Tag: Shanghai Composite

Posted on

Santa rally: Monetary easing offsets China woes

China’s economy is struggling despite injection of moderate stimulus and efforts to support a collapsing real estate sector. Shrinking demand from China threatens a global economic contraction. G7 central banks have responded with monetary easing, causing a broad rally in stocks. This is most likely a bear market rally, with far shorter duration than a bull market.

China’s Shanghai Composite Index is testing primary support at 2900, warning of an economic contraction. The Trend Index peak near zero confirms selling pressure.

Shanghai Composite

Copper, however, has penetrated its descending trendline. Follow-through above 8500 would test resistance at $8750 per metric ton, threatening a wide double-bottom reversal with a target of $9500. Breakout above $8750 would signal global economic recovery, while reversal below $7800 would warn of a global recession.

Copper

US Stocks

The S&P 500 is testing it 2022 high at 4800, buoyed by injections of liquidity into financial markets.

S&P 500

The equal-weighted S&P 500 broke resistance at 6300, suggesting a broader rally than just the top 7 stocks. Retracement that respects the new support level would confirm the target at 6665.

S&P 500 Equal-Weighted Index ($IQX)

The Russell 2000 small caps ETF (IWM) threatens a similar breakout above 200, offering a target of 240. Breakout would confirm that investors are growing more aggressive (risk-on) and downplaying risks.

Russell 2000 Small Caps ETF (IWM)

Interest Rates

Ten-year Treasury yields are retracing to test resistance at 3.9% or 4.0%; respect is likely and would confirm the target of 3.5%.

10-Year Treasury Yield
An increase in supply of Treasury Notes will test bulls’ conviction next week:

A raft of fresh, post-Christmas government bond supply will put that comprehensive bullishness to the test. Next week, Treasury will auction $57 billion, $58 billion and $40 billion in two-, five- and seven-year notes, respectively. That’s up 20%, 15% and 7% from their average sizes over the past four monthly auctions. (Grant’s Current Yield)

The 2-year Treasury yield (purple below) is falling in anticipation of Fed rate cuts next year. A peak in the 2-year tends to lead the first rate cuts by 6 to 9 months. The signal misfired with the SVB banks crisis in March but the October peak warns of Fed rate cuts in Q2 or Q3 of 2024.
Fed Funds Rate Minimum Target & 2-Year Treasury Yield

International Stocks

The FTSE 100 is testing resistance at 7700, with a Trend Index trough at zero signaling buying pressure.

FTSE 100

The DJ Stoxx Euro 600 — reflecting the top 600 stocks in Europe — broke resistance at 470. Follow-through above 480 would test the 2022 high of 494.

DJ Euro Stoxx 600

Japan’s Nikkei 225 is testing long-term resistance at 33750. Breakout would signal a fresh primary advance but declining Trend Index peaks show a lack of commitment from buyers.

Nikkei 225 Index

The ASX 200 is testing resistance at 7600, buoyed by strong iron ore prices and falling long-term bond yields. A sharp rise in the Trend Index indicates buying pressure but reversal below 7400 would warn of a correction to test support at 7000.

ASX 200

Gold & the Dollar

The US Dollar Index respected resistance at 102.50, confirming the target at 100. Trend Index peaks below zero signal strong selling pressure.

Dollar Index

Gold broke through resistance at $2050, closing at $2053 per ounce. Expect retracement to test the new support level; respect would confirm another attempt at $2100. A falling Dollar and increased bullion demand from central banks is expected to maintain upward pressure on Gold prices.

Spot Gold

Conclusion

Stocks are rallying in response to falling long-term Treasury yields and in anticipation of Fed rate cuts next year. But falling LT Treasury yields is a medium-term rally in a long-term bear market, with LT yields expected to rise in 2025. Fed rate cuts are also a bearish sign, normally preceding a recession by several quarters — falling earnings are definitely not bullish for stocks.

Investors will need to be agile, to take advantage of the current bullishness in stocks while guarding against:

  • a trend reversal in long-term yields; and
  • signs that the broad economy is falling into recession.

Vacation

This is our last newsletter of the year as we close our office for two weeks over Christmas and the New Year.

We wish all our readers peace and goodwill over the festive season and hope for a less tumultuous year ahead.

