Bellwether transport stock Fedex, in a primary down-trend, warns of slowing economic activity in the US. The 6-month Twiggs Momentum peak below zero flags a strong down-trend. Breach of support at 130.00 would warn of another decline — and worsening economic climate.
European equivalent Deutsche Post AG (DPW.DE), owner of DHL, also warns of declining economic activity. Breach of support at 23.00 would warn of another decline.
Last week I touched on the bearish divergence on the Nasdaq 100, warning of a reversal. This week we look at bearish signs on the Dow Jones Global Index, transport bellwether Fedex and a number of major indices outside the US and Japan.
First, the Dow Jones Global Index. After a failed breakout in May, the index broke through primary support at 300, warning of a down-trend. The subsequent rally allayed fears but ran into resistance at 320. Reversal below 300 would strengthen the bear signal, while a 13-week Twiggs Momentum peak below zero (and or breach of 290) would confirm the (primary) down-trend.
* Target calculation: 300 – ( 335 – 300 ) = 265
The S&P 500 is headed for a test of medium-term support at 2000. Peaks on 13-week Twiggs Money Flow are healthy, but reversal (of the index) below support would put us back in bear territory. Breach of primary support at 1870 is unlikely but would confirm a primary down-trend.
* Target calculation: 2130 + ( 2130 – 1870 ) = 2390
CBOE Volatility Index (VIX) below 20 indicates market risk is subdued, but some macro indicators remain elevated. Breakout above 20 would warn that risk is again climbing.
Transport bellwether Fedex is falling. Breach of $140 would signal a decline to $115*. Reversal of 13-week Twiggs Money Flow below zero warns of strong selling pressure.
* Target calculation: 140 – ( 165 – 140 ) = 115
Canada’s TSX 60 broke support at 765, confirming a primary down-trend. 13-Week Twiggs Momentum peaks below zero strengthen the bear signal. Target for the decline is 700*.
* Target calculation: 800 – ( 900 – 800 ) = 700
Germany’s DAX retreated below 11000, warning of a correction to test 10000. Declining 13-week Twiggs Money Flow peaks warn of selling pressure, but breach of primary support at 9300 remains unlikely.
The Footsie broke medium-term support at 6250, while 13-week Twiggs Money Flow below zero warns of strong selling pressure. Breach of 6000 is now likely and would signal a primary down-trend.
The Shanghai Composite Index is again testing support at 3500. Reversal below 3300 would confirm another assault on primary support at 3000. I remain wary of China because of the high Debt to GDP ratio, the need to wean itself off investment stimulus, and impending rate rises in the US which could encourage further capital outflows. The PBOC has massive foreign currency reserves which act as a buffer, but these have already been depleted by half a trillion Dollars.
Japan’s Nikkei 225 is retracing for another test of medium-term support at 19000. Respect would confirm an advance to 21000. Breach of 19000 is less likely, but Japan is not impervious to an emerging markets crisis. Collapse of Asian markets would damage exports.
* Target calculation: 19000 + ( 19000 – 17000 ) = 21000
India’s Sensex is testing 25000. Decline of 13-week Twiggs Money Flow below zero warns of selling pressure. Breach of support is likely and would confirm a primary down-trend with an initial target of 23000*.
* Target calculation: 26500 – ( 30000 – 26500 ) = 23000
The ASX 200 is testing primary support at 5000. Reversal of 13-week Twiggs Money Flow below zero indicates strong selling pressure. Breach is likely and would signal a primary down-trend.
* Target calculation: 5000 – ( 6000 – 5000 ) = 4000
Bears continue to dominate equity markets. Patches of support are visible across North America, Europe and Asia but this is likely to be a secondary rally rather than a trend change.
The Russian bear is also playing up. This time in Syria. Senator John McCain sums up the escalating crisis in the Middle East in this 15-minute video.
The S&P 500 respected support between 1870 and 1900, rallying toward another test of resistance at 2000. The 21-day Twiggs Money Flow peak just above zero continues to indicate (medium-term) selling pressure. Recovery above 2000 is unlikely, but would signal a relieving rally. Breach of support at 1870 would confirm the primary down-trend.
