Tag: FTSE 100

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DAX surges ahead while others retreat

The DAX is headed for its long-term target of 12000 while most markets (other than Japan) undergo a correction.

The S&P 500 broke support at 2080, indicating a correction to test 2000. Breach of primary support is unlikely and another 13-week Twiggs Money Flow trough above zero would signal another advance.

S&P 500 Index

* Target calculation: 2100 + ( 2100 – 2000 ) = 2200

Dow Jones Industrial Average is similarly correcting to test primary support at 17000.

Dow Jones Industrial Average

CBOE Volatility Index continues to indicate low risk typical of a bull market.

S&P 500 VIX

Europe

Germany’s DAX broke resistance at 11500 and is headed for a test of the long-term target at 12000*. Expect further resistance, possibly a correction, at this level. Rising 13-week Twiggs Momentum indicates a strong up-trend.

DAX

* Target calculation: 11000 + ( 11000 – 10000 ) = 12000

The Footsie retreated from a test of its December 1999 high of 6950. 13-Week Twiggs Momentum oscillating around zero indicates further consolidation. Expect a test of support at 6500.

FTSE 100

* Target calculation: 7000 + ( 7000 – 6000 ) = 8000

Asia

China’s Shanghai Composite Index is consolidating between 3050 and 3400. Declining 13-week Twiggs Money Flow warns of medium-term selling pressure. Reversal below 3050 would warn of a decline to test the primary trendline at 2700. Breakout above 3400 is less likely, but would signal another primary advance.

Shanghai Composite Index

Breach of support at 24000 on Hong Kong’s Hang Seng Index warns of further weakness in China. Follow-through below 23000 would indicate a primary down-trend — and a stronger bear signal (for China).

Hang Seng Index

Japan’s Nikkei 225 Index is retracing to test new support at its 2007 high of 18000/18300. Rising 13-week Twiggs Momentum indicates a strong up-trend. Respect of support is likely and would signal an advance to 20000* — confirmed by follow-through above 19000.

Nikkei 225 Index

* Target calculation: 18000 + ( 18000 – 16000 ) = 20000

India’s Sensex faces stiff resistance at 30000. Bearish divergence on 13-week Twiggs Momentum warns the primary-trend is weakening, but not necessarily a reversal. This could be a mid-point consolidation. Retreat below 29000 indicates a correction. Follow-through below 28000 would test primary support at 26500/27000. Respect of the primary trendline would establish a solid base for further advances.

SENSEX

Australia

The ASX 200 found support at 5750. Recovery above 5850 would suggest the correction is over. Follow-through above 6000 would confirm another advance, with a target of 6250*. Declining 21-day Twiggs Money Flow indicates mild selling pressure. Breach of 5750 is less likely, but would warn of a correction to 5500.

ASX 200

* Target calculation: 6000 + ( 6000 – 5750 ) = 6250


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When good news is bad news

Crude in contango

Life is a school of probability.

~ Walter Bagehot (hat tip to Barry Ritholz)

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Market strength

Apart from China and India, major markets continue to look bullish.

The S&P 500 is retracing to test support at 2080/2100, but respect is likely and would confirm an advance to 2200*. Oscillation of 13-week Twiggs Money Flow high above zero indicates strong long-term buying pressure.

S&P 500 Index

* Target calculation: 2100 + ( 2100 – 2000 ) = 2200

A quarterly chart shows the Nasdaq 100 headed for its Dotcom high of 4800. Expect major resistance at this level. Correction back to 4000 and the primary trendline may provide a long-term buying opportunity.

Nasdaq 100 Index

CBOE Volatility Index at 14 indicates low risk typical of a bull market.

S&P 500 VIX

Europe

Germany’s DAX found resistance at 11500. Expect retracement to test new support at 11000, but respect is likely and would confirm the target of 12000*. Rising 13-week Twiggs Money Flow indicates healthy buying pressure.