The Magpie by Claude Monet

The Magpie by Claude Monet

Posted on

Markets that are likely to outperform in 2021

There is no reliable benchmark for assessing performance of different markets (stocks, bonds, precious metals, commodities, etc.) since central banks have flooded financial markets with more than $8 trillion in freshly printed currency since the start of 2020. The chart below from Ed Yardeni shows total assets of the five major central banks (Fed, ECB, BOC, BOE and BOJ) expanded to $27.9T at the end of November 2020, from below $20T at the start of the year.

Central Banks: Total Assets

With no convenient benchmark, the best way to measure performance is using relative strength between two prices/indices.

Measured in Gold (rather than Dollars) the S&P 500 iShares ETF (IVV) has underperformed since mid-2019. Respect of the red descending trendline would confirm further weakness ahead (or outperformance for Gold).

S&P 500 iShares ETF/Gold

But if we take a broad basket of commodities, stocks are still outperforming. Reversal of the current up-trend would signal that he global economy is recovering, with rising demand for commodities as manufacturing output increases. Breach of the latest, sharply rising trendline would warn of a correction to the long-term rising trendline and, most likely, even further.

S&P 500 iShares ETF/DJ-UBS Commodity Index

Commodities

There are pockets of rising prices in commodities but the broader indices remain weak.

Copper shows signs of a recovery. Breakout above -0.5 would signal outperformance relative to Gold.

Copper/Gold

Brent crude shows a similar rally. Breakout above the declining red trendline would suggest outperformance ahead.

Brent Crude/Gold

But the broad basket of commodities measured by the DJ-UBS Commodity Index is still in a down-trend.

DJ-UBS Commodity Index/Gold

Precious Metals

Silver broke out of its downward trend channel relative to Gold. Completion of the recent pullback (at zero) confirms the breakout and signals future outperformance.

Silver/Gold

Stock Markets

Comparing major stock indices, the S&P 500 has outperformed the DJ Stoxx Euro 600 since 2010. Lately the up-trend has accelerated and breach of the latest rising trendline would warn of reversion to at least the long-term trendline. More likely even further.

S&P 500 iShares ETF/Euro Stoxx 600

The S&P 500 shows a similar accelerating up-trend relative to the ASX 200. Breach of the latest trendline would similarly signal reversion to the LT trendline and most likely further.

S&P 500 iShares ETF/ASX 200

Reversion is already under way with India’s Nifty 50 (NSX), now outperforming the S&P 500.

S&P 500 iShares ETF/Nifty 50

S&P 500 performance relative to the Shanghai Composite plateaued at around +0.4. Breakout would signal further gains but respect of resistance is as likely.

S&P 500 iShares ETF/Shanghai Composite

Growth/Value

Looking within the Russell 1000 large caps index, Growth stocks (IWF) have clearly outperformed Value (IWD) since 2006. Breach of the latest, incredibly steep trendline, however, warns of reversion to the mean. We are likely to see Value outperform Growth in 2021.

Russell 1000 Value/Growth

Bonds

The S&P 500 has made strong gains against Treasury bonds since March (iShares 20+ Year Treasury Bond ETF [TLT]) but is expected to run into resistance between 1.3 and 1.4. Rising inflation fears, however, may lower bond prices, spurring further outperformance by stocks.

S&P 500 iShares ETF/Long_term Bond ETF (TLT)

Currencies

The US Dollar is weakening against a basket of major currencies. Euro breakout above resistance at $1.25 would signal a long-term up-trend.

Euro/Dollar

China’s Yuan has already broken resistance at 14.6 US cents, signaling a long-term up-trend.

Yuan/Dollar

India’s Rupee remains sluggish.

Indian Rupee/Dollar

But the Australian Dollar is surging. The recent correction that respected support at 70 US cents suggests an advance to at least 80 cents.

Australian Dollar/Dollar

Gold, surprisingly, retraced over the last few months despite the weakening US Dollar. But respect of support at $1800/ounce would signal another primary advance.

