Japan & India

Dow Jones Japan Index is headed for a test of the descending trendline but 63-day Twiggs Momentum remains deep below zero, indicating a strong primary down-trend.

Dow Jones Japan Index

Dow Jones India 30 Titans index found support above 150 and is headed for another test of resistance around 170. Bullish divergence on 13-week Twiggs Money Flow favors a primary trend reversal. Breakout above 172 would confirm.

Dow Jones India 30 Titans Index

* Target calculation: 170 + ( 170 – 150 ) = 190

Footsie and Euro Stoxx 50 shows signs of resurgence

The FTSE 100 index is headed for resistance at 5700. Breakout would signal an advance to the 2011 highs at 6100. Rising 13-week Twiggs Money Flow indicates buying pressure.

FTSE 100 Index

* Target calculation: 5700 + ( 5700 – 5200 ) = 6200

The Dow Jones Euro Stoxx 50 also shows signs of recovery, heading for a test of the descending trendline and resistance at 2500. Breakout would signal a primary advance to 2900* and the end of the bear market. Momentum is rising but remains a long way below the zero line. Respect of 2500 would be a bear signal not only for the euro-zone, but for the global economy.

Euro Stoxx 50 Index

* Target calculation: 2500 + ( 2500 – 2100 ) = 2900

Canada TSX 60

The TSX 60 index is headed for a test of the descending trendline and resistance at 720 on the weekly chart. Upward breakout would signal a primary advance to 790* and the end of the bear market. Respect of zero by 13-week Twiggs Money Flow would strengthen the signal, indicating strong buying pressure.

TSX 60 Index

* Target calculation: 720 + ( 720 – 650 ) = 790

US markets show promise of recovery

We are not out of the woods yet, but the S&P 500 weekly chart is starting to diverge from its mid-2008 pattern. Headed for a test of the descending trendline and resistance at 1300, an index breakout would signal a primary advance to 1450* and the end of the bear market. Recovery of 63-day Twiggs Momentum above zero would support this.

S&P 500 Index

* Target calculation: 1300 + ( 1300 – 1150 ) = 1450

Dow Jones Industrial Average, however, displays short-term resistance between 12000 and 12300 on the daily chart. Reversal of 21-day Twiggs Money Flow below zero would warn of rising selling pressure.

Dow Jones Industrial Average

* Target calculation: 12300 + ( 12300 – 11200 ) = 13400

Nasdaq 100 Index is headed for resistance at 2400. Upward breakout would offer a target of 2750*. Bearish divergence on 13-week Twiggs Money Flow warns of selling pressure, but breakout above the descending trendline would negate this.

Nasdaq 100 Index

* Target calculation: 2400 + ( 2400 – 2050 ) = 2750

Australia rallies

The ASX 200 rallied off support at 4000, headed for a test of medium-term resistance at 4150 — and the descending trendline. 21-Day Twiggs Money Flow remains below zero and respect of the zero line would warn of strong medium-term selling pressure. In the longer term, breach of primary support at 3850 would signal a primary decline to 3350*.

ASX 200 Index

* Target calculation: 3850 – ( 4350 – 3850 ) = 3350

Canada: TSX 60 respects trendline

Canada’s TSX 60 index is testing medium-term support at 650. Respect of the descending trendline and 63-day Twiggs Momentum oscillating below zero both suggest another decline. Failure of primary support at 625 would offer a target of 580*.

TSX 60 Index

* Target calculation: 650 – ( 720 – 650 ) = 580

Yen set for a major reversal

This is a 20-year (monthly) chart of the US dollar against the Japanese yen. The dollar has declined in a primary down-trend since early 2008. Long-term support at 80 failed to halt the fall and the greenback is now ranging between ¥75 and ¥80. The down-trend is in its fourth year and large bullish divergence on 63-day Twiggs Momentum warns of a reaction. Penetration of the declining trendline would strengthen the signal and breakout above 80 would confirm, offering a long-term target of 100.

USDJPY

Asian markets

The Shanghai Composite Index reflects China’s controlled slow-down, edging lower with intermittent bear market rallies. The index is currently testing the descending (secondary) trendline at 2500. Penetration would offer a target of 2650 but would not indicate that the primary down-trend is over. Failure of support at 2300/2350 remains more likely and would offer a target of 2000.

Shanghai Composite Index

* Target calculation: 2300 – ( 2600 – 2300 ) = 2000

HongKong’s Hang Seng Index is headed for a test of the (primary) descending trendline at 21000; breakout above 20000 would confirm. The primary trend remains downward, however, and respect of the trendline would suggest another test of 16000.

