Japan & China rally

Japan’s Nikkei 225 Index broke resistance at 17500 while rising Money Flow indicates buying pressure. Target for the rally is the November 2015 high of 20000*.

Nikkei 225 Index

* Target medium-term: 17500 + ( 17500 – 15000 ) = 20000

Shanghai Composite Index followed through after a brief consolidation at 3200, offering a target of 3400*. Expect retracement to test the new support level at 3100 but rising Money Flow suggests respect is likely.

Shanghai Composite Index

* Target medium-term: 3100 + ( 3100 – 2800 ) = 3400

Asia pulls back

China’s Shanghai Composite Index retreated below resistance at 3100. Prospects of a primary up-trend have dimmed and further consolidation between 2800 and 3100 is likely.

Shanghai Composite Index

Japan’s Nikkei 225 Index is pretty directionless, retreating from resistance at 17000. Breach of 16000 would warn of another test of primary support at 15000. But a broad base between 15000 and 17000 is likely.

Nikkei 225 Index

India’s BSE Sensex is the most promising, consolidating in a bullish narrow range around 28000. Upward breakout would signal a further advance towards the 2015 high of 30000. Bearish divergence on Twiggs Money Flow warns of long-term selling pressure, however, and downward breakout would warn of a correction to 25000 or 26000.

SENSEX

Asia: Shanghai weakens

The Shanghai Composite Index broke medium-term support at 2900, warning of another test of primary support at 2700. Reversal of Money Flow below zero would warn of a decline to 2400*.

Shanghai Composite Index

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

Japan’s Nikkei 225 Index is edging higher but trend strength is weak. Breakout above resistance at 17000 was followed by a retreat to 16000. Support is weak and breach of 16000 would signal another test of primary support at 15000.

Nikkei 225 Index

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

India’s Sensex is more bullish, testing its upper trend channel at 26000. Short retracement is a bullish sign and breakout above 26000 would signal that the down-trend is ending. Recovery of 13-week Twiggs Momentum above zero would strengthen the signal.

SENSEX

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

Signs of recovery

A strong blue candle on the S&P 500 daily chart suggests that the latest correction is over. Penetration of the descending trendline would confirm. 21-Day Twiggs Money Flow recovery above zero would strengthen the signal. Recovery above 2120 would signal an advance to 2200*. Look for confirmation from the Dow Jones Industrial Average and Transport sector.

S&P 500 Index

* Target calculation: 2120 + ( 2120 – 2040 ) = 2200

CBOE Volatility Index (VIX) at 13 indicates low risk typical of a bull market.

S&P 500 VIX

Dow Jones Industrial Average also shows signs of a recovery. Reversal above 18000 would confirm the correction is over. Breakout above 18300 would offer a target of 19000*. 13-Week Twiggs Money Flow holding above zero continues to signal a healthy primary up-trend. Breach of support at 17500 is unlikely, but would warn of a correction to test primary support (and trendline) at 17000.

Dow Jones Industrial Average

* Target calculation: 18300 + ( 18300 – 17600 ) = 19000

Bellwether transport stock, Fedex surged to test primary resistance at $184. Rising 13-week Twiggs Money Flow indicates buying pressure. Breakout would offer a target of 204* — a positive sign for the economy.

Fedex

* Target calculation: 184 + ( 184 – 164 ) = 204

A long tail on Canada’s TSX 60 suggests strong support at 855. Recovery above the descending trendline would indicate the correction is over. A 13-week Twiggs Momentum trough above zero would signal continuation of the primary up-trend, while breakout above 900 would offer a long-term target of 1000*.

TSX 60 Index

* Target calculation: 900 + ( 900 – 800 ) = 1000

Europe

Germany’s DAX is testing support at 11000. Recovery above the descending trendline would indicate the correction is over. Declining 13-week Twiggs Money Flow continues to warn of selling pressure, but penetration of the descending trendline would also suggest that buyers are back in control. Reversal below 11000 is unlikely, but would offer a target of 10000*.

DAX

* Target calculation: 11000 – ( 12000 – 11000 ) = 10000

The Footsie is testing support at 6700/6750. Declining 13-week Twiggs Money Flow continues to warn of selling pressure, but penetration of the descending trendline would suggest the return of buyers. Breakout above 7100 would confirm a primary advance with a long-term target of 8000*. Reversal below 6700 is unlikely, but would warn of a primary down-trend.

FTSE 100

* Target calculation: 7000 + ( 7000 – 6000 ) = 8000

Asia

The Shanghai Composite broke 5000. The situation appears artificial, considering current economic data, and I believe the accelerating up-trend will lead to a blow-off.

Shanghai Composite Index

* Target calculation: 3500 + ( 3500 – 2500 ) = 4500

Retracement on Japan’s Nikkei 225 Index respected support at 20000, suggesting an advance to 22000*. Oscillation high above zero on 13-week Twiggs Momentum signals a strong primary up-trend.

Nikkei 225 Index

* Target calculation: 20000 + ( 20000 – 18000 ) = 22000

India’s Sensex is testing primary support at 26500. Rising 13-week Twiggs Money Flow indicates medium-term buying pressure, however, and recovery above zero would strengthen the signal. Respect of support and penetration of the descending trendline would suggest another primary advance. Breach of primary support is less likely, but would warn of a primary down-trend with support at 23000*.

SENSEX

* Target calculation: 26500 – ( 30000 – 26500 ) = 23000

Australia

“Unemployment has fallen to a one-year low of 6 per cent in May as an estimated 42,000 jobs were added to the economy last month.” ~ ABC News

The ASX 200 found support at 5500 after solid employment numbers and a rally in US markets. Recovery above 5650 and the descending trendline would indicate the correction is over, suggesting a fresh advance. Breakout above 6000 is still some way off but would offer a target of 6500*. Reversal below 5450 remains as likely, however, and would warn of a test of primary support at 5120/5150.

