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A Quick Update & Seasons Greetings

By Colin Twiggs
December 23rd, 2014 9:00 p.m. AEDT (5:00 a.m. ET)

Advice herein is provided for the general information of readers and does not have regard to any particular person's investment objectives, financial situation or needs. Accordingly, no reader should act on the basis of any information contained herein without first having consulted a suitably qualified financial advisor.


Apologies for my absence. My computer was damaged in a thunderstorm and it has taken weeks to reinstate all my programs on a replacement. Backups proved useless and I would endorse Frank Aquino's recommendation of using Macrium Reflect to take mirror images of your hard disk instead.

This will be my last update until the new year.

Quick Update

Threat of a Russian collapse roiled markets in early December, but the immediate crisis now seems to have passed.

Recovery of the S&P 500 above resistance at 2080 would indicate another advance , with a target of 2150*. Rising 13-week Twiggs Money Flow troughs indicate long-term buying pressure. Reversal below 2000 is most unlikely.

S&P 500 Index

* Target calculation: 2000 + ( 2000 - 1850 ) = 2150

A 10-year view of CBOE Volatility Index (VIX) suggests low to moderate risk typical of a bull market.

S&P 500 VIX

My favorite bellwether, transport stock Fedex, also underwent a correction. The long tail suggests buying pressure and breakout above the recent high would confirm a strong bull trend, indicating rising economic activity.

Fedex

Dow Jones Euro Stoxx 50 found support at 3000 and is likely to test 3300. Rising 13-week Twiggs Money Flow indicates buying pressure, but the index is likely to continue ranging between these two levels until tensions between Russia and Eastern Europe are resolved.

DJ Euro Stoxx 50

China's Shanghai Composite Index is in a strong bull trend, having broken resistance at 2500, and is likely to test the 2009 high at 3500. Rising 13-week Twiggs Money Flow indicates strong (medium-term) buying pressure.

Shanghai Composite Index

I continue to question China's ability to sustain this performance, given their poor economic foundation.

Japan's Nikkei 225 Index breakout above its 2007 high of 18000 would signal an advance to 19000*. Rising 13-Week Twiggs Money Flow indicates strong buying pressure. Index gains are largely attributable to rising inflation and a weaker yen.

Nikkei 225 Index

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

India's Sensex found support at 27000. Recovery above 28000 would suggest another advance. Breakout above 29000 would confirm a target of 31000*.

Sensex

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

ASX 200 performance remains weak. Breach of the recent descending trendline suggests that the correction is over, but only breakout above 5550 would complete a double-bottom formation, suggesting a fresh advance. Rising troughs on 13-week Twiggs Money Flow indicate medium-term buying pressure. Reversal of TMF below zero, or breach of support at 5000/5150, is now less likely, but would warn of a down-trend.

ASX 200

* Target calculation: 5500 + ( 5500 - 5000 ) = 6000

Stille Nacht / Silent Night

Tomorrow is the 100th anniversary of a momentous event that took place on Christmas Eve, during the First World War. By December of 1914 the war had already drawn to a stalemate with huge loss of life on both sides and appalling conditions in the trenches. Many of the dead could not be retrieved and were abandoned in No-Man's land. The war that was supposed to be over by Christmas stretched interminably ahead.

Despite the conditions, German troops decorated the parapets of their trenches with small conifers, resembling Christmas trees. Temperatures fell below zero. On Christmas Eve soldiers of the XIX Corps of the German Army, from Saxony, lit candles and sang carols.

The Germans lit candles and in beautiful harmony sang "Silent night...Holy night." So moved by their cheer, the British soldiers responded with carols of their own. This goodwill inspired many soldiers on both sides to toss gifts of food over into their enemy trenches. The German side applauded the British singing then the Brits cheered and applauded the Germans. One miracle act of goodness led to another, then another.....

On some parts of the front, informal truces were negotiated by officers despite warnings from British High Command that the enemy may be planning an attack.

WWI Christmas Truce: German and British Officers

Captain R J Armes of the 1st North Staffordshire Regiment arranged, with a German officer, for a cease fire in his sector that was to last until midnight on Christmas Day. Some of the more adventurous on both sides left their trenches and exchanged small gifts, swapping chocolate for sauerkraut and sausages.

"What a sight; little groups of Germans and British extending along the length of our front. Out of the darkness we could hear the laughter and see lighted matches. Where they couldn't talk the language, they made themselves understood by signs, and everyone seemed to be getting on nicely. Here we were laughing and chatting to men whom only a few hours before we were trying to kill " ~ Corporal John Ferguson of the Seaforth Highlanders.
WWI Christmas Truce: German and British Troops

Christmas Day started with unarmed German and British soldiers collecting their dead from No-Mans Land.

WWI No-Man's Land: Collecting the Dead

Fraternisation continued throughout the day and regimental records of the 133rd Saxon Regiment report a football match which they won 3-2.

Roughly 100,000 British and German troops were involved in the unofficial cessations of hostilities. Similar exchanges of gifts were reported between German and French troops and an unofficial ceasefire was also recorded between Austrian and Russian troops on the Eastern front.

Similar overtures in later years were less successful after Allied Command forbade fraternisation with the enemy and ordered artillery barrages throughout the day to discourage communication. Attempts to negotiate local truces to collect the dead between the lines were severely punished.

Company commander, Sir Iain Colquhoun of the Scots Guards, was court-martialled for defying standing orders to the contrary. While found guilty and reprimanded, the punishment was later annulled by General Haig and Colquhoun remained in his position.

The Christmas truce of 1914 was a triumph of the human spirit over adversity and is a symbol of man's humanity towards his fellow man. When we recognize that the enemy is not some faceless devil, as some leaders would have us believe, but much like us — with mothers, fathers, brothers, sisters, husbands, wives, sons and daughters — we will find it easier to resolve our differences without waging war.

Scène du film "Joyeux Noël" (Version Française)

Wishing you peace and goodwill over the Christmas season and prosperity in the year ahead.



The most dangerous man to any government is the man who is able to think things out for himself, without regard to the prevailing superstitions and taboos.

~ H. L. Mencken

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