Hang Seng Index

Japan’s Nikkei 225 Index is ranging between 8400 and 9100. Breakout would indicate future trend direction.

Nikkei 225 Index

* Target calculation: 8400 – ( 9000 – 8400 ) = 7800

South Korea’s Seoul Composite Index continues to reflect buying pressure on 13-week Twiggs Money Flow. Follow-through above recent highs would indicate a strong bear rally, but the primary trend remains downward.

Seoul Composite Index

* Target calculation: 1900 + ( 1900 – 1800 ) = 2000

Canada TSX 60

Canada’s TSX 60 index is consolidating between 680 and 720. Upward breakout would penetrate the descending trendline, indicating that the primary down-trend is weakening. A 13-week Twiggs Money Flow trough that respects the zero line would signal a primary up-trend. Reversal below 680, however, would warn of another test of primary support at 620.

TSX 60 Index

* Target calculation: 720 + ( 720 – 680 ) = 760

Commodity down-trend

The strengthening dollar should see commodities weaken. Reversal below 315 would indicate respect of the descending trendline — and another test of primary support at 295. Breakout is unlikely, despite the rise of crude oil, but would indicate that the down-trend is weakening.

CRB Commodities Index

* Target calculation: 295 – ( 325 – 295 ) = 265

Gold falters on dollar surge

Spot gold is testing short-term support at $1750/ounce as the greenback strengthens. Breach of the rising trendline would suggest that the advance is losing momentum — and breakout below $1700 would signal another test of primary support at $1600. Respect of $1700 is less likely, but would signal an advance to $1900.

Spot Gold

* Target calculation: 1800 + ( 1800 – 1700 ) = 1900

Dow Jones Shanghai

Dow Jones Shanghai Index is also hesitant, with no advance over the last 3 trading days. Reversal below 304 would indicate a test of primary support at 284. Breakout above the descending trendline — and resistance at 330 — is unlikely with 21-day Twiggs Money Flow (respect of the zero line from below) warning of selling pressure.

Dow Jones Shanghai Index

Canada TSX 60

The TSX 60 is testing the band of resistance from 720 to 730 and the descending trendline. Upward breakout would indicate that the primary down-trend is weakening, while respect would warn of another test of primary support. The sharp rise on 13-week Twiggs Money Flow indicates buying pressure, but there is no sign yet of a reversal.

TSX 60 Index

* Target calculation: 650 – ( 720 – 650 ) = 580

Kiwi Dollar

The Kiwi respected the band of resistance at $0.80/$0.82 against the greenback, warning of a primary decline. Earlier breach of the rising trendline strengthens the signal. Failure of support at $0.75 would offer a target of $0.70.

NZDUSD

* Target calculation: 0.75 – ( 0.80 – 0.75 ) = 0.70

Commodities and crude oil

CRB Commodities Index is testing the descending trendline at 320. Breakout would suggest that the down-trend has weakened and the index is forming a bottom; respect would indicate another test of primary support at 295. Breach of the long term rising trendline would warn of another test of 2009 lows at 200.

CRB Commodities Index

Brent crude is also testing its descending trendline, at $110/barrel. Respect would signal another test of primary support at $99, while breakout would suggest that the down-trend has ended. In the long-term, breach of the rising trendline would warn of a decline to around $70/barrel.

IPE Brent Afternoon Markers

Dollar rebounds as euro-zone debt crisis drags on

The Dollar Index is consolidating below resistance at 77.50. Breach of the descending trendline suggests the correction is over and recovery of 63-day Twiggs Momentum above the zero line indicates that the primary trend remains upward. Breakout above 77.50 would offer a medium-term target of 80*.

US Dollar Index

* Target calculation: 77.50 + ( 77.50 – 75.00 ) = 80.00

Japan and South Korea

Dow Jones Japan Index weakened Monday, warning of another test of primary support at 48.

Dow Jones Japan Index

Dow Jones South Korea Index had a stronger breakout, but is also now retracing. Respect of support would confirm the up-trend, while reversal below 400 would signal weakness.

Dow Jones South Korea Index

Hong Kong and China

HongKong’s Hang Seng Index broke its secondary descending trendline at 19000, indicating a test of the primary trendline at 21000/22000.

Hang Seng Index

* Target calculation: 19 + ( 19 – 16 ) = 22

The Shanghai Composite Index recovered above support at 2350. Breakout above its secondary trendline would also test the primary trendline around 2900.

Shanghai Composite Index

Dow Jones HongKong Index shows retracement to test short-term support on Monday. Respect of the rising trendline would signal trend strength, while failure of support at 360 would signal another decline.

Dow Jones HongKong Index