ASX 200

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

Moderate decline of 13-week Twiggs Money Flow indicates medium-term selling pressure, typical of a secondary correction not a reversal.

The Banking sector [XBAK] dragged the index lower over the last two months, but now faces solid support at its two-year low of 83. Twiggs Momentum (13-week) bearish divergence warns of a down-trend, but recovery above zero would suggest otherwise.

ASX 300 Banks


More….

The Impunity Trap by Jeffrey D. Sachs | Project Syndicate

RIP ZIRP | PIMCO

How much longer can the global trading system last? | Michael Pettis

Crude retraces

Gold breaks $1180 support

Australian exports hammered

Itzhak Perlman: Schindler’s List

Mike Batt: Caravans (on the move)

The law locks up the man or woman
Who steals the goose off the common
But leaves the greater villain loose
Who steals the common from the goose.

~ Medieval English ditty from Jeffrey Sachs The Impunity Trap

ASX breaks support

Australia

The ASX 200 broke through the band of support between 5650 and 5550, warning of a test of primary support at 5120. Declining 13-week Twiggs Money Flow indicates medium-term selling pressure, typical of a secondary correction not a reversal.

ASX 200

If we look at the two biggest sectors on a monthly chart, Metals & Mining has been in a down-trend since 2011 and is testing the lows of 2008. The Australian economy withstood the decline primarily because of low employment in the mining sector relative to its size.

ASX 300 Metals & Mining

Banks held up surprisingly well on the back of a resilient real estate market — I would call it a housing bubble because of the high average price to household income ratio. Pressure is mounting to improve bank capital ratios (especially after the Murray Inquiry) and curb aggressive lending. The long-awaited correction is under way and likely to find support between 82 and 84. The weight of the sector means the ASX 200 index is likely to follow.

ASX 300 Banks

Twiggs Momentum, however, shows a bearish divergence and has crossed below zero, warning of a (sector) reversal. Breach of primary support would strengthen the signal.

North America

The S&P 500 is ranging in a bullish narrow band between 2100 and 2120 on the daily chart. 21-Day Twiggs Money Flow holding above zero suggests moderate buying pressure. Upward breakout would signal an advance to 2200*, while reversal below 2100 would warn of a correction to 2040/2050. Look for confirmation from the Dow Jones Industrial Average.

S&P 500 Index

* Target calculation: 2120 + ( 2120 – 2040 ) = 2200

CBOE Volatility Index (VIX) indicates low risk typical of a bull market. The 63-day moving average holding below 20 reinforces the signal.

S&P 500 VIX

Dow Jones Industrial Average found support at 18000. Expect another test of resistance at 18300. Breakout would offer a target of 19000*. Reversal below 18000 is unlikely, but would warn of a correction to test the primary trendline and support at 17000.

Dow Jones Industrial Average

* Target calculation: 18300 + ( 18300 – 17600 ) = 19000

Canada’s TSX 60 continues to test resistance at 890. Breakout would confirm the end of the correction and indicate another test of long-term resistance at 900. 13-Week Twiggs Momentum holding above zero suggests a primary up-trend. Breakout above 900 would offer a long-term target of 1000*.

TSX 60 Index

* Target calculation: 900 + ( 900 – 800 ) = 1000

Europe

Germany’s DAX retreated from resistance at 12000. Declining 13-week Twiggs Money Flow warns of further selling pressure. Reversal below 11000 is unlikely, but would offer a target of 10000*.

DAX

* Target calculation: 11000 – ( 12000 – 11000 ) = 10000

The Footsie is ranging in a bullish narrow band on the weekly chart. Gradual decline of 13-week Twiggs Money Flow is typical of a secondary correction or consolidation. Breakout above 7100 would confirm a primary advance, offering a long-term target of 8000*. Reversal below 6900 is unlikely, but would warn of a correction to 6700.

FTSE 100

* Target calculation: 7000 + ( 7000 – 6000 ) = 8000

Asia

The Shanghai Composite is testing 5000 after a brief retracement to 4500. Bearish divergence on 13-week Twiggs Money Flow warns of selling pressure. I am wary of long-term prospects for the Chinese economy and believe the current accelerating up-trend is likely to end in a blow-off.

Shanghai Composite Index

* Target calculation: 3500 + ( 3500 – 2500 ) = 4500

Japan’s Nikkei 225 Index is headed for a target of 22000*, but bearish divergence on 13-week Twiggs Money Flow warns of selling pressure.

Nikkei 225 Index

* Target calculation: 20000 + ( 20000 – 18000 ) = 22000

India’s Sensex is headed for a test of primary support at 26500. Succesive peaks below zero on 13-week Twiggs Money Flow warn of reversal to a primary down-trend. Breach of primary support would confirm. Recovery above 28000 is unlikely, but would signal another test of 30000.

SENSEX


More….

Treasury yields surge but Dollar falls

Gold tests support at $1180

U2 busking in NYC subway

Yann Tiersen: The Fall

Life is a school of probability.

~ Walter Bagehot

Stocks find support

Breakouts on the S&P 500 and in China and Japan, together with buying support across Europe and Asia, indicate a broad resurgence.

North American Stocks

The S&P 500 is retracing to test the new support level at 2120 after its recent breakout. Respect of support would confirm a further advance to 2200*. 21-Day Twiggs Money Flow is oscillating in a narrow range above the zero line, suggesting mild buying pressure. Upward breakout would signal another advance, while reversal below zero would warn of a correction.

S&P 500 Index

* Target calculation: 2120 + ( 2120 – 2040 ) = 2200

CBOE Volatility Index (VIX) at 12 continues to indicate low risk typical of a bull market.

S&P 500 VIX

St Louis Fed Financial Stress index below -1.0 likewise displays low levels of stress in financial markets.

St Louis Fed Financial Stress Index

Dow Jones Industrial Average continues to test resistance at 18300. Buying pressure remains positive and breakout would offer a target of 19000*, confirming the S&P 500 signal. Reversal below 18000 is unlikely, but would warn of a correction to test the primary trendline and support at 17000.

