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

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

Germany: DAX retraces

Germany’s DAX is retracing to test its new support level at 12400/12500. Rising Twiggs Money Flow signals long-term buying pressure. Respect of support is likely and would confirm a primary advance, with a target of 13400*.

DAX

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

Europe strengthens

Germany’s DAX broke through resistance from its 2015 high, signaling a fresh advance with a long-term target of 15000.

DAX

France’s CAC-40 index displays a similar bullish breakout, above resistance at 5000/5200 to offer a target of 6000.

CAC-40

Europe advances

Germany’s DAX is testing the band of resistance between 12000 and its April 2015 high of 12400. Rising troughs on Twiggs Money Flow indicate strong buying pressure. Breakout is expected but we are likely to experience consolidation below 12400, or a moderate correction, ahead of this.

DAX

The FTSE 100 followed through above resistance at 7350, signaling another advance. Rising troughs on Twiggs Money Flow indicate strong buying pressure. Target for the advance is 7600*.

FTSE 100

* Target: 7350 + ( 7350 – 7100 ) = 7600

Europe: Dax & Footsie strengthen

Both the DAX and FTSE 100 display Twiggs Money Flow troughs above zero, indicating long-term buying pressure.

Germany’s DAX is approaching its 2015 high of 12400. Twiggs Money Flow signals long-term buying pressure but expect resistance between 12000 and 12400.

DAX

The FTSE 100 is retracing to test its new support level at 7000/7100. Rising Twiggs Money Flow indicates buying pressure. Respect of support is likely and would signal an advance to 7500*.

FTSE 100

* Target: 7100 + ( 7100 – 6700 ) = 7500

The DAX is back

Germany’s DAX broke out of its narrow line (or consolidation) between 10200 and 10800, signaling a primary advance with a target of 11500* and confirming a bull market.

DAX

* Target calculation: 10500 + ( 10500 – 9500 ) = 11500

DAX retreats

Germany’s DAX is retracing to test support at 10200. The DAX has formed a narrow line (or consolidation) between 10200 and 10800 over the last quarter. Declining Twiggs Money Flow is typical during a consolidation and does not have much significance unless it crosses below zero. Breakout will signal future direction, either an advance to 11500* or a test of support at 9000.

DAX

* Target calculation: 10500 + ( 10500 – 9500 ) = 11500

DAX in line

Germany’s DAX formed a narrow line (or consolidation) between 10200 and 10800 over the last quarter, in line with its earlier April/May highs. Declining Twiggs Money Flow is typical during a consolidation and does not have much significance unless it crosses below zero. Breakout above 10800 would signal a primary advance with a target of 11500*. Reversal below 10200, however, should not be ruled out before then.

DAX

* Target calculation: 10500 + ( 10500 – 9500 ) = 11500

DAX hesitates

Germany’s DAX is consolidating below 10800 but Twiggs Money Flow still reflects selling pressure. Breakout above 10800 would signal a primary advance with a target of 11500* but another test of 10200 looks equally likely.

DAX

* Target calculation: 10500 + ( 10500 – 9500 ) = 11500

DAX

Germany’s DAX is testing resistance at 10800 after a shallow, saucer-shaped correction. Declining Twiggs Money Flow has leveled off above zero. Breakout would signal a primary advance with a target of 11500*.

DAX

* Target calculation: 10500 + ( 10500 – 9500 ) = 11500

DAX levels off

Germany’s DAX is consolidating between 10200 and 10800. Declining Twiggs Money Flow has leveled off above zero. Recovery above 10800 would signal a primary advance with a target of 11500*.

DAX

* Target calculation: 10500 + ( 10500 – 9500 ) = 11500

DAX support at 10500

Germany’s DAX is testing support at 10500. Declining Twiggs Money Flow warns of selling pressure. Follow-through below recent lows would warn of a correction to the rising long-term trendline.

DAX

* Target calculation: 10500 + ( 10500 – 9500 ) = 11500

Europe: DAX & Footsie on the mend

Germany’s DAX is testing support at 10500. Respect would confirm the primary up-trend. This week’s long tail and a Twiggs Money Flow trough above zero indicate buying pressure. Follow-through above 10800 would complete a bear trap — a bullish signal with a target of 11500*.

DAX

* Target calculation: 10500 + ( 10500 – 9500 ) = 11500

The FTSE 100 is also rallying, to test long-term resistance at 7000/7100. Rising troughs on Twiggs Money flow signal long-term buying pressure.

FTSE 100

DAX bear trap

Germany’s DAX recovered above the former support level of 10500, confirming the primary up-trend. A Twiggs Money Flow trough above zero would signal long-term buying pressure. Follow-through above 10800 would complete a bear trap — a bullish signal with a target of 11500*.

