East to West: Seoul and Footsie find support

A Twiggs Money Flow trough high above zero reflects strong buying support on the Seoul Composite Index. Breach of support at 2300 is unlikely but would signal a primary down-trend.

Seoul Composite Index

Japan’s Nikkei 225 Index broke resistance at 20200, signaling another advance.

Nikkei 225 Index

Hong Kong’s Hang Seng Index has been in a strong bull market since breaking resistance at 24000 early this year.

Hang Seng Index

India’s NSE Nifty Index displays strong buying pressure, with Twiggs Money Flow oscillating above the zero line. Breakout above resistance at 10000/10100 is likely and would signal another advance.

Nifty Index

Target 10000 + ( 10000 – 9000 ) = 11000

Moving to Europe, Dow Jones Euro Stoxx 50 is headed for a test of resistance at 3650. A big Twiggs Money Flow trough above zero signals buying pressure. Breakout is likely and would offer a target of 3900*.

DJ Euro Stoxx 50

* Target calculation: 3650 + ( 3650 – 3400 ) = 3900

The UK’s Footsie is rallying strongly after a bear trap at 7300. Often the strongest bull signals start with a bear trap or false break through support. breakout above 7550 would offer a target of 7900*.

FTSE 100

* Target calculation: 7550 + ( 7550 – 7200 ) = 7900

Canada’s TSX 60 continues to consolidate below its former primary support level at 900. Beset by a massive property bubble, with soaring household debt, and weak crude oil prices the index displays a similar pattern to the ASX 200. Declining Twiggs Money Flow warns of selling pressure. Breach of support at 880 would confirm the primary down-trend.

TSX 60

Catalonian referendum violence plunges EU into crisis as ‘90% of voters back independence’

A woman tends to her injuries in front of riot police near a school being used as a polling station

From Hannah Strange and James Badcock:

Catalonia’s government said 90 percent of those who voted in an unauthorised independence referendum chose to split from Spain.

On a day marred by clashes between police and voters, 2.26 million people took part in the referendum, regional government spokesman Jordi Turull said. That represents a turnout of 42.3 percent of Catalonia’s 5.34 million voters.

Of those who took part, 2.02 million Catalans voted “yes” to the question: “Do you want Catalonia to become an independent state in the form of a republic?”

….Carles Puigdemont, the Catalan leader, said the region had “won the right to an independent state” after “millions” turned out to vote in a banned independence referendum.

“With this day of hope and suffering, the citizens of Catalonia have won the right to an independent state in the form a republic,” he said in a televised announcement after polls had closed.

Before the results were announced, he said he would keep his pledge to declare independence unilaterally within 48 hours of the vote if the “Yes” side won the referendum.

Source: Catalonian referendum violence plunges EU into crisis as ‘90% of voters back independence’

Germany’s voters have spoken….

Opinion by Prince Michael of Lichtenstein:

The CDU/CSU under Chancellor Angela Merkel has again emerged from Sunday’s general election as Germany’s strongest party. The victory looks more like a crushing defeat, however, as its 33 percent support in the early returns would be the party’s worst result since 1949. The CDU/CSU’s partner in the grand coalition, the Social Democrats, fared just as poorly, polling 20.5 percent, the lowest in their postwar history.

….The AfD was founded in 2012 by a group of free-market economists critical of the way the euro area handled its fiscal crisis. While the original party leadership was very sensible and ideologically neutral, Ms. Merkel immediately branded them as right-wingers. As a result, the original founders were ousted, and the AfD turned rather nationalistic. Now, with 12.6 percent of the vote, it will be the third-largest party in parliament.

….The AfD’s success does not mean that Germans have become nationalistic, populist or antidemocratic. It is a sign of popular frustration with the Christian Democrats and the Social Democrats. Both parties have abandoned their principles in favor of expediency, as became painfully obvious during the Merkel-Schulz debate. The Christian Democrats have abandoned Christians, and the Social Democrats have betrayed working people, both blue-collar and white-collar.

