S&P500 holds strong while Canada and Europe weaken

By Colin Twiggs
June 25th, 2013 4:30 am EDT (6:30 pm AET)

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10-Year Treasury yields broke resistance at 2.50% as bond-holders offload their positions. Expect weak retracement to test the new support level at 2.00%, but recovery above 2.50% is likely and would signal a long-term advance to test resistance at 4.00%. Breakout above 4.00% would end the 31-year secular bear-trend. Rising yields reflect market expectations that the economy will recover, enabling the Fed to curtail further quantitative easing.

10-Year Treasury yields

The S&P 500 broke support at 1600 and is undergoing a correction to test the long-term rising trendline at 1500. Twiggs Money Flow reflects moderate selling and the primary up-trend looks secure.

S&P 500

My concern is: can the US withstand negative sentiment from global markets? The rising VIX is not yet cause for alarm, with the market shrugging off the last foray above 20, but a spike above 25 would warn of elevated risk.

VIX Index

The TSX Composite broke support at 11900/12000 to signal a primary down-trend. Falling 13-week Twiggs Money Flow continues to warn of selling pressure. Expect a test of the 2012 low at 11250.

TSX Composite

The FTSE 100 is testing the rising trendline and support at 6000. Bearish divergence on 13-week Twiggs Money Flow warns of a reversal. Failure of support at 6000 would strengthen the signal.

FTSE 100 Index

Germany's DAX is headed for a test of the long-term trendline and primary support at 7400/7500. Bearish divergence on 13-week Twiggs Money Flow continues to warn of selling pressure. Breach of 7400 would signal reversal to a primary down-trend.

DAX Index

I should therefore prefer to restrict my guidelines to the following:
Don't believe that military interventions, no matter how morally justified, can succeed without clear military goals.
Don't fall into the trap of imagining that the West can remake societies.
Don't take public opinion for granted — but don't either underrate the degree to which good people will endure sacrifices for a worthwhile cause.
Don't allow tyrants and aggressors to get away with it
And when you fight — fight to win.

~ Margaret Thatcher, Statecraft: Strategies for a Changing World