DAX

* Target calculation: 11000 + ( 11000 – 10000 ) = 12000

The Footsie is consolidating below its December 1999 high of 6950. 13-Week Twiggs Money Flow oscillating high above zero indicates long-term buying pressure. Breakout would signal a fresh primary advance, with a long-term target of 8000*. Follow-through above 7000 would confirm.

FTSE 100

* Target calculation: 7000 + ( 7000 – 6000 ) = 8000

Asia

China’s Shanghai Composite Index faces resistance at 3400. Declining 13-week Twiggs Money Flow warns of medium-term selling pressure. Reversal below 3050 would warn of a decline to test the primary trendline at 2700. Breakout above 3400 is less likely, but would signal another primary advance.

Shanghai Composite Index

Japan’s Nikkei 225 Index is likely to retrace to test new support at its 2007 high of 18000/18300. Rising 13-week Twiggs Money Flow indicates buying pressure. Respect is likely and would signal an advance to 20000*.

Nikkei 225 Index

* Target calculation: 18000 + ( 18000 – 16000 ) = 20000

India’s Sensex encountered stiff resistance at 30000. Declining 13-week Twiggs Money Flow indicates medium-term selling pressure. Reversal below 28000 would warn of a correction to 26500/27000. Respect of the primary trendline would establish a solid base for further advances, otherwise we may see an extended consolidation below 30000.

SENSEX

Australia

The ASX 200 encountered resistance at 6000, retracing to test support at 5850. 13-Week Twiggs Money Flow continues to reflect healthy buying pressure. Respect of support would indicate continuation of the advance, towards 6150*. Follow-through above 6000 would confirm. Breach of 5850 is less likely, but would warn of a correction back to the rising trendline, around 5650.

ASX 200

* Target calculation: 5650 + ( 5650 – 5150 ) = 6150

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The rally continues

Apart from China and India, last week’s broad market rally is going strong, with the S&P 500 and the DAX making new highs.

The S&P 500 broke resistance at 2100. Expect retracement to test the new support level, but respect is likely to confirm an advance to 2200*. Rising 13-week Twiggs Money Flow indicates medium-term buying pressure.

S&P 500 Index

* Target calculation: 2100 + ( 2100 – 2000 ) = 2200

CBOE Volatility Index is declining, indicating low risk typical of a bull market.

S&P 500 VIX

Europe

Germany’s DAX broke resistance at its medium-term target of 11000*. Expect retracement to test the new support level. Respect of support would indicate trend strength and a medium-term target of 11500 (10000-8500). Rising 13-week Twiggs Momentum troughs above zero predict a strong up-trend.

DAX

* Target calculation: 10000 + ( 10000 – 9000 ) = 11000

The Footsie is testing its December 1999 high of 6950. Breakout would signal a fresh primary advance, with a long-term target of 8000*. Follow-through above 7000 would confirm. Momentum is rising, but it will take considerable impetus to make a new high.

FTSE 100

* Target calculation: 7000 + ( 7000 – 6000 ) = 8000

Asia

China’s Shanghai Composite Index faces considerable resistance at 3400. Declining 13-week Twiggs Money Flow warns of medium-term selling pressure. Reversal below 3050 would warn of a decline to test the primary trendline at 2700.

Shanghai Composite Index

Is the Chinese economy a one-trick pony or will economic growth continue when the infrastructure boom ends?

Japan’s Nikkei 225 Index broke resistance at its 2007 high of 18000/18300. Rising 13-week Twiggs Money Flow reflects buying pressure. Expect retracement to test the new support level, but target for the advance is 20000*.

Nikkei 225 Index

* Target calculation: 18000 + ( 18000 – 16000 ) = 20000

India’s Sensex is testing resistance at 30000, but declining 13-week Twiggs Momentum over the last 6 months warns the primary up-trend is weakening. A healthy correction to 26500/27000 (signaled by breach of support at 28000) would re-establish a solid base, otherwise the index may struggle to break 30000.

SENSEX

Australia

The ASX 200 is consolidating between 5850 and 5950. The narrow range is a bullish sign and breakout above 5950 would indicate continuation of the advance to 6150*. Rising 13-week Twiggs Money Flow indicates buying pressure. Reversal below support at 5850 is unlikely, but would warn of a correction.

