The FTSE 100 is testing long-term resistance at 7000/7100. Declining Twiggs Money warns of selling pressure. Retreat below 6950 would warn of a correction to test 6500.
The quarterly chart below shows the FTSE 100 first tested 7000 resistance in December 1999, reaching a high of 6950, and has struggled to break clear of this level ever since.
With the pound approaching record lows from 1985, and exports expected to rise, the Footsie finally has a decent chance of breaking clear.
The FTSE 100 has run into stubborn long-term resistance at 7000/7100. Declining Twiggs Money warns of selling pressure. Follow-through below the last two weeks’ lows would warn of a correction to test 6500.
Germany’s DAX is testing support at 10500. Respect would confirm the primary up-trend. This week’s long tail and a Twiggs Money Flow trough above zero indicate buying pressure. Follow-through above 10800 would complete a bear trap — a bullish signal with a target of 11500*.
* Target calculation: 10500 + ( 10500 – 9500 ) = 11500
The FTSE 100 is also rallying, to test long-term resistance at 7000/7100. Rising troughs on Twiggs Money flow signal long-term buying pressure.
The Footsie rebounded after a short retracement — a bullish sign. Expect strong resistance at 7000/7100 but completion of another trough on Twiggs Money Flow, high above zero, would signal strong buying pressure.
* Target calculation: 6500 + ( 6500 – 5900 ) = 7100
Footsie retracement continues to look promising. Twiggs Money Flow high above zero suggests long-term buying pressure. Respect of support at 6400/6500 would establish a solid base for another attempt at 7000/7100*.
* Target calculation: 6500 + ( 6500 – 5900 ) = 7100
Germany’s DAX is holding above its new support level at 10500. Respect, with follow-through above 10800, would confirm the primary up-trend.
* Target calculation: 10500 + ( 10500 – 9500 ) = 11500
France’s CAC-40 Index is consolidating in a narrow band between 4400 and 4500. Upward breakout would suggest a primary up-trend. Follow-through above 4600, completing a broad double bottom, would confirm. Rising Twiggs Money Flow reflects buying pressure.
The Footsie retreated from resistance at 7000 but short candles and strong Twiggs Money Flow, high above zero, suggest long-term buying pressure. Expect strong resistance between 7000 and 7100. Correction to 6500 would establish a more stable base for further advances.
* Target calculation: 6500 + ( 6500 – 5900 ) = 7100
Germany’s DAX respected its new support at 10500. Follow-through above 10800 would confirm the primary up-trend.
* Target calculation: 10500 + ( 10500 – 9500 ) = 11500
Italy’s FTSE MIB (Milano Italia Borsa) Index remains in a primary down-trend. Breakout above 17000 and the descending trendline, however, would suggest that a base is forming. Rising Twiggs Money Flow highlights buying pressure.
The Footsie retreated from resistance at 7000 but short candles and rising Twiggs Money Flow suggest buying pressure. Expect another test of 7000/7100 but resistance is strong. Correction to 6500 would establish a more stable base for further advances.
* Target calculation: 6500 + ( 6500 – 5900 ) = 7100
From The Guardian, June 14th:
Support for leaving the EU is strengthening, with phone and online surveys reporting a six-point lead, according to a pair of Guardian/ICM polls.
Leave now enjoys a 53%-47% advantage once “don’t knows” are excluded, according to research conducted over the weekend, compared with a 52%-48% split reported by ICM a fortnight ago.
….Prof John Curtice of Strathclyde University, who analyses available referendum polling data on his website whatukthinks.org, noted that after the ICM data, the running average “poll of polls” would stand at 52% for leave and 48% for remain, the first time leave has been in such a strong position.
If the UK votes to LEAVE, we can expect:
Hat tip to The Coppo Report
Dow Jones Global Index is headed for a test of resistance at 320 after penetrating its descending trendline. Respect of 320 is likely but a bottom is forming and a higher trough would suggest an inverted head-and-shoulders formation. 13-Week Twiggs Momentum recovery above zero is bullish but another low peak would indicate that bears still dominate.
The S&P 500 continues to test the band of resistance at 2100 to 2130. Money Flow remains bullish but I expect stubborn resistance at this level, further strengthened by poor quarterly results, so far, in the earnings season.
A CBOE Volatility Index (VIX) at a low 14 indicates that (short-term) market risk is low. Long-term measures are also starting to ease but we maintain high cash levels in our portfolios.
Canada’s TSX 60 is headed for a test of resistance at 825. Penetration of the descending trendline suggests that a bottom is forming. Resistance is likely to hold but an ensuing higher trough would be a bullish sign. Rising 13-week Twiggs Momentum is encouraging but a low peak above zero would indicate that bears still dominate.
Germany’s DAX broke resistance at 10000 and is headed for a test of the descending trendline. Rising Money Flow indicates medium-term buying pressure. Retreat below 10000 would warn of another decline.
* Target calculation: 9500 – ( 11000 – 9500 ) = 8000
The Footsie is headed for a test of 6500. Rising Money Flow suggests decent buying pressure. Respect of resistance is likely but a bottom is forming and an ensuing higher trough would suggest a primary up-trend.
* Target calculation: 6000 – ( 6500 – 6000 ) = 5500
The Shanghai Composite Index retreated below 3000. Breach of medium-term support at 2900 would warn of another test of primary support at 2700. Rising Money Flow suggests that breach of primary support is unlikely.
* Target calculation: 3000 – ( 3600 – 3000 ) = 2400
Japan’s Nikkei 225 Index broke resistance at 17000, a higher trough signaling a primary up-trend. Expect retracement to test the new support level at 17000. Rising Money Flow confirms buying pressure.
