Germany’s DAX broke through resistance from its 2015 high, signaling a fresh advance with a long-term target of 15000.
France’s CAC-40 index displays a similar bullish breakout, above resistance at 5000/5200 to offer a target of 6000.
European stocks retreat
Dow Jones Euro Stoxx 50 retreated below the first line of support at 3000, warning of a correction to the rising trendline. 13-Week Twiggs Momentum above zero continues to suggest a primary up-trend. A trough above zero would strengthen the signal. Recovery above 3100 is now unlikely, but would signal an advance to 3500*.
* Target calculation: 3000 + ( 3000 – 2500 ) = 3500
Germany’s DAX continues a primary advance with a long-term target of 10000*. Rising 13-week Twiggs Money Flow indicates strong buying pressure. Reversal below 9000, however, would warn of a correction.
* Target calculation: 7500 + ( 7500 – 5000 ) = 10000
France’s CAC-40 also displays long-term buying pressure, with rising 13-week Twiggs Money Flow, but retreat below the new support level at 4200 warns of a correction. Recovery above 4200 is now unlikely, but would indicate an advance to 4400*.
* Target calculation: 4000 + ( 4000 – 3600 ) = 4400
Bearish divergence on the FTSE 100, 13-week Twiggs Money Flow, indicates selling pressure and breach of support at 6600 signals a correction. Follow-through below the lower border of the flag formation (6500) would confirm. Failure of primary support at 6400 and breach of the rising trendline would warn of reversal to a primary down-trend.
* Target calculation: 6700 + ( 6700 – 6400 ) = 7000
European markets retrace, but FTSE bearish
European markets are consolidating after recent gains with the exception of Italy, which is suffering from political instability, while the FTSE 100 displays persistent selling pressure.
The FTSE 100 is heading for a test of primary support at 6400, having broken medium-term support at 6500. Declining 21-day Twiggs Money Flow after a lengthy period below zero indicates medium-term selling pressure; bearish divergence on the 13-week indicator also warns of strong selling pressure. Failure of support at 6400 would signal a primary down-trend; respect is unlikely, but would suggest another test of 6700.
Germany’s DAX retraced to the new support level at 8500. Respect would offer a medium-term target of 9000* and a long-term target of 9400*. Reversal below 8000 is unlikely, but would warn of another test of primary support at 7600.
* Target calculation: 8500 + ( 8500 – 8000 ) = 9000 ; 8500 + ( 8500 – 7600 ) = 9400
France’s CAC-40 is similarly testing support at 4100. Recovery above its 2011 high of 4200 would offer an immediate target of 4300* and a long-term target of 4500*. Reversal below 3900 is unlikely but would warn of a test of primary support at 3600.
* Target calculation: 4100 + ( 4100 – 3900 ) = 4300 ; 4050 + ( 4050 – 3600 ) = 4500
Spain’s Madrid General Index displays healthy buying pressure on 13-week Twiggs Money Flow. Retracement that respects support at 900 would confirm a long-term advance to 1050*. Reversal below 900 is unlikely, but would warn of a correction.
* Target calculation: 900 + ( 900 – 750 ) = 1050
Italy’s MIB Index is weaker, following a rift between Prime Minister Enrico Letta and his coalition partner, Silvio Berlusconi. Follow-through below the rising trendline would test support at 16500. Recovery above 18000, on the other hand, would signal a primary advance with a long-term target of 20000*.
* Target calculation: 17500 + ( 17500 – 15000 ) = 20000
Europe: Bullish except for FTSE
European markets continue to display healthy primary up-trends with the exception of the FTSE 100 which warns of selling pressure.
Germany’s DAX broke through medium-term resistance at 8500, offering a medium-term target of 9000* and a long-term target of 9500*. Reversal below 8000 is unlikely, but would warn of another test of primary support at 7500.
* Target calculation: 8500 + ( 8500 – 8000 ) = 9000 ; 8500 + ( 8500 – 7500 ) = 9500
France’s CAC-40 is testing resistance at its 2011 high of 4200. Retracement to short-term support at 4100 is likely. Respect of support would be a bullish sign, while breakout above 4200 would offer an immediate target of 4300* and a long-term target of 4500*. Reversal below 3900 is unlikely but would warn of a bull trap.
* Target calculation: 4100 + ( 4100 – 3900 ) = 4300 ; 4050 + ( 4050 – 3600 ) = 4500
Spain’s Madrid General Index followed through above 900, but is now retracing to test the new support level. Respect would confirm a long-term advance to 1050* (960* in the medium-term). Rising 13-week Twiggs Money Flow indicates buying pressure. Reversal below 840 is unlikely, but would warn of a bull trap.
* Target calculation: 900 + ( 900 – 750 ) = 1050 ; 900 + ( 900 – 840 ) = 960
Italy’s MIB Index is testing resistance at 18000. Retracement to support at 17500 is likely, but respect would be bullish. Breakout above 18000 would offer an immediate target of 18500 and a long-term target of 20000*. Reversal below 16500 is most unlikely, but would warn of a bull trap.