ASX 200

* Target calculation: 5650 + ( 5650 – 5150 ) = 6150

Alexander Hamilton started the U.S. Treasury with nothing, and that was the closest our country has ever been to being even.

~ Will Rogers

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Broad market rally

Major indices across the US, Europe and Japan are displaying strong performance. China and India appear to be encountering stronger resistance, but should also be buoyed by the broad recovery.

Bellwether transport stock Fedex (FDX) is headed for another test of resistance at $182/$184. Breakout would signal a primary advance, with a target of $200*, indicating that economic activity is improving.

Fedex

* Target calculation: 184 + ( 184 – 168 ) = 200

The S&P 500 is testing resistance at 2100. Breakout would offer a medium-term target of 2200*. Rising 13-week Twiggs Money Flow indicates medium-term buying pressure. Respect of 2100 is unlikely, but would suggest another test of primary support at 2000.

S&P 500 Index

* Target calculation: 2100 + ( 2100 – 2000 ) = 2200

The Nasdaq 100 successfully penetrated resistance at 4300/4350, signaling an advance to 4500*. Oscillation of 13-week Twiggs Money Flow high above zero suggests strong buying pressure. Expect retracement to test the new support level, but breach is unlikely and would warn of another correction.

Nasdaq 100 Index

* Target calculation: 4300 + ( 4300 – 4100 ) = 4500

CBOE Volatility Index broke out below the recent triangle, indicating risk has reverted from Moderate to Low.

S&P 500 VIX

Europe

Germany’s DAX is testing resistance at 11000*. Rising 13-week Twiggs Momentum troughs above zero indicate a strong up-trend. Retracement that respects medium-term support at 10600 would strengthen the bull signal.

DAX

* Target calculation: 10000 + ( 10000 – 9000 ) = 11000

The Footsie is also testing long-term resistance at 6900. Breakout would signal a fresh primary advance, with a long-term target of 8000*. Follow-through above 7000 would confirm. Momentum is rising, but it will take considerable impetus to break through the December 1999 high of 6950.

FTSE 100

* Target calculation: 7000 + ( 7000 – 6000 ) = 8000

Asia

China’s Shanghai Composite Index found support at 3050, but declining 13-week Twiggs Money Flow warns of medium-term selling pressure. Respect of resistance at 3400 is likely. Reversal below 3050 would warn of a test of the primary trendline at 2700. The stimulus effect of lower energy prices may cushion the fall but economic activity is declining.

Shanghai Composite Index

Japan’s Nikkei 225 Index continues to test resistance at its 2007 high of 18000. Rising 13-week Twiggs Money Flow reflects medium-term buying pressure. Breakout above 18000 would signal another primary advance, with a target of 20000*.

Nikkei 225 Index

* Target calculation: 18000 + ( 18000 – 16000 ) = 20000

India’s SENSEX found support at 28000 and recovery above 29000 signals another test of 30000. A lower peak on 13-week Twiggs Money Flow reflects medium-term selling pressure. Respect of resistance at 30000 is likely, while breach of support at 28000 would test primary support at 26500.

SENSEX

* Target calculation: 29000 + ( 29000 – 27000 ) = 31000

Australia

The ASX 200 is headed for a test of 6000 after breaking out of the recent flag continuation pattern. Rising 21-day Twiggs Money Flow indicates short-term buying pressure. Reversal below support at 5850 is unlikely, but would warn of a correction.

ASX 200

* Target calculation: 5650 + ( 5650 – 5150 ) = 6150

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ASX breakout on RBA rate cut

Australia’s ASX 200 broke through resistance at 5660, signaling a fresh primary advance after several months in the doldrums. Rising 13-week Twiggs Money Flow indicates medium-term buying pressure. Retracement to test new support at 5550/5650 is likely, but the target for the advance is 6150*.