Dow Jones Industrial Average

* Target calculation: 18300 + ( 18300 – 17600 ) = 19000

Canada’s TSX 60 is testing resitance at 890. Breakout would signal the end of the correction and another test of long-term resistance at 900. 13-Week Twiggs Momentum holding above zero continues to indicate a primary up-trend. Breakout above 900 would offer a long-term target of 1000*.

TSX 60 Index

* Target calculation: 900 + ( 900 – 800 ) = 1000

Europe

Germany’s DAX broke its descending trendline, indicating another attempt at 12500. A 13-week Twiggs Money Flow trough above zero would confirm long-term buying pressure. Reversal below 11000 is unlikely.

DAX

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* Target calculation: 12500 + ( 12500 – 12000 ) = 13000

–>

Shallow retracement on the Footsie suggests buying pressure. Recovery of 13-week Twiggs Money Flow above its descending trendline strengthens the signal. Breakout above 7100 would confirm a primary advance. The long-term target is 8000*.

FTSE 100

* Target calculation: 7000 + ( 7000 – 6000 ) = 8000

Asia

The Shanghai Composite broke resistance at 4500, indicating continuation of its strong advance. 13-Week Twiggs Money Flow troughs high above zero reflect long-term buying pressure.

Shanghai Composite Index

* Target calculation: 3500 + ( 3500 – 2500 ) = 4500

Economic data, however, continues to warn of a slow-down.

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Japan’s Nikkei 225 Index broke resistance at 20000, suggesting an advance to 22000*. Recovery of 13-week Twiggs Money Flow above the descending trendline would strengthen the signal.

Nikkei 225 Index

* Target calculation: 20000 + ( 20000 – 18000 ) = 22000

India’s Sensex respected support at 26500 and is now testing resistance at 28000. Breakout above 28000 and the descending trendline would signal another attempt at 30000. Recovery of 13-week Twiggs Money Flow above zero would strengthen the signal. Another (TMF) peak below zero is unlikely, but would warn of a primary down-trend.

SENSEX

Australia

The ASX 200 found support between 5650 and 5550, highlighted by the latest long-tailed candle. Recovery above 5750 would signal the correction is over and another test of 6000 is likely. Mild decline on 13-week Twiggs Money Flow indicates medium-term selling pressure — not a reversal. Breach of 5550 is unlikely, but would warn of a test of primary support at 5120.

ASX 200

* Target calculation: 6000 + ( 6000 – 5750 ) = 6250


More….

Liquidity Mismatch Helps Predict Bank Failure and Distress

T-Bonds Burn

Philip Glass: Glassworks

Elodie Sablier: Vertigo

B.B. King: The Thrill Is Gone

Teach us that wealth is not elegance; that profusion is not magnificence; and that splendour is not beauty. Teach us that taste is a talisman which can do greater wonders than the millions of the loanmonger. Teach us that to vie is not to rival, and to imitate not to invent. Teach us that pretension is a bore. Teach us that wit is excessively good-natured, and, like champagne, not only sparkles, but is sweet. Teach us the vulgarity of malignity. Teach us that envy spoils our complexions, and that anxiety destroys our figure.

~ Benjamin Disraeli, The Young Duke (1831)

Long-tailed candles

Stocks are recovering from their recent soft patch and breakout above resistance is likely, signaling further gains.

North American Stocks

The S&P 500 is testing medium-term resistance at 2120. Breakout would signal an advance to 2200*. Three weekly candles with long tails reflect medium-term buying pressure, while a 13-week Twiggs Money Flow trough high above zero indicates long-term pressure. Retracement that respects the new support level at 2100 would further strengthen the bull signal.

S&P 500 Index

* Target calculation: 2120 + ( 2120 – 2040 ) = 2200

CBOE Volatility Index (VIX) at 12 indicates low risk typical of a bull market.

S&P 500 VIX

Dow Jones Industrial Average is testing resistance at 18300. Buying pressure appears similar to the S&P 500 and breakout would offer a target of 19000*.

Dow Jones Industrial Average

* Target calculation: 18300 + ( 18300 – 17600 ) = 19000

Canada’s TSX 60 found support at 870. 13-Week Twiggs Momentum holding above zero continues to indicate a primary up-trend. Breakout above 900 would offer a long-term target of 1000*.

TSX 60 Index

* Target calculation: 900 + ( 900 – 800 ) = 1000

Europe

Germany’s DAX encountered support above 11000. Penetration of the descending trendline would indicate the correction is over and follow-through above 12000 would suggest a primary advance. Declining 13-week Twiggs Money Flow warns of continued selling pressure and a further test of 11000, but respect of support remains likely and would provide a solid base for further advances.

DAX

The Footsie also displays long tails, suggesting medium-term buying support, but declining 13-week Twiggs Money Flow indicates continued selling pressure. Breach of 6900 would warn of a correction to 6700, but further losses are unlikely at present. Recovery above 7100 would confirm the long-term breakout, offering a target of 8000*.

FTSE 100

* Target calculation: 7000 + ( 7000 – 6000 ) = 8000

Asia

The Shanghai Composite is consolidating between 4000 and 4500. Breach of either of these levels would signal future direction. Declining 13-week Twiggs Money Flow warns of medium-term selling pressure, favoring the downside.

Shanghai Composite Index

* Target calculation: 3500 + ( 3500 – 2500 ) = 4500

Short retracement on Japan’s Nikkei 225 Index is a bullish sign. Breakout above 20000 would offer a target of 22000*. Declining 13-week Twiggs Money Flow reflects medium-term selling pressure; recovery above the descending trendline would be a bullish sign.

Nikkei 225 Index

* Target calculation: 20000 + ( 20000 – 18000 ) = 22000

India’s Sensex found support between 26500 and 27000. Long tails suggest medium-term buying pressure. Recovery above 28000 and the descending trendline would suggest another attempt at 30000. But 13-week Twiggs Money Flow remains below zero, warning of (long-term) selling pressure. Another peak below zero would warn of breach of primary support and a reversal.

