Dow surges on strong jobs data

By Colin Twiggs
August 5, 2016 10:30 p.m. EDT (12:30 p.m. AEST)

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Global

Dow Jones Global Index retraced to test support between 316 and 320. Respect is likely and would signal an advance to 340*. Momentum troughs above zero indicate trend strength.

* Target calculation: 320 + ( 320 - 300 ) = 340

North America

Strong jobs numbers helped the S&P 500 break out of its narrow flag/rectangle, signaling another advance. The false break below 2160 strengthens the signal. Rising 21-day Money Flow highlights buying pressure.

* Target calculation: 2100 + ( 2100 - 1800 ) = 2400

The Dow Jones Industrial Average similarly broke out of its recent flag, signaling continuation of the primary up-trend. The immediate target is 19000*.

* Target medium-term: 18500 + ( 18500 - 18000 ) = 19000; Long-term: 18000 + ( 18000 - 16000 ) = 20000

VIX declined below 12, indicating low market risk.

Canada's TSX 60 has run into further resistance at 850. Expect another retracement to test the rising trendline. Rising Momentum troughs above zero indicate trend strength.

Europe

Germany's DAX hesitated at resistance at 10500, the long tail indicating uncertainty. Further consolidation between 10000 and 10500 would be a bullish sign, while breakout above 10500 would confirm a primary up-trend.

* Target calculation: 10500 + ( 10500 - 9500 ) = 11500

The Footsie is already in a primary up-trend. We could still see retracement testing the new support level at 6500 but respect is likely and would confirm the primary trend. Expect an advance to 7100*.

* Target calculation: 6500 + ( 6500 - 5900 ) = 7100

Asia

The Shanghai Composite Index met stubborn resistance at 3100. Reversal below 3000 warns of another test of primary support.

Japan's Nikkei 225 Index is retracing and may resolve into another test of primary support at 15000. Breakout above 17500 is unlikely but would complete a double-bottom reversal.

* Target calculation: 15000 - ( 18000 - 15000 ) = 12000

India's Sensex is testing resistance at 28000. Retracement to establish support at 27000 is likely. Penetration of the rising trendline, however, would warn of a correction.

Australia

The ASX 200 is retracing to test the new support level at 5400. Respect would signal a test of the upper trend channel at 5700*. A Momentum trough above zero indicates a healthy up-trend.

* Target calculation: 5400 + ( 5400 - 5100 ) = 5700

The major banks continue to weigh on the index, with the ASX 300 (not "ASX 30") Banks Index respecting resistance at 8000. Reversal below 7800 suggests another test of primary support at 7200.

Australian Banks are still low on capital compared to their US counterparts and housing is likely to come under pressure from an over-supply of high-density units.

The trouble with the rat race is that even if you win, you're still a rat.

~ Lily Tomlin