Stocks find support
By Colin Twiggs
May 23st, 2015 11:00 a.m. AET (09:00 p.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.
Revised Performance
Some trades were incorrectly placed in our S&P 500 Momentum model portfolio and we have revised the unaudited performance figures published at the end of April 2015. The correct figures are:
No changes to your portfolio are required. ASX performance is unaffected.
Market Insight
Breakouts on the S&P 500 and in China and Japan, together with buying support across Europe and Asia, indicate a broad resurgence.
North American Stocks
The S&P 500 is retracing to test the new support level at 2120 after its recent breakout. Respect of support would confirm a further advance to 2200*. 21-Day Twiggs Money Flow is oscillating in a narrow range above the zero line, suggesting mild buying pressure. Upward breakout would signal another advance, while reversal below zero would warn of a correction.
* Target calculation: 2120 + ( 2120 - 2040 ) = 2200
CBOE Volatility Index (VIX) at 12 continues to indicate low risk typical of a bull market.
St Louis Fed Financial Stress index below -1.0 likewise displays low levels of stress in financial markets.
Dow Jones Industrial Average continues to test resistance at 18300. Buying pressure remains positive and breakout would offer a target of 19000*, confirming the S&P 500 signal. Reversal below 18000 is unlikely, but would warn of a correction to test the primary trendline and support at 17000.
* Target calculation: 18300 + ( 18300 - 17600 ) = 19000
Canada's TSX 60 is testing resitance at 890. Breakout would signal the end of the correction and another test of long-term resistance at 900. 13-Week Twiggs Momentum holding above zero continues to indicate a primary up-trend. Breakout above 900 would offer a long-term target of 1000*.
* Target calculation: 900 + ( 900 - 800 ) = 1000
Europe
Germany's DAX broke its descending trendline, indicating another attempt at 12500. A 13-week Twiggs Money Flow trough above zero would confirm long-term buying pressure. Reversal below 11000 is unlikely.
Shallow retracement on the Footsie suggests buying pressure. Recovery of 13-week Twiggs Money Flow above its descending trendline strengthens the signal. Breakout above 7100 would confirm a primary advance. The long-term target is 8000*.
* Target calculation: 7000 + ( 7000 - 6000 ) = 8000
Asia
The Shanghai Composite broke resistance at 4500, indicating continuation of its strong advance. 13-Week Twiggs Money Flow troughs high above zero reflect long-term buying pressure.
* Target calculation: 3500 + ( 3500 - 2500 ) = 4500
Economic data, however, continues to warn of a slow-down.
Barclays says China slide "undeniable", here showing M2 at multi-year lows pic.twitter.com/3i8MFxGA5k
— David Schawel (@DavidSchawel) May 22, 2015Japan's Nikkei 225 Index broke resistance at 20000, suggesting an advance to 22000*. Recovery of 13-week Twiggs Money Flow above the descending trendline would strengthen the signal.
* Target calculation: 20000 + ( 20000 - 18000 ) = 22000
India's Sensex respected support at 26500 and is now testing resistance at 28000. Breakout above 28000 and the descending trendline would signal another attempt at 30000. Recovery of 13-week Twiggs Money Flow above zero would strengthen the signal. Another (TMF) peak below zero is unlikely, but would warn of a primary down-trend.
Australia
The ASX 200 found support between 5650 and 5550, highlighted by the latest long-tailed candle. Recovery above 5750 would signal the correction is over and another test of 6000 is likely. Mild decline on 13-week Twiggs Money Flow indicates medium-term selling pressure — not a reversal. Breach of 5550 is unlikely, but would warn of a test of primary support at 5120.
* Target calculation: 6000 + ( 6000 - 5750 ) = 6250
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