SENSEX

Australia

ASX 200 support at 5750, 5650 or 5550: which is most relevant? Judging by some of the questions received, I succeeded in confusing a number of readers. Here is a brief summary:

  • 5750 acted as medium-term support until the beginning of May, when breach of 5750 and the rising trendline warned of a correction.
  • 5750 transformed into medium-term resistance and penetration would suggest the correction is over.
  • There is a strong band of support between the two recent (2014) highs of 5650 and 5550.
  • Breach of this band (i.e. below 5550) would indicate a test of primary support at 5120.
  • Respect (i.e. 5550 intact) would provide a solid base for a rally and a further (primary) advance if resistance at 6000 is broken.

Mild decline of 13-week Twiggs Money Flow suggests medium-term selling pressure — not a reversal. Recovery above 5750 remains more likely than breach of 5550.

ASX 200

* Target calculation: 6000 + ( 6000 – 5750 ) = 6250


More….

Gold: Ichimoku Cloud

Benjamin Disraeli: Success

China: Cement Production

US GDP: Where is it headed?

Peter Drucker: Last deadly sin

B.B. King: The Thrill Is Gone

B.B. King: Lucille

I think I’ve done the best I could have done. But I keep wanting to play better, go further. There are so many sounds I still want to make, so many things I haven’t yet done. When I was younger I thought maybe I’d reached that peak. But I’m 86 now, and if I make it through to next month, I’ll be 87. And now I know it can never be perfect, it can never be exactly what it should be, so you got to keep going further, getting better.

~ Riley (B.B.) King

Asian stocks

The Shanghai Composite is consolidating between 4000 and 4500. Breach of either of these levels would signal future direction. Declining 13-week Twiggs Money Flow warns of medium-term selling pressure, favoring the downside.

Shanghai Composite Index

* Target calculation: 3500 + ( 3500 – 2500 ) = 4500

Short retracement on Japan’s Nikkei 225 Index is a bullish sign. Breakout above 20000 would offer a target of 22000*. Declining 13-week Twiggs Money Flow reflects medium-term selling pressure; recovery above the descending trendline would be a bullish sign.

Nikkei 225 Index

* Target calculation: 20000 + ( 20000 – 18000 ) = 22000

India’s Sensex found support between 26500 and 27000. Long tails suggest medium-term buying pressure. Recovery above 28000 and the descending trendline would suggest another attempt at 30000. But 13-week Twiggs Money Flow remains below zero, warning of (long-term) selling pressure. Another peak below zero would warn of breach of primary support and a reversal.

SENSEX

TSX bull signal

Canada’s TSX 60 index has followed the Footsie bull signal of last week, breaking long-term resistance at 900 to signal a fresh advance and long-term target of 1000*. A 13-week Twiggs Momentum trough above zero strengthens the signal. Expect retracement to test the new support level, but respect is likely.

TSX 60 Index

* Target calculation: 900 + ( 900 – 800 ) = 1000

Global stocks are generally recovering and appear set for another advance.

The S&P 500 recovered above 2100; follow-through above 2120 would confirm an advance to 2200*. 13-Week Twiggs Money Flow oscillating above zero reflects long-term buying pressure. Breach of support at 2040/2050 remains unlikely, but would test primary support at 1980/2000.

S&P 500 Index

* Target calculation: 2120 + ( 2120 – 2040 ) = 2200

Declining CBOE Volatility Index (VIX) is close to its lows of 2013, indicating low risk typical of a bull market.

S&P 500 VIX

Europe

Germany’s DAX encountered resistance at Deutsche Bank’s long-term target of 12500. Expect retracement to test support at 12000. Respect of support, and a short retracement, would be a bullish sign, suggesting an advance to 13000. Reversal below 12000 is unlikely, but would warn of a correction to the primary trendline at 11000.

DAX

* Target calculation: 12500 + ( 12500 – 12000 ) = 13000

Initial retracement of the Footsie respected new support at 7000. Declining 13-week Twiggs Money Flow indicates medium-term selling pressure. Expect further retracement, but reversal below 6950/7000 is unlikely.

FTSE 100

* Target calculation: 7000 + ( 7000 – 6000 ) = 8000

Asia

Patrick Chovanec’s tweet on China sums up my ambivalent attitude towards Chinese stocks:

The Shanghai Composite Index broke resistance at 4000 and is now retracing to test the new support level. Rising 13-week Twiggs Money Flow continues to indicate long-term buying pressure.

Shanghai Composite Index

* Target calculation: 3400 + ( 3400 – 2400 ) = 4400

Japan’s Nikkei 225 Index continues to test resistance at 20000. Rising 13-week Twiggs Momentum indicates long-term buying pressure. Breach of support at 19000 is unlikely. Breakout above 20000 would offer a long-term target of 22000*.

Nikkei 225 Index

* Target calculation: 20000 + ( 20000 – 18000 ) = 22000

India’s Sensex is approaching a watershed moment, having encountered resistance at 29000. Breakout would test 30000 and suggest an advance to 33000. Respect of resistance, however, would be a strong bear signal: reversal below 27000 would warn of a primary down-trend. 13-Week Twiggs Momentum has been slowing for the past 9 months and decline of 13-week Twiggs Money Flow to zero reinforces this. Recovery would indicate a false alarm while reversal below zero would reflect further selling.

SENSEX

Australia

The ASX 200 appears set for another test of resistance at 6000, the upper border of a bullish ascending triangle. Breakout above 6000 would signal an advance to 6250*. Declining 21-day Twiggs Money Flow, however, warns of medium-term selling pressure. Reversal below 5900 and the lower border of the triangle would warn of another correction.

ASX 200

* Target calculation: 6000 + ( 6000 – 5750 ) = 6250


More….