ASX 200

* Target calculation: 5650 + ( 5650 – 5150 ) = 6150

The surge was driven by an RBA rate cut to a new low of 2.25%.

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The cut was largely unexpected. My view was (and is) that a cut is unnecessary, given that falling commodity prices (especially crude oil and LNG) are weakening the Aussie Dollar. Now that we have one, further cuts are likely.

US Markets

The S&P 500 continues to test support at 2000, but rising 13-week Twiggs Money Flow indicates long-term buying pressure. Breach of 1980/2000 is unlikely, but would warn of another correction. Recovery above the descending trendline would suggest the start of a fresh advance.

S&P 500 Index

* Target calculation: 2000 + ( 2000 – 1800 ) = 2200

CBOE Volatility Index retreated below 20%, but only breakout below the triangle would reassure that the recent up-surge has passed — and risk has reverted to ‘low’ from ‘moderate’.

S&P 500 VIX

Europe

Germany’s DAX is heading for 11000* after breaking resistance at 10000. A 13-week Twiggs Momentum trough above zero confirms the primary up-trend.

DAX

* Target calculation: 10000 + ( 10000 – 9000 ) = 11000

The Footsie continues to test long-term resistance at 6900/7000. Breakout would signal a fresh primary advance, with a long-term target of 8000*. 13-Week Twiggs Money Flow is rising, but it will take considerable buying pressure to break through the 1999/2000 high.

FTSE 100

* Target calculation: 7000 + ( 7000 – 6000 ) = 8000

China’s Shanghai Composite Index is retreating from resistance at its 2009 high of 3400. A small decline in 13-week Twiggs Money Flow indicates medium-term buying pressure is weakening. Reversal below 3100 would warn of a correction. Breakout above 3400 remains as likely, however, and would signal a fresh primary advance. The stimulus effect of lower energy prices may allow the PBOC scope to rein in monetary expansion, which would have a dampening effect on the current stock boom.

Shanghai Composite Index

The whole art of government consists in the art of being honest.

~ Thomas Jefferson

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ASX rebounds

A low inflation outlook is likely to ease pressure on the Fed to raise interest rates. The S&P 500 is testing support at 2000. Breach would warn of another correction, but the primary trend is intact. Respect of the secondary trendline would suggest this is likely to continue. Rising 13-week Twiggs Money Flow indicates long-term buying pressure; decline below the rising trendline would again warn of a secondary correction.

S&P 500 Index

* Target calculation: 2000 + ( 2000 – 1800 ) = 2200

CBOE Volatility Index is making more frequent penetrations of 20%, suggesting moderate risk. VIX ranging between 20% and 30% would warn of increased market stress.

S&P 500 VIX

The Nasdaq 100 is also testing support, at 4100, and breach of this level would warn of a correction. But the primary trend is strong and further 13-week Twiggs Money Flow troughs above zero would reinforce this.

Nasdaq 100 Index

* Target calculation: 4100 + ( 4100 – 3700 ) = 4500

Europe is buoyant after the ECB signaled further monetary easing (QE). Germany’s DAX is heading for 11000* after breaking resistance at 10000. Recovery of 13-week Twiggs Momentum indicates continuation of the up-trend.

DAX

* Target calculation: 10000 + ( 10000 – 9000 ) = 11000

The Footsie has also recovered, testing long-term resistance at 6900/7000. Expect strong resistance at this level. Breakout would signal a fresh primary advance, with a long-term target of 8000*.

FTSE 100

* Target calculation: 7000 + ( 7000 – 6000 ) = 8000

China is benefiting from falling oil prices, with the Shanghai Composite Index again testing resistance at 3400. Breakout would signal a fresh primary advance. Rising 13-week Twiggs Money Flow indicates strong (medium-term) buying pressure. The stimulus effect of lower energy prices may allow the PBOC scope to rein in monetary expansion, which would have a dampening effect on the current stock boom.

