Nikkei Slips Despite Buying Support
By Colin Twiggs
May 24, 2010 6:00 a.m. ET (8:00 p.m. AET)
Most markets display signs of short-term buying support, indicating a bear rally. This is likely to be a temporary pause rather than an end to the correction. South Korea and Japan, affected by heightened tensions with North Korea, failed, however, to join in — the Nikkei 225 signaling a primary down-trend.
The Baltic Dry Index is advancing toward 4650. Rising demand for dry bulk shipping — primarily iron ore and coal — is at odds with the down-turn in Chinese stock markets, but the lag can last several months. Breakout above 4650 would confirm the primary up-trend, while reversal below 2900 would warn of a primary down-trend — if confirmed by the Baltic Panamax Index.
A strong close on Friday indicates a Dow rally to test 10700. Twiggs Money Flow (21-day) recovery above the declining trendline would confirm.
S&P 500 showed a similar blue candle on Friday and Twiggs Money Flow (21-day) breakout above the declining trendline would signal a bear rally.
The Dow Transport index broke medium-term support, indicating a weak primary up-trend.
The Nasdaq 100 displays a similar picture, with a strong close on Friday.
* Target calculation: 1900 + ( 1900 - 1750 ) = 2050
The TSX Composite likewise signals a bear rally.
* Target calculation: 12000 + ( 12000 - 11000 ) = 13000
The FTSE 100 goes further, with a bullish divergence on Twiggs Money Flow (21-day) accompanying Friday's long tail.
The DAX likewise displays a bullish divergence on Twiggs Money Flow (21-day), signaling short/medium-term buying pressure.
The Sensex also displays bullish divergence on Twiggs Money Flow (21-day), signaling a rally to test 17000. In the long term, reversal below 15800 would signal a primary down-trend; recovery above 18000, however, would offer a target of 20000*.
* Target calculation: 18000 + ( 18000 - 16000 ) = 20000
The Nikkei 225 broke support at 9900 to signal a primary down-trend. Triple bearish divergence on Twiggs Money Flow (13-week) confirms strong selling pressure. The breakout offers a target of 9000*.
* Target calculation: 10000 - ( 11000 - 10000 ) = 9000
The Seoul Composite is headed for a test of primary support at 1550. Twiggs Money Flow (21-day) reversal below zero would warn of a primary down-trend.
The Shanghai Composite Index rallied to 2670 Monday; breakout above 2750 would offer a target of 2950. Twiggs Money Flow (21-day) recovery above the declining trendline indicates short/medium-term buying pressure. The primary trend, however, remains downward.
* Target calculations: 2900 - ( 3150 - 2900 ) = 2650
The Hang Seng Index encountered support at 19500, but remains in a primary down-trend. Expect consolidation between 19500 and 20000 before another down-swing with a target of the July 2009 low at 17000*. Declining Twiggs Money Flow (13-week) indicates continued selling pressure.
* Target calculations: 19500 - ( 22000 - 19500 ) = 17000
The All Ordinaries is in a primary down-trend, having broken support at 4500. Twiggs Money Flow (21-day) recovery above the declining trendline indicates retracement to test the new resistance level. Breakout above 4700 would warn of a bear trap.
The ASX 200 is undergoing a similar retracement. Twiggs Money Flow (13-week) below zero, however, confirms the primary down-trend.
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