Gold Dollar pause

Crude breakout: exercise caution

Inflation outlook

Don’t be afraid of missing opportunities. Behind every failure is an opportunity somebody wishes they had missed.

~ Lily Tomlin

Footsie breaks 7000

London’s FTSE 100 broke long-term resistance at its 1999 high, closing the week above 7000 and signaling a primary advance. Expect retracement to test the new support level, but the long-term target is 8000*.

FTSE 100

* Target calculation: 7000 + ( 7000 – 6000 ) = 8000

Global stocks, generally, recovered from recent weakness and appear set for another advance.

The S&P 500 recovered above 2100, suggesting a fresh advance. Foolow-through above 2120 would confirm, offering a target of 2200*. A 21-day Twiggs Money Flow trough above zero would reflect long-term buying pressure. Breach of support at 2040/2050 is unlikely, but would test primary support at 1980/2000.

S&P 500 Index

* Target calculation: 2120 + ( 2120 – 2040 ) = 2200

Declining CBOE Volatility Index (VIX) indicates low risk typical of a bull market.

S&P 500 VIX

Bellwether transport stock Fedex rallied off primary support at 164. A 13-week Twiggs Money Flow trough at zero suggests continuation of the primary up-trend; a good sign for the economy.

Fedex

Europe

Germany’s DAX followed through above 12200, offering a medium-term target of 12800*. Rising 13-week Twiggs Money Flow indicates long-term buying pressure. Reversal below 12000 is unlikely.

DAX

* Target calculation: 12200 + ( 12200 – 11600 ) = 12800

The Footsie built a solid base of support, with two short corrections, for its breakout above 7000. 13-Week Twiggs Money Flow high above zero indicates long-term buying pressure. Expect retracement to test the new support level, but reversal below 6950/7000 is unlikely.

FTSE 100

* Target calculation: 7000 + ( 7000 – 6000 ) = 8000

Asia

China’s Shanghai Composite Index continues its primary advance, breaking resistance at 4000. An up-turn in the Harpex container shipping index suggests an increase in international trade. Rising 13-week Twiggs Money Flow indicates long-term buying pressure.

Shanghai Composite Index

* Target calculation: 3400 + ( 3400 – 2400 ) = 4400

Japan’s Nikkei 225 Index is testing resistance at 20000. Rising 13-week Twiggs Momentum indicates long-term buying pressure. Breach of support at 19000 is unlikely. Breakout above 20000 would offer a long-term target of 22000*.

Nikkei 225 Index

* Target calculation: 20000 + ( 20000 – 18000 ) = 22000

India’s Sensex recovery above 28500 indicates the correction is over. Expect another test of resistance at 30000. Recovery of 13-week Twiggs Money Flow above zero suggests continuation of the up-trend. Breakout above 30000 would offer a target of 33000. Breach of primary support at 26500/27000 is now unlikely.

SENSEX

Australia

The ASX 200 is testing resistance at 6000, the upper border of a bullish ascending triangle. Breakout above 6000 would signal an advance to 6250*. Rising 13-week Twiggs Money Flow indicates long-term buying pressure. Reversal below 5750 is unlikely, but would warn of a correction to 5500.

ASX 200

* Target calculation: 6000 + ( 6000 – 5750 ) = 6250


More….

Light vehicle sales

Upsurge in global trade

Dollar double bottom — gold tests support

Jobs growth slows (slightly)

The greatest deception men suffer is from their own opinions.

~ Leonardo da Vinci

Stocks hesitant

The S&P 500 found short-term support at 2050, but declining 21-day Twiggs Money Flow indicates medium-term selling pressure. Breach of support would signal a correction to test the band of primary support between 1970 and 2000. Recovery above 2080 is less likely at present, but would indicate another test of 2120.

S&P 500 Index

* Target calculation: 2100 + ( 2100 – 2000 ) = 2200

Long-term, the S&P 500 remains bullish and CBOE Volatility Index (VIX) continues to indicate low risk typical of a bull market.

S&P 500 VIX

Dow Jones Industrial Average also retreated and is testing medium-term support at 17500/17600 on the weekly chart. Declining 13-week Twiggs Money Flow indicates moderate selling pressure. Breach of 17500 would test primary support at 17000, while recovery above 18000 would signal another primary advance — confirmed if there is follow-through above 18300.

Dow Jones Industrial Average

* Target calculation: 18000 + ( 18000 – 17000 ) = 19000

Europe

Germany’s DAX encountered resistance at 12000, but selling pressure looks weak. Rising 13-week Twiggs Money Flow indicates long-term buying pressure. Expect support at 11500. Recovery above 12000 would suggest an advance to 12500*.

DAX

* Target calculation: 10000 + ( 10000 – 7500 ) = 12500

The Footsie retreated from 7000. Declining 13-Week Twiggs Money Flow indicates medium-term selling pressure. Breach of support at 6700 would warn of a correction to test primary support at 6150/6200, while respect of support at 6700 would be a bullish sign. Breakout above 7000 would offer a long-term target of 8000*.

FTSE 100

* Target calculation: 7000 + ( 7000 – 6000 ) = 8000

Asia

China’s Shanghai Composite Index continues its primary advance. Recovery of 13-week Twiggs Money Flow above its descending trendline strengthens the signal. Retracement to test the new support level at 3400 remains likely, but expected to be weak.

Shanghai Composite Index

* Target calculation: 3400 + ( 3400 – 2400 ) = 4400

Japan’s Nikkei 225 Index is retracing. Breach of support at 19000 would signal a correction to test 18000, but respect is more likely and recovery above 19500 would indicate another attempt at the long-term target of 20000*. Rising 13-week Twiggs Momentum indicates long-term buying pressure.

Nikkei 225 Index

* Target calculation: 18000 + ( 18000 – 16000 ) = 20000

India’s Sensex is faltering at resistance at 30000. Reversal of 13-week Twiggs Money Flow below zero warns of strong selling pressure. Breach of primary support at 26500/27000 would signal a reversal. Respect of the primary trendline, however, would establish a sound base for further advances.