Shanghai Composite Index

Discussion of monetary expansion would not be complete without mention of Japan where the BOJ has gone “all in” to curb long-term deflationary pressures. The Nikkei 225 Index is testing resistance at its 2007 high of 18000. Rising 13-week Twiggs Money Flow respecting the zero line suggests long-term buying pressure. Breakout above 18000 would signal another primary advance, with a target of 20000*.

Nikkei 225 Index

* Target calculation: 18000 + ( 18000 – 16000 ) = 20000

Australia’s ASX 200 has suffered from falling commodity prices over the past 12 months, with falling crude adding to the energy sector’s woes in the last quarter. But an up-tick of 13-week Twiggs Money Flow hints at brighter days ahead. Breakout above 5650 would offer a target of 6000*.

ASX 200

* Target calculation: 5600 + ( 5600 – 5200 ) = 6000

The Daily chart shows the index completed a double bottom, breaking resistance at 5550, after twice testing primary support at 5120/5150. A 21-day Twiggs Money Flow trough above zero signals medium-term buying pressure. Follow-through above 5660 would confirm a fresh primary advance.

ASX 200

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Europe: Out of the ashes

Deutsche Post AG (y_DPW.DE) serves as a bellwether for European markets, with subsidiary DHL couriers occupying a similar position to that of Fedex in US markets. DPW is testing resistance at €28.00 after a strong correction. 13-Week Twiggs Momentum recovered above zero and breakout above €28.00 would indicate another primary advance — a bullish sign for economic activity in the Eurozone.

Deutsche Post AG

* Target calculation: 28 + ( 28 – 22 ) = 34

Like a phoenix rising from the ashes, the DAX broke through resistance at 10000, signaling a fresh primary advance. A trough above zero on 13-Week Twiggs Momentum indicates continuation of the up-trend. The market is taking a positive view of expected quantitative easing (QE) by the European Central Bank (ECB).

DAX

* Target calculation: 10000 + ( 10000 – 9000 ) = 11000

France’s CAC-40 shows early signs of recovery, having broken through its descending trendline of recent months. Rising 13-week Twiggs Momentum suggests resumption of the primary up-trend. Recovery above 4500 would strengthen the signal, while breakout above 4600 would confirm.

CAC-40

Italy’s MIB Index remains weak, with 13-week Twiggs Momentum oscillating below zero. Respect of resistance is more likely, but breakout above 20000 would suggest a recovery.

MIB Index

Spain’s Madrid General Index also remains in the Doldrums, with declining 13-week Twiggs Momentum below zero. Only recovery above 1100 would provide cause for optimism.

Madrid General Index

Decline of inflation below zero for the Eurozone has forced the hand of the ECB. Announcement of significant QE is imminent. Expansion of the money supply should help to indirectly support stock prices. Unfortunately the Swiss National Bank, which held vast reserves of Euros because of its informal peg at 1.20 EUR/CHF, faced a difficult choice. Either go “all-in” to support the peg, and place their entire credit standing in question, or cut their losses (rumored to be around $70 billion) and walk away with their reputation a little worse for wear, but intact. Faced with the choice they had, in my opinion they took the correct option.

EURCHF

On the other side of the Channel, the Footsie is testing resistance at 6650. Recovery above the descending trendline would suggest the down-trend is over, especially if accompanied by recovery of 13-week Twiggs Momentum above zero. Strong resistance at 6900/7000 remains a major obstacle to a further advance.

FTSE 100

One final paragraph of advice: do not burn yourselves out. Be as I am — a reluctant enthusiast… a part-time crusader, a half-hearted fanatic. Save the other half of yourselves and your lives for pleasure and adventure. It is not enough to fight for the land; it is even more important to enjoy it. While you can. While it’s still here. So get out there and hunt and fish and mess around with your friends, ramble out yonder and explore the forests, climb the mountains, bag the peaks, run the rivers, breathe deep of that yet sweet and lucid air, sit quietly for a while and contemplate the precious stillness, the lovely, mysterious, and awesome space. Enjoy yourselves, keep your brain in your head and your head firmly attached to the body, the body active and alive, and I promise you this much; I promise you this one sweet victory over our enemies, over those desk-bound men and women with their hearts in a safe deposit box, and their eyes hypnotized by desk calculators. I promise you this: You will outlive the bastards.