Spot Gold/Dollar

Conclusion

Silver is expected to outperform Gold.
Gold is expected to outperform stocks.
Value stocks are expected to outperform Growth.
India’s Nifty 50 is expected to outperform other major indices. This is likely to be followed by the Stoxx Euro 600 and ASX 200 but only if they break their latest, sharply rising trendlines. That leaves the S&P 500 and Shanghai Composite filling the minor placings.
Copper and Crude show signs of a recovery but the broad basket of currencies is expected to underperform stocks and precious metals.
The Greenback is expected to weaken against most major currencies, while rising inflation is likely to leave bond investors holding the wooden spoon.

Posted on

Asia: Japan surges while China ebbs

Japan is surging ahead, with the Nikkei 225 index headed for a test of 20000* after its breakout above 17500 four weeks ago.

Nikkei 225 Index

* Target medium-term: 17500 + ( 17500 – 15000 ) = 20000

India’s Sensex found support at 26000, but narrow consolidation and declining Twiggs Money Flow both warn of selling pressure. Breach of 26000 would indicate another decline, with a target of 23000*.

Sensex Index

* Target medium-term: 26000 – ( 29000 – 26000 ) = 23000

Shanghai Composite Index is undergoing another correction. Respect of support at 3100 would indicate a healthy up-trend, while breach of 3000 would warn of a reversal. Declining Twiggs Money Flow indicates medium-term selling pressure.

Shanghai Composite Index

* Target medium-term: 3100 + ( 3100 – 2800 ) = 3400

Sharply falling Money Flow warns of strong selling pressure on Hong Kong’s Hang Seng Index. Breach of support at 22000 would signal a primary down-trend with an initial decline to 20000.

Hang Seng Index

Posted on

Asia steadies

China’s Shanghai Composite Index steadied and is again testing resistance at 3100. Breakout would signal a primary up-trend. Rising troughs on Twiggs Money Flow indicate buying pressure.

Shanghai Composite Index

Japan’s Nikkei 225 Index rallied for another test of resistance at 17000. Breakout above 17000 would suggest a primary up-trend. Follow-through above 17600, completing a broad double-bottom, would confirm. Further consolidation, however, is more likely.

Nikkei 225 Index

India’s BSE Sensex broke out of its narrow rectangle at 28000, signaling another advance. Expect a test of the 2015 high at 30000. Bearish divergence on Twiggs Money Flow now appears misleading.

SENSEX

Posted on

Signs of recovery

A strong blue candle on the S&P 500 daily chart suggests that the latest correction is over. Penetration of the descending trendline would confirm. 21-Day Twiggs Money Flow recovery above zero would strengthen the signal. Recovery above 2120 would signal an advance to 2200*. Look for confirmation from the Dow Jones Industrial Average and Transport sector.

S&P 500 Index

* Target calculation: 2120 + ( 2120 – 2040 ) = 2200

CBOE Volatility Index (VIX) at 13 indicates low risk typical of a bull market.

S&P 500 VIX

Dow Jones Industrial Average also shows signs of a recovery. Reversal above 18000 would confirm the correction is over. Breakout above 18300 would offer a target of 19000*. 13-Week Twiggs Money Flow holding above zero continues to signal a healthy primary up-trend. Breach of support at 17500 is unlikely, but would warn of a correction to test primary support (and trendline) at 17000.

Dow Jones Industrial Average

* Target calculation: 18300 + ( 18300 – 17600 ) = 19000

Bellwether transport stock, Fedex surged to test primary resistance at $184. Rising 13-week Twiggs Money Flow indicates buying pressure. Breakout would offer a target of 204* — a positive sign for the economy.

Fedex

* Target calculation: 184 + ( 184 – 164 ) = 204

A long tail on Canada’s TSX 60 suggests strong support at 855. Recovery above the descending trendline would indicate the correction is over. A 13-week Twiggs Momentum trough above zero would signal continuation of the primary up-trend, while breakout above 900 would offer a long-term target of 1000*.

TSX 60 Index

* Target calculation: 900 + ( 900 – 800 ) = 1000

Europe

Germany’s DAX is testing support at 11000. Recovery above the descending trendline would indicate the correction is over. Declining 13-week Twiggs Money Flow continues to warn of selling pressure, but penetration of the descending trendline would also suggest that buyers are back in control. Reversal below 11000 is unlikely, but would offer a target of 10000*.

DAX

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

The Footsie is testing support at 6700/6750. Declining 13-week Twiggs Money Flow continues to warn of selling pressure, but penetration of the descending trendline would suggest the return of buyers. Breakout above 7100 would confirm a primary advance with a long-term target of 8000*. Reversal below 6700 is unlikely, but would warn of a primary down-trend.