SENSEX

Australia

The ASX 200 continues to hesitate at 6000. Declining 13-week Twiggs Money Flow indicates moderate (medium-term) selling pressure. Reversal below 5750 is unlikely, but would warn of a correction to 5500. Breakout above 6000 would offer a (medium-term) target of 6250*.

ASX 200

* Target calculation: 6000 + ( 6000 – 5750 ) = 6250


More….

Gold hesitant response to weak Dollar

Crude consolidates

Footsie breaks 15-year high

The measure of who we are is what we do with what we have.

~ Vince Lombardi

Fed patience buoys stocks

The S&P 500 rallied to 2100 on the strength of the Fed’s latest FOMC statement, allaying fears of an imminent rate rise. Follow-through above 2120 would indicate a test of 2200*. Another 13-week Twiggs Money Flow trough above zero would signal continuation of the primary up-trend.

S&P 500 Index

* Target calculation: 2100 + ( 2100 – 2000 ) = 2200

CBOE Volatility Index at 14 indicates low risk typical of a bull market.

S&P 500 VIX

Europe

Germany’s DAX retreated below its long-term target at 12000*. Correction to 11000 would indicate a healthy up-trend, while narrow consolidation below 12000 would be a bullish sign. Rising 13-week Twiggs Money Flow indicates strong buying pressure.

DAX

* Target calculation: 11000 + ( 11000 – 10000 ) = 12000

The Footsie rallied to 6950. The short correction is a bullish sign, suggesting a fresh advance. 13-Week Twiggs Money Flow oscillating above zero indicates healthy buying pressure. Breakout above 7000 would signal a primary advance with a long-term target of 8000*.

FTSE 100

* Target calculation: 7000 + ( 7000 – 6000 ) = 8000

Asia

China’s Shanghai Composite Index broke resistance at 3400, signaling a fresh advance. Economic data is not strong, but expectation of further stimulus has buoyed the market. A 13-week Twiggs Money Flow rally indicates medium-term buying pressure. Reversal below 3050 is now unlikely.

Shanghai Composite Index

* Target calculation: 3400 + ( 3400 – 2400 ) = 4400

Japan’s Nikkei 225 Index is heading for a test of its long-term target at 20000*. Rising 13-week Twiggs Momentum indicates a strong (primary) up-trend.

Nikkei 225 Index

* Target calculation: 18000 + ( 18000 – 16000 ) = 20000

India’s Sensex faces stiff resistance at 30000. Declining 13-week Twiggs Momentum warns the primary-trend is weakening. Recovery above 29000 would indicate the correction is over, while breach of 28000 would test primary support at 26500/27000. Respect of the primary trendline would establish a solid base for further advances.

SENSEX

Australia

The ASX 200 rallied to 5950, the short correction suggesting another advance. Breakout above 6000 would confirm, offering a (medium-term) target of 6250*. Rising 13-week Twiggs Money Flow indicates buying pressure. Reversal below 5750 is unlikely, but would warn of a correction to 5500.

ASX 200

* Target calculation: 6000 + ( 6000 – 5750 ) = 6250


More….

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Concessions to adversaries only end in self reproach, and the more strictly they are avoided the greater will be the chance of security.

~ Thucydides (c. 460 BC – c. 400 BC): History of the Peloponnesian War

DAX surges ahead while others retreat

The DAX is headed for its long-term target of 12000 while most markets (other than Japan) undergo a correction.

The S&P 500 broke support at 2080, indicating a correction to test 2000. Breach of primary support is unlikely and another 13-week Twiggs Money Flow trough above zero would signal another advance.

S&P 500 Index

* Target calculation: 2100 + ( 2100 – 2000 ) = 2200

Dow Jones Industrial Average is similarly correcting to test primary support at 17000.

Dow Jones Industrial Average

CBOE Volatility Index continues to indicate low risk typical of a bull market.

S&P 500 VIX

Europe

Germany’s DAX broke resistance at 11500 and is headed for a test of the long-term target at 12000*. Expect further resistance, possibly a correction, at this level. Rising 13-week Twiggs Momentum indicates a strong up-trend.

DAX

* Target calculation: 11000 + ( 11000 – 10000 ) = 12000

The Footsie retreated from a test of its December 1999 high of 6950. 13-Week Twiggs Momentum oscillating around zero indicates further consolidation. Expect a test of support at 6500.

FTSE 100

* Target calculation: 7000 + ( 7000 – 6000 ) = 8000

Asia

China’s Shanghai Composite Index is consolidating between 3050 and 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. Breakout above 3400 is less likely, but would signal another primary advance.

Shanghai Composite Index

Breach of support at 24000 on Hong Kong’s Hang Seng Index warns of further weakness in China. Follow-through below 23000 would indicate a primary down-trend — and a stronger bear signal (for China).

Hang Seng Index

Japan’s Nikkei 225 Index is retracing to test new support at its 2007 high of 18000/18300. Rising 13-week Twiggs Momentum indicates a strong up-trend. Respect of support is likely and would signal an advance to 20000* — confirmed by follow-through above 19000.

Nikkei 225 Index

* Target calculation: 18000 + ( 18000 – 16000 ) = 20000

India’s Sensex faces stiff resistance at 30000. Bearish divergence on 13-week Twiggs Momentum warns the primary-trend is weakening, but not necessarily a reversal. This could be a mid-point consolidation. Retreat below 29000 indicates a correction. Follow-through below 28000 would test primary support at 26500/27000. Respect of the primary trendline would establish a solid base for further advances.

SENSEX

Australia

The ASX 200 found support at 5750. Recovery above 5850 would suggest the correction is over. Follow-through above 6000 would confirm another advance, with a target of 6250*. Declining 21-day Twiggs Money Flow indicates mild selling pressure. Breach of 5750 is less likely, but would warn of a correction to 5500.

ASX 200

* Target calculation: 6000 + ( 6000 – 5750 ) = 6250


More….

