Tag: $VIX

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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


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The greatest deception men suffer is from their own opinions.

~ Leonardo da Vinci

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Stocks hesitant

The S&P 500 found short-term support at 2050, but declining 21-day Twiggs Money Flow indicates medium-term selling pressure. Breach of support would signal a correction to test the band of primary support between 1970 and 2000. Recovery above 2080 is less likely at present, but would indicate another test of 2120.

S&P 500 Index

* Target calculation: 2100 + ( 2100 – 2000 ) = 2200

Long-term, the S&P 500 remains bullish and CBOE Volatility Index (VIX) continues to indicate low risk typical of a bull market.

S&P 500 VIX

Dow Jones Industrial Average also retreated and is testing medium-term support at 17500/17600 on the weekly chart. Declining 13-week Twiggs Money Flow indicates moderate selling pressure. Breach of 17500 would test primary support at 17000, while recovery above 18000 would signal another primary advance — confirmed if there is follow-through above 18300.

Dow Jones Industrial Average

* Target calculation: 18000 + ( 18000 – 17000 ) = 19000

Europe

Germany’s DAX encountered resistance at 12000, but selling pressure looks weak. Rising 13-week Twiggs Money Flow indicates long-term buying pressure. Expect support at 11500. Recovery above 12000 would suggest an advance to 12500*.

DAX

* Target calculation: 10000 + ( 10000 – 7500 ) = 12500

The Footsie retreated from 7000. Declining 13-Week Twiggs Money Flow indicates medium-term selling pressure. Breach of support at 6700 would warn of a correction to test primary support at 6150/6200, while respect of support at 6700 would be a bullish sign. Breakout above 7000 would offer a long-term target of 8000*.

FTSE 100

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

Asia

China’s Shanghai Composite Index continues its primary advance. Recovery of 13-week Twiggs Money Flow above its descending trendline strengthens the signal. Retracement to test the new support level at 3400 remains likely, but expected to be weak.

Shanghai Composite Index

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

Japan’s Nikkei 225 Index is retracing. Breach of support at 19000 would signal a correction to test 18000, but respect is more likely and recovery above 19500 would indicate another attempt at the long-term target of 20000*. Rising 13-week Twiggs Momentum indicates long-term buying pressure.

Nikkei 225 Index

* Target calculation: 18000 + ( 18000 – 16000 ) = 20000

India’s Sensex is faltering at resistance at 30000. Reversal of 13-week Twiggs Money Flow below zero warns of strong selling pressure. Breach of primary support at 26500/27000 would signal a reversal. Respect of the primary trendline, however, would establish a sound base for further advances.

SENSEX

Australia

The ASX 200 continues to hesitate at 6000. Declining 13-week Twiggs Money Flow indicates moderate (medium-term) selling pressure. Reversal below 5750 is unlikely, but would warn of a correction to 5500. Breakout above 6000 would offer a (medium-term) target of 6250*.

ASX 200

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


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Crude consolidates

Footsie breaks 15-year high

The measure of who we are is what we do with what we have.

~ Vince Lombardi

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Fed patience buoys stocks

The S&P 500 rallied to 2100 on the strength of the Fed’s latest FOMC statement, allaying fears of an imminent rate rise. Follow-through above 2120 would indicate a test of 2200*. Another 13-week Twiggs Money Flow trough above zero would signal continuation of the primary up-trend.

S&P 500 Index

* Target calculation: 2100 + ( 2100 – 2000 ) = 2200

CBOE Volatility Index at 14 indicates low risk typical of a bull market.

S&P 500 VIX

Europe

Germany’s DAX retreated below its long-term target at 12000*. Correction to 11000 would indicate a healthy up-trend, while narrow consolidation below 12000 would be a bullish sign. Rising 13-week Twiggs Money Flow indicates strong buying pressure.

DAX

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

The Footsie rallied to 6950. The short correction is a bullish sign, suggesting a fresh advance. 13-Week Twiggs Money Flow oscillating above zero indicates healthy buying pressure. Breakout above 7000 would signal a primary advance with a long-term target of 8000*.