* Target calculation: 17500 + ( 17500 – 15000 ) = 20000
Bearish divergence on the FTSE 100 (13-week Twiggs Money Flow) warns of strong selling pressure. Reversal below 6400 would warn of a primary down-trend, confirmed if the rising trendline is broken. Reversal of TMF below zero would strengthen the signal. Breakout above 6750 is unlikely, but would signal a medium-term advance to the 1999 high of 7000.
Europe: Unleash the bulls
Spain’s Madrid General Index broke resistance at 900, indicating a long-term advance to 1050* (960* in the medium-term). Rising 13-week Twiggs Money Flow indicates buying pressure. Reversal below 840 is unlikely, but would warn of a bull trap.
* Target calculation: 900 + ( 900 – 750 ) = 1050; 900 + ( 900 – 840 ) = 960
Germany’s DAX is similarly testing resistance at 8500. Breakout would offer a medium-term target of 9000* and a long-term target of 9500*. Recovery of 13-week Twiggs Momentum above 10% would also signal continuation of the primary up-trend.
* Target calculation: 8500 + ( 8500 – 8000 ) = 9000; 8500 + ( 8500 – 7500 ) = 9500
France’s CAC-40 is testing resistance at 4120. Breakout would offer a medium-term target of 4300*, but follow-through above its 2011 high at 4200 would also confirm a long-term advance to 4500*. Reversal below 3900 is unlikely but would warn of a bull trap.
* Target calculation: 4100 + ( 4100 – 3900 ) = 4300; 4050 + ( 4050 – 3600 ) = 4500
Italy’s MIB Index is also testing resistance, at 17700. Money Flow indicates strong buying pressure and breakout above 18000 would signal a long-term advance to 20000*. Reversal below 16500 is most unlikely, but would again warn of a bull trap.
* Target calculation: 17500 + ( 17500 – 15000 ) = 20000
The FTSE 100 is far more subdued, encountering resistance at 6600 after an end to the recent correction. Follow-through above 6700 would signal a medium-term advance to the 1999 high of 7000*, but reversal below 6500 would warn of another test of medium-term support at 6400. Failure of 6400, while unlikely, would test primary support at 6000.
Europe: Improving but beware of The Joker
Monthly charts best reflect the state of play in Europe. Germany and France are improving but there are still pockets of weakness elsewhere that threaten to destabilize the monetary union.
Germany’s DAX recovered above its 2007 high at 8200. Reversal below 8000 would indicate hesitancy, with another test of primary support (and rising trendline) at 7600. But the up-trend is intact and follow-through above 8500 would offer a long-term target of 9500*. Momentum is slowing but 13-week Twiggs Momentum holding above zero suggests continuation of the up-trend.
* Target calculation: 8500 + ( 8500 – 7500 ) = 9500
The FTSE 100 fell through support at 6500 but the long tail indicates buying pressure. Reversal below 6400 would confirm a correction to the rising trendline. Breakout above 6750 would signal an advance to the 1999 high of 7000, but strong bearish divergence on 13-week Twiggs Money Flow warns of a correction. Breach of primary support at 6000 would signal a reversal.
France’s CAC-40 is headed for another test of its 2011 high at 4200. Breakout would offer a long-term target of 4800*. Reversal below 3600 is unlikely but would signal a primary down-trend.
* Target calculation: 4200 + ( 4200 – 3600 ) = 4800
Italy’s MIB Index is testing resistance at 18000. Momentum is weakening so one needs to be prepared for another correction. But breakout would offer a target of 21000*.
* Target calculation: 18000 + ( 18000 – 15000 ) = 21000
Adam Taylor at Business Insider quotes Tim Parks from New York Review of Books:
If Nixon had refused to accept impeachment and had tried somehow to hang on to power, he would have been summarily removed. The same goes for any leader in Europe’s main democracies. Most will step down at the first sign of a serious criminal charge against them, aware that their parties will not support someone who damages their cause. The truly disquieting aspect of the present situation in Italy is not so much Berlusconi’s brazenness, but that his blackmail is possible and credible, that he has such complete control over such a large political party, and that he still commands considerable popular support. Astonishing as it may seem to those not familiar with the country, even serious newspapers and respectable commentators seem reluctant to insist on the enforcement of law, rarely mentioning the details of his crimes and actually giving credence to the argument that removing Berlusconi from the political scene would amount to disenfranchising the millions of voters who supported him at the previous election, as if there was no autonomous party in parliament to represent their views, as if they were not free to choose another leader before the next election.
The Joker may still have the last laugh.
Reproduced with thanks to Vincos on Flickr.com.
Spain’s Madrid General Index is testing resistance at 900. Momentum is weakening so, again, be prepared for another correction. But breakout above 900 would indicate an advance to 1050*.
* Target calculation: 900 + ( 900 – 750 ) = 1050
Europe: Still positive
Germany’s DAX found support at 7200. Respect would indicate another attempt at long-term resistance at 7500/7600. Rising troughs above zero on 13-week Twiggs Money Flow indicate strong buying pressure. Breakout would signal a long-term advance to 8400*.
