Tag: primary support

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Brazilian Real and South African Rand

The Brazilian Real has fallen sharply against the greenback since the government took measures to stem the inflow of funds on capital account. Breach of medium-term support at $0.56 would indicate respect of the descending trendline and another test of primary support at $0.52. In the long-term, failure of primary support would warn of a fall to $0.40.

Brazilian Real

* Target calculation: 0.52 – ( 0.64 – 0.52 ) = 0.40

The South African Rand is weakening against both the US and Aussie dollar. The Aussie (another resources currency) shows an accelerating up-trend against the Rand. Breakout above R8.30 would signal an advance to R9.00*. Accelerating up-trends, however, inevitably lead to blow-offs — as in 2008.

South African Rand

* Target calculation: 7.50 + ( 7.50 – 6.00 ) = 9.00

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DJ Europe warns of selling pressure

Dow Jones Europe Index is testing medium-term support at 230. Bearish divergence on 21-day Twiggs Money Flow warns of selling pressure. Failure of support would test the primary level at 210 — and breach of primary support would signal another decline, with a target of 160*.

Dow Jones Europe Index

* Target calculation: 210 – ( 260 – 210 ) = 160

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India & Singapore

The BSE Sensex found support at 17000, rallying to 17300 Monday. Breakout above 18000 would offer a target of 19000 — and breach of the descending trendline would warn that the primary down-trend is weakening. Reversal below 17000 remains as likely, however, and would test primary support at 16000. Twiggs Money Flow oscillating close to zero indicates uncertainty.

BSE Sensex Index

* Target calculation: 18 + ( 18 – 17 ) = 19

Singapore’s Straits Times Index found medium-term support at 2750 last week before rallying to 2840 Monday. 63-Day Twiggs Momentum deep below zero continues to indicate a primary down-trend. Failure of support at 2750 would test primary support at 2500, while breakout above 2900 would offer a target of 3200*.

Singapore Straits Times Index

* Target calculation: 2900 + ( 2900 – 2600 ) = 3200

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Canada TSX 60

Canada’s TSX 60 index is consolidating between 680 and 720. Upward breakout would penetrate the descending trendline, indicating that the primary down-trend is weakening. A 13-week Twiggs Money Flow trough that respects the zero line would signal a primary up-trend. Reversal below 680, however, would warn of another test of primary support at 620.

TSX 60 Index

* Target calculation: 720 + ( 720 – 680 ) = 760

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Nasdaq fails to dispel fears of a bear market

The Nasdaq 100 is consolidating in a narrow band below resistance at 2400 on the weekly chart, suggesting an upward breakout. Follow-through above 2450 would confirm the target of 2800*. 13-Week Twiggs Money Flow continues to signal buying pressure after an earlier bullish divergence.

Nasdaq 100 Index

* Target calculation: 2400 + ( 2400 – 2000 ) = 2800

The Dow Industrial Average is consolidating below 12300. Rising 21-day Twiggs Money Flow indicates medium-term buying pressure. Breakout above 12300 would offer a target of 12800*. Failure of support at 11600 is less likely, but would mean another test of primary support at 10600.

Dow Jones Industrial Average

* Target calculation: 12200 + ( 12200 – 11600 ) = 12800

The S&P 500 is similarly consolidating between 1220 and 1300. Expect strong resistance at 1350.

S&P500 Index


Comparing to early 2008, the S&P500 displays a similar pattern, with the index testing resistance at 1400. We are close to a watershed: reversal below medium-term support (1220) would be a strong bear signal, while follow-through above recent highs would dispel fears of another bear market.

Index

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Europe consolidates

The FTSE Italian MIB index found support at 15000. Expect an upsurge in response to news that Mario Monti has been asked to form a new government. Breakout above 17000 would signal a rally to 19000. Rising 13-week Twiggs Money Flow indicates consistent buying pressure over the past few weeks.

