Where oil goes, stocks will follow. Crude oil prices are the canary in the coalmine at present. June 2016 Light Crude futures retreated from resistance at $43/barrel. Breach of medium-term support at $38 warns of another test of primary support at $32/barrel. Failure of support at $32 would offer a target of $22/barrel*, while respect of support would suggest that a bottom is forming.
* Target calculation: 32 – ( 42 – 32 ) = 22
The ASX started Monday with an early rally but ran into a spate of selling before the close. ASX 200 follow-through below 5000 would warn of a test of primary support at 4750. Declining 21-day Twiggs Money Flow, below zero, indicates medium-term selling pressure. Failure of primary support would reaffirm the long-term target of 4000*.
* Target calculation: 5000 – ( 6000 – 5000 ) = 4000