Transports deflate

By Colin Twiggs
July 24th, 2015 10:00 a.m. AET (8:00 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.

Bellwether transport stock Fedex is testing primary support at $164 on the weekly chart. Bearish divergence on 13-week Twiggs Money Flow warns of a reversal. Breach of $164 would signal a primary down-trend — a warning that economic activity is contracting.

Nasdaq 100

The LoDI National Index from University of Louisville and Oklahoma State University also declined for the last two months but remains above 50, indicating a healthy level of economic activity.

LoDI National Index
The LoDI Index uses linear regression analysis to combine cargo volume data from rail, barge, air, and truck transit, along with various economic factors. The resulting indicator is designed to predict upcoming changes in the level of logistics and distribution activity in the US and is represented by a value between 1 and 100. An index at or above 50 represents a healthy level of activity in the industry.

Breach of primary support by Fedex and reversal of the LoDI below 50 would warn of a contraction in economic activity but we are not there yet.

North America

The reporting season got off to a shaky start with Apple disappointing but the ship seems to have steadied. Of the 62 stocks in the S&P 500 that have reported, 43 beat, 5 met and 14 (or 22%) missed their estimates.

The S&P 500 met resistance at 2130 and 21-day Twiggs Money Flow peaks close to zero warn of medium-term selling pressure. Another test of support at 2040/2050 is likely. Recovery above 2130 is unlikely at present, but would offer a target of 2200*.

S&P 500 Index

* Target calculation: 2130 + ( 2130 - 2050 ) = 2210

The CBOE Volatility Index (VIX) remains at low levels typical of a bull market.

S&P 500 VIX

Canada's TSX 60 respected the upper trend channel, warning of continuation of the correction. Declining 13-week Twiggs Momentum below zero warns of a primary down-trend. Breach of support at 800 would confirm.

TSX 60 Index

* Target calculation: 900 + ( 900 - 850 ) = 950


The ASX 200 respected resistance at 5650/5700, warning of another test of support at 5400. Breach would test primary support at 5150/5200, while respect would indicate that the correction is over; follow-through above 5700 would confirm. 13-Week Twiggs Money Flow oscillating above zero indicates long-term buying pressure, suggesting that the primary up-trend is intact.

ASX 200

If investing is entertaining, if you're having fun, you're probably not making any money. Good investing is boring.

~ George Soros


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