FTSE MIB Index

* Target calculation: 17 + ( 17 – 15 ) = 19

France’s CAC-40 index similarly found support at 3000. Recovery above 3400 would offer a target of 3800, but 63-day Twiggs Momentum, a long way below zero, indicates a primary down-trend.

CAC-40 Index

* Target calculation: 2800 – ( 3400 – 2800 ) = 2200 AND 3400 + ( 3400 – 3000 ) = 3800

The German DAX found support at 5700. Recovery above 6400 would offer a target of 7100, while failure of support would warn of another test of primary support at 5000.

DAX Index

* Target calculation: 6400 + ( 6400 – 5700 ) = 7100

The FTSE 100 is also consolidating above medium-term support — this time at 5350. 13-Week Twiggs Money Flow continues to signal strong buying pressure. Breakout above 5700 would re-test the 2011 highs at 6100. Failure of support is unlikely, but would warn of another test of primary support at 4800.

FTSE 100 Index

* Target calculation: 5700 + ( 5700 – 5300 ) = 6100

We need to remember, however, that this is still a bear market. We have seen one or two favorable news headlines but very little substance. And the European economy faces strong headwinds over the next few years.

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Euro sinks, dragging sterling lower

EURUSD broke through $1.36 warning of another test of primary support at $1.32. Respect of the zero line by 63-day Twiggs Momentum confirms a primary down-trend. Failure of support would offer a target of $1.22*.

EURUSD

* Target calculation: 1.32 – ( 1.42 – 1.32 ) = 1.22

GBPUSD is being dragged lower by the euro. Reversal below $1.60 warns of another test of primary support at $1.53 — as does 63-day Twiggs Momentum respect of the zero line.  Failure of support would offer a target of $1.46*.

GBPUSD

* Target calculation: 1.53 – ( 1.60 – 1.53 ) = 1.46

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Dow Jones Shanghai

Dow Jones Shanghai Index is also hesitant, with no advance over the last 3 trading days. Reversal below 304 would indicate a test of primary support at 284. Breakout above the descending trendline — and resistance at 330 — is unlikely with 21-day Twiggs Money Flow (respect of the zero line from below) warning of selling pressure.

Dow Jones Shanghai Index

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Japan and South Korea

Dow Jones Japan Index is consolidating between 48 and 52. Breakout will signal future direction. 21-Day Twiggs Money Flow is rising but there is no clear break as yet above the zero line. Monday’s candle indicates continued hesitancy.

Dow Jones Japan Index


Dow Jones South Korea Index also showed hesitancy Monday. Reversal below 400 would warn of another test of primary support at 350, while respect of 400 would indicate a primary advance to 450*. 21-Day Twiggs Money Flow is declining but respect of the zero line would also signal a primary advance.

Dow Jones South Korea Index

* Target calculation: 400 + ( 400 – 350 ) = 450

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Nasdaq threatens breakout

The Dow is testing medium-term support at 11600. Failure would mean another test of primary support at 10600, while respect of support (with breakout above 12300) would confirm the primary advance to 12800*. Rising 21-day Twiggs Money Flow continues to indicate buying pressure, favoring an advance.

Dow Jones Industrial Average

* Target calculation: 11600 + ( 11600 – 10400 ) = 12800

The S&P 500 is also testing medium-term support, this time at 1220. Respect would signal an advance to the 2011 high, while failure would re-test 1100. In the long-term, breach of 1100 would offer a target of 900* and breakout above 1350 would signal an advance to 1600.

S&P 500 Index

* Target calculation: 1100 – ( 1300 – 1100 ) = 900

Bullish divergence on the Nasdaq 100 indicates strong buying pressure and a likely reversal. Breakout above 2440 would signal an advance to 2800*. Reversal below 2300 is less likely, but would warn of another test of primary support at 2000.

Nasdaq 100 Index

* Target calculation: 2400 + ( 2400 – 2000 ) = 2800

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