Asia: China & Japan bearish, India hesitant
By Colin Twiggs
September 4th, 2012 1:30 a.m. ET (3:30 p.m. AET)
These extracts from my trading diary are for educational purposes and should not be interpreted as investment or trading advice. Full terms and conditions can be found at Terms of Use.
China's official manufacturing PMI fell to a nine-month low in August, below 50 at 49.2; steel prices are at their lowest level since 2009 and rail cargo volumes have experienced their sharpest fall since 2008. In the circumstances, stocks have held up surprisingly well, with a gradual rather than vertical descent. The Shenzhen Composite index is headed for a test of support at 800 and declining 63-day Twiggs Momentum below zero indicates a primary down-trend, but the index is still a long way above its 2008 low of 450.
* Target calculation: 800 - ( 1000 - 800 ) = 600
The Shanghai Composite is closer to its 2008 low of 1660. 13-Week Twiggs Money Flow below zero indicates selling pressure and follow-through below 2100 offers a target of 1800*.
* Target calculation: 2150 - ( 2500 - 2150 ) = 1800
Hong Kong's Hang Seng Index is drifting sideways, approaching the apex of its large triangle, but failure of 63-day Twiggs Momentum to cross above zero warns of downside risk. Breach of primary support at 18000 would signal a decline to 16000*.
* Target calculation: 18 - ( 20 - 18 ) = 16
India's Sensex retreated below its new support level at 17500, warning of a false break. Penetration of the rising trendline would suggest a bull trap, while respect would test 18500*. Reversal of 13-week Twiggs Money Flow below zero would indicate selling pressure.
* Target calculation: 17.5 + ( 17.5 - 16.5 ) = 18.5
The NSE Nifty Index also retreated below its new support level and 63-day Twiggs Momentum is above zero. Respect of the rising trendline would indicate a test of 5600, while penetration would warn of a bull trap.
* Target calculation: 5350 + ( 5350 - 5050 ) = 5650
Singapore's Straits Times Index is retracing to test support at 3000. The up-trend appears weak and failure of support would signal a test of the lower trend channel. It is unclear whether 63-day Twiggs Momentum will oscillate around zero, indicating a ranging market, or above zero, indicating a healthy up-trend. The next trough should clarify this: respect of zero indicating a primary up-trend.
Japan's Nikkei 225 index retreated below 9000, indicating a false breakout. Matching peaks below zero on 63-day Twiggs Momentum and 13-Week Twiggs Money Flow warn of a strong down-trend. Failure of primary support at 8200 would confirm.
* Target calculation: 8000 - ( 9000 - 8000 ) = 7000
South Korea's Seoul Composite index retraced to test support after breakout above 1900. Declining peaks on 13-Week Twiggs Money Flow depict rising selling pressure. Failure of support at 1900 would suggest another test of primary support at 1750.
I've missed more than 9000 shots in my career. I've lost almost 300 games. 26 times, I've been trusted to take the game winning shot and missed. I've failed over and over and over again in my life. And that is why I succeed.
~ Michael Jordan