More impressive than man’s first steps on the moon

A Bulgarian man, paralysed from the chest down when his spinal cord was severed in 2010, has taken his first steps after a team of surgeons, led by Pawel Tabakow, consultant neurosurgeon at Wroclaw University in Poland, transplanted olfactory nerve cells into the spinal cord.

“What we’ve done is establish a principle, nerve fibres can grow back and restore function, provided we give them a bridge,” said Geoff Raisman, chair of neural regeneration at University College London’s Institute of Neurology, who led the British research team working on the joint project.

“To me, this is more impressive than a man walking on the Moon. I believe this is the moment when paralysis can be reversed.”

Read more at Paralysed man walks again after breakthrough spinal treatment – Business Insider.

Hat tip to Greg McKenna.

Russia’s Ruble in a world of pain

Russia’s ruble is in a world of pain, having lost one-third of its value against the Dollar over the last 40 months. The down-trend is accelerating, emphasized by two large 13-week Twiggs Momentum peaks below the zero line.

RUBUSD

Vladimir Putin has backed himself into a corner and has no way out but to escalate. His current strategy in Eastern Europe of one-step-back-two-steps-forward is becoming predictable and the European Union is likely to run out of patience, responding with further sanctions. Increasingly threatening behavior in the Baltic is also unlikely to intimidate, merely strengthening alliances and resolve.

George Soros on the Ukraine crisis:

Former Swedish PM Carl Bildt seems to agree:

Ambrose Evans-Pritchard weighs in on Russia’s economic woes:

Crude oil threatens support

Brent crude [pink] has already broken long-term support at $90/barrel and Nymex Light Crude [blue] is testing similar support at $78 to $80/barrel. Breach would confirm a primary down-trend and a long-term target of $50*.

Nymex WTI Crude

* Target calculation: 80 – ( 110 – 80 ) = 50

Gold Bugs and Silver warn of further weakness

Low interest rates strengthen demand for gold as they reduce the carrying cost. A rising dollar, however, would reduce demand.

Gold encountered stubborn resistance at $1250/ounce. Respect would confirm the primary down-trend. Another 13-week Twiggs Momentum peak below zero would strengthen the signal. Breach of primary support at $1180 would offer a long-term target of $1000*. Recovery above $1250 is unlikely, but would test the descending trendline around $1300.

Spot Gold

* Target calculation: 1200 – ( 1400 – 1200 ) = 1000

Gold Bugs Index, representing un-hedged gold stocks, broke long-term support at 190, signaling another primary decline. Gold is likely to follow.

Gold Bugs Index

Silver failed to rally in concert with gold, instead consolidating in a narrow range which suggests further weakness. Another bearish sign for gold.

Silver

Treasury yields fall and the Dollar finds support

The yield on ten-year Treasury Notes is in a primary down-trend (since breaking support at 2.50%). Expect retracement to test resistance at 2.30%. Respect is likely and would indicate another test of primary support at 2.00%*. A 13-week Twiggs Momentum peak below zero signals bear strength. Recovery above 2.30 is unlikely, but would test the descending trendline and resistance at 2.50%.

10-Year Treasury Yields

* Target calculation: 2.30 – ( 2.60 – 2.30 ) = 2.00

Inflation expectations are falling, with the 5-year inflation breakeven rate (5-year treasury yields minus the 5-year TIPS rate) now close to 1.4%.

5-Year Inflation Breakeven Rate

The Dollar Index respected its new support level at 84.50. Recovery above 86.5 would confirm a primary advance and a target of 89*. Rising 13-week Twiggs Momentum suggests a healthy (primary) up-trend. Failure of support at 84.50 is unlikely, but would warn of a correction to the primary trendline.

Dollar Index

* Target calculation: 84 + ( 84 – 79 ) = 89.00

Shots fired in parliament building, Ottawa [video]

The suspect had apparently already shot and killed a reservist soldier standing guard at the National War Memorial.

RBA targets mortgage lending

ASX 200 breaks resistance

The ASX 200 broke resistance at 5340/5350 in the first hour of trading this morning. Expect retracement to test the new support level on the hourly chart. Respect would confirm that the correction is over.

ASX 200

Get Ready for Iraq War IV

Retired army officer John A. Nagl writes:

The United States is now at war in Iraq for the third time in my lifetime, and after being in the middle of the first two I’m planning to sit this one out.

