Home Site Map About Us Privacy Policy Advertise (pdf) Contact Us
 
 
sitesearch
 

Nasdaq bearish divergence

By Colin Twiggs
December 3rd, 2015 7:30 p.m. AEDT (3:30 a.m. EST)

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.

Research & Investment: Performance at 30th November 2015

The S&P 500 Prime Momentum strategy returned +7.12%* for the 12 months ended 30th November 2015, compared to +2.75% for the S&P 500 Total Return Index.

Macroeconomic and volatility filters continue to indicate elevated market risk and we maintain a strong cash position (47.4% of portfolio value), with reduced exposure to equities.

The ASX 200 Prime Momentum strategy is trailing the benchmark index. Performance for the 12 months ended 30th November 2015 is -4.07%*, compared to +1.90% for ASX200 Accumulation Index. Concentrated portfolios are more volatile, but they also tend to perform better in the long-term — which is why we recommend a minimum investment horizon of 5 years.

Macroeconomic and volatility filters again indicate elevated market risk and we maintain cash holdings of 45.9%, with reduced exposure to equities.

* Results are unaudited and subject to revision.

North America

The S&P 500 found resistance at 2100, indicating a continued lack of enthusiasm. Declining 13-week Twiggs Money Flow flags medium-term selling pressure. Reversal below 2000 would warn of another test of primary support at 1870. Upward breakout now appears less likely, but would signal a fresh advance to 2400*.

S&P 500 Index

* Target calculation: 2130 + ( 2130 - 1870 ) = 2390

Declining CBOE Volatility Index (VIX) below 20 indicates market risk is returning to normal. Some macro indicators remain elevated, however, which is why we maintain reduced exposure.

S&P 500 VIX

The Nasdaq 100 is testing the previous (2000) high of 4800. Breakout would be a bullish sign for the broader market but bearish divergence on 13-week Twiggs Money Flow continues to warn of stubborn resistance.

Nasdaq 100

Canada's TSX 60 is struggling to break resistance at 800. 13-Week Twiggs Momentum peaks below zero continue to warn of a strong primary down-trend. Recovery above 825 is unlikely, while failure of support at 765 would confirm another decline.

TSX 60 Index

* Target calculation: 775 - ( 825 - 775 ) = 725

Europe

Germany's DAX is retracing to test its new support level at 11000. Respect is likely and would confirm another test of 12400. Rising 13-week Twiggs Money Flow indicates medium-term buying pressure. Reversal below 11000 is unlikely, but would warn of another test of 10000.

DAX

The Footsie is strengthening, with rising 13-week Twiggs Momentum. Breakout above 6500 would indicate another test of 7000/7100. Reversal below 6000 is unlikely but would signal a primary down-trend.

FTSE 100

Asia

Dow Jones Shanghai Index

The Shanghai Composite Index recovered above support at 3500. I remain wary of China because of the high Debt to GDP ratio, the need to wean itself off investment stimulus, and impending rate rises in the US which could encourage further capital outflows.

Japan's Nikkei 225 is testing short-term resistance at 20000. This is unlikely to impede an advance to 21000. Rising 13-week Twiggs Money Flow indicates buying pressure.

Nikkei 225 Index

* Target calculation: 19000 + ( 19000 - 17000 ) = 21000

India's Sensex is retracing to test the former band of primary support at 26000/26500. Respect would confirm a primary down-trend. Reversal of 13-week Twiggs Money Flow below zero would strengthen the signal. Follow-through below 25000 would offer a target of 22500*. Recovery above the upper trend channel at 27000 is unlikely, but would suggest a rally to 30000.

SENSEX

* Target calculation: 25000 - ( 27500 - 25000 ) = 22500

Australia

The ASX 200 encountered short-term resistance at 5300. Declining 13-week Twiggs Money Flow indicates (medium-term) selling pressure; reversal below zero would strengthen the signal. Breach of 5150 would warn of another test of primary support at 5000. Failure of support would signal a primary down-trend.

ASX 200

* Target calculation: 5000 - ( 6000 - 5000 ) = 4000



Be great in act, as you have been in thought;
Let not the world see fear and sad distrust
Govern the motion of a kingly eye:
Be stirring as the time; be fire with fire;
Threaten the threatener and outface the brow
Of bragging horror: so shall inferior eyes,
That borrow their behaviors from the great,
Grow great by your example and put on
The dauntless spirit of resolution.
....What, shall they seek the lion in his den,
And fright him there? and make him tremble there?
O, let it not be said: forage, and run
To meet displeasure farther from the doors,
And grapple with him ere he comes so nigh.

~ William Shakespeare: King John, Act 5, Scene 1

Disclaimer

Porter Private Clients Pty Ltd, trading as Research & Investment ("R&I"), is a Corporate Authorized Representative (AR Number 384 397) of Andika Pty Ltd which holds an Australian Financial Services Licence (AFSL 297069).

The information on this web site and in the newsletters is general in nature and does not consider your personal circumstances. Please contact your professional financial adviser for advice tailored to your needs.

R&I has made every effort to ensure the reliability of the views and recommendations expressed in the reports published on its websites and newsletters. Our research is based upon information known to us or which was obtained from sources which we believe to be reliable and accurate.

No guarantee as to the capital value of investments, nor future returns are made by R&I. Neither R&I nor its employees make any representation, warranty or guarantee that the information provided is complete, accurate, current or reliable.

You are under no obligation to use these services and should always compare financial services/products to find one which best meets your personal objectives, financial situation or needs.

To the extent permitted by law, R&I and its employees, agents and authorised representatives exclude all liability for any loss or damage (including indirect, special or consequential loss or damage) arising from the use of, or reliance on, any information. If the law prohibits the exclusion of such liability, such liability shall be limited, to the extent permitted by law, to the resupply of the said information or the cost of the said resupply.

Important Warning About Simulated Results

Research & Investment (R&I) specialise in developing, testing and researching investment strategies and systems. Within the R&I web site and newsletters, you will find information about investment strategies and their performance. It is important that you understand that results from R&I research are simulated and not actual results.

No representation is made that any investor will or is likely to achieve profits or losses similar to those shown.

Simulated performance results are generally prepared with the benefit of hindsight and do not involve financial risk. No modeling can completely account for the impact of financial risk in actual investment. Account size, brokerage and slippage may also diverge from simulated results. Numerous other factors related to the markets in general or to the implementation of any specific investment system cannot be fully accounted for in the preparation of simulated performance results and may adversely affect actual investment results.

To the extent permitted by law, R&I and its employees, agents and authorised representatives exclude all liability for any loss or damage (including indirect, special or consequential loss or damage) arising from the use of, or reliance on, any information offered by R&I whether or not caused by any negligent act or omission.



 
Top of Page