Tag: Shanghai Composite Index

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Crude and commodities still bearish

Nymex crude continues its downward trend. Respect of the descending trendline would warn of further weakness, while breach of support at $92 would indicate a decline to $84/barrel*. Recovery above $100 is unlikely, with 13-week Twiggs Momentum declining below zero. Brent crude continues its consolidation above $105, reflecting global supply constraints. Breach of $105 would warn of a down-trend.

Brent Crude and Nymex Crude

* Target calculation: 92 – ( 100 – 92 ) = 84

Commodities also continue their primary down-trend, encouraged by a falling Shanghai Composite Index. Bullish divergence on Dow Jones-UBS Commodity Index 13-week Twiggs Momentum, however, warns that a bottom is forming. Breach of the descending trendline would strengthen the signal — as would recovery of Momentum above zero. Breakout above 128 would signal a primary up-trend: a bullish sign for resources stocks.

Dow Jones UBS Commodities Index

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Shanghai selling pressure

A sharp fall below zero on 13-week Twiggs Money Flow warns of selling pressure on China’s Shanghai Composite Index. Breach of support at 1950 is likely and would offer a target of 1800*.

Shanghai Composite Index

* Target calculation: 1950 – ( 2100 – 1950 ) = 1800

Michael Pettis summarizes the four challenges facing China:

  1. China is over-reliant on credit to generate growth;
  2. Attempts to boost consumption will reverse the long-standing subsidy of new investment;
  3. Attempts to resolve excess capacity also slow growth; and
  4. Unrecognized bad debt on bank balance sheets mean that growth is overstated.
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Japan bullish, but India & China reflect selling pressure

Japan’s Nikkei 225 is retracing to test its latest support level at 16000. Rising 13-week Twiggs Money Flow after a trough above zero indicates buying pressure. Respect of support would confirm a primary advance, with a long-term target of 17500*. A rising Dollar/Yen exchange rate would strengthen the signal. Breach of the rising trendline is unlikely, but would warn of another correction.

Nikkei 225

* Target calculation: 15000 + ( 15000 – 12500 ) = 17500

China’s Shanghai Composite breached support at 2080, confirming the primary down-trend. Expect support at 1950: the low of December 2012 and respected in 2013. Twiggs Money Flow below zero indicates selling pressure. Recovery above 2080 is unlikely but would warn of a bear trap.

Shanghai Composite Index

India’s Sensex encountered strong resistance at 21200 and declining 13-week Twiggs Money Flow warns of medium-term selling pressure. Expect another test of support at 20200. Failure would warn of a primary down-trend. Breakout above 21200 is unlikely in the next few weeks, but would suggest a primary advance to 22000*.

Sensex

* Target calculation: 21000 + ( 21000 – 20000 ) = 22000

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Asia: China buying pressure but HK retreats

Japan’s Nikkei 225 is retracing to test its new support level around 15000. 21-Day Twiggs Money Flow holding above zero indicates buying pressure. Respect of support would confirm a primary advance, with a long-term target of 17500*. Reversal below the rising trendline is unlikely, but would warn of a correction to the base of the formation at 12500.

Nikkei 225

* Target calculation: 15000 + ( 15000 – 12500 ) = 17500

China’s Shanghai Composite is testing resistance at 2250. Breakout would signal a primary advance to 2450. 21-Day Twiggs Money Flow holding above zero indicates buying pressure. Reversal below the rising trendline is unlikely, but would warn of trend weakness.

Shanghai Composite Index

Hong Kong’s Hang Seng index retreated from resistance at 24000. Expect short-term support at 23500. Bearish divergence on 21-day Twiggs Money Flow warns of selling pressure. Breach of the rising trendline would warn of a correction. Breakout above 24000 is less likely, but would signal a primary advance to 24500, with a long-term target of 25500*.

Hang Seng Index

* Target calculation: 23500 + ( 23500 – 21500 ) = 25500

India’s Sensex also warns of selling pressure, with a bearish divergence on 21-day Twiggs Money Flow. Respect of resistance at 21000/21200 would strengthen the warning. And reversal below 20200 would signal a correction. Breakout above 21200 is less likely, but would confirm the primary advance, offering a target of 24000*.

Sensex

* Target calculation: 21000 + ( 21000 – 18000 ) = 24000

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Gold support at $1200

Gold

The long tail on this week’s candle reflects buying support for spot gold at $1200/ounce. Recovery above $1250 would suggest another rally to $1350. But the 63-day Twiggs Momentum peak below zero warns of a down-trend. And breach of primary support at $1200 would confirm.

Spot Gold

* Target calculation: 1250 – ( 1350 – 1250 ) = 1150

Often a leading indicator of spot prices, the Gold Bugs Index, representing un-hedged gold stocks, continues in a primary down-trend after breaking support at 210. Completion of a 13-week Twiggs Momentum peak below zero would strengthen the signal.