The first Iraq war was necessary and conducted well, as wars go; the second was unnecessary and conducted poorly at first, but ended up in a reasonable place given what a fiasco it had been at the start. This third war was entirely preventable, caused by a premature departure of U.S. troops after the second. Although it’s too soon to say how it will turn out, it is not too early to say that unless we get the endgame right, the United States will fight yet another war in Iraq before too long.

Read more at Get Ready for Iraq War IV.

In Milan, Germany’s leader strikes the right note on Russian sanctions | Washington Post

Opinion from the Washington Post:

To her credit, Ms. Merkel is staking out a firm position, perhaps because she has spent more time than any other Western leader talking to Mr. Putin about Ukraine. On Monday she said, “There’s a long way to a cease-fire, unfortunately,” and added that Russia would have to respect Ukraine’s territorial integrity “not just on paper” before sanctions could be lifted. That added weight to comments last week by Secretary of State John F. Kerry, who — even as he tried to promote U.S.-Russian cooperation on other issues — said Russia would have to withdraw “heavy equipment” and allow its border with Ukraine “to be properly monitored and secured” to win sanctions relief.

Mr. Putin is unlikely ever to meet those terms. To do so would doom Novorossiya, which can’t survive without military and material support from Russia. As the sanctions bite, he is as liable to escalate his aggression as to offer concessions….

Further escalation is not likely — it’s inevitable. Decisive action now will save much pain later. Read Putin’s Coup, Ben Judah’s piece on how Vladimir Putin has consolidated his hold on power. The parallels with Germany’s NSDAP in the 1930s are chilling — using fear to quell dissent.

Read more at In Milan, Germany’s leader strikes the right note on Russian sanctions | The Washington Post.

Hang Seng falters

Hong Kong’s Hang Seng Index is testing support at 23000. Reversal of 13-week Twiggs Money Flow below zero warns of a primary down-trend. Breach of support at 21000 would confirm.

Hang Seng Index

China’s Shanghai Composite Index continues to test its new support level at 2340. Respect would suggest an advance to 2500*. Breach would warn of a correction. I remain wary because of weakness in Hong Kong.

Shanghai Composite Index

* Target calculation: 2250 + ( 2250 – 2000 ) = 2500

India’s Sensex tests support

India’s Sensex penetrated its secondary rising trendline, warning of a correction. Bearish divergence on 13-week Twiggs Money Flow continues to warn of selling pressure. Breach of support at 26000 would offer a target of 25000 and the primary trendline. Respect of support and follow-through above the descending flag would indicate an advance to 28000*.

Sensex

* Target calculation: 27000 + ( 27000 – 26000 ) = 28000

Aussie Dollar and ASX find support

The Australian Dollar is testing resistance at $0.8900, but the primary trend is down. Breakout would suggest a bear rally, while respect would warn of another decline. 13-Week Twiggs Momentum below zero indicates a primary down-trend. Breach of primary support at $0.8650 would offer a target of $0.80*.

AUDUSD

* Target calculation: 0.87 – ( 0.94 – 0.87 ) = 0.80

ASX 200 penetrated its descending trendline, suggesting the correction is over. The index would be further buoyed by a rally of the Aussie Dollar. Bullish divergence and recovery of 21-day Twiggs Money Flow above zero indicates medium-term buying pressure. Breach of resistance at 5350 would strengthen the bull signal. Reversal below 5250, however, would warn of a test of primary support at 5000/5050.

ASX 200

* Target calculation: 5350 – ( 5650 – 5350 ) = 5050

The ASX 200 VIX at 15.5 continues to indicate low risk typical of a bull market. A significantly higher trough is unlikely, but would be a bearish sign.

ASX 200

Another bear trap?

Bellwether transport stock Fedex found support at $154, the long tail and rising 13-week Twiggs Money Flow indicating buying pressure. Expect a test of $165. Reversal below $150 is unlikely, but would warn of a test of primary support at $130. Continuation of the primary up-trend signals improvement for the broad economy.

Fedex

* Target calculation: 165 + ( 165 – 150 ) = 180

The S&P 500 is testing its new resistance level at 1900/1910. Last week’s long tail indicates short-term buying pressure but declining 13-week Twiggs Money Flow continues to warn of long-term selling pressure. Recovery above 1910 would suggest that the correction is over, while penetration of the descending trendline would strengthen the signal.

S&P 500

* Target calculation: 1900 – ( 2000 – 1900 ) = 1800

Someone asked why I felt the correction was over, when there are so many bearish signs on the charts. My answer in brief was:

  • Strong support on the Dow and S&P 500;
  • Breach of descending trendline on the ASX 200;
  • October sell-off nearing an end;
  • US reporting season has started and fund managers will revert to accumulation of stronger performing stocks.

