Market strength
By Colin Twiggs
March 5th, 2015 6:30 p.m. AEDT (2:30 a.m. ET)
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.
Performance Update
The ASX200 Prime Momentum strategy returned +10.75%* for the 12 months ended 28 February 2015, compared to +14.53% for the ASX200 Accumulation Index. Performance of +24.19% p.a.* over 24 months, however, still comfortably exceeds the index (+12.58%). ASX stocks underperformed in 2014, but macroeconomic and volatility filters continue to indicate low to moderate risk and we maintain full exposure to equities in expectation of a recovery.
The S&P 500 Prime Momentum strategy returned +22.39%* over the 12 months ended 28 February 2015, compared to +15.5% for the S&P 500 Total Return Index. Performance since inception (November 2013) is +26.78% p.a.*, compared to 16.9% for the index.
Divergence between the ASX 200 and S&P 500 may continue and investors should consider splitting their investment between the two markets.
* Results are unaudited and subject to revision.
Market Insight
Apart from China and India, major markets continue to look bullish.
The S&P 500 is retracing to test support at 2080/2100, but respect is likely and would confirm an advance to 2200*. Oscillation of 13-week Twiggs Money Flow high above zero indicates strong long-term buying pressure.
* Target calculation: 2100 + ( 2100 - 2000 ) = 2200
A quarterly chart shows the Nasdaq 100 headed for its Dotcom high of 4800. Expect major resistance at this level. Correction back to 4000 and the primary trendline may provide a long-term buying opportunity.
CBOE Volatility Index at 14 indicates low risk typical of a bull market.
Europe
Germany's DAX found resistance at 11500. Expect retracement to test new support at 11000, but respect is likely and would confirm the target of 12000*. Rising 13-week Twiggs Money Flow indicates healthy buying pressure.
* Target calculation: 11000 + ( 11000 - 10000 ) = 12000
The Footsie is consolidating below its December 1999 high of 6950. 13-Week Twiggs Money Flow oscillating high above zero indicates long-term buying pressure. Breakout would signal a fresh primary advance, with a long-term target of 8000*. Follow-through above 7000 would confirm.
* Target calculation: 7000 + ( 7000 - 6000 ) = 8000
Asia
China's Shanghai Composite Index faces resistance at 3400. Declining 13-week Twiggs Money Flow warns of medium-term selling pressure. Reversal below 3050 would warn of a decline to test the primary trendline at 2700. Breakout above 3400 is less likely, but would signal another primary advance.
Japan's Nikkei 225 Index is likely to retrace to test new support at its 2007 high of 18000/18300. Rising 13-week Twiggs Money Flow indicates buying pressure. Respect is likely and would signal an advance to 20000*.
* Target calculation: 18000 + ( 18000 - 16000 ) = 20000
India's Sensex encountered stiff resistance at 30000. Declining 13-week Twiggs Money Flow indicates medium-term selling pressure. Reversal below 28000 would warn of a correction to 26500/27000. Respect of the primary trendline would establish a solid base for further advances, otherwise we may see an extended consolidation below 30000.
Australia
The ASX 200 encountered resistance at 6000, retracing to test support at 5850. 13-Week Twiggs Money Flow continues to reflect healthy buying pressure. Respect of support would indicate continuation of the advance, towards 6150*. Follow-through above 6000 would confirm. Breach of 5850 is less likely, but would warn of a correction back to the rising trendline, around 5650.
* Target calculation: 5650 + ( 5650 - 5150 ) = 6150
The real Russia today. Former deputy prime minister lies dead in front of the Kremlin, shot in the chest. pic.twitter.com/sbxa3WUzXa
— Michael Weiss (@michaeldweiss) February 27, 2015Boris Nemtsov was a tireless fighter and one of the most skilled critics of the Putin government, a role that was by no means his only possible destiny. A successful mayor in Nizhny-Novgorod and a capable cabinet member and parliamentarian, he could have led a comfortable life in government as a token liberal voice of reform. But Boris was unqualified to work for the Putin regime. He had principles, you see, and could not bear to watch our country slide back into the totalitarian depths.
~ Garry Kasparov
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