Gold Bugs Index

Dollar Index

The yield on ten-year Treasury Notes broke through medium-term resistance 2.75, suggesting a primary advance to 3.50 percent*. Breakout above 3.00 percent would confirm. Reversal below the rising trendline is unlikely, but would warn of trend weakness and another test of 2.50. Higher yields are likely to strengthen the dollar.

10-Year Treasury Yields

* Target calculation: 3.00 + ( 3.00 – 2.50 ) = 3.50

The Dollar Index shows evidence of strong support at 80.50, consolidating in a narrow band between 80.50 and 81.00 over the last 2 weeks. Upward breakout would suggest a primary advance; confirmed if resistance at 81.50 is broken. Breach of support at 80.50 remains as likely and would warn of another test of primary support at 79.

Dollar Index

* Target calculation: 81.5 + ( 81.5 – 79 ) = 84

Higher interest rates and a stronger dollar would increase downward pressure on gold.

Crude Oil

Nymex crude penetrated its downward trendline but this first bear rally may not be the last. Expect resistance between $98 and $100/barrel. Respect remains likely and would indicate another test of support at $92. Brent crude reflects global supply constraints and is likely to find strong support at $100/barrel.

Brent Crude and Nymex Crude

Commodity Prices

A rising Shanghai Composite Index is supporting commodity prices. Recovery of the Dow Jones-UBS Commodity Index above 126 would indicate a bear trap. Breakout above 130 would suggest reversal to a primary up-trend; and cross-over of 13-week Twiggs Momentum above zero would strengthen the signal. Respect of resistance at 126 and a primary decline now appear unlikely.

Dow Jones UBS Commodities Index

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ASX correction despite Asian bulls

Japan’s Nikkei 225 is likely to retrace to test its new support level at 15000. Respect would negate the bearish divergence on 13-week Twiggs Money Flow and confirm the long-term target of 17500*. Reversal below the rising trendline, however, would warn of a correction to 13000.

Nikkei 225

* Target calculation: 15000 + ( 15000 – 12500 ) = 17500

China’s Shanghai Composite is consolidating between 2100 and 2250. Upward breakout would suggest a test of the descending trendline at 2450 on the monthly chart. Momentum remains weak and reversal below 2100 is as likely, which would test primary support at 1950.

Shanghai Composite Index

Hong Kong’s Hang Seng is testing this year’s high of 24000. Rising 13-week Twiggs Money Flow indicates medium-term buying pressure. Breakout above 24000 is likely and would signal a primary advance to 24500, with a long-term target of 25500*. Reversal below 23500 is unlikely, but would warn of another test of 22500.

Hang Seng Index

* Target calculation: 23500 + ( 23500 – 21500 ) = 25500

India’s Sensex is headed for a test of 21200 after respecting support at 20200. Breakout above its 2007/2010 highs at 21000 would confirm the primary advance, offering a target of 24000*. Another 13-week Twiggs Money Flow trough above zero would strengthen the signal. Reversal below 20200 is unlikely, but would warn of a correction to primary support at 18000.

Sensex

* Target calculation: 21000 + ( 21000 – 18000 ) = 24000

The ASX 200 is undergoing a correction after breaching the rising trendline and support at 5290/5300. Bearish divergence on 13-week Twiggs Money Flow warns of selling pressure, but a trough above zero would indicate a healthy (primary) up-trend. There are plenty of support levels evident on the chart, but I would expect strongest support around 4900 and the 2009/2011 highs of 5000.

ASX 200

The ASX 200 VIX index, below 15, continues to indicate low market risk.

ASX 200

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Gold: $1200 next?

Spot gold consolidating in a narrow band below support at $1250/ounce suggests a test of $1200. The 63-day Twiggs Momentum peak below zero strengthens the signal. Breakout below the June low ($1200) would confirm a primary down-trend. Recovery above $1260 is unlikely, but would indicate a rally to $1350.

Spot Gold

* Target calculation: 1250 – ( 1350 – 1250 ) = 1150

Silver broke through support at $20.50/ounce and is headed for a test of primary support at $18/ounce. Completion of a 13-week Twiggs Momentum peak below zero warns of a primary down-trend. Breach of primary support would confirm.

Spot Silver

Often a leading indicator of spot prices, the Gold Bugs Index, representing un-hedged gold stocks, broke primary support at 210 to signal a primary down-trend. Completion of a 13-week Twiggs Momentum peak below zero would strengthen the signal.

Gold Bugs Index

Dollar Index

The yield on ten-year Treasury Notes retreated below 2.75. Breakout would signal a fresh primary advance, with a target of 3.50 percent* (breakout above 3.00 percent would confirm). Reversal below the rising trendline is less likely, but would warn of trend weakness and another test of 2.50. Higher yields would help strengthen the dollar.

