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"Grexit" threat unsettles markets

By Colin Twiggs
June 18th, 2015 3:30 p.m. AET (1:30 a.m. EDT)

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.


Markets are unsettled by the threat of a Greek exit from the EU, but impact of a "Grexit" may have been exaggerated in popular media.

North America

The S&P 500 rallied off medium-term support at 2075, encountering short-term resistance at 2100. Recovery of 21-day Twiggs Money Flow above zero indicates buying pressure. Penetration of the descending trendline would suggest that the correction is over and a fresh advance likely. Recovery above 2120 would confirm, offering a target of 2200*. Further confirmation can be obtained from other major indices, like the Dow Jones Industrial Average, and the Transport sector.

S&P 500 Index

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

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

S&P 500 VIX

The Nasdaq 100 is close to its all-time (1999/2000) high of 4800. Recovery above 4550 would offer a target of 4800*. 13-week Twiggs Money Flow troughs above zero signal long-term buying pressure. Reversal below 4300 and the rising trendline is unlikely.

Nasdaq 100

* Target calculation: 4550 + ( 4550 - 4300 ) = 4800

Canada's TSX 60 is testing primary support at 855. Reversal of 13-week Twiggs Momentum below zero warns of a primary down-trend, while recovery above zero (a false signal) would offer a buy opportunity. Especially if accompanied by a breakout above 870 and the descending trendline. Breakout above 900 would offer a long-term target of 1000*, but breach of primary support is as likely and follow-through below 850 would offer a target of 800.

TSX 60 Index

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

Europe

Germany's DAX continues to test support at 11000 on fears of a Greek exit from the EU. Recovery above the descending trendline would indicate the correction is over (and a buy opportunity), while follow-through below 10800 would offer a target of 10000*. Declining 13-week Twiggs Money Flow warns of selling pressure; penetration of the descending trendline, however, would suggest that buyers are back in control.

DAX

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

The Footsie broke support at 6700/6750, warning of a decline to 6300*. Reversal of 13-week Twiggs Momentum below zero strengthens the signal. Recovery above 6750 is now unlikely, but would indicate a false signal and buy opportunity.

FTSE 100

* Target calculation: 6700 - ( 7100 - 6700 ) = 6300

Asia

The Shanghai Composite displays a bearish divergence on 13-week Twiggs Money Flow, warning of medium-term selling pressure. The situation appears unstable and the accelerating up-trend is likely to lead to a blow-off.

Shanghai Composite Index

Japan's Nikkei 225 also shows a bearish divergence on 13-week Twiggs Money Flow, but respect of support at 20000 and follow-through above 20500 would suggest an advance to 22000*.

Nikkei 225 Index

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

India's Sensex recovered above 27000 shortly after today's opening, indicating a successful test of primary support at 26500. Penetration of the descending trendline would indicate another rally to test 30000. Recovery of 13-week Twiggs Money Flow above zero would signal buying pressure. Breach of primary support is now unlikely, but would warn of a primary down-trend with support at 23000*.

SENSEX

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

Australia

The Banking sector [XBAK] jumped on excitement over Warren Buffett's first investment on the ASX, but is likely to encounter resistance at 9200 followed by another test of 8400. Twiggs Momentum (13-week) below zero warns of a primary down-trend.

ASX 300 Banks

The ASX 200 is testing support at 5450. Declining 13-week Twiggs Money Flow warns of medium-term selling pressure. Breach of 5450 would test the primary level at 5120/5150. Recovery above 5650 and the descending trendline would indicate the correction is over and present a buy opportunity.

ASX 200

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



Recent studies have shown that when "generalized trust" in society is high, economic performance is improved and life satisfaction is higher..... It is no coincidence that the Scandinavian countries rank among the world's happiest and most prosperous year after year.

~ Jeffrey Sachs: The Impunity Trap

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