The AfD, with its 12.6 percent support, poses no threat to democracy. It can rather be seen as an opportunity to make Germany’s parties stick to their principles. The real danger to German democracy and to the rule of law is the lack of courage, vision and statesmanship in the country’s two establishment parties.

Source: Germany’s voters have spoken, and now Angela Merkel must get creative

East to West: Seoul selling pressure

Declining peaks on Twiggs Trend Index and a tall shadow on this week’s candle warn of selling pressure on the Seoul Composite Index. Breach of support at 2300 would signal a primary down-trend.

Seoul Composite Index

Most other exchanges remain bullish, with Japan’s Nikkei 225 Index breaking resistance at 20200. Expect retracement to test the new support level. Respect would signal a fresh advance.

Nikkei 225 Index

China’s Shanghai Composite Index is retracing to test its new support level at 3300. Declining peaks on the Trend Index warn of medium-term selling pressure. Respect of support would confirm a primary advance.

Shanghai Composite Index

India’s NSE Nifty Index respected resistance at 10000/10100 and declining peaks on Twiggs Trend Index warn of medium-term selling pressure. Follow-through below the rising trendline would warn of a correction.

Nifty Index

Target 10000 + ( 10000 – 9000 ) = 11000

Moving to Europe, Germany’s DAX consolidated ahead of the elections. The Trend Index trough at zero indicates buying pressure and a test of 13000 is likely.

DJ Euro Stoxx 600

The UK’s Footsie retraced to test its new resistance level at 7300. Respect would confirm a primary down-trend. Declining Twiggs Trend Index peaks, especially below zero, signal selling pressure. Follow-through below 7100 would strengthen the bear signal.

FTSE 100

Canada’s TSX 60 continues to consolidate below its former primary support level at 900. Declining Trend Index warns of selling pressure. Breach of medium-term support at 880 would confirm the primary down-trend.

TSX 60

East to West

First, the canary in the coal mine, the Seoul Composite Index, found support at 2300. Follow-through above 2400 would be a bullish sign, suggesting a fresh advance.

Seoul Composite Index

Japan’s Nikkei 225 Index found support despite ICBMs flying overhead, rallying to test resistance at 20000. Recovery above 20000 is likely and would signal a fresh advance.

Nikkei 225 Index

China’s Shanghai Composite Index is retracing to test its new support level at 3300. Respect is likely and would confirm a fresh advance.

Shanghai Composite Index

India’s NSE Nifty Index is testing resistance at 10000/10100. Twiggs Trend Index oscillating above zero signals long-term buying pressure. Breakout is likely and would indicate a fresh advance with a long-term target of 11000*.

Nifty Index

Target 10000 + ( 10000 – 9000 ) = 11000

Moving to Europe, Germany’s DAX rallied off support at 12000, suggesting a fresh advance. Recovery of the Trend Index above zero is bullish. Breakout above 13000 would signal another primary advance.

DJ Euro Stoxx 600

The UK’s Footsie, however, broke support at 7300 on the back of BREXIT worries, warning of a primary down-trend. Twiggs Trend Index peaks below zero signal selling pressure. Follow-through below 7100 would confirm a bear market.

FTSE 100

In Canada, the TSX 60 continues to consolidate below its former primary support level at 900. A declining Trend Index warns of selling pressure. Breach of medium-term support at 880 would confirm a primary down-trend.

TSX 60

Asian stocks rally, Europe follows

Asian stocks have started to rally and Europe is likely to follow. Canada faces stronger headwinds and is expected to struggle to break resistance at 900.

Starting near Korean epicenter of political tensions, the Seoul Composite Index remains bullish. Though breach of the rising trendline could change matters in an instant. No hint of panic selling….yet.

Seoul Composite Index

China’s Shanghai Composite Index finally broke through resistance at 3300, offering a target of 3500. The Trend Index oscillating above zero indicates long-term buying pressure.

Shanghai Composite Index

Japan’s Nikkei 225 Index encountered strong resistance at 20000 but a rounding top is a bullish sign. Recovery above 20000 is likely and would signal a fresh advance.