FTSE 100

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

Asia

China’s Shanghai Composite Index broke resistance at 3400, signaling a fresh advance. Economic data is not strong, but expectation of further stimulus has buoyed the market. A 13-week Twiggs Money Flow rally indicates medium-term buying pressure. Reversal below 3050 is now unlikely.

Shanghai Composite Index

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

Japan’s Nikkei 225 Index is heading for a test of its long-term target at 20000*. Rising 13-week Twiggs Momentum indicates a strong (primary) up-trend.

Nikkei 225 Index

* Target calculation: 18000 + ( 18000 – 16000 ) = 20000

India’s Sensex faces stiff resistance at 30000. Declining 13-week Twiggs Momentum warns the primary-trend is weakening. Recovery above 29000 would indicate the correction is over, while breach of 28000 would test primary support at 26500/27000. Respect of the primary trendline would establish a solid base for further advances.

SENSEX

Australia

The ASX 200 rallied to 5950, the short correction suggesting another advance. Breakout above 6000 would confirm, offering a (medium-term) target of 6250*. Rising 13-week Twiggs Money Flow indicates buying pressure. Reversal below 5750 is unlikely, but would warn of a correction to 5500.

ASX 200

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


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Concessions to adversaries only end in self reproach, and the more strictly they are avoided the greater will be the chance of security.

~ Thucydides (c. 460 BC – c. 400 BC): History of the Peloponnesian War

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DAX surges ahead while others retreat

The DAX is headed for its long-term target of 12000 while most markets (other than Japan) undergo a correction.

The S&P 500 broke support at 2080, indicating a correction to test 2000. Breach of primary support is unlikely and another 13-week Twiggs Money Flow trough above zero would signal another advance.

S&P 500 Index

* Target calculation: 2100 + ( 2100 – 2000 ) = 2200

Dow Jones Industrial Average is similarly correcting to test primary support at 17000.

Dow Jones Industrial Average

CBOE Volatility Index continues to indicate low risk typical of a bull market.

S&P 500 VIX

Europe

Germany’s DAX broke resistance at 11500 and is headed for a test of the long-term target at 12000*. Expect further resistance, possibly a correction, at this level. Rising 13-week Twiggs Momentum indicates a strong up-trend.

DAX

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

The Footsie retreated from a test of its December 1999 high of 6950. 13-Week Twiggs Momentum oscillating around zero indicates further consolidation. Expect a test of support at 6500.

FTSE 100

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

Asia

China’s Shanghai Composite Index is consolidating between 3050 and 3400. Declining 13-week Twiggs Money Flow warns of medium-term selling pressure. Reversal below 3050 would warn of a decline to test the primary trendline at 2700. Breakout above 3400 is less likely, but would signal another primary advance.

Shanghai Composite Index

Breach of support at 24000 on Hong Kong’s Hang Seng Index warns of further weakness in China. Follow-through below 23000 would indicate a primary down-trend — and a stronger bear signal (for China).

Hang Seng Index

Japan’s Nikkei 225 Index is retracing to test new support at its 2007 high of 18000/18300. Rising 13-week Twiggs Momentum indicates a strong up-trend. Respect of support is likely and would signal an advance to 20000* — confirmed by follow-through above 19000.

Nikkei 225 Index

* Target calculation: 18000 + ( 18000 – 16000 ) = 20000

India’s Sensex faces stiff resistance at 30000. Bearish divergence on 13-week Twiggs Momentum warns the primary-trend is weakening, but not necessarily a reversal. This could be a mid-point consolidation. Retreat below 29000 indicates a correction. Follow-through below 28000 would test primary support at 26500/27000. Respect of the primary trendline would establish a solid base for further advances.

SENSEX

Australia

The ASX 200 found support at 5750. Recovery above 5850 would suggest the correction is over. Follow-through above 6000 would confirm another advance, with a target of 6250*. Declining 21-day Twiggs Money Flow indicates mild selling pressure. Breach of 5750 is less likely, but would warn of a correction to 5500.

ASX 200

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


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When good news is bad news

Crude in contango

Life is a school of probability.

~ Walter Bagehot (hat tip to Barry Ritholz)

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Market strength

Apart from China and India, major markets continue to look bullish.