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When good news is bad news

Crude in contango

Life is a school of probability.

~ Walter Bagehot (hat tip to Barry Ritholz)

Market strength

Apart from China and India, major markets continue to look bullish.

The S&P 500 is retracing to test support at 2080/2100, but respect is likely and would confirm an advance to 2200*. Oscillation of 13-week Twiggs Money Flow high above zero indicates strong long-term buying pressure.

S&P 500 Index

* Target calculation: 2100 + ( 2100 – 2000 ) = 2200

A quarterly chart shows the Nasdaq 100 headed for its Dotcom high of 4800. Expect major resistance at this level. Correction back to 4000 and the primary trendline may provide a long-term buying opportunity.

Nasdaq 100 Index

CBOE Volatility Index at 14 indicates low risk typical of a bull market.

S&P 500 VIX

Europe

Germany’s DAX found resistance at 11500. Expect retracement to test new support at 11000, but respect is likely and would confirm the target of 12000*. Rising 13-week Twiggs Money Flow indicates healthy buying pressure.

DAX

* Target calculation: 11000 + ( 11000 – 10000 ) = 12000

The Footsie is consolidating below its December 1999 high of 6950. 13-Week Twiggs Money Flow oscillating high above zero indicates long-term buying pressure. Breakout would signal a fresh primary advance, with a long-term target of 8000*. Follow-through above 7000 would confirm.

FTSE 100

* Target calculation: 7000 + ( 7000 – 6000 ) = 8000

Asia

China’s Shanghai Composite Index faces 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. Breakout above 3400 is less likely, but would signal another primary advance.

Shanghai Composite Index

Japan’s Nikkei 225 Index is likely to retrace to test new support at its 2007 high of 18000/18300. Rising 13-week Twiggs Money Flow indicates buying pressure. Respect is likely and would signal an advance to 20000*.

Nikkei 225 Index

* Target calculation: 18000 + ( 18000 – 16000 ) = 20000

India’s Sensex encountered stiff resistance at 30000. Declining 13-week Twiggs Money Flow indicates medium-term selling pressure. Reversal below 28000 would warn of a correction to 26500/27000. Respect of the primary trendline would establish a solid base for further advances, otherwise we may see an extended consolidation below 30000.

SENSEX

Australia

The ASX 200 encountered resistance at 6000, retracing to test support at 5850. 13-Week Twiggs Money Flow continues to reflect healthy buying pressure. Respect of support would indicate continuation of the advance, towards 6150*. Follow-through above 6000 would confirm. Breach of 5850 is less likely, but would warn of a correction back to the rising trendline, around 5650.

ASX 200

* Target calculation: 5650 + ( 5650 – 5150 ) = 6150

The rally continues

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.

S&P 500 Index

* Target calculation: 2100 + ( 2100 – 2000 ) = 2200

CBOE Volatility Index is declining, indicating low risk typical of a bull market.

S&P 500 VIX

Europe

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.

DAX

* 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.

FTSE 100

* Target calculation: 7000 + ( 7000 – 6000 ) = 8000

Asia

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.

Shanghai Composite Index

Is the Chinese economy a one-trick pony or will economic growth continue when the infrastructure boom ends?

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*.

Nikkei 225 Index

* 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.

SENSEX

Australia

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.

ASX 200

* Target calculation: 5650 + ( 5650 – 5150 ) = 6150

Alexander Hamilton started the U.S. Treasury with nothing, and that was the closest our country has ever been to being even.

~ Will Rogers

Broad market rally

Major indices across the US, Europe and Japan are displaying strong performance. China and India appear to be encountering stronger resistance, but should also be buoyed by the broad recovery.

Bellwether transport stock Fedex (FDX) is headed for another test of resistance at $182/$184. Breakout would signal a primary advance, with a target of $200*, indicating that economic activity is improving.

Fedex

* Target calculation: 184 + ( 184 – 168 ) = 200

The S&P 500 is testing resistance at 2100. Breakout would offer a medium-term target of 2200*. Rising 13-week Twiggs Money Flow indicates medium-term buying pressure. Respect of 2100 is unlikely, but would suggest another test of primary support at 2000.

S&P 500 Index

* Target calculation: 2100 + ( 2100 – 2000 ) = 2200

The Nasdaq 100 successfully penetrated resistance at 4300/4350, signaling an advance to 4500*. Oscillation of 13-week Twiggs Money Flow high above zero suggests strong buying pressure. Expect retracement to test the new support level, but breach is unlikely and would warn of another correction.

Nasdaq 100 Index

* Target calculation: 4300 + ( 4300 – 4100 ) = 4500

CBOE Volatility Index broke out below the recent triangle, indicating risk has reverted from Moderate to Low.

S&P 500 VIX

Europe

Germany’s DAX is testing resistance at 11000*. Rising 13-week Twiggs Momentum troughs above zero indicate a strong up-trend. Retracement that respects medium-term support at 10600 would strengthen the bull signal.

DAX

* Target calculation: 10000 + ( 10000 – 9000 ) = 11000

The Footsie is also testing long-term resistance at 6900. 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 break through the December 1999 high of 6950.

FTSE 100

* Target calculation: 7000 + ( 7000 – 6000 ) = 8000

Asia

China’s Shanghai Composite Index found support at 3050, but declining 13-week Twiggs Money Flow warns of medium-term selling pressure. Respect of resistance at 3400 is likely. Reversal below 3050 would warn of a test of the primary trendline at 2700. The stimulus effect of lower energy prices may cushion the fall but economic activity is declining.

Shanghai Composite Index

Japan’s Nikkei 225 Index continues to test resistance at its 2007 high of 18000. Rising 13-week Twiggs Money Flow reflects medium-term buying pressure. Breakout above 18000 would signal another primary advance, with a target of 20000*.