DAX

* Target calculation: 10500 + ( 10500 – 9500 ) = 11500

Europe on the mend

Germany’s DAX is holding above its new support level at 10500. Respect, with follow-through above 10800, would confirm the primary up-trend.

DAX

* Target calculation: 10500 + ( 10500 – 9500 ) = 11500

France’s CAC-40 Index is consolidating in a narrow band between 4400 and 4500. Upward breakout would suggest a primary up-trend. Follow-through above 4600, completing a broad double bottom, would confirm. Rising Twiggs Money Flow reflects buying pressure.

CAC-40

The Footsie retreated from resistance at 7000 but short candles and strong Twiggs Money Flow, high above zero, suggest long-term buying pressure. Expect strong resistance between 7000 and 7100. Correction to 6500 would establish a more stable base for further advances.

FTSE 100

* Target calculation: 6500 + ( 6500 – 5900 ) = 7100

Europe strengthens

Germany’s DAX respected its new support at 10500. Follow-through above 10800 would confirm the primary up-trend.

DAX

* Target calculation: 10500 + ( 10500 – 9500 ) = 11500

Italy’s FTSE MIB (Milano Italia Borsa) Index remains in a primary down-trend. Breakout above 17000 and the descending trendline, however, would suggest that a base is forming. Rising Twiggs Money Flow highlights buying pressure.

FTSE MIB

The Footsie retreated from resistance at 7000 but short candles and rising Twiggs Money Flow suggest buying pressure. Expect another test of 7000/7100 but resistance is strong. Correction to 6500 would establish a more stable base for further advances.

FTSE 100

* Target calculation: 6500 + ( 6500 – 5900 ) = 7100

Plenty of bottom signals

Global

Dow Jones Global Index is headed for a test of resistance at 320 after penetrating its descending trendline. Respect of 320 is likely but a bottom is forming and a higher trough would suggest an inverted head-and-shoulders formation. 13-Week Twiggs Momentum recovery above zero is bullish but another low peak would indicate that bears still dominate.

Dow Jones Global Index

North America

The S&P 500 continues to test the band of resistance at 2100 to 2130. Money Flow remains bullish but I expect stubborn resistance at this level, further strengthened by poor quarterly results, so far, in the earnings season.

S&P 500 Index

A CBOE Volatility Index (VIX) at a low 14 indicates that (short-term) market risk is low. Long-term measures are also starting to ease but we maintain high cash levels in our portfolios.

S&P 500 VIX

Canada’s TSX 60 is headed for a test of resistance at 825. Penetration of the descending trendline suggests that a bottom is forming. Resistance is likely to hold but an ensuing higher trough would be a bullish sign. Rising 13-week Twiggs Momentum is encouraging but a low peak above zero would indicate that bears still dominate.

TSX 60 Index

Europe

Germany’s DAX broke resistance at 10000 and is headed for a test of the descending trendline. Rising Money Flow indicates medium-term buying pressure. Retreat below 10000 would warn of another decline.

DAX

* Target calculation: 9500 – ( 11000 – 9500 ) = 8000

The Footsie is headed for a test of 6500. Rising Money Flow suggests decent buying pressure. Respect of resistance is likely but a bottom is forming and an ensuing higher trough would suggest a primary up-trend.

FTSE 100

* Target calculation: 6000 – ( 6500 – 6000 ) = 5500

Asia

The Shanghai Composite Index retreated below 3000. Breach of medium-term support at 2900 would warn of another test of primary support at 2700. Rising Money Flow suggests that breach of primary support is unlikely.

Shanghai Composite Index

* Target calculation: 3000 – ( 3600 – 3000 ) = 2400

Japan’s Nikkei 225 Index broke resistance at 17000, a higher trough signaling a primary up-trend. Expect retracement to test the new support level at 17000. Rising Money Flow confirms buying pressure.

Nikkei 225 Index

* Target calculation: 17000 – ( 20000 – 17500 ) = 15000

India’s Sensex is testing its upper trend channel at 26000. Penetration of the descending trendline would suggest that a bottom is forming. Respect, indicated by reversal below 25000, would warn of another test of primary support.

SENSEX

* Target calculation: 23000 – ( 25000 – 23000 ) = 21000

Australia

A sharp fall in the Australian Dollar as result of record low inflation numbers may precipitate some selling by international buyers. Further weakness in iron ore would impact both the ASX and the Aussie Dollar.

The ASX 200 has also penetrated its descending trendline, suggesting that a bottom is forming. But bearish divergence on 13-week Money Flow warns of selling pressure. Retreat below 5000 would warn of another test of primary support at 4700.

ASX 200

* Target calculation: 4700 – ( 5200 – 4700 ) = 4200