Asia: India recovers but China & Japan bearish
By Colin Twiggs
August 14th, 2012 1:00 a.m. ET (3:00 p.m. AET)
India's Sensex broke resistance at 17500, signaling a primary up-trend. Expect an advance to 18500*. Rising 13-week Twiggs Money Flow — above zero — indicates strong buying pressure.
* Target calculation: 17.5 + ( 17.5 - 16.5 ) = 18.5
NSE Nifty is testing resistance at 5350. Breakout would confirm the Sensex primary up-trend. Rising 63-Day Twiggs Momentum is promising but we need a trough above zero to signal a strong up-trend. Target for the breakout would be 5650*.
* Target calculation: 5350 + ( 5350 - 5050 ) = 5650
Momentum is an oscillator, so you would expect equal peaks if the trend is constant. If oscillating above zero, it would be a constant up-trend; below zero, a constant down-trend; with zero at the mid-point, a ranging market. Divergence should ideally show a clear transition from one to the other or at least a sharp difference in the height of peaks or troughs. A trendline drawn under rising momentum will indicate that momentum is accelerating; a trendline break would indicate slowing acceleration — not necessarily a reversal.
Japan's Nikkei 225 index is testing resistance at 9000 but 13-week Twiggs Money Flow continues to warn of strong selling pressure, with a peak below zero. Breakout above 9000 is unlikely, but would signal an advance to 10000. Failure of support at 8200 would indicate another test of the 2008/2009 lows at 7000*.
* Target calculation: 8000 - ( 9000 - 8000 ) = 7000
China's Shanghai Composite Index retreated below support at 2150; follow-through below 2100 would indicate a decline to 2000*. Declining 63-day Twiggs Momentum continues to signal a primary down-trend.
* Target calculation: 2250 - ( 2500 - 2250 ) = 2000
Hong Kong's Hang Seng Index is more bullish, consolidating above resistance at 20000. Follow-through would indicate an advance to 22000*. Recovery of 63-Day Twiggs Momentum above zero would suggest a primary up-trend.
* Target calculation: 20 + ( 20 - 18 ) = 22
Singapore's Straits Times Index is similarly consolidating above former resistance at 3040. Rising 63-day Twiggs Momentum — above zero — indicates the primary up-trend is intact. Calculated target is 3300* but the trend channel suggests resistance at 3200.
* Target calculation: 3000 + ( 3000 - 2700 ) = 3300
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