The S&P 500 is retracing to test support at 2080/2100, but respect is likely and would confirm an advance to 2200*. Oscillation of 13-week Twiggs Money Flow high above zero indicates strong long-term buying pressure.

S&P 500 Index

* Target calculation: 2100 + ( 2100 – 2000 ) = 2200

A quarterly chart shows the Nasdaq 100 headed for its Dotcom high of 4800. Expect major resistance at this level. Correction back to 4000 and the primary trendline may provide a long-term buying opportunity.

Nasdaq 100 Index

CBOE Volatility Index at 14 indicates low risk typical of a bull market.

S&P 500 VIX

Europe

Germany’s DAX found resistance at 11500. Expect retracement to test new support at 11000, but respect is likely and would confirm the target of 12000*. Rising 13-week Twiggs Money Flow indicates healthy buying pressure.

DAX

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

The Footsie is consolidating below its December 1999 high of 6950. 13-Week Twiggs Money Flow oscillating high above zero indicates long-term buying pressure. Breakout would signal a fresh primary advance, with a long-term target of 8000*. Follow-through above 7000 would confirm.

FTSE 100

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

Asia

China’s Shanghai Composite Index faces resistance at 3400. Declining 13-week Twiggs Money Flow warns of medium-term selling pressure. Reversal below 3050 would warn of a decline to test the primary trendline at 2700. Breakout above 3400 is less likely, but would signal another primary advance.

Shanghai Composite Index

Japan’s Nikkei 225 Index is likely to retrace to test new support at its 2007 high of 18000/18300. Rising 13-week Twiggs Money Flow indicates buying pressure. Respect is likely and would signal an advance to 20000*.

Nikkei 225 Index

* Target calculation: 18000 + ( 18000 – 16000 ) = 20000

India’s Sensex encountered stiff resistance at 30000. Declining 13-week Twiggs Money Flow indicates medium-term selling pressure. Reversal below 28000 would warn of a correction to 26500/27000. Respect of the primary trendline would establish a solid base for further advances, otherwise we may see an extended consolidation below 30000.

SENSEX

Australia

The ASX 200 encountered resistance at 6000, retracing to test support at 5850. 13-Week Twiggs Money Flow continues to reflect healthy buying pressure. Respect of support would indicate continuation of the advance, towards 6150*. Follow-through above 6000 would confirm. Breach of 5850 is less likely, but would warn of a correction back to the rising trendline, around 5650.

ASX 200

* Target calculation: 5650 + ( 5650 – 5150 ) = 6150

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The rally continues

Apart from China and India, last week’s broad market rally is going strong, with the S&P 500 and the DAX making new highs.

The S&P 500 broke resistance at 2100. Expect retracement to test the new support level, but respect is likely to confirm an advance to 2200*. Rising 13-week Twiggs Money Flow indicates medium-term buying pressure.

S&P 500 Index

* Target calculation: 2100 + ( 2100 – 2000 ) = 2200

CBOE Volatility Index is declining, indicating low risk typical of a bull market.

S&P 500 VIX

Europe

Germany’s DAX broke resistance at its medium-term target of 11000*. Expect retracement to test the new support level. Respect of support would indicate trend strength and a medium-term target of 11500 (10000-8500). Rising 13-week Twiggs Momentum troughs above zero predict a strong up-trend.

DAX

* Target calculation: 10000 + ( 10000 – 9000 ) = 11000

The Footsie is testing its December 1999 high of 6950. Breakout would signal a fresh primary advance, with a long-term target of 8000*. Follow-through above 7000 would confirm. Momentum is rising, but it will take considerable impetus to make a new high.

FTSE 100

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

Asia

China’s Shanghai Composite Index faces considerable resistance at 3400. Declining 13-week Twiggs Money Flow warns of medium-term selling pressure. Reversal below 3050 would warn of a decline to test the primary trendline at 2700.

Shanghai Composite Index

Is the Chinese economy a one-trick pony or will economic growth continue when the infrastructure boom ends?