~ Edward Abbey

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A long-term view

Better than expected US jobs data and strong German factory orders helped to rally markets Friday. Also, ECB chief Mario Draghi’s Thursday announcement is seen as supporting broad-based asset purchases (QE) early in 2015. A long-term view of major markets may help to place current activity in perspective.

The S&P 500 continues a strong advance, with rising 13-week Twiggs Money Flow indicating medium-term buying pressure. Long-term and medium targets coincide at 2250* and we should expect further resistance at this level.

S&P 500 Index

* Target calculation: 1500 + ( 1500 – 750 ) = 2250; 2050 + ( 2050 – 1850 ) = 2250

CBOE Volatility Index (VIX) continues to indicate low risk typical of a bull market.

S&P 500 VIX

Germany’s DAX broke resistance at its earlier high of 10000, suggesting a further advance. Recovery of 13-week Twiggs Momentum above zero indicates continuation of the up-trend. The long-term target is 12500*, though I cannot see this being reached until tensions in Eastern Europe are resolved.

DAX

* Target calculation: 7500 + ( 7500 – 2500 ) = 12500

The Footsie is testing long-term resistance at 6900/7000. Respect of the zero line by 13-Week Twiggs Money Flow indicates long-term buying pressure. Breakout above 7000 would signal a fresh primary advance, with a long-term target of 10500*.

FTSE 100

* Target calculation: 7000 + ( 7000 – 3500 ) = 10500

China’s Shanghai Composite Index broke resistance at 2500 and is likely to test the 2009 high at 3500. Rising 13-week Twiggs Money Flow indicates strong (medium-term) buying pressure.

Shanghai Composite Index

Japan’s Nikkei 225 Index is testing resistance at its 2007 high of 18000. 13-Week Twiggs Money Flow respecting the zero line indicates long-term buying pressure. Breakout would signal another primary advance. A long-term target of 28000* seems unachievable unless one factors in rising inflation and continued devaluation of the yen.

Nikkei 225 Index

* Target calculation: 18000 + ( 18000 – 8000 ) = 28000

Weak ASX 200 performance is highlighted by the distance below its 2007 high of 6850. Falling commodity prices have retarded the recovery and are likely to continue for some time ahead.

The 2005-2008 Australian commodities boom was squandered, damaging local industry and hampering the current recovery. Norway successfully weathered a similar commodities boom in the 1990s, protecting local industry while establishing a sovereign wealth fund that is the envy of its peers. Their fiscal discipline set a precedent which should be followed by any resource-rich country looking to navigate a sustainable path through a commodities boom and avoid the dreaded “Dutch Disease”.

Respect of support at 5000 would indicate the primary up-trend is intact — but declining 13-week Twiggs Money Flow indicates selling pressure. Reversal of TMF below zero or breach of support at 5000/5150 would warn of a down-trend.

ASX 200

* Target calculation: 5000 + ( 5000 – 4000 ) = 6000

The daily chart shows a slightly improved perspective. 21-Day Twiggs Money Flow oscillating around zero signals indecision. Recovery above 5400 would suggest the correction is over. But reversal below 5200 is as likely and would warn of a test of primary support at 5120/5150.

ASX 200 daily

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A tale of two economies

Stock markets in Western Europe and Asia are rallying on the strength of falling oil prices, joining the US in a bull trend. But primary producers, largely dependent on commodity exports, are likely to suffer as a result of falling prices. Australia is no exception.

The S&P 500 continues a primary advance. A conservative target would be 2200*. Rising 13-week Twiggs Money Flow indicates medium-term buying support. Reversal below 2000 is unlikely, but would warn of another correction.

S&P 500 Index

* Target calculation: 2000 + ( 2000 – 1800 ) = 2200

CBOE Volatility Index (VIX) indicates low risk typical of a bull market.

