retracement to test the new support level of 5000 is likely in the weekly (if not monthly) time frame. Respect of support on the weekly chart would confirm a primary advance with a long-term target of 6000*.
* Target calculation: 5000 + ( 5000 – 4000 ) = 6000
ASX small-caps are still doing badly, with the ASX 50 [$XFL] out-performing the $XSO by a substantial margin. That is the opposite of what one would expect in a bull market and should be treated as a warning to exercise caution.
The ASX 200 broke short-term resistance at 5050 on the hourly chart before retreating to test its new support level. The index is advancing in layers of 25 points (5000 >> 5025 >> 5050 >> 5075) and shows no signs of abating. But retracement to test the new support level of 5000 remains likely in the larger time frames. Respect of support on the weekly chart would confirm a primary advance, with a long-term target of 6000*.
* Target calculation: 5000 + ( 5000 – 4000 ) = 6000
One area of concern: the advance is being driven by a scramble for yield, with blue chip stocks in the ASX 50 [$XFL] out-performing mid-caps [$XMD] by a wide margin — the exact opposite of what one would expect in a bull market.
The situation is even worse when comparing to small-caps [$XSO].
The ASX 200 passed its first test after breaking long-term resistance at 5000. The index retraced to test the new support level [test #1] in the first hour of trading today but rallied strongly thereafter. Respect of support strengthens the breakout signal but expect further tests in the weeks ahead. Respect in the Daily and Weekly time frames would confirm the primary advance, with a long-term target of 6000*.
* Target calculation: 5000 + ( 5000 – 4000 ) = 6000