Nikkei 225 Index

India’s NSE Nifty Index is testing resistance at 10000. Twiggs Trend Index oscillating above zero signals long-term buying pressure. Breakout is likely and would indicate a fresh advance with a long-term target of 11000*.

Nifty Index

Target 10000 + ( 10000 – 9000 ) = 11000

In Europe, the UK’s Footsie, beset with BREXIT issues, still managed to respect support at 7300, avoiding a primary down-trend. Another test of 7600 is likely but breakout and another primary advance appear remote given the loss of momentum and selling pressure signaled by the declining Trend Index.

FTSE 100

Dow Jones Euro Stoxx 600 found support at the rising trendline, around 370. Recovery of the Trend Index above zero is likely. Follow-through above 380 would suggest another primary advance.

DJ Euro Stoxx 600

Moving to North America, Canada’s TSX 60 continues to consolidate in a narrow line below the former primary support level at 900. Declining Trend Index warns of long-term selling pressure. Breach of support at 880 is likely and would confirm a primary down-trend.

TSX 60

Global correction

Global stock markets have mostly experienced selling pressure over the last two weeks but most of the activity is secondary in nature and, apart from longer-term issues in the UK and Canada, is unlikely to affect the primary up-trend.

Starting near the North Korean epicenter of the latest tensions, the Seoul Composite Index is largely unfazed. The monthly chart reflects a secondary correction with moderate selling pressure and no hint of panic selling.

Seoul Composite Index

China’s Shanghai Composite Index rallied after a modest correction.

Shanghai Composite Index

While bearish divergence on Hong Kong’s Hang Seng Index warns of selling pressure and a secondary correction to test 26000.

Hang Seng Index

India’s Sensex is undergoing a correction after breaking its rising trendline but found support at 31000.

BSE Sensex

Moving farther afield, Canada’s TSX 60 continues to consolidate in a narrow line below the former primary support level at 900. Declining Twiggs Money Flow warns of long-term selling pressure. Breach of support at 880 is likely and would confirm a primary down-trend.

TSX 60

Europe also experienced selling pressure, with the Footsie testing primary support at 7300. Breach of support would signal a primary down-trend.

FTSE 100

Germany’s Dax found support at 12000. Respect, with a Twiggs Money Flow trough above zero, would indicate another primary advance.

DJ Euro Stoxx 50

Selling pressure surges around the globe

Canada’s TSX 60 fell sharply this week. Twiggs Trend Index below zero warns of long-term selling pressure. Breach of support at 880 would confirm a primary down-trend.

TSX 60

In the UK, the Footsie is testing primary support at 7300. Twiggs Trend Index below zero again warns of long-term selling pressure. Breach of support would signal a primary down-trend.

FTSE 100

Dow Jones Euro Stoxx 50 is testing long-term support at 3400. Twiggs Trend Index, again below zero, warns of long-term selling pressure

DJ Euro Stoxx 50

India’s Sensex is undergoing a correction after breaking its rising trendline and support at 31500. Expect strong support at 29000.

BSE Sensex

China’s Shanghai Composite Index is also testing support. Breach of 3200 would warn of another test of primary support at 3000.

Shanghai Composite Index

Around the markets: Hong Kong & India bullish

Canada’s TSX 60 continues to test resistance at the former primary support level of 900. Bearish divergence on Twiggs Money Flow warns of strong selling pressure. Decline below 880 would confirm a primary down-trend, with an initial target of 865*.

TSX 60 Index

* Target calculation: 900 – ( 935 – 900 ) = 865

The Footsie recovered above 7400 but bearish divergence on Twiggs Money Flow warns of long-term selling pressure. Another test of primary support at 7100 remains likely.

FTSE 100 Index

European stocks are taking a beating, with the Dow Jones Euro Stoxx 50 Index testing support at 3400. Sharp decline on Twiggs Money Flow warns of selling pressure. Breach of 3400 would warn of a test of 3200.

DJ Euro Stoxx 50 Index

* Target calculation: 3650 – ( 3650 – 3450 ) = 3850

India’s Sensex remains in a bull market.