* Target calculation: 1900 – ( 2000 – 1900 ) = 1800
The CBOE Volatility Index (VIX) holding above 20 indicates elevated market risk.
NYSE short sales remain subdued.
Dow Jones Industrial Average is testing support at 16000. Long tails on the last two weekly candles and recovery of 13-week Twiggs Money Flow above zero indicate strong support. Breach of 16000 would confirm a primary down-trend but we are likely to see a (secondary) bear rally beforehand.
Bellwether transport stock Fedex continues to warn of a contraction in economic activity.
And retail sales growth remains subdued.
A long tail on Canada’s TSX 60 indicates continued support despite the breach of 790. Declining 13-week Twiggs Momentum below zero indicates a primary down-trend. Recovery above 820 is unlikely, but would suggest a bear trap.
* Target calculation: 800 – ( 900 – 800 ) = 700
Germany’s DAX signals a primary down-trend, but appears to have found secondary support at 9500. Recovery of 13-week Twiggs Money Flow above zero would suggest a bear rally.
The Footsie found strong support at 6000, with long tails and 13-week Twiggs Money Flow recovering above zero. Penetration of the descending trendline is unlikely but would warn of a bear trap. Breach of support at 6000 is more likely and would confirm the primary down-trend.
The Shanghai Composite Index continues to test government-enforced support at 3000. Recovery above 3500 is most unlikely. Breach of 3000 would warn of another sharp sell-off.
Hong Kong’s Hang Seng Index broke support at 21000, confirming the primary down-trend — signaled earlier by 13-week Twiggs Money Flow.
Japan’s Nikkei 225 is testing primary support between 16500 and 17000. Gradual decline on 13-week Twiggs Money Flow suggests a secondary correction, but reversal of 13-week Momentum below zero warns of a primary down-trend. Breach of 16500 would confirm.
* Target calculation: 17500 – ( 19000 – 17500 ) = 16000
India’s Sensex found support at 25000 before testing resistance at 26500. 13-Week Twiggs Money Flow trough above zero indicates strong buying pressure. Recovery above 26500 would warn of a bear trap. Reversal below 25000 is less likely, but would confirm the primary down-trend.
* Target calculation: 25000 – ( 26500 – 25000 ) = 23500
The ASX 200 also shows solid support at 5000, with rising 21-Day Twiggs Money Flow indicating medium-term buying pressure. Recovery above 5200 would indicate a bear rally. Breach of 5000 remains likely, however, and would confirm the primary down-trend.
* Target calculation: 5000 – ( 5400 – 5000 ) = 4600
I think anybody who is a great investor, a good investor, a successful investor has to be a person who can be both aggressive and defensive….. have enough fear to have the caution. But you can’t let the fear control you.
~ Ray Dalio, Bridgewater Associates
Profit margins in the US are contracting, with the second quarter showing a 6.0% decine in profit per unit of real gross value added (Nonfinancial). Contraction of greater than 10% would be cause for concern, but we need to dig a little deeper.
Earnings per share for the S&P 500 Index declined for the last two quarters and is projected to decline for the next two quarters as well (Q2 which is 98.6% complete and Q3 2015).
The sharp fall in index earnings is primarily caused by losses in the Energy sector. Other sectors are reasonably healthy.
Another cause for concern is bellwether transport stock Fedex. Commencement of a primary down-trend normally warns that economic activity is contracting. Freight revenue for the fiscal fourth quarter increased by only 1%, while ground revenue increased by 19%. Slower earnings growth due to a lag in fuel surcharges and integration challenges with the acquisition of TNT may both be weighing on the stock.
The Freight Transportation Services Index, however, has turned upwards.
And the LoDI Index continues to climb.
The LoDI Index uses linear regression analysis to combine cargo volume data from rail, barge, air, and truck transit, along with various economic factors. The resulting indicator is designed to predict upcoming changes in the level of logistics and distribution activity in the US and is represented by a value between 1 and 100. An index at or above 50 represents a healthy level of activity in the industry.
