A 30 percent decline on the Fedex weekly chart reflects the slowing rate of economic activity. Recovery above resistance at $70 suggests another bear market rally, but the primary trend is down. Declining 13-week Twiggs Money Flow, below zero, indicates long-term selling pressure.
* Target calculation: 70 – (80 – 70 ) = 60
The weekly chart of Deutsche Post AG indicates similar weakness in Europe. We may see a rally test resistance at €11.00 but the primary trend is down and reversal below €9.00 would offer a target of €7.00*.
* Target calculation: 9 – ( 11 – 9 ) = 7
Transport bellwether Fedex respected resistance at $70, signaling a down-swing to $55*. 13-week Twiggs Money Flow declining below zero indicates a strong primary down-trend. UPS (lime green) is also in a primary down-trend; reversal below its August low would confirm the Fedex bear signal. Declining transport stocks warn of shrinking activity levels in the overall economy.
* Target calculation: 70 – ( 85 – 70 ) = 55
Bellwether transport stocks Fedex and UPS are both in a primary down-trend, warning of a decline in economic activity.
* Target calculation: 85 – ( 100 – 85 ) = 70
Deutsche Post-DHL shows a similar drop of about 30% from its 2010 peak, indicating that European and international shipping are unlikely to fare any better.
* Target calculation: 12 – ( 14 – 12 ) = 10
Don’t be fooled by current month-end froth in the markets — into thinking that the bear market is over or that the early August plunge was a false signal. The S&P 500 Index has made little headway after completing a double bottom at 1200 despite average volumes indicating the absence of strong selling. 63-Day Momentum peaking below the zero line indicates a primary down-trend. Expect the bear rally to test resistance at 1250/1260 before a retreat to 1100. Breach of 1100 would find support at the 2010 low of 1000, but the calculated target is even lower*.
* Target calculation: 1100 – ( 1250 – 1100 ) = 950
The Nasdaq 100 performed better, clearing 2200 to complete a double bottom with a target of 2350*. Bullish divergence on 13-week Twiggs Money Flow indicates buying pressure. But this is a bear rally in the middle of a bear market, and further falls on the Dow/S&P 500 would drag the Nasdaq lower.
* Target calculation: 2200 + ( 2200 – 2050 ) = 2350
Fedex and UPS remain in a primary down-trend, indicating that economic activity levels remain poor.