* Target calculation: 7200 + ( 7200 – 6000 ) = 8400
Madrid General Index similarly found support at 770. A 63-day Twiggs Momentum trough above zero would indicate a primary up-trend. Respect of support would indicate a test of resistance at 900, while failure would retrace to 720.
France’s CAC-40 retraced to 3350. Respect would mean another test of 3600, while breach of the rising trendline would warn of a down-swing to test primary support at 2900. A 63-day Twiggs Momentum trough above zero would suggest a primary up-trend. Breakout above 3600 would confirm, offering a target of the 2011 high at 4100.
* Target calculation: 3600 + ( 3600 – 3000 ) = 4200
A daily chart of the FTSE 100 shows medium-term support at 5740. Follow-through above 5880 would indicate an attempt at primary resistance at 6000/6100. Rising 21-day Twiggs Money Flow troughs above zero indicate buying pressure, but the last (marginal) breakout above 5880 warns of strong resistance at 6000. Breakout above 6100 would offer a long-term target of 6750*.
* Target calculation: 6000 + ( 6000 – 5250 ) = 6750
UK & Europe
Dow Jones Europe Index found medium-term support at 220 but reversal of 13-week Twiggs Money Flow below zero warns of strong selling pressure. Breach of primary support at 210 would signal a decline to 160*, close to the 2009 low. Respect of support is less likely but would indicate a rally to 260.
* Target calculation: 210 – ( 260 – 210 ) = 160
The FTSE 100 is consolidating above 5250 on the weekly chart. 13-Week Twiggs Money Flow remains above zero but 63-day Twiggs Momentum warns of a primary down-trend. Failure of primary support at 5000/5100 would confirm.
* Target calculation: 5000 – ( 6000 – 5000 ) = 4000
UK & Europe: Closer to the breach
Europe inches closer to the point when the artificial levee, built to protect European banks from market forces, is breached. Germany and France delay the inevitable while they attempt to restore bank balance sheets — by widening interest margins at the expense of depositors and transferring risky bonds to the European Central Bank . They do their utmost to avert a Greek default, because of contagion risk to the rest of the euro-zone, but their actions merely encourage more strident demands from Greece. If the levee breaks, damage will be that much greater because of the build-up of market forces behind the artificial barrier.
Spain’s Madrid General Index broke support at the 2009 low of 700, signaling another primary decline with an immediate target of 600*. Reversal of 13-week Twiggs Money Flow below zero reinforces the signal.
* Target calculation: 750 – ( 900 – 750 ) = 600
Italy’s MIB Index broke primary support at 13000, confirming the earlier signal from 63-day Twiggs Momentum and offering a long-term target of 10000*. Recovery above 13500 is unlikely but would warn of a bear trap.
* Target calculation: 13500 – ( 17000 – 13500 ) = 10000
Germany’s DAX broke support at 6500 and is testing the rising trendline. Support remains strong, with 13-week Twiggs Money Flow holding above zero, but breach of the rising trendline and breach of short-term support at 6200 would indicate a test of primary support at 5400.
France’s CAC-40 is also headed for a test of primary support at 2800. Reversal of 13-week Twiggs Money Flow below zero warns of selling pressure. Failure of primary support would offer a long-term target of 2000*.
* Target calculation: 2800 – ( 3600 – 2800 ) = 2000
The FTSE 100 found short-term support at 5300 but breach of the rising trendline and 63-Day Twiggs Momentum below zero warn of a primary down-trend. Failure of primary support at 5000/5050 would offer a long-term target of 4000*.
* Target calculation: 5000 – ( 6000 – 5000 ) = 4000
UK & Europe: Madrid at 2009 low
The monthly chart of the Madrid General Index is testing its 2009 low of 700. With unemployment rates (24.4 per cent) similar to the US Great Depression and more than half of Spaniards under 25 jobless, there is no recovery in sight. 63-Day Twiggs Momentum oscillating below zero indicates a strong primary down-trend. Failure of support at 700 would signal another primary decline.
* Target calculation: 750 – ( 900 – 750 ) = 600
Italy’s MIB Index is more resilient, with recovery of 13-week Twiggs Money Flow above zero indicating buying pressure. Expect another test of resistance at 17000.
The CAC-40 monthly chart shows France in a similar fix. Failure of support at 3100 would indicate another test of primary support, close to the 2009 low of 2500. Recovery above 3600, however, would indicate another test of 4000 — especially if accompanied by recovery of 63-day Twiggs Momentum above 10%.
The German DAX respected support at 6500, confirming the primary up-trend. Rising 13-week Twiggs Money Flow indicates strong buying pressure. Expect another test of 7500.
The FTSE 100 respected support at 5600 and breakout above 5800 would signal an advance to 6400*. The 13-week Twiggs Money Flow trough above the zero line indicates buying pressure. Reversal below 5600 is unlikely but would warn that the primary up-trend is weakening.
* Target calculation: 6000 + ( 6000 – 5600 ) = 6400