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.
* Target calculation: 2100 + ( 2100 – 2000 ) = 2200
CBOE Volatility Index is declining, indicating low risk typical of a bull market.
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.
* 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.
* Target calculation: 7000 + ( 7000 – 6000 ) = 8000
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.
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*.
* 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.
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.
* Target calculation: 5650 + ( 5650 – 5150 ) = 6150
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