S&P 500 VIX

Germany’s DAX is testing resistance at its earlier high of 10000. Recovery of 13-week Twiggs Money Flow above the declining trendline suggests medium-term buying pressure. Breakout above resistance would offer a conservative target of 11000*. Reversal below 9000 is unlikely, but would warn of a primary down-trend.

DAX

* Target calculation: 10000 + ( 10000 – 9000 ) = 11000

The Footsie is also testing long-term resistance on the monthly chart — at 6900/7000. The sharp rise on 13-Week Twiggs Money Flow indicates strong medium-term buying pressure, but resistance at the December 1999 high is likely to be solid. Reversal below 6500 remains unlikely.

FTSE 100

China’s Shanghai Composite Index cleared resistance at 2440/2500, signaling a primary up-trend. 13-Week Twiggs Money Flow respect of its rising trendline confirms (medium-term) buying pressure. I remain wary of China. The recent rate-cut by the PBOC is cause for concern, not jubilation.

Shanghai Composite Index

* Target calculation: 2500 + ( 2500 – 2000 ) = 3000

Japan’s Nikkei 225 Index is headed for long-term resistance at 18000. 13-Week Twiggs Money Flow oscillating above the zero line indicates long-term buying pressure. Reversal below 16500 is unlikely.

Nikkei 225 Index

* Target calculation: 16000 + ( 16000 – 14000 ) = 18000

The ASX 200 is undergoing another correction. Respect of support at 5250/5300 would indicate the primary up-trend is intact — but 13-week Twiggs Money Flow reversal below zero warns of strong selling pressure. Breach of support is likely and would warn of a test of 5000.

ASX 200

* Target calculation: 5650 + ( 5650 – 5300 ) = 6000

Posted on

A tale of two economies

Stock markets in Western Europe and Asia are rallying on the strength of falling oil prices, joining the US in a bull trend. But primary producers, largely dependent on commodity exports, are likely to suffer as a result of falling prices. Australia is no exception.

The S&P 500 continues a primary advance. A conservative target would be 2200*. Rising 13-week Twiggs Money Flow indicates medium-term buying support. Reversal below 2000 is unlikely, but would warn of another correction.

S&P 500 Index

* Target calculation: 2000 + ( 2000 – 1800 ) = 2200

CBOE Volatility Index (VIX) indicates low risk typical of a bull market.

S&P 500 VIX

Germany’s DAX is testing resistance at its earlier high of 10000. Recovery of 13-week Twiggs Money Flow above the declining trendline suggests medium-term buying pressure. Breakout above resistance would offer a conservative target of 11000*. Reversal below 9000 is unlikely, but would warn of a primary down-trend.

DAX

* Target calculation: 10000 + ( 10000 – 9000 ) = 11000

The Footsie is also testing long-term resistance on the monthly chart — at 6900/7000. The sharp rise on 13-Week Twiggs Money Flow indicates strong medium-term buying pressure, but resistance at the December 1999 high is likely to be solid. Reversal below 6500 remains unlikely.

FTSE 100

China’s Shanghai Composite Index cleared resistance at 2440/2500, signaling a primary up-trend. 13-Week Twiggs Money Flow respect of its rising trendline confirms (medium-term) buying pressure. I remain wary of China. The recent rate-cut by the PBOC is cause for concern, not jubilation.

Shanghai Composite Index

* Target calculation: 2500 + ( 2500 – 2000 ) = 3000

Japan’s Nikkei 225 Index is headed for long-term resistance at 18000. 13-Week Twiggs Money Flow oscillating above the zero line indicates long-term buying pressure. Reversal below 16500 is unlikely.

Nikkei 225 Index

* Target calculation: 16000 + ( 16000 – 14000 ) = 18000

The ASX 200 is undergoing another correction. Respect of support at 5250/5300 would indicate the primary up-trend is intact — but 13-week Twiggs Money Flow reversal below zero warns of strong selling pressure. Breach of support is likely and would warn of a test of 5000.

ASX 200

* Target calculation: 5650 + ( 5650 – 5300 ) = 6000

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