* Target calculation: 17000 – ( 20000 – 17500 ) = 15000
India’s Sensex is testing its upper trend channel at 26000. Penetration of the descending trendline would suggest that a bottom is forming. Respect, indicated by reversal below 25000, would warn of another test of primary support.
* Target calculation: 23000 – ( 25000 – 23000 ) = 21000
A sharp fall in the Australian Dollar as result of record low inflation numbers may precipitate some selling by international buyers. Further weakness in iron ore would impact both the ASX and the Aussie Dollar.
The ASX 200 has also penetrated its descending trendline, suggesting that a bottom is forming. But bearish divergence on 13-week Money Flow warns of selling pressure. Retreat below 5000 would warn of another test of primary support at 4700.
* Target calculation: 4700 – ( 5200 – 4700 ) = 4200
At present, stock prices are heavily influenced by the price of crude oil. Whichever direction crude takes, stocks are likely to follow. The current rally in Light Crude (June 2016 Futures) is testing resistance at $42/barrel. Respect would warn of another test of primary support at $32. Breach of $32 would offer a target of $22/barrel* but we are more likely to see further consolidation (between $32 and $42) first.
* Target calculation: 32 – ( 42 – 32 ) = 22
Another major factor influencing prices is corporate buybacks. Lu Wang at Bloomberg points out that inflows/outflows from managed funds are dwarfed by repurchases:
Standard & Poor’s 500 Index constituents are poised to repurchase as much as $165 billion of stock this quarter, approaching a record reached in 2007. The buying contrasts with rampant selling by clients of mutual and exchange-traded funds, who after pulling $40 billion since January are on pace for one of the biggest quarterly withdrawals ever.
Of more concern is that we are approaching the March quarter-end. Repurchases are expected to fall dramatically in April.
Dow Jones Global Index continues to test resistance at 300 and the descending trendline. 13-Week Twiggs Momentum continues to flag a strong primary down-trend. Respect of resistance is likely and reversal below 290 would warn of another decline. Breach of 270 would confirm. Penetration of the descending trendline, however, would warn that the down-trend is losing momentum and a bottom is forming.
* Target calculation: 270 – ( 300 – 270 ) = 240
The S&P 500 broke resistance at 2000 and rising 13-week Twiggs Money Flow indicates medium-term buying pressure. Respect of short-term support at 2100 would indicate a rally to 2100. But I remain wary of this rally.
A look at the monthly chart explains why. Respect of 2100, or even a feint (false break) above the previous high of 2170 would keep the weight on the sell side (an outgoing tide). Declining 13-week Twiggs Momentum, below zero, warns of a primary down-trend.
* Target calculation: 1900 – ( 2100 – 1900 ) = 1700
A CBOE Volatility Index (VIX) peak below 20 indicates that (short-term) market risk has eased. But our longer-term risk measures continue to warn of elevated risk.
Canada’s TSX 60 is testing resistance at 800. Expect stubborn resistance at the former primary support level. A correction to test support at 700 is likely. Recovery of 13-week Twiggs Momentum above zero would indicate that the primary down-trend has ended. Penetration of the descending trendline suggests that a bottom is forming. A higher trough on the next correction would be a bullish sign.
Dow Jones Euro Stoxx 50 found resistance at 3100 but bullish divergence on 13-week Twiggs Money Flow suggests that a test of 3300 is likely. The primary trend remains down and a lower peak, followed by reversal below 3000, would warn of decline to 2500*.
* Target calculation: 3000 – ( 3500 – 3000 ) = 2500
Germany’s DAX is similarly testing resistance at 10000. Breakout would indicate an advance to 11000. Buying pressure on 13-week Twiggs Money Flow appears secondary. Reversal below 9300 would warn of another decline.
* Target calculation: 9500 – ( 11000 – 9500 ) = 8000
The Footsie found stronger than expected resistance at 6250. Reversal below 6000 would warn of another test of 5500. Breach of the descending trendline suggests that a bottom is forming. A higher trough would favor a reversal. While a trough above zero on 13-week Twiggs Money Flow would strengthen the signal.
* Target calculation: 6000 – ( 6500 – 6000 ) = 5500
The Shanghai Composite Index is consolidating in a narrow range between 2700 and 2900, suggesting continuation of the primary down-trend.
* Target calculation: 3000 – ( 3600 – 3000 ) = 2400
Japan’s Nikkei 225 Index encountered stubborn resistance at 17000. Respect would warn of another test of 15000, while breakout would be likely to encounter further resistance at 18000. 13-Week Twiggs Money Flow holding above zero is encouraging but I expect the primary down-trend is far from over.
* Target calculation: 17000 – ( 20000 – 17500 ) = 15000
India’s Sensex is testing resistance at 25000. Rising 13-week Twiggs Money Flow reflects strong (medium-term) buying pressure. Narrow consolidation below resistance suggests breakout is likely, which would test the upper trend channel at 26000. Respect of the trend channel is likely and would warn of another test of 22500*.
* Target calculation: 25000 – ( 27500 – 25000 ) = 22500
The ASX 200 is testing resistance at 5150 and the descending trendline. Rising 13-week Twiggs Money Flow indicates medium-term buying pressure. This is a bear market and respect of resistance is likely to warn of another decline. Penetration of the descending trendline, however, would warn that a bottom is forming. Reversal below 5000 is likely and would warn of another test of 4700, while breach of 4700 would offer a target of 4400*.
* Target calculation: 4800 – ( 5200 – 4800 ) = 4400
The Banks Index is also testing its descending trendline. Respect is likely and would warn of another decline. Penetration would again suggest that a bottom is forming.