FTSE 100

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

Asia

The Shanghai Composite broke 5000. The situation appears artificial, considering current economic data, and I believe the accelerating up-trend will lead to a blow-off.

Shanghai Composite Index

* Target calculation: 3500 + ( 3500 – 2500 ) = 4500

Retracement on Japan’s Nikkei 225 Index respected support at 20000, suggesting an advance to 22000*. Oscillation high above zero on 13-week Twiggs Momentum signals a strong primary up-trend.

Nikkei 225 Index

* Target calculation: 20000 + ( 20000 – 18000 ) = 22000

India’s Sensex is testing primary support at 26500. Rising 13-week Twiggs Money Flow indicates medium-term buying pressure, however, and recovery above zero would strengthen the signal. Respect of support and penetration of the descending trendline would suggest another primary advance. Breach of primary support is less likely, but would warn of a primary down-trend with support at 23000*.

SENSEX

* Target calculation: 26500 – ( 30000 – 26500 ) = 23000

Australia

“Unemployment has fallen to a one-year low of 6 per cent in May as an estimated 42,000 jobs were added to the economy last month.” ~ ABC News

The ASX 200 found support at 5500 after solid employment numbers and a rally in US markets. Recovery above 5650 and the descending trendline would indicate the correction is over, suggesting a fresh advance. Breakout above 6000 is still some way off but would offer a target of 6500*. Reversal below 5450 remains as likely, however, and would warn of a test of primary support at 5120/5150.

ASX 200

* Target calculation: 6000 + ( 6000 – 5500 ) = 6500

Moderate decline of 13-week Twiggs Money Flow indicates medium-term selling pressure, typical of a secondary correction not a reversal.

The Banking sector [XBAK] dragged the index lower over the last two months, but now faces solid support at its two-year low of 83. Twiggs Momentum (13-week) bearish divergence warns of a down-trend, but recovery above zero would suggest otherwise.

ASX 300 Banks


More….

The Impunity Trap by Jeffrey D. Sachs | Project Syndicate

RIP ZIRP | PIMCO

How much longer can the global trading system last? | Michael Pettis

Crude retraces

Gold breaks $1180 support

Australian exports hammered

Itzhak Perlman: Schindler’s List

Mike Batt: Caravans (on the move)

The law locks up the man or woman
Who steals the goose off the common
But leaves the greater villain loose
Who steals the common from the goose.

~ Medieval English ditty from Jeffrey Sachs The Impunity Trap

Posted on

ASX breaks support

Australia

The ASX 200 broke through the band of support between 5650 and 5550, warning of a test of primary support at 5120. Declining 13-week Twiggs Money Flow indicates medium-term selling pressure, typical of a secondary correction not a reversal.

ASX 200

If we look at the two biggest sectors on a monthly chart, Metals & Mining has been in a down-trend since 2011 and is testing the lows of 2008. The Australian economy withstood the decline primarily because of low employment in the mining sector relative to its size.

ASX 300 Metals & Mining

Banks held up surprisingly well on the back of a resilient real estate market — I would call it a housing bubble because of the high average price to household income ratio. Pressure is mounting to improve bank capital ratios (especially after the Murray Inquiry) and curb aggressive lending. The long-awaited correction is under way and likely to find support between 82 and 84. The weight of the sector means the ASX 200 index is likely to follow.

ASX 300 Banks

Twiggs Momentum, however, shows a bearish divergence and has crossed below zero, warning of a (sector) reversal. Breach of primary support would strengthen the signal.

North America

The S&P 500 is ranging in a bullish narrow band between 2100 and 2120 on the daily chart. 21-Day Twiggs Money Flow holding above zero suggests moderate buying pressure. Upward breakout would signal an advance to 2200*, while reversal below 2100 would warn of a correction to 2040/2050. Look for confirmation from the Dow Jones Industrial Average.

S&P 500 Index

* Target calculation: 2120 + ( 2120 – 2040 ) = 2200

CBOE Volatility Index (VIX) indicates low risk typical of a bull market. The 63-day moving average holding below 20 reinforces the signal.

