S&P 500 breakout / Australia: Lean years ahead

By Colin Twiggs
May 26, 2017 7:00 p.m. EDT (9:00 a.m. AEST)

Please read the Disclaimer. I am not a licensed investment adviser.

The S&P 500 broke resistance at 2400, signaling a fresh advance. This time the target is 2500*. 13-Week Twiggs Money Flow is recovering from its decline over the last two months, signaling medium-term buying pressure. Retracement that respects the new support level at 2400 would further strengthen the bull signal.

S&P 500

* Target calculation: 2400 + ( 2400 � 2300 ) = 2500

Bellwether transport stock Fedex [FDX] has consolidated in a broad rectangle over the last six months, with bearish divergence on 13-week Twiggs Money Flow indicating strong selling pressure. Now Twiggs Money Flow recovering above zero suggests another test of resistance at 200. Breakout above 200 would signal another advance for Fedex, a strong bull signal for the broader economy. Breach of support at 184/185 is less likely but would signal a primary down-trend.


Australia: Lean years ahead

Growth in total monthly hours worked has slowed to 1.3% for the 12 months to April 2017. In fact, growth has been pretty lean over the last 5 years, except for the period January 2015 to February 2016.

ABS: Hours Worked & GDP growth

High commodity prices in 2004 to 2008 and late 2010 to 2011 coincide with periods of strong employment and GDP growth, as indicated on the chart above.

DJ-UBS Commodity Index

The current down-trend in commodity prices, depicted on the DJ-UBS Commodity Index above, and low growth in hours worked both point to anemic employment and GDP growth ahead.

At the present moment in world history nearly every nation must choose between alternative ways of life. The choice is too often not a free one.

One way of life is based upon the will of the majority, and is distinguished by free institutions, representative government, free elections, guarantees of individual liberty, freedom of speech and religion, and freedom from political oppression.

The second way of life is based upon the will of a minority forcibly imposed upon the majority. It relies upon terror and oppression, a controlled press and radio; fixed elections, and the suppression of personal freedoms.

I believe that it must be the policy of the United States to support free peoples who are resisting attempted subjugation by armed minorities or by outside pressures. I believe that we must assist free peoples to work out their own destinies in their own way.

~ President Harry S. Truman, March 1947 speech to a joint session of the US Congress outlining what became known as The Truman Doctrine