Japan’s Nikkei 225 Index broke resistance at its 2007 high of 18000/18300. Rising 13-week Twiggs Money Flow reflects buying pressure. Expect retracement to test the new support level, but target for the advance is 20000*.

Nikkei 225 Index

* Target calculation: 18000 + ( 18000 – 16000 ) = 20000

India’s Sensex is testing resistance at 30000, but declining 13-week Twiggs Momentum over the last 6 months warns the primary up-trend is weakening. A healthy correction to 26500/27000 (signaled by breach of support at 28000) would re-establish a solid base, otherwise the index may struggle to break 30000.

SENSEX

Australia

The ASX 200 is consolidating between 5850 and 5950. The narrow range is a bullish sign and breakout above 5950 would indicate continuation of the advance to 6150*. Rising 13-week Twiggs Money Flow indicates buying pressure. Reversal below support at 5850 is unlikely, but would warn of a correction.

ASX 200

* Target calculation: 5650 + ( 5650 – 5150 ) = 6150

Alexander Hamilton started the U.S. Treasury with nothing, and that was the closest our country has ever been to being even.

~ Will Rogers

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Broad market rally

Major indices across the US, Europe and Japan are displaying strong performance. China and India appear to be encountering stronger resistance, but should also be buoyed by the broad recovery.

Bellwether transport stock Fedex (FDX) is headed for another test of resistance at $182/$184. Breakout would signal a primary advance, with a target of $200*, indicating that economic activity is improving.

Fedex

* Target calculation: 184 + ( 184 – 168 ) = 200

The S&P 500 is testing resistance at 2100. Breakout would offer a medium-term target of 2200*. Rising 13-week Twiggs Money Flow indicates medium-term buying pressure. Respect of 2100 is unlikely, but would suggest another test of primary support at 2000.

S&P 500 Index

* Target calculation: 2100 + ( 2100 – 2000 ) = 2200

The Nasdaq 100 successfully penetrated resistance at 4300/4350, signaling an advance to 4500*. Oscillation of 13-week Twiggs Money Flow high above zero suggests strong buying pressure. Expect retracement to test the new support level, but breach is unlikely and would warn of another correction.

Nasdaq 100 Index

* Target calculation: 4300 + ( 4300 – 4100 ) = 4500

CBOE Volatility Index broke out below the recent triangle, indicating risk has reverted from Moderate to Low.

S&P 500 VIX

Europe

Germany’s DAX is testing resistance at 11000*. Rising 13-week Twiggs Momentum troughs above zero indicate a strong up-trend. Retracement that respects medium-term support at 10600 would strengthen the bull signal.

DAX

* Target calculation: 10000 + ( 10000 – 9000 ) = 11000

The Footsie is also testing long-term resistance at 6900. Breakout would signal a fresh primary advance, with a long-term target of 8000*. Follow-through above 7000 would confirm. Momentum is rising, but it will take considerable impetus to break through the December 1999 high of 6950.

FTSE 100

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

Asia

China’s Shanghai Composite Index found support at 3050, but declining 13-week Twiggs Money Flow warns of medium-term selling pressure. Respect of resistance at 3400 is likely. Reversal below 3050 would warn of a test of the primary trendline at 2700. The stimulus effect of lower energy prices may cushion the fall but economic activity is declining.

Shanghai Composite Index

Japan’s Nikkei 225 Index continues to test resistance at its 2007 high of 18000. Rising 13-week Twiggs Money Flow reflects medium-term buying pressure. Breakout above 18000 would signal another primary advance, with a target of 20000*.

Nikkei 225 Index

* Target calculation: 18000 + ( 18000 – 16000 ) = 20000

India’s SENSEX found support at 28000 and recovery above 29000 signals another test of 30000. A lower peak on 13-week Twiggs Money Flow reflects medium-term selling pressure. Respect of resistance at 30000 is likely, while breach of support at 28000 would test primary support at 26500.

SENSEX

* Target calculation: 29000 + ( 29000 – 27000 ) = 31000

Australia

The ASX 200 is headed for a test of 6000 after breaking out of the recent flag continuation pattern. Rising 21-day Twiggs Money Flow indicates short-term buying pressure. Reversal below support at 5850 is unlikely, but would warn of a correction.