S&P 500 VIX

Dow Jones Industrial Average found support at 18000. Expect another test of resistance at 18300. Breakout would offer a target of 19000*. Reversal below 18000 is unlikely, but would warn of a correction to test the primary trendline and support at 17000.

Dow Jones Industrial Average

* Target calculation: 18300 + ( 18300 – 17600 ) = 19000

Canada’s TSX 60 continues to test resistance at 890. Breakout would confirm the end of the correction and indicate another test of long-term resistance at 900. 13-Week Twiggs Momentum holding above zero suggests a primary up-trend. Breakout above 900 would offer a long-term target of 1000*.

TSX 60 Index

* Target calculation: 900 + ( 900 – 800 ) = 1000

Europe

Germany’s DAX retreated from resistance at 12000. Declining 13-week Twiggs Money Flow warns of further selling pressure. Reversal below 11000 is unlikely, but would offer a target of 10000*.

DAX

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

The Footsie is ranging in a bullish narrow band on the weekly chart. Gradual decline of 13-week Twiggs Money Flow is typical of a secondary correction or consolidation. Breakout above 7100 would confirm a primary advance, offering a long-term target of 8000*. Reversal below 6900 is unlikely, but would warn of a correction to 6700.

FTSE 100

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

Asia

The Shanghai Composite is testing 5000 after a brief retracement to 4500. Bearish divergence on 13-week Twiggs Money Flow warns of selling pressure. I am wary of long-term prospects for the Chinese economy and believe the current accelerating up-trend is likely to end in a blow-off.

Shanghai Composite Index

* Target calculation: 3500 + ( 3500 – 2500 ) = 4500

Japan’s Nikkei 225 Index is headed for a target of 22000*, but bearish divergence on 13-week Twiggs Money Flow warns of selling pressure.

Nikkei 225 Index

* Target calculation: 20000 + ( 20000 – 18000 ) = 22000

India’s Sensex is headed for a test of primary support at 26500. Succesive peaks below zero on 13-week Twiggs Money Flow warn of reversal to a primary down-trend. Breach of primary support would confirm. Recovery above 28000 is unlikely, but would signal another test of 30000.

SENSEX


More….

Treasury yields surge but Dollar falls

Gold tests support at $1180

U2 busking in NYC subway

Yann Tiersen: The Fall

Life is a school of probability.

~ Walter Bagehot

Posted on

Stocks find support

Breakouts on the S&P 500 and in China and Japan, together with buying support across Europe and Asia, indicate a broad resurgence.

North American Stocks

The S&P 500 is retracing to test the new support level at 2120 after its recent breakout. Respect of support would confirm a further advance to 2200*. 21-Day Twiggs Money Flow is oscillating in a narrow range above the zero line, suggesting mild buying pressure. Upward breakout would signal another advance, while reversal below zero would warn of a correction.

S&P 500 Index

* Target calculation: 2120 + ( 2120 – 2040 ) = 2200

CBOE Volatility Index (VIX) at 12 continues to indicate low risk typical of a bull market.

S&P 500 VIX

St Louis Fed Financial Stress index below -1.0 likewise displays low levels of stress in financial markets.

St Louis Fed Financial Stress Index

Dow Jones Industrial Average continues to test resistance at 18300. Buying pressure remains positive and breakout would offer a target of 19000*, confirming the S&P 500 signal. Reversal below 18000 is unlikely, but would warn of a correction to test the primary trendline and support at 17000.

Dow Jones Industrial Average

* Target calculation: 18300 + ( 18300 – 17600 ) = 19000

Canada’s TSX 60 is testing resitance at 890. Breakout would signal the end of the correction and another test of long-term resistance at 900. 13-Week Twiggs Momentum holding above zero continues to indicate a primary up-trend. Breakout above 900 would offer a long-term target of 1000*.

TSX 60 Index

* Target calculation: 900 + ( 900 – 800 ) = 1000

Europe

Germany’s DAX broke its descending trendline, indicating another attempt at 12500. A 13-week Twiggs Money Flow trough above zero would confirm long-term buying pressure. Reversal below 11000 is unlikely.

DAX

<!–

* Target calculation: 12500 + ( 12500 – 12000 ) = 13000

–>

Shallow retracement on the Footsie suggests buying pressure. Recovery of 13-week Twiggs Money Flow above its descending trendline strengthens the signal. Breakout above 7100 would confirm a primary advance. The long-term target is 8000*.