I could have added that our market filters continue to indicate low to moderate risk.

I am also suspicious of breaks of support after the bear traps of 2010 and 2011.

S&P 500

Breaches are indicated by red arrows, recoveries by green.

S&P 500

Investors remain extremely skittish after the 2009 crash and likely to jump at shadows.

CBOE Volatility Index (VIX) has retreated below 20%, suggesting low risk typical of a bull market. Recovery above 20% is not likely, but a (significantly) higher trough would warn of rising risk.

VIX Index

The Nasdaq 100 rallied off support at 3700. Follow-through above 3900 would suggest another test of 4100. Recovery above 4000 and the descending trendline would strengthen the signal. Divergence on 13-week Twiggs Money Flow indicates mild selling pressure. Reversal below 3700 and the rising (secondary) trendline would warn of a test of primary support at 3400.

Nasdaq 100

* Target calculation: 3750 – ( 4100 – 3750 ) = 3400

October sell-off: Drawing to a close?

  • DAX and FTSE find support, but remain in a down-trend
  • China is bullish, but Japan bearish
  • US stocks find support and continue to indicate a bull market
  • ASX respects primary support

The S&P 500 found support at 1820 and is testing resistance at 1900. Breach of resistance would suggest that the correction is over. 21-Day Twiggs Money Flow below zero, however, continues to warn of medium-term selling pressure. Respect of resistance is more likely, indicating another test of support at 1800*.

S&P 500 Index

* Target calculation: 1900 – ( 2000 – 1900 ) = 1800

CBOE Volatility Index (VIX) retreated to 22, indicating moderate risk, but nowhere near the 30+ levels typical of a bear market.

S&P 500 VIX

Dow Jones Industrial Average recovered above resistance (the former support level) at 16300, the long tail indicating short-term buying pressure. Follow-through above the descending trendline would signal that the correction is over. Recovery above the recent highs at 25% on 13-week Twiggs Money Flow would suggest that buyers have regained control.

Dow Jones Industrial Average

Germany’s DAX is retracing to test resistance at 9000. Respect would confirm a primary down-trend. 13-Week Twiggs Momentum below zero strengthens the bear signal. Target for the decline is 8000*. Recovery above 9000 remains unlikely, but would warn of a bear trap.

Dow Jones Euro Stoxx 50

* Target calculation: 9000 – ( 10000 – 9000 ) = 8000

The Footsie displays a similar long tail, indicating buying pressure. Recovery above 6500 is unlikely, but would warn of a bear trap. Respect of resistance would offer a target of 6000*.

FTSE 100 Index

* Target calculation: 6400 – ( 6800 – 6400 ) = 6000

China’s Shanghai Composite Index is testing support at 2340/2350. Breach would warn of a correction. But the primary up-trend remains and rising 13-week Twiggs Money Flow signals medium-term buying pressure.

Shanghai Composite Index

Japan’s Nikkei 225 Index plunged through support at 14800, warning of a test of primary support at 13900/14000. Reversal of 13-week Twiggs Money Flow below zero indicates (long-term) selling pressure.

Nikkei 225 Index

The ASX 200 recovered above resistance at 5250 and the descending trendline, suggesting that the correction is over. Bullish divergence and a rising 21-day Twiggs Money Flow (above zero) indicates medium-term buying pressure. Recovery above 5350 would confirm that buyers are back in control, while reversal below 5250 would indicate another test of 5000/5050.

ASX 200

* Target calculation: 5350 – ( 5650 – 5350 ) = 5050

ASX 200 VIX remains below 20, indicating low risk typical of a bull market.

ASX 200 VIX

Aussie & Euro rally, but for how long?

The Aussie Dollar continues to pressure primary support at $0.8650. 13-Week Twiggs Momentum below zero indicates a primary down-trend. Respect of resistance at $0.89 would strengthen the signal. Breach of primary support would confirm, offering a target of the 2010 low at $0.80.

Aussie Dollar

* Target calculation: 87 – ( 94 – 87 ) = 80

The Euro retraced to test its new resistance at $1.28. Declining 13-week Twiggs Momentum (below zero) confirms a strong down-trend. Respect of resistance would warn of another decline, while breach of medium-term support at $1.25 would target the 2010/2011 lows of $1.20.

Euro/USD

* Target calculation: 1.28 – ( 1.40 – 1.28 ) = 1.16