ASX 200

* Target calculation: 5650 + ( 5650 – 5150 ) = 6150

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US Recovery on Track

The Leading Index calculated by the Philadelphia Fed has, in the past proved a reliable indicator of economic conditions. The latest value of 1.74% (December 2014) reflects a healthy recovery.

Philadelphia Fed Leading Index

Light vehicle sales also indicate consumer confidence. Annual sales to December 2014 of 16.8 million units are in the same realm as the buoyant conditions of 2004 to 2007.

Light vehicle sales

The Freight Transportation Services Index suggests that broader economic activity is also soaring.

Freight Transport Index

The S&P 500 successfully tested support at 2000, recovery above the declining trendline suggesting that the recent correction is over. Penetration of the descending trendline on 13-week Twiggs Money Flow would strengthen the signal. Breach of 1980/2000 is unlikely. Breakout above 2080 would indicate a fresh advance; follow-through above 2100 would confirm.

S&P 500 Index

* Target calculation: 2100 + ( 2100 – 2000 ) = 2200

CBOE Volatility Index is declining. Breakout below the recent triangle would indicate that risk has reverted to ‘Low’ from ‘Moderate’.

S&P 500 VIX

Europe

Dow Jones Euro Stoxx 50 index is consolidating above support at 3300 despite tensions between Greece and its Northern EMU partners. Respect of 3300 would indicate a fresh primary advance, with a long-term target of 3600*. Follow-through above 3425 would confirm.

Dow Jones Euro Stoxx 50

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

Asia

China’s Shanghai Composite Index found support at 3050, but declining 13-week Twiggs Money Flow warns of medium-term selling pressure. Failure to break resistance at 3400 is increasingly likely, and reversal below 3050 would warn of a test of the primary trendline at 2700. The stimulus effect of lower energy prices may cushion the fall but economic activity is declining and the PBOC faces a number of challenges.

Shanghai Composite Index

Japan’s Nikkei 225 Index has benefited from aggressive monetary expansion by the BOJ and is testing resistance at its 2007 high of 18000. Rising 13-week Twiggs Momentum reflects a healthy up-trend. Breakout above 18000 would signal another primary advance, with a target of 20000*.

Nikkei 225 Index

* Target calculation: 18000 + ( 18000 – 16000 ) = 20000

Long-term momentum of India’s SENSEX has been slowing since mid-2014. A fall below zero is unlikely, but would warn of a trend reversal. Respect of the secondary rising trendline would suggest another test of 30000, while breach would test primary support at 26500.

SENSEX

* Target calculation: 29000 + ( 29000 – 27000 ) = 31000

Australia

Australia’s ASX 200 is retracing to test its new support level at 5660. Respect would confirm a fresh primary advance. 13-Week Twiggs Money Flow holding above the zero line indicates medium-term buying pressure. Breakout above the descending flag would signal another advance, with a target of 6150*. Failure of support is unlikely.

ASX 200

* Target calculation: 5650 + ( 5650 – 5150 ) = 6150

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ASX breakout on RBA rate cut

Australia’s ASX 200 broke through resistance at 5660, signaling a fresh primary advance after several months in the doldrums. Rising 13-week Twiggs Money Flow indicates medium-term buying pressure. Retracement to test new support at 5550/5650 is likely, but the target for the advance is 6150*.

ASX 200

* Target calculation: 5650 + ( 5650 – 5150 ) = 6150

The surge was driven by an RBA rate cut to a new low of 2.25%.

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The cut was largely unexpected. My view was (and is) that a cut is unnecessary, given that falling commodity prices (especially crude oil and LNG) are weakening the Aussie Dollar. Now that we have one, further cuts are likely.

US Markets

The S&P 500 continues to test support at 2000, but rising 13-week Twiggs Money Flow indicates long-term buying pressure. Breach of 1980/2000 is unlikely, but would warn of another correction. Recovery above the descending trendline would suggest the start of a fresh advance.

S&P 500 Index

* Target calculation: 2000 + ( 2000 – 1800 ) = 2200

CBOE Volatility Index retreated below 20%, but only breakout below the triangle would reassure that the recent up-surge has passed — and risk has reverted to ‘low’ from ‘moderate’.