FTSE 100

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

Asia

The Shanghai Composite broke resistance at 4500, indicating continuation of its strong advance. 13-Week Twiggs Money Flow troughs high above zero reflect long-term buying pressure.

Shanghai Composite Index

* Target calculation: 3500 + ( 3500 – 2500 ) = 4500

Economic data, however, continues to warn of a slow-down.

//platform.twitter.com/widgets.js

Japan’s Nikkei 225 Index broke resistance at 20000, suggesting an advance to 22000*. Recovery of 13-week Twiggs Money Flow above the descending trendline would strengthen the signal.

Nikkei 225 Index

* Target calculation: 20000 + ( 20000 – 18000 ) = 22000

India’s Sensex respected support at 26500 and is now testing resistance at 28000. Breakout above 28000 and the descending trendline would signal another attempt at 30000. Recovery of 13-week Twiggs Money Flow above zero would strengthen the signal. Another (TMF) peak below zero is unlikely, but would warn of a primary down-trend.

SENSEX

Australia

The ASX 200 found support between 5650 and 5550, highlighted by the latest long-tailed candle. Recovery above 5750 would signal the correction is over and another test of 6000 is likely. Mild decline on 13-week Twiggs Money Flow indicates medium-term selling pressure — not a reversal. Breach of 5550 is unlikely, but would warn of a test of primary support at 5120.

ASX 200

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


More….

Liquidity Mismatch Helps Predict Bank Failure and Distress

T-Bonds Burn

Philip Glass: Glassworks

Elodie Sablier: Vertigo

B.B. King: The Thrill Is Gone

Teach us that wealth is not elegance; that profusion is not magnificence; and that splendour is not beauty. Teach us that taste is a talisman which can do greater wonders than the millions of the loanmonger. Teach us that to vie is not to rival, and to imitate not to invent. Teach us that pretension is a bore. Teach us that wit is excessively good-natured, and, like champagne, not only sparkles, but is sweet. Teach us the vulgarity of malignity. Teach us that envy spoils our complexions, and that anxiety destroys our figure.

~ Benjamin Disraeli, The Young Duke (1831)

Posted on

Long-tailed candles

Stocks are recovering from their recent soft patch and breakout above resistance is likely, signaling further gains.

North American Stocks

The S&P 500 is testing medium-term resistance at 2120. Breakout would signal an advance to 2200*. Three weekly candles with long tails reflect medium-term buying pressure, while a 13-week Twiggs Money Flow trough high above zero indicates long-term pressure. Retracement that respects the new support level at 2100 would further strengthen the bull signal.

S&P 500 Index

* Target calculation: 2120 + ( 2120 – 2040 ) = 2200

CBOE Volatility Index (VIX) at 12 indicates low risk typical of a bull market.

S&P 500 VIX

Dow Jones Industrial Average is testing resistance at 18300. Buying pressure appears similar to the S&P 500 and breakout would offer a target of 19000*.

Dow Jones Industrial Average

* Target calculation: 18300 + ( 18300 – 17600 ) = 19000

Canada’s TSX 60 found support at 870. 13-Week Twiggs Momentum holding above zero continues to indicate a primary up-trend. Breakout above 900 would offer a long-term target of 1000*.

TSX 60 Index

* Target calculation: 900 + ( 900 – 800 ) = 1000

Europe

Germany’s DAX encountered support above 11000. Penetration of the descending trendline would indicate the correction is over and follow-through above 12000 would suggest a primary advance. Declining 13-week Twiggs Money Flow warns of continued selling pressure and a further test of 11000, but respect of support remains likely and would provide a solid base for further advances.

DAX

The Footsie also displays long tails, suggesting medium-term buying support, but declining 13-week Twiggs Money Flow indicates continued selling pressure. Breach of 6900 would warn of a correction to 6700, but further losses are unlikely at present. Recovery above 7100 would confirm the long-term breakout, offering a target of 8000*.

FTSE 100

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

Asia

The Shanghai Composite is consolidating between 4000 and 4500. Breach of either of these levels would signal future direction. Declining 13-week Twiggs Money Flow warns of medium-term selling pressure, favoring the downside.