BSE Sensex

* Target calculation: 29000 + ( 29000 – 26000 ) = 32000

As does Hong Kong’s Hang Seng Index.

Hang Seng Index

* Target calculation: 24000 – ( 24000 – 21500 ) = 26500

While China’s Shanghai Composite index ranges between 3000 and 3300. Government interference remains a concern.

Shanghai Composite Index

Round the world: India & Hong Kong advance, Canada falters

Canada’s TSX 60 retraced to test resistance at the former primary support level of 900. Respect is likely and would signal a bear market. Decline of Twiggs Money Flow/Trend Index below zero would strengthen the bear signal. Medium-term target for the decline is 865*.

TSX 60 Index

* Target calculation: 900 – ( 935 – 900 ) = 865

The Footsie is losing momentum, with penetration of successive trendlines and declining Twiggs Trend Index. A test of primary support at 7100 is likely.

FTSE 100 Index

Dow Jones Euro Stoxx 50 Index, representing the 50 largest stocks in the Euro Zone, found support above 3400. Penetration of the declining trendline would indicate the correction is over and suggest the start of another advance — confirmed if the index breaks its recent (May 2017) high.

DJ Euro Stoxx 50 Index

* Target calculation: 3650 – ( 3650 – 3450 ) = 3850

It’s full steam ahead for India’s Sensex. Trend Index troughs above zero indicate strong buying pressure. Expect some profit-taking at the target of 32000* but any correction is likely to be shallow as the bull market gathers momentum.

BSE Sensex

* Target calculation: 29000 + ( 29000 – 26000 ) = 32000

Hong Kong’s Hang Seng Index has also reached its target of 26500. Again Trend Index troughs above zero indicate solid buying pressure.

Hang Seng Index

* Target calculation: 24000 – ( 24000 – 21500 ) = 26500

China’s Shanghai Composite index is also rallying but I remain wary of government intervention.

Shanghai Composite Index

Europe: DJ Stoxx 50 correction

Dow Jones Euro Stoxx 50 is undergoing a correction. Breach of medium-term support at 3500 indicates hesitancy but the primary trend remains upward. Twiggs Trend Index and Twiggs Money Flow both look similar, with a sharp decline in the last two weeks. Respect of support at 3400 remains likely and recovery above 3500 would suggest an advance to the 2015 high at 3800*.

DJ Euro Stoxx 50

* Target calculation: 3650 + ( 3650 – 3500 ) = 3800

The Footsie and DJ Euro Stoxx 50 display a similar correction. My bearishness for the former primarily stems from the Pound weakening against the Euro.

Footsie falters

Sterling continues to test primary support at 1.13 against the Euro. Twiggs Trend Index peaking below zero warns of selling pressure. Breach of support is likely and would signal a test of the 2016 low at €1.10.

GBPEUR

The FTSE 100 breached medium-term support at 7400 and the long-term rising trendline, warning that momentum is slowing. Bearish divergence on Twiggs Trend Index warns of rising selling pressure. Test of primary support at 7100 is likely.

FTSE 100

* Target: 7400 + ( 7400 – 7100 ) = 7700

Warsaw: Trump unequivocally commits to Article V | CNN

….As long as we know our history, we will know how to build our future. Americans know that a strong alliance of free, sovereign and independent nations is the best defense for our freedoms and for our interests. That is why my administration has demanded that all members of NATO finally meet their full and fair financial obligation.

As a result of this insistence, billions of dollars more have begun to pour into NATO. In fact, people are shocked. But billions and billions of dollars more are coming in from countries that, in my opinion, would not have been paying so quickly.To those who would criticize our tough stance, I would point out that the United States has demonstrated not merely with words but with its actions that we stand firmly behind Article 5, the mutual defense commitment. (Applause.)

Words are easy, but actions are what matters. And for its own protection — and you know this, everybody knows this, everybody has to know this — Europe must do more. Europe must demonstrate that it believes in its future by investing its money to secure that future.