Spending on durables remains promising, with light motor vehicle sales rising.
And construction spending (adjusted for core CPI) climbing steeply.
The ISM Manufacturing PMI Composite Index remains above 50, indicating expansion, but is softer than it has been for a while.
The Leading Index from the Philadelphia Fed, however, at a healthy 1.57%, continues to project a healthy economic outlook.
Despite the falling Fedex stock price and softer PMI, there does not appear to be much wrong with the US economy. The positives outweigh the negatives. Analysts’ optimism about an fourth quarter upturn may be a little premature, but does not appear far off-track.
The 1990s featured two significant upheavals in global financial markets. First, 1990 saw the Nikkei collapse from its high of 39000, reaching an eventual low of 7000 in 2008.
The collapse followed strong appreciation of the Yen after the September 1985 Plaza Accord and the ensuing October 1987 global stock market crash. The Plaza Accord attempted to curtail long-term currency manipulation by Japan who had built up foreign reserves — mainly through purchases of US Treasuries — to suppress appreciation of the Yen against the Dollar and maintain a current account surplus.
Seven years later, collapsing currencies during the 1997 Asian financial crisis destroyed fast-growing economies — with Thailand, South Korea and Indonesia experiencing 40%, 34% and 83% falls in (1998) GNP respectively — and eventually led to the 1998 Russian default and break up of the Soviet Union. Earlier, rapidly growing exports with currencies pegged to the Dollar brought a flood of offshore investment and easy credit into the Asian tigers. Attempts by the IMF to impose discipline and a string of bankruptcies spooked investors into a stampede for the exits. Falling exchange rates caused by the stampede led to a further spate of bankruptcies as domestic values of dollar-denominated debt skyrocketed. Attempts by central banks to shore up their currencies through raising interest rates failed to stem the outflow and further exacerbated the disaster, causing even more bankruptcies, with borrowers unable to meet higher interest charges.
What we are witnessing is a repeat of the nineties. This time it was China that attempted to ride the dragon, pegging its currency against the Dollar and amassing vast foreign reserves in order to suppress appreciation of the Yuan and boost exports. The Chinese economy benefited enormously from the vast trade surplus with the US, but those who live by the dragon die by the dragon. Restrictions on capital inflows into China may dampen the reaction, compared to the 1997 crisis, but are unlikely to negate it. The market will have its way.
Financial markets in the West are cushioned by floating exchange rates which act as an important shock-absorber against fluctuations in financial markets. The S&P 500 fell 13.5% in 1990 but only 3.5% in October 1997. The ensuing collapse of the ruble and failure of LTCM, however, caused another fall of 9.0% a year later. Not exactly a crisis, but unpleasant all the same.
The domestic US economy slowed in the past few months but increased spending on light motor vehicles and housing suggested that robust employment growth would continue. Upheaval in financial markets (and exports) now appears likely to negate this, leading to a global market down-turn.
The S&P 500 breached primary support at 1980, signaling a primary down-trend. The index has fallen 4.5% from its earlier high and presents a medium-term target of 1830*. Decline of 13-week Twiggs Money Flow below zero would confirm the signal but descent has been gradual, suggesting medium-rather than long-term selling pressure.
* Target calculation: 1980 + ( 2130 – 1980 ) = 1830
The CBOE Volatility Index (VIX) spiked upwards indicating rising market risk.
Bellwether transport stock Fedex broke primary support at $164, confirming the primary down-trend signaled by 13-week Twiggs Money Flow reversal below zero. The fall warns of declining economic activity.
Canada’s TSX 60 broke primary support at 800, confirming the earlier bear signal from 13-week Twiggs Momentum reversal below zero. Target for a decline is 700*.
* Target calculation: 800 – ( 900 – 800 ) = 700
Germany’s DAX broke medium-term support at 10700. Expect further medium-term support at 10000 but reversal of 13-week Twiggs Money Flow below zero warns of selling pressure. Breach of 10000 would indicate a test of primary support at 9000.