Shanghai Composite Index

* Target calculation: 3500 + ( 3500 – 2500 ) = 4500

Short retracement on Japan’s Nikkei 225 Index is a bullish sign. Breakout above 20000 would offer a target of 22000*. Declining 13-week Twiggs Money Flow reflects medium-term selling pressure; recovery above the descending trendline would be a bullish sign.

Nikkei 225 Index

* Target calculation: 20000 + ( 20000 – 18000 ) = 22000

India’s Sensex found support between 26500 and 27000. Long tails suggest medium-term buying pressure. Recovery above 28000 and the descending trendline would suggest another attempt at 30000. But 13-week Twiggs Money Flow remains below zero, warning of (long-term) selling pressure. Another peak below zero would warn of breach of primary support and a reversal.

SENSEX

Australia

ASX 200 support at 5750, 5650 or 5550: which is most relevant? Judging by some of the questions received, I succeeded in confusing a number of readers. Here is a brief summary:

  • 5750 acted as medium-term support until the beginning of May, when breach of 5750 and the rising trendline warned of a correction.
  • 5750 transformed into medium-term resistance and penetration would suggest the correction is over.
  • There is a strong band of support between the two recent (2014) highs of 5650 and 5550.
  • Breach of this band (i.e. below 5550) would indicate a test of primary support at 5120.
  • Respect (i.e. 5550 intact) would provide a solid base for a rally and a further (primary) advance if resistance at 6000 is broken.

Mild decline of 13-week Twiggs Money Flow suggests medium-term selling pressure — not a reversal. Recovery above 5750 remains more likely than breach of 5550.

ASX 200

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


More….

Gold: Ichimoku Cloud

Benjamin Disraeli: Success

China: Cement Production

US GDP: Where is it headed?

Peter Drucker: Last deadly sin

B.B. King: The Thrill Is Gone

B.B. King: Lucille

I think I’ve done the best I could have done. But I keep wanting to play better, go further. There are so many sounds I still want to make, so many things I haven’t yet done. When I was younger I thought maybe I’d reached that peak. But I’m 86 now, and if I make it through to next month, I’ll be 87. And now I know it can never be perfect, it can never be exactly what it should be, so you got to keep going further, getting better.

~ Riley (B.B.) King

Posted on

TSX bull signal

Canada’s TSX 60 index has followed the Footsie bull signal of last week, breaking long-term resistance at 900 to signal a fresh advance and long-term target of 1000*. A 13-week Twiggs Momentum trough above zero strengthens the signal. Expect retracement to test the new support level, but respect is likely.

TSX 60 Index

* Target calculation: 900 + ( 900 – 800 ) = 1000

Global stocks are generally recovering and appear set for another advance.

The S&P 500 recovered above 2100; follow-through above 2120 would confirm an advance to 2200*. 13-Week Twiggs Money Flow oscillating above zero reflects long-term buying pressure. Breach of support at 2040/2050 remains unlikely, but would test primary support at 1980/2000.

S&P 500 Index

* Target calculation: 2120 + ( 2120 – 2040 ) = 2200

Declining CBOE Volatility Index (VIX) is close to its lows of 2013, indicating low risk typical of a bull market.

S&P 500 VIX

Europe

Germany’s DAX encountered resistance at Deutsche Bank’s long-term target of 12500. Expect retracement to test support at 12000. Respect of support, and a short retracement, would be a bullish sign, suggesting an advance to 13000. Reversal below 12000 is unlikely, but would warn of a correction to the primary trendline at 11000.

DAX

* Target calculation: 12500 + ( 12500 – 12000 ) = 13000

Initial retracement of the Footsie respected new support at 7000. Declining 13-week Twiggs Money Flow indicates medium-term selling pressure. Expect further retracement, but reversal below 6950/7000 is unlikely.

FTSE 100

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

Asia

Patrick Chovanec’s tweet on China sums up my ambivalent attitude towards Chinese stocks:

The Shanghai Composite Index broke resistance at 4000 and is now retracing to test the new support level. Rising 13-week Twiggs Money Flow continues to indicate long-term buying pressure.