10-Year Treasury Yields

* Target calculation: 3.00 + ( 3.00 – 2.50 ) = 3.50

The Dollar Index retraced to test the new support level at 80.50. Completion of a 13-week Twiggs Momentum peak below zero would warn of a primary down-trend. Breach of primary support at 79 would confirm. Breakout above 81.50 remains as likely, however, and would indicate an advance to 84*.

Dollar Index

* Target calculation: 81.5 + ( 81.5 – 79 ) = 84

Higher interest rates and a stronger dollar would increase downward pressure on gold.

Crude Oil

Nymex crude is undergoing a strong correction and is likely to test primary support at $85/$86 per barrel. Reversal of 13-Week Twiggs Momentum below zero warns of a primary down-trend. Brent crude is rising despite an easing of tensions with Iran. The primary reason for the divergence is supply. Iain Armstrong, oil analyst at Brewin Dolphin, earlier in the year explained that Brent is effectively a global brand — affected by global issues of supply/demand — while Nymex is a “local” brand and benefits from plentiful shale oil in the US.

Brent Crude and Nymex Crude

Commodity Prices

A resurgent Shanghai Composite Index is supporting commodity prices. Recovery of the Dow Jones-UBS Commodity Index above 126 would indicate a bear trap. A peak below zero on 13-week Twiggs Momentum, however, warns of a continuing down-trend. Respect of the resistance level, as indicated by follow-through below 122, would signal a decline to 114*.

Dow Jones UBS Commodities Index

* Target calculation: 124 – ( 134 – 124 ) = 114

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Muted ASX response to Asian bulls

Japan’s Nikkei 225 is likely to retrace to test its new support level at 15000. Respect would negate the bearish divergence on 13-week Twiggs Money Flow and confirm the long-term target of 17500*. Reversal below the rising trendline, however, would warn of a correction to 12500/13000.

Nikkei 225

* Target calculation: 15000 + ( 15000 – 12500 ) = 17500

Narrow consolidation at China’s Shanghai Composite upper trend channel suggests continuation of the rally. Follow-through above 2210 would signal a test of 2270. Reversal below 2180 is less likely, but would indicate a down-swing to the lower channel. The 21-day Twiggs Money Flow trough above zero suggests medium-term buying pressure. Breakout above 2270 would signal a primary up-trend.

Shanghai Composite Index

Hong Kong’s Hang Seng is likely to retrace to test the new support level at 23500. Respect would confirm an advance to 25500*, signaling a primary up-trend. Follow-through above 24000 would confirm. Rising 13-week Twiggs Money Flow indicates medium-term buying pressure. Reversal below 23500 is unlikely, but would warn of another test of 22500.

Hang Seng Index

* Target calculation: 23500 + ( 23500 – 21500 ) = 25500

India’s Sensex is again rallying after testing support at 20200. Breakout above its 2007/2010 highs at 21000 would confirm the primary advance, offering a target of 24000*. Another 13-week Twiggs Money Flow trough above zero would strengthen the signal. Reversal below 20200 is unlikely, but would warn of a correction to the rising trendline and primary support at 18000.

Sensex

* Target calculation: 21000 + ( 21000 – 18000 ) = 24000

Singapore’s Straits Times Index is struggling with resistance at 3250/3300. 13-Week Twiggs Money Flow below zero continues to warn of selling pressure. Breakout above 3300 is unlikely at present, but would signal a primary advance to 3600*. Reversal below 3120 would warn of another correction to primary support at 3000.

Straits Times Index

* Target calculation: 3300 + ( 3300 – 3000 ) = 3600

The ASX 200 continues to encounter selling pressure, with 21-day Twiggs Money Flow below zero. Reversal below the rising trendline and short-term support at 5290 would signal a correction. Breakout above 5400 is less likely, but would suggest an advance to 5600*. Follow-through above 5450 would confirm.

ASX 200

* Target calculation: 5450 + ( 5450 – 5300 ) = 5600

Readings on the ASX 200 VIX index are more bullish, suggesting relatively low market risk.

ASX 200

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Rising interest rates drive gold through support

The yield on ten-year Treasury Notes followed through above 2.75, indicating a fresh primary advance, with a target of 3.50 percent*. Breakout above 3.00 percent would confirm. Completion of a 13-week Twiggs Momentum trough above zero (recovery above say 30%) would strengthen the signal. Reversal below the rising trendline is unlikely, but would warn of another test of 2.50.