Nikkei 225 Index

* Target calculation: 18000 + ( 18000 – 16000 ) = 20000

India’s SENSEX found support at 28000 and recovery above 29000 signals another test of 30000. A lower peak on 13-week Twiggs Money Flow reflects medium-term selling pressure. Respect of resistance at 30000 is likely, while breach of support at 28000 would test primary support at 26500.

SENSEX

* Target calculation: 29000 + ( 29000 – 27000 ) = 31000

Australia

The ASX 200 is headed for a test of 6000 after breaking out of the recent flag continuation pattern. Rising 21-day Twiggs Money Flow indicates short-term buying pressure. Reversal below support at 5850 is unlikely, but would warn of a correction.

ASX 200

* Target calculation: 5650 + ( 5650 – 5150 ) = 6150

US Recovery on Track

The Leading Index calculated by the Philadelphia Fed has, in the past proved a reliable indicator of economic conditions. The latest value of 1.74% (December 2014) reflects a healthy recovery.

Philadelphia Fed Leading Index

Light vehicle sales also indicate consumer confidence. Annual sales to December 2014 of 16.8 million units are in the same realm as the buoyant conditions of 2004 to 2007.

Light vehicle sales

The Freight Transportation Services Index suggests that broader economic activity is also soaring.

Freight Transport Index

The S&P 500 successfully tested support at 2000, recovery above the declining trendline suggesting that the recent correction is over. Penetration of the descending trendline on 13-week Twiggs Money Flow would strengthen the signal. Breach of 1980/2000 is unlikely. Breakout above 2080 would indicate a fresh advance; follow-through above 2100 would confirm.

S&P 500 Index

* Target calculation: 2100 + ( 2100 – 2000 ) = 2200

CBOE Volatility Index is declining. Breakout below the recent triangle would indicate that risk has reverted to ‘Low’ from ‘Moderate’.

S&P 500 VIX

Europe

Dow Jones Euro Stoxx 50 index is consolidating above support at 3300 despite tensions between Greece and its Northern EMU partners. Respect of 3300 would indicate a fresh primary advance, with a long-term target of 3600*. Follow-through above 3425 would confirm.

Dow Jones Euro Stoxx 50

* Target calculation: 3300 + ( 3300 – 3000 ) = 3600

Asia

China’s Shanghai Composite Index found support at 3050, but declining 13-week Twiggs Money Flow warns of medium-term selling pressure. Failure to break resistance at 3400 is increasingly likely, and reversal below 3050 would warn of a test of the primary trendline at 2700. The stimulus effect of lower energy prices may cushion the fall but economic activity is declining and the PBOC faces a number of challenges.

Shanghai Composite Index

Japan’s Nikkei 225 Index has benefited from aggressive monetary expansion by the BOJ and is testing resistance at its 2007 high of 18000. Rising 13-week Twiggs Momentum reflects a healthy up-trend. Breakout above 18000 would signal another primary advance, with a target of 20000*.

Nikkei 225 Index

* Target calculation: 18000 + ( 18000 – 16000 ) = 20000

Long-term momentum of India’s SENSEX has been slowing since mid-2014. A fall below zero is unlikely, but would warn of a trend reversal. Respect of the secondary rising trendline would suggest another test of 30000, while breach would test primary support at 26500.

SENSEX

* Target calculation: 29000 + ( 29000 – 27000 ) = 31000

Australia

Australia’s ASX 200 is retracing to test its new support level at 5660. Respect would confirm a fresh primary advance. 13-Week Twiggs Money Flow holding above the zero line indicates medium-term buying pressure. Breakout above the descending flag would signal another advance, with a target of 6150*. Failure of support is unlikely.

ASX 200

* Target calculation: 5650 + ( 5650 – 5150 ) = 6150

ASX breakout on RBA rate cut

Australia’s ASX 200 broke through resistance at 5660, signaling a fresh primary advance after several months in the doldrums. Rising 13-week Twiggs Money Flow indicates medium-term buying pressure. Retracement to test new support at 5550/5650 is likely, but the target for the advance is 6150*.

ASX 200

* Target calculation: 5650 + ( 5650 – 5150 ) = 6150

The surge was driven by an RBA rate cut to a new low of 2.25%.

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The cut was largely unexpected. My view was (and is) that a cut is unnecessary, given that falling commodity prices (especially crude oil and LNG) are weakening the Aussie Dollar. Now that we have one, further cuts are likely.

US Markets

The S&P 500 continues to test support at 2000, but rising 13-week Twiggs Money Flow indicates long-term buying pressure. Breach of 1980/2000 is unlikely, but would warn of another correction. Recovery above the descending trendline would suggest the start of a fresh advance.

S&P 500 Index

* Target calculation: 2000 + ( 2000 – 1800 ) = 2200

CBOE Volatility Index retreated below 20%, but only breakout below the triangle would reassure that the recent up-surge has passed — and risk has reverted to ‘low’ from ‘moderate’.

S&P 500 VIX

Europe

Germany’s DAX is heading for 11000* after breaking resistance at 10000. A 13-week Twiggs Momentum trough above zero confirms the primary up-trend.

DAX

* Target calculation: 10000 + ( 10000 – 9000 ) = 11000

The Footsie continues to test long-term resistance at 6900/7000. Breakout would signal a fresh primary advance, with a long-term target of 8000*. 13-Week Twiggs Money Flow is rising, but it will take considerable buying pressure to break through the 1999/2000 high.

FTSE 100

* Target calculation: 7000 + ( 7000 – 6000 ) = 8000

China’s Shanghai Composite Index is retreating from resistance at its 2009 high of 3400. A small decline in 13-week Twiggs Money Flow indicates medium-term buying pressure is weakening. Reversal below 3100 would warn of a correction. Breakout above 3400 remains as likely, however, and would signal a fresh primary advance. The stimulus effect of lower energy prices may allow the PBOC scope to rein in monetary expansion, which would have a dampening effect on the current stock boom.

Shanghai Composite Index

The whole art of government consists in the art of being honest.

~ Thomas Jefferson