Shanghai Composite Index

* Target calculation: 3400 + ( 3400 – 2400 ) = 4400

Japan’s Nikkei 225 Index continues to test resistance at 20000. Rising 13-week Twiggs Momentum indicates long-term buying pressure. Breach of support at 19000 is unlikely. Breakout above 20000 would offer a long-term target of 22000*.

Nikkei 225 Index

* Target calculation: 20000 + ( 20000 – 18000 ) = 22000

India’s Sensex is approaching a watershed moment, having encountered resistance at 29000. Breakout would test 30000 and suggest an advance to 33000. Respect of resistance, however, would be a strong bear signal: reversal below 27000 would warn of a primary down-trend. 13-Week Twiggs Momentum has been slowing for the past 9 months and decline of 13-week Twiggs Money Flow to zero reinforces this. Recovery would indicate a false alarm while reversal below zero would reflect further selling.

SENSEX

Australia

The ASX 200 appears set for another test of resistance at 6000, the upper border of a bullish ascending triangle. Breakout above 6000 would signal an advance to 6250*. Declining 21-day Twiggs Money Flow, however, warns of medium-term selling pressure. Reversal below 5900 and the lower border of the triangle would warn of another correction.

ASX 200

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


More….

Gold Dollar pause

Crude breakout: exercise caution

Inflation outlook

Don’t be afraid of missing opportunities. Behind every failure is an opportunity somebody wishes they had missed.

~ Lily Tomlin

Posted on

Footsie breaks 7000

London’s FTSE 100 broke long-term resistance at its 1999 high, closing the week above 7000 and signaling a primary advance. Expect retracement to test the new support level, but the long-term target is 8000*.

FTSE 100

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

Global stocks, generally, recovered from recent weakness and appear set for another advance.

The S&P 500 recovered above 2100, suggesting a fresh advance. Foolow-through above 2120 would confirm, offering a target of 2200*. A 21-day Twiggs Money Flow trough above zero would reflect long-term buying pressure. Breach of support at 2040/2050 is unlikely, but would test primary support at 1980/2000.

S&P 500 Index

* Target calculation: 2120 + ( 2120 – 2040 ) = 2200

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

S&P 500 VIX

Bellwether transport stock Fedex rallied off primary support at 164. A 13-week Twiggs Money Flow trough at zero suggests continuation of the primary up-trend; a good sign for the economy.

Fedex

Europe

Germany’s DAX followed through above 12200, offering a medium-term target of 12800*. Rising 13-week Twiggs Money Flow indicates long-term buying pressure. Reversal below 12000 is unlikely.

DAX

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

The Footsie built a solid base of support, with two short corrections, for its breakout above 7000. 13-Week Twiggs Money Flow high above zero indicates long-term buying pressure. Expect retracement to test the new support level, but reversal below 6950/7000 is unlikely.

FTSE 100

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

Asia

China’s Shanghai Composite Index continues its primary advance, breaking resistance at 4000. An up-turn in the Harpex container shipping index suggests an increase in international trade. Rising 13-week Twiggs Money Flow indicates long-term buying pressure.

Shanghai Composite Index

* Target calculation: 3400 + ( 3400 – 2400 ) = 4400

Japan’s Nikkei 225 Index is testing resistance at 20000. Rising 13-week Twiggs Momentum indicates long-term buying pressure. Breach of support at 19000 is unlikely. Breakout above 20000 would offer a long-term target of 22000*.

Nikkei 225 Index

* Target calculation: 20000 + ( 20000 – 18000 ) = 22000

India’s Sensex recovery above 28500 indicates the correction is over. Expect another test of resistance at 30000. Recovery of 13-week Twiggs Money Flow above zero suggests continuation of the up-trend. Breakout above 30000 would offer a target of 33000. Breach of primary support at 26500/27000 is now unlikely.

SENSEX

Australia

The ASX 200 is testing resistance at 6000, the upper border of a bullish ascending triangle. Breakout above 6000 would signal an advance to 6250*. Rising 13-week Twiggs Money Flow indicates long-term buying pressure. Reversal below 5750 is unlikely, but would warn of a correction to 5500.

ASX 200

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


More….

Light vehicle sales

Upsurge in global trade

Dollar double bottom — gold tests support

Jobs growth slows (slightly)

The greatest deception men suffer is from their own opinions.

~ Leonardo da Vinci

Powered by WordPress / WordPress Maintenance Service By Website Helper