10-Year Treasury Yields

* Target calculation: 3.00 + ( 3.00 – 2.50 ) = 3.50

Dollar Index

Rising interest rates would strengthen the dollar. The Dollar Index rallied off support at 79 on the monthly chart, suggesting a test of 84. Breach of the rising trendline, however, still warns of trend weakness, and 13-week Twiggs Momentum respect of the zero line (from below) would strengthen the signal.

Dollar Index

* Target calculation: 79 – ( 84 – 79 ) = 74 or 84 + ( 84 – 79 ) = 89

Gold

Rising interest rates and a stronger dollar weaken gold. Spot gold broke support at $1250/ounce, signaling a primary down-trend. A 63-day Twiggs Momentum peak below zero strengthens the signal. Follow-through below the next support level, the June low of $1200, would confirm. Recovery above $1260 is unlikely, but would warn of a bear trap.

Spot Gold

* Target calculation: 1250 – ( 1350 – 1250 ) = 1150

Crude Oil

Nymex crude is undergoing a strong correction. 13-Week Twiggs Momentum crossing to below zero warns of reversal to a primary down-trend; a peak below the zero line would strengthen the signal. Expect strong support at $85/$86 per barrel. Respect of support would mean that Nymex remains in a primary (albeit weak) up-trend. Diverging Brent crude reflects both a strengthening European recovery and continued supply threats in the Middle East.

Brent Crude and Nymex Crude

Commodity Prices

Copper prices, bellwether for the global economy, respected resistance at $7400/$7500 per tonne and are heading for another test of the 2011 lows at $6800/tonne. Downward breakout would signal a primary down-trend, as would completion of a 13-week Twiggs Momentum peak below zero. Recovery above the descending trendline would be a bullish sign for the global economy, while breach of support at $6800 would be bearish.

Copper

China is a primary driver of commodity prices and a strengthening Shanghai Composite Index has slowed the fall in commodity prices. Dow Jones-UBS Commodity Index broke primary support at 124, but is consolidating in a narrow range below the former support level. Recovery above 124 would be a bullish sign, while follow-through below 122 would indicate a decline to 114*. Completion of a 13-week Twiggs Momentum peak below zero would also suggest a continuing down-trend.

Dow Jones UBS Commodities Index

* Target calculation: 124 – ( 134 – 124 ) = 114

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Asia rallies while ASX smoulders

India’s Sensex found support at 20200 before rallying to test resistance at 21200. Breakout above its 2007 and 2010 highs at 21000 would confirm the primary advance, offering a target of 24000*. Rising 13-week Twiggs Money Flow suggests medium-term buying pressure. Reversal below 20200 is unlikely, but would warn of a correction to primary support at 18000.

Sensex

* Target calculation: 21000 + ( 21000 – 18000 ) = 24000

Japan’s Nikkei 225 broke through resistance at 15000, but bearish divergence on 13-week Twiggs Money Flow warns of selling pressure. Expect retracement to test the new support level. Respect of 15000 is unlikely, but would confirm the primary up-trend, with a long-term target of 17500*. Reversal below the rising trendline would test primary support at 13200, warning of trend weakness.

Nikkei 225

* Target calculation: 15000 + ( 15000 – 12500 ) = 17500

Singapore’s Straits Times Index respected support at 3000 on the monthly chart, but is struggling to make an impression on long-term resistance at 3300. 13-Week Twiggs Momentum below zero continues to warn of a primary down-trend. Breakout above 3300 is unlikely at present, but would signal a primary advance to 3600*.

Straits Times Index

* Target calculation: 3300 + ( 3300 – 3000 ) = 3600

China’s Shanghai Composite is testing resistance at its upper trend channel. Follow-through above 2200 would indicate the correction is over and a test of 2270 is likely. A down-swing to test the lower channel is just as likely, however, and would indicate continuation of the correction. Completion of a 21-day Twiggs Money Flow trough above zero (say > 15%) would signal medium-term buying pressure. Breakout above 2270 may be some way off but would signal a primary up-trend.

Shanghai Composite Index

Hong Kong’s Hang Seng broke resistance at 23500, signaling a primary up-trend. Follow-through above 24000 would confirm, offering a medium-term target of 24500 and a long-term target of 28000*. Rising 13-week Twiggs Money Flow indicates medium-term buying pressure. Reversal below 23500 is unlikely, but would warn of another test of 22500 or the primary trendline.

Hang Seng Index

* Target calculation: 24000 + ( 24000 – 20000 ) = 28000

The ASX 200 is testing medium-term support at 5300. Penetration of the rising trendline, would warn of a correction. Bearish divergence on 21-day Twiggs Money Flow suggests selling pressure.

ASX 200

The monthly chart shows a correction would be likely to test the secondary rising trendline around 5000. Recovery above 5400 is unlikely at present, but would signal an advance to 5600*.

ASX 200

* Target calculation: 5450 + ( 5450 – 5300 ) = 5600

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