* Target calculation: 10700 – ( 11800 – 10700 ) = 9600
The Footsie broke 6450, signaling a test of primary support at 6100. Reversal of 13-week Twiggs Money Flow below zero warns of (long-term) selling pressure. Breach of 6100 would offer a target of 5000**.
* Target calculation: 6450 – ( 6800 – 6450 ) = 6100 **Long-term: 6000 – ( 7000 – 6000 ) = 5000
The Shanghai Composite reflects artificial, state-backed support at 3500. Declining 13-week Twiggs Money Flow warns of long-term selling pressure. Withdrawal of government support is unlikely, but breach of 3400/3500 would cause a nineties-style collapse in stock prices.
* Target calculation: 4000 – ( 5000 – 4000 ) = 3000
Japan’s Nikkei 225 appears headed for a test of 19000. Breach would test primary support at 17000 but, given the scale of BOJ easing, respect is as likely and would indicate further consolidation between 19000 and 21000. Gradual decline of 13-week Twiggs Money Flow suggests medium-term selling pressure.
* Target calculation: 21000 + ( 21000 – 19000 ) = 23000
India’s Sensex is holding up well, with rising 13-week Twiggs Money Flow signaling medium-term buying pressure. Breakout above 28500 is unlikely but would indicate another test of 30000. Decline below 27000 would warn of a primary down-trend; confirmed if there is follow-through below 26500.
Commodity-rich Australian stocks are exposed to China and emerging markets. The only protection is the floating exchange rate which is likely to adjust downward to absorb the shock — as it did during the 1997 Asian crisis. 13-Week Twiggs Money Flow below zero warns of (long-term) selling pressure on the ASX 200. Breach of support at 5150 is likely and would confirm a primary down-trend. Long-term target for the decline is 4400*. Respect of primary support is unlikely, but would indicate consolidation above the support level rather than a rally.
The 1990s featured two significant upheavals in global financial markets. First, 1990 saw the Nikkei collapse from its high of 39000, reaching an eventual low of 7000 in 2008.
The collapse followed strong appreciation of the Yen after the September 1985 Plaza Accord and the ensuing October 1987 global stock market crash. The Plaza Accord attempted to curtail long-term currency manipulation by Japan who had built up foreign reserves — mainly through purchases of US Treasuries — to suppress appreciation of the Yen against the Dollar and maintain a current account surplus.
Seven years later, collapsing currencies during the 1997 Asian financial crisis destroyed fast-growing economies — with Thailand, South Korea and Indonesia experiencing 40%, 34% and 83% falls in (1998) GNP respectively — and eventually led to the 1998 Russian default and break up of the Soviet Union. Earlier, rapidly growing exports with currencies pegged to the Dollar brought a flood of offshore investment and easy credit into the Asian tigers. Attempts by the IMF to impose discipline and a string of bankruptcies spooked investors into a stampede for the exits. Falling exchange rates caused by the stampede led to a further spate of bankruptcies as domestic values of dollar-denominated debt skyrocketed. Attempts by central banks to shore up their currencies through raising interest rates failed to stem the outflow and further exacerbated the disaster, causing even more bankruptcies, with borrowers unable to meet higher interest charges.
What we are witnessing is a repeat of the nineties. This time it was China that attempted to ride the dragon, pegging its currency against the Dollar and amassing vast foreign reserves in order to suppress appreciation of the Yuan and boost exports. The Chinese economy benefited enormously from the vast trade surplus with the US, but those who live by the dragon die by the dragon. Restrictions on capital inflows into China may dampen the reaction, compared to the 1997 crisis, but are unlikely to negate it. The market will have its way.
Financial markets in the West are cushioned by floating exchange rates which act as an important shock-absorber against fluctuations in financial markets. The S&P 500 fell 13.5% in 1990 but only 3.5% in October 1997. The ensuing collapse of the ruble and failure of LTCM, however, caused another fall of 9.0% a year later. Not exactly a crisis, but unpleasant all the same.
