Next Portfolio Update
The next update for S&P 500 and ASX200 Prime Momentum strategies will be on the weekend, so that investors can place trades on Monday, 3rd August 2015, the first trading day of the month.
Bellwether transport stock Fedex respected primary support at $164, rallying strongly to form a bullish engulfing candle on the weekly chart. Recovery of 13-week Twiggs Money Flow above zero would confirm the bull signal, suggesting a target of $184. Breach of $164 is now unlikely, but a primary down-trend would warn that broad economic activity is contracting.
The reporting season got off to a shaky start with Apple and Microsoft disappointing but the ship has steadied. Of the 187 stocks in the S&P 500 that have reported so far, 138 (74%) beat, 14 met and 35 (19%) missed their estimates.
The S&P 500 found support above 2050, the higher trough on 21-day Twiggs Money Flow indicating increased interest from buyers. Breakout above 2130 would signal an advance to 2200*, but further consolidation below the resistance level is likely. Reversal below support at 2040/2050 is unlikely.
* Target calculation: 2130 + ( 2130 – 2050 ) = 2210
The CBOE Volatility Index (VIX) indicates low volatility typical of a bull market.
Canada’s TSX 60 rallied off the lower trend channel but is likely to encounter resistance at the upper trend channel and 855. Declining 13-week Twiggs Momentum below zero warns of a primary down-trend. Breach of support at 800 would confirm.
Germany’s DAX is testing support at 11000. A fall-off in export sales to China may be weighing on the market. The decline in 13-week Twiggs Money Flow has leveled off and a trough above zero would signal long-term buyers are driving the market. Recovery above the (second) descending trendline would suggest another advance; confirmed if resistance at 12400 is broken. Reversal below 10700 is unlikely.
* Target calculation: 12500 + ( 12500 – 11000 ) = 14000
The Footsie found support at 6500. Recovery above 6800 would complete a double bottom reversal, indicating a test of 7100. Completion of a 13-week Twiggs Money Flow trough above zero would also flag buying pressure.
* Target calculation: 7000 + ( 7000 – 6500 ) = 7500
The Shanghai Composite experienced strong buying at Wednesday’s close. Support resumed at 3800 on Thursday but efforts to restore stability are likely to undermine credibility of stock prices. The large divergence on 13-week Twiggs Money Flow continues to warn of selling pressure.
* Target calculation: 4000 – ( 5000 – 4000 ) = 3000
Japan’s Nikkei 225 is testing support at 20000. Respect would indicate another test of 21000. Breakout above 21000 would offer a target of 23000*. Decline of 13-week Twiggs Money Flow has leveled off, but failure of support at 20000 would signal further selling pressure and another test of 19000.
* Target calculation: 21000 + ( 21000 – 19000 ) = 23000
India’s Sensex retreated below 28000, suggesting another test of primary support. Respect of the rising trendline and support at 27000 would indicate the primary up-trend is intact, while breach of 26500 would signal a reversal. A 13-week Twiggs Money Flow trough at zero would confirm buying pressure, while decline below zero would warn of a primary down-trend.
The ASX 200 is testing resistance at 5650/5700. Breakout would indicate another test of 6000. 13-Week Twiggs Money Flow leveled off, suggesting that selling pressure has eased and the primary up-trend is intact. Reversal below 5400 is unlikely, but would warn of a test of primary support at 5150/5200.
It’s not whether you’re right or wrong, but how much money you make when you’re right and how much you lose when you’re wrong.
~ George Soros