By Colin Twiggs
June 9, 2016 4:30 p.m. AEST (2:30 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 reflect cautious optimism. Prices are recovering but low volumes suggest a lack of enthusiasm.
Breakout of the S&P 500 above 2100 signals a fresh advance. Follow-through above 2130 would confirm. Expect some resistance at 2130, but narrow consolidation below this level would be a bullish sign. Retreat below 2100 is unlikely but would warn of another correction. Rising 13-week Money Flow, but below the previous peak, indicates weak medium-term buying pressure.
* Target calculation: 2100 + ( 2100 - 1800 ) = 2400
Dow Jones Industrial Average is testing resistance at 18000. Breakout is likely, following the path of the S&P 500, and follow-through above 18300 would confirm another advance. 13-Week Money Flow is slowly rising, suggesting weak medium-term buying pressure.
A CBOE Volatility Index (VIX) at 14 continues to indicate low market risk. Long-term measures have also eased.
Canada's TSX 60 is likely to encounter resistance around 850 (820 + 820 - 790). Retracement that respects support at 820 would indicate a healthy up-trend. Rising 13-week Twiggs Momentum, above zero, signals a primary up-trend.
Germany's DAX is headed for a test of resistance at 10500. 13-Week Money Flow troughs above zero indicate buying pressure. Penetration of 10500 and the descending trendline would suggest that a bottom is forming. Reversal below the trend channel would indicate another correction, but a higher trough would be likely to confirm a primary up-trend.
The Footsie is headed for a test of 6400/6500. Completion of a higher trough would confirm a primary up-trend. Again, Money Flow troughs above zero signal buying pressure.
* Target calculation: 6400 + ( 6400 - 6000 ) = 6800
The Shanghai Composite Index formed two 13-week Money Flow troughs above zero, signaling strong support at 2700. But the index is likely to encounter stubborn resistance at 3100, resulting in a wide bottom ranging between 2700 and 3100.
* Target calculation: 3000 - ( 3600 - 3000 ) = 2400
Japan's Nikkei 225 Index is rising in a broad trend channel. Money Flow remains above zero but the broad channel suggests weakness. Expect stubborn resistance at 18000. Breach of the channel would warn of another decline.
* Target calculation: 15000 - ( 18000 - 15000 ) = 12000
India's Sensex is likely to encounter resistance at 27000 after a bullish breakout above 26000. Bearish divergence on 13-week Money Flow warns of a correction despite rising troughs. A correction that respects support at 25000 (or higher), however, would confirm the primary up-trend.
The ASX 200 is testing resistance at 5400. Narrow consolidation would be a bullish sign but bearish divergence on 13-week Money Flow warns of medium-term selling pressure. We are entering the seasonal sell-off before financial year end. A correction that respects the lower trend channel at 5200 is likely in the current bullish climate and would suggest another advance.
The Banks Index penetrated its descending trendline at 7800, suggesting that a bottom is forming and support at 7200 is likely to hold. Recovery above 8200 would complete a double bottom reversal but reversal below 7800 warns that there may be another correction first.
The Metals & Mining Index is testing its long-term descending trendline on a monthly chart. Bullish divergence on 13-week Money Flow suggests long-term buying pressure. While I am bearish on China and iron ore prices, it would be difficult to argue against a breakout above 2600 or a Money Flow trough above zero.
Democracy never lasts long. It soon wastes, exhausts, and murders itself. There is never a democracy that did not commit suicide.
~ John Adams, 2nd US President (1797 - 1801)
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.