The domestic US economy slowed in the past few months but increased spending on light motor vehicles and housing suggested that robust employment growth would continue. Upheaval in financial markets (and exports) now appears likely to negate this, leading to a global market down-turn.
The S&P 500 breached primary support at 1980, signaling a primary down-trend. The index has fallen 4.5% from its earlier high and presents a medium-term target of 1830*. Decline of 13-week Twiggs Money Flow below zero would confirm the signal but descent has been gradual, suggesting medium-rather than long-term selling pressure.
* Target calculation: 1980 + ( 2130 – 1980 ) = 1830
The CBOE Volatility Index (VIX) spiked upwards indicating rising market risk.
Bellwether transport stock Fedex broke primary support at $164, confirming the primary down-trend signaled by 13-week Twiggs Money Flow reversal below zero. The fall warns of declining economic activity.
Canada’s TSX 60 broke primary support at 800, confirming the earlier bear signal from 13-week Twiggs Momentum reversal below zero. Target for a decline is 700*.
* Target calculation: 800 – ( 900 – 800 ) = 700
Germany’s DAX broke medium-term support at 10700. Expect further medium-term support at 10000 but reversal of 13-week Twiggs Money Flow below zero warns of selling pressure. Breach of 10000 would indicate a test of primary support at 9000.
* Target calculation: 10700 – ( 11800 – 10700 ) = 9600
The Footsie broke 6450, signaling a test of primary support at 6100. Reversal of 13-week Twiggs Money Flow below zero warns of (long-term) selling pressure. Breach of 6100 would offer a target of 5000**.
* Target calculation: 6450 – ( 6800 – 6450 ) = 6100 **Long-term: 6000 – ( 7000 – 6000 ) = 5000
The Shanghai Composite reflects artificial, state-backed support at 3500. Declining 13-week Twiggs Money Flow warns of long-term selling pressure. Withdrawal of government support is unlikely, but breach of 3400/3500 would cause a nineties-style collapse in stock prices.
* Target calculation: 4000 – ( 5000 – 4000 ) = 3000
Japan’s Nikkei 225 appears headed for a test of 19000. Breach would test primary support at 17000 but, given the scale of BOJ easing, respect is as likely and would indicate further consolidation between 19000 and 21000. Gradual decline of 13-week Twiggs Money Flow suggests medium-term selling pressure.
* Target calculation: 21000 + ( 21000 – 19000 ) = 23000
India’s Sensex is holding up well, with rising 13-week Twiggs Money Flow signaling medium-term buying pressure. Breakout above 28500 is unlikely but would indicate another test of 30000. Decline below 27000 would warn of a primary down-trend; confirmed if there is follow-through below 26500.
Commodity-rich Australian stocks are exposed to China and emerging markets. The only protection is the floating exchange rate which is likely to adjust downward to absorb the shock — as it did during the 1997 Asian crisis. 13-Week Twiggs Money Flow below zero warns of (long-term) selling pressure on the ASX 200. Breach of support at 5150 is likely and would confirm a primary down-trend. Long-term target for the decline is 4400*. Respect of primary support is unlikely, but would indicate consolidation above the support level rather than a rally.
The rally in bellwether transport stock Fedex was short-lived and it is once again testing primary support at $164. Declining 13-week Twiggs Momentum, below zero, warns of a primary down-trend. Breach of support would confirm, suggesting a broad slow-down in US economic activity.
The Freight Transportation Services Index reinforces this, declining since late 2014.
But the LoDI Index contradicts, continuing its climb.
The LoDI Index uses linear regression analysis to combine cargo volume data from rail, barge, air, and truck transit, along with various economic factors. The resulting indicator is designed to predict upcoming changes in the level of logistics and distribution activity in the US and is represented by a value between 1 and 100. An index at or above 50 represents a healthy level of activity in the industry.
Growth in retail trade (excluding Motor Vehicles, Gasoline and Spares) also declined for the last two quarters but remains above core CPI.