That is why we applaud Poland for its decision to move forward this week on acquiring from the United States the battle-tested Patriot air and missile defense system — the best anywhere in the world. (Applause.) That is also why we salute the Polish people for being one of the NATO countries that has actually achieved the benchmark for investment in our common defense. Thank you. Thank you, Poland. I must tell you, the example you set is truly magnificent, and we applaud Poland. Thank you. (Applause.)

We have to remember that our defense is not just a commitment of money, it is a commitment of will. Because as the Polish experience reminds us, the defense of the West ultimately rests not only on means but also on the will of its people to prevail and be successful and get what you have to have. The fundamental question of our time is whether the West has the will to survive. Do we have the confidence in our values to defend them at any cost? Do we have enough respect for our citizens to protect our borders? Do we have the desire and the courage to preserve our civilization in the face of those who would subvert and destroy it? (Applause.)

We can have the largest economies and the most lethal weapons anywhere on Earth, but if we do not have strong families and strong values, then we will be weak and we will not survive. (Applause.) If anyone forgets the critical importance of these things, let them come to one country that never has. Let them come to Poland. (Applause.) And let them come here, to Warsaw, and learn the story of the Warsaw Uprising….

Source: Trump’s speech in Warsaw (full transcript, video)

Europe: Mild correction

Dow Jones Euro Stoxx 50 is undergoing a correction to test medium-term support at 3500. Declining Twiggs Money Flow indicates moderate selling pressure but long-term troughs above zero suggest a bull market. Respect of support is likely and would signal an advance to the 2015 high at 3800*.

DJ Euro Stoxx 50

* Target calculation: 3650 + ( 3650 – 3500 ) = 3800

Footsie hesitates as Sterling tests support

Brexit uncertainty is likely to continue for an extended period, with Sterling testing primary support at 1.13 against the Euro. Breach would signal a test of the 2016 low at 1.10.

GBPEUR

The FTSE 100 retraced to test support at 7400, with bearish divergence on Twiggs Money Flow indicating medium-term selling pressure. Respect would confirm the target of 7700*. But breach of the rising trendline is as likely, and would warn of a test of primary support at 7100.

FTSE 100

* Target: 7400 + ( 7400 – 7100 ) = 7700

Footsie stalls, Sterling weakens

Political uncertainty, with a hung parliament, increased downward pressure on Sterling which is testing primary support at 1.13/1.14 against the Euro. Breach would signal a test of the 2016 low at 1.10.

GBPEUR

The FTSE 100 stalled at 7600, with bearish divergence on Twiggs Money Flow indicating medium-term selling pressure. Retracement that respects support at 7400 would re-affirm the target of 7700*. But breach of the rising trendline is as likely, which would warn of a test of primary support at 7100.

FTSE 100

* Target: 7400 + ( 7400 – 7100 ) = 7700

DAX renews advance

Germany’s DAX is advancing after retracement respected its new support level at 12400/12500. Rising Twiggs Money Flow signals long-term buying pressure. Target for the advance is 13400*.

DAX

* Target calculation: 12400 + ( 12400 – 11400 ) = 13400

UK election throws up new uncertainties | Bond Vigilantes

From Jim Leaviss:

The UK has a hung parliament, with Theresa May’s Conservative Party losing seats and likely ending up 8 short of an overall majority. It looks as if young people voted in large numbers, mainly for Jeremy Corbyn’s Labour Party. The Conservatives remain the single largest party however, and together with the Conservative-leaning DUP on 10 seats, they will likely form the new government. The Prime Minister is holding a press conference at 10am – it is possible that she resigns at that time. This is an extremely poor result for her personally, having gambled that another General Election would significantly boost her majority. For an election designed to deliver a “Strong and Stable” government, we face the possibility of a new Conservative Party leadership battle (perhaps beginning later today) and even another General Election later this year.

This renewed uncertainty seems likely to be unhelpful to the UK’s Brexit negotiations, due to start on 19th June. The Conservatives did especially badly in “Remain” constituencies…… Finally, some good news for those fed up with election campaigns: the poor performance of the SNP in Scotland reduces the likelihood of a new Scottish independence referendum in the next few years.

Source: UK election throws up new uncertainties for markets – Bond Vigilantes