retracement Archives - the patient investor

September 19, 2019September 19, 2019

Australia: Leading Index of Employment in 16th month of decline

The Department of Employment, Skills, Small and Family Business released their Monthly Leading Indicator of Employment for September 2019, recording its 16th straight month of decline.

Hat tip to Macrobusiness, this is a peach of an indicator, predicting Australia’s economic performance.

I have added % retracement in the ASX 200 to the graph below. Each of the significant past troughs in the Leading Index coincides with a drawdown of more than 20% in the ASX 200.

Leading Index of Employment

Is the current fall in the Leading Index a false alarm, as in the 2005/2006 raging commodities bull market, or are we in for another retracement?

Leading Index of Employment - Components

My money is on the retracement.

October 31, 2011

Hong Kong and China

HongKong’s Hang Seng Index broke its secondary descending trendline at 19000, indicating a test of the primary trendline at 21000/22000.

Hang Seng Index

* Target calculation: 19 + ( 19 – 16 ) = 22

The Shanghai Composite Index recovered above support at 2350. Breakout above its secondary trendline would also test the primary trendline around 2900.

Shanghai Composite Index

Dow Jones HongKong Index shows retracement to test short-term support on Monday. Respect of the rising trendline would signal trend strength, while failure of support at 360 would signal another decline.

Dow Jones HongKong Index

October 25, 2011

2008 Deja Vu

Early May 2008, the S&P 500 index recovered above resistance at the former primary support level of 1400 on its second attempt. 13-Week Twiggs Money Flow broke back above zero, indicating secondary buying pressure. Breakout was followed by two pull-backs in May. The first made a false break below the new support level; the second followed through, commencing a 50% decline to 700.

S&P 500 Index Weekly Chart - 2008

We are now at a similar watershed. Expect retracement in the week ahead to test the new support level at 1250. Respect of support would strengthen the signal, but beware of any penetration. Follow-through above 1300 would signal that the (immediate) danger is over. Until then, consider this a bear market.

S&P 500 Index Weekly - 2011

* Target calculation: 1250 + ( 1250 – 1100 ) = 1400