On a positive note, however, light motor vehicle sales are climbing.
New housing starts are edging upwards while building permits jumped sharply, indicating further increases.
And overall construction spending is steadily rising.
Solid rises in spending on durables suggests further employment growth. This makes me reasonably confident that retail sales and freight/transport activity will recover. All the same, it would pay to keep a weather eye on Fedex and the transport indices.
The rally in bellwether transport stock Fedex was short-lived and it is once again testing primary support at $164. Declining 13-week Twiggs Momentum, below zero, warns of a primary down-trend. Breach of support would confirm, suggesting a broad slow-down in US economic activity.
The Freight Transportation Services Index reinforces this, declining since late 2014.
But the LoDI Index contradicts, continuing its climb.
The LoDI Index uses linear regression analysis to combine cargo volume data from rail, barge, air, and truck transit, along with various economic factors. The resulting indicator is designed to predict upcoming changes in the level of logistics and distribution activity in the US and is represented by a value between 1 and 100. An index at or above 50 represents a healthy level of activity in the industry.
Growth in retail trade (excluding Motor Vehicles, Gasoline and Spares) also declined for the last two quarters but remains above core CPI.
On a positive note, however, light motor vehicle sales are climbing.
New building permits for private housing retreated in July but the trend remains upwards and new housing starts are increasing.
Overall construction spending is also rising.
Solid growth in spending on durables suggests further employment increases. This makes me reasonably confident that retail sales and freight/transport activity will recover. All the same, it would pay to keep a weather eye on Fedex and the transport indices.
[August 19th – This post was updated for Fedex and today’s release on Housing Permits and New Building Starts]
Earnings results for the second quarter of 2015 remain on track. Of the 354 stocks in the S&P 500 that have reported, 252 (71%) beat, 26 met and 76 (21%) missed their estimates.
The S&P 500 has lost momentum since March 2015, consolidating below resistance at 2130. Gradual decline of 13-week Twiggs Money Flow suggests buyers remain interested and this is a secondary formation. Breakout above 2130 would signal an advance to 2200*, but there is no indication that this is imminent. Reversal below support at 2040/2050 is unlikely, but penetration of the rising trendline would warn of a reversal — confirmed if support at 1980/2000 is breached.
* Target calculation: 2130 + ( 2130 – 2050 ) = 2210
Dow Jones Industrial Average is weaker than the S&P 500. Breach of support at 17500 would test primary support at 17000. Reversal of 13-week Twiggs Money Flow below zero would warn of selling pressure.
The CBOE Volatility Index (VIX) remains low — typical of a bull market.
Canada’s TSX 60 broke through the upper trend channel, suggesting the correction is over. Follow-through above 875 would indicate another test of 900. Recovery of 13-week Twiggs Momentum above zero would strengthen the signal.
Germany’s DAX respected support at 11000. Follow-through above 11800 would indicate another test of 12400. Rising 13-week Twiggs Money Flow indicates medium-term buying pressure.
* Target calculation: 12500 + ( 12500 – 11000 ) = 14000
The Footsie similarly respected support at 6500. Follow-through above 6800 would complete a double bottom reversal, indicating a test of 7100. A 13-week Twiggs Money Flow trough above zero flags buying pressure.
* Target calculation: 7000 + ( 7000 – 6500 ) = 7500
The Shanghai Composite continues to reflect selling pressure with declining 13-week Twiggs Money Flow. Withdrawal of government support is unlikely, but would cause a breach of 3400/3500.
* Target calculation: 4000 – ( 5000 – 4000 ) = 3000
Japan’s Nikkei 225 is respected support at 20000, indicating another test of 21000. Breakout above 21000 would offer a target of 23000*. Decline of 13-week Twiggs Money Flow has leveled off. Reversal below support at 20000 is unlikely but would warn of another test of 19000.
* Target calculation: 21000 + ( 21000 – 19000 ) = 23000
A higher trough on India’s Sensex suggests buying pressure. Rising 13-week Twiggs Money Flow confirms. Breakout above 28500 would signal another test of 30000. Decline below 27000 is unlikely.