S&P 500 VIX

Europe

Germany’s DAX is heading for 11000* after breaking resistance at 10000. A 13-week Twiggs Momentum trough above zero confirms the primary up-trend.

DAX

* Target calculation: 10000 + ( 10000 – 9000 ) = 11000

The Footsie continues to test long-term resistance at 6900/7000. Breakout would signal a fresh primary advance, with a long-term target of 8000*. 13-Week Twiggs Money Flow is rising, but it will take considerable buying pressure to break through the 1999/2000 high.

FTSE 100

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

China’s Shanghai Composite Index is retreating from resistance at its 2009 high of 3400. A small decline in 13-week Twiggs Money Flow indicates medium-term buying pressure is weakening. Reversal below 3100 would warn of a correction. Breakout above 3400 remains as likely, however, and would signal a fresh primary advance. The stimulus effect of lower energy prices may allow the PBOC scope to rein in monetary expansion, which would have a dampening effect on the current stock boom.

Shanghai Composite Index

The whole art of government consists in the art of being honest.

~ Thomas Jefferson

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ASX rebounds

A low inflation outlook is likely to ease pressure on the Fed to raise interest rates. The S&P 500 is testing support at 2000. Breach would warn of another correction, but the primary trend is intact. Respect of the secondary trendline would suggest this is likely to continue. Rising 13-week Twiggs Money Flow indicates long-term buying pressure; decline below the rising trendline would again warn of a secondary correction.

S&P 500 Index

* Target calculation: 2000 + ( 2000 – 1800 ) = 2200

CBOE Volatility Index is making more frequent penetrations of 20%, suggesting moderate risk. VIX ranging between 20% and 30% would warn of increased market stress.

S&P 500 VIX

The Nasdaq 100 is also testing support, at 4100, and breach of this level would warn of a correction. But the primary trend is strong and further 13-week Twiggs Money Flow troughs above zero would reinforce this.

Nasdaq 100 Index

* Target calculation: 4100 + ( 4100 – 3700 ) = 4500

Europe is buoyant after the ECB signaled further monetary easing (QE). Germany’s DAX is heading for 11000* after breaking resistance at 10000. Recovery of 13-week Twiggs Momentum indicates continuation of the up-trend.

DAX

* Target calculation: 10000 + ( 10000 – 9000 ) = 11000

The Footsie has also recovered, testing long-term resistance at 6900/7000. Expect strong resistance at this level. Breakout would signal a fresh primary advance, with a long-term target of 8000*.

FTSE 100

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

China is benefiting from falling oil prices, with the Shanghai Composite Index again testing resistance at 3400. Breakout would signal a fresh primary advance. Rising 13-week Twiggs Money Flow indicates strong (medium-term) buying pressure. The stimulus effect of lower energy prices may allow the PBOC scope to rein in monetary expansion, which would have a dampening effect on the current stock boom.

Shanghai Composite Index

Discussion of monetary expansion would not be complete without mention of Japan where the BOJ has gone “all in” to curb long-term deflationary pressures. The Nikkei 225 Index is testing resistance at its 2007 high of 18000. Rising 13-week Twiggs Money Flow respecting the zero line suggests long-term buying pressure. Breakout above 18000 would signal another primary advance, with a target of 20000*.

Nikkei 225 Index

* Target calculation: 18000 + ( 18000 – 16000 ) = 20000

Australia’s ASX 200 has suffered from falling commodity prices over the past 12 months, with falling crude adding to the energy sector’s woes in the last quarter. But an up-tick of 13-week Twiggs Money Flow hints at brighter days ahead. Breakout above 5650 would offer a target of 6000*.

ASX 200

* Target calculation: 5600 + ( 5600 – 5200 ) = 6000

The Daily chart shows the index completed a double bottom, breaking resistance at 5550, after twice testing primary support at 5120/5150. A 21-day Twiggs Money Flow trough above zero signals medium-term buying pressure. Follow-through above 5660 would confirm a fresh primary advance.

ASX 200

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