The ASX 200 encountered stubborn resistance at 5700. Rising troughs on 21-day Twiggs Money Flow continue to indicate buying pressure. Respect of support at 5550 would be bullish, while breakout above 5700 would indicate another test of 6000. Failure of 5550 is less likely, but would test medium-term support at 5400.
I find the idea that you can introduce democracy by military force a very quaint idea. Moreover, if I wanted to choose a testing ground for doing it, Iraq would be the last nation I would choose.
~ George Soros (2004)
The next update for S&P 500 and ASX200 Prime Momentum strategies will be on the weekend, so that investors can place trades on Monday, 3rd August 2015, the first trading day of the month.
Bellwether transport stock Fedex respected primary support at $164, rallying strongly to form a bullish engulfing candle on the weekly chart. Recovery of 13-week Twiggs Money Flow above zero would confirm the bull signal, suggesting a target of $184. Breach of $164 is now unlikely, but a primary down-trend would warn that broad economic activity is contracting.
The reporting season got off to a shaky start with Apple and Microsoft disappointing but the ship has steadied. Of the 187 stocks in the S&P 500 that have reported so far, 138 (74%) beat, 14 met and 35 (19%) missed their estimates.
The S&P 500 found support above 2050, the higher trough on 21-day Twiggs Money Flow indicating increased interest from buyers. Breakout above 2130 would signal an advance to 2200*, but further consolidation below the resistance level is likely. Reversal below support at 2040/2050 is unlikely.
* Target calculation: 2130 + ( 2130 – 2050 ) = 2210
The CBOE Volatility Index (VIX) indicates low volatility typical of a bull market.
Canada’s TSX 60 rallied off the lower trend channel but is likely to encounter resistance at the upper trend channel and 855. Declining 13-week Twiggs Momentum below zero warns of a primary down-trend. Breach of support at 800 would confirm.
Germany’s DAX is testing support at 11000. A fall-off in export sales to China may be weighing on the market. The decline in 13-week Twiggs Money Flow has leveled off and a trough above zero would signal long-term buyers are driving the market. Recovery above the (second) descending trendline would suggest another advance; confirmed if resistance at 12400 is broken. Reversal below 10700 is unlikely.
* Target calculation: 12500 + ( 12500 – 11000 ) = 14000
The Footsie found support at 6500. Recovery above 6800 would complete a double bottom reversal, indicating a test of 7100. Completion of a 13-week Twiggs Money Flow trough above zero would also flag buying pressure.
* Target calculation: 7000 + ( 7000 – 6500 ) = 7500
The Shanghai Composite experienced strong buying at Wednesday’s close. Support resumed at 3800 on Thursday but efforts to restore stability are likely to undermine credibility of stock prices. The large divergence on 13-week Twiggs Money Flow continues to warn of selling pressure.
* Target calculation: 4000 – ( 5000 – 4000 ) = 3000
Japan’s Nikkei 225 is testing support at 20000. Respect would indicate another test of 21000. Breakout above 21000 would offer a target of 23000*. Decline of 13-week Twiggs Money Flow has leveled off, but failure of support at 20000 would signal further selling pressure and another test of 19000.
* Target calculation: 21000 + ( 21000 – 19000 ) = 23000
India’s Sensex retreated below 28000, suggesting another test of primary support. Respect of the rising trendline and support at 27000 would indicate the primary up-trend is intact, while breach of 26500 would signal a reversal. A 13-week Twiggs Money Flow trough at zero would confirm buying pressure, while decline below zero would warn of a primary down-trend.
The ASX 200 is testing resistance at 5650/5700. Breakout would indicate another test of 6000. 13-Week Twiggs Money Flow leveled off, suggesting that selling pressure has eased and the primary up-trend is intact. Reversal below 5400 is unlikely, but would warn of a test of primary support at 5150/5200.
It’s not whether you’re right or wrong, but how much money you make when you’re right and how much you lose when you’re wrong.
~ George Soros
