China tests support while India strengthens

Shanghai’s Composite Index is testing support at 3100. Twiggs Money Flow recovered above zero but buying pressure remains weak. Breach of 3100 would warn of a primary down-trend.

* Target medium-term: May 2016 low of 2800

Hong Kong is faring better, with the Hang Seng index recovering above 24000 to signal a fresh advance.

India’s Sensex is testing major resistance at 30000. Rising Twiggs Money Flow indicates medium-term buying pressure. Breakout is likely and would offer a target of 32000*.

* Target medium-term: 29000 + ( 29000 – 26000 ) = 32000

China dips while India strengthens

Shanghai’s Composite Index is experiencing selling pressure, with Twiggs Money Flow crossing below zero for the first time since 2014. Reversal below 3100 would warn of a primary down-trend.

* Target medium-term: May 2016 low of 2800

India’s Sensex is consolidating in a bullish narrow band below major resistance at 30000. Rising Twiggs Money Flow indicates medium-term buying pressure. Breakout is likely and would offer a target of 32000*.

* Target medium-term: 29000 + ( 29000 – 26000 ) = 32000

Asia pulls back

China’s Shanghai Composite Index retreated below resistance at 3100. Prospects of a primary up-trend have dimmed and further consolidation between 2800 and 3100 is likely.

Japan’s Nikkei 225 Index is pretty directionless, retreating from resistance at 17000. Breach of 16000 would warn of another test of primary support at 15000. But a broad base between 15000 and 17000 is likely.

India’s BSE Sensex is the most promising, consolidating in a bullish narrow range around 28000. Upward breakout would signal a further advance towards the 2015 high of 30000. Bearish divergence on Twiggs Money Flow warns of long-term selling pressure, however, and downward breakout would warn of a correction to 25000 or 26000.

India: SENSEX resists

India’s Sensex displays strong resistance at its 2007 and 2010 high of 21000, with several failed attempts at a breakout. Reversal below 20500 would warn of another correction to the primary trendline. Declining 13-week Twiggs Money Flow indicates medium-term selling pressure typical of a consolidation.

* Target calculation: 21000 + ( 21000 – 20000 ) = 22000

China & India bouyant, Japan weakens

Japan’s Nikkei 225 broke short-term support at 14300, indicating a correction to 13000. Penetration of the rising trendline would warn that momentum is slowing, while breach of 13000 would signal a primary down-trend. Earlier bearish divergence on 13-week Twiggs Money Flow warned of a reversal; decline below recent lows at 15% would strengthen the signal.

China’s Shanghai Composite followed through today above the (secondary) declining trendline, suggesting a rally to test resistance — and the upper trend channel — at 2330. A 21-day Twiggs Money Flow trough above zero would indicate medium-term buying pressure. Reversal below 2150 is unlikely, but would indicate another test of primary support at 1950.

India’s Sensex is consolidating below resistance at 20400 — a bullish sign. Breakout above 20400 would signal another primary advance, but reversal below 19400 is as likely, and would warn of another test of 18000. A 13-week Twiggs Money Flow trough above zero would indicate long-term buying pressure.

* Target calculation: 18500 – ( 20500 – 18500 ) = 16500

Asian markets and ASX cautious

Japan’s Nikkei 225 Index broke its descending trendline, indicating the correction is over. Breakout above 15000 would signal a primary advance to 18000*. Recovery of 13-week Twiggs Money Flow above 30% would support this.  Reversal below 13000 is now unlikely.

China’s Shanghai Composite breached its descending trendline at 2200, indicating the down-trend is over. A long wick (or shadow) on last week’s candle, however, suggests resistance — and reversal below 2150 and the rising trendline would warn of a bull trap. But rising 13-week Twiggs Money Flow continues to signal medium-term buying pressure. Follow-through above 2350 is likely, and would indicate a test of 2450.

India’s Sensex also displays a long wick on last week’s candle. Expect strong resistance at 20500. Respect would indicate another test of primary support at 18000. Rising 13-week Twiggs Money Flow indicates medium-term buying pressure, but long-term direction is unclear.

The ASX 200 is cautiously testing long-term resistance at 5250. Europe is bullish and Asian markets are rising, but the Dow and S&P 500 remain mildly bearish. Respect of resistance at 5250, indicated by reversal below 5150 and the rising trendline, would present another bearish divergence on 13-week Twiggs Money Flow, indicating long-term selling pressure. Breakout above 5250, however, would signal another primary advance, with a long-term target of 5750*.

* Target calculation: 5250 + ( 5250 – 4750 ) = 5750

Asian markets lift the ASX 200

Dow Jones Japan Index jumped today on Tokyo’s success in its bid for the 2020 Olympics. Follow-through above the descending trendline indicates the correction is over and a test of 81.50 likely. Upward breakout would signal continuation of the primary up-trend. Reversal below 73.50 is unlikely, but would warn of a test of primary support at 69.00.

China’s Shanghai Composite breached resistance at 2100, indicating a test of the descending trendline at 2200. Rising 13-week Twiggs Money Flow suggests medium-term buying pressure. The primary trend remains down, however, and reversal below the rising trendline would warn of another test of primary support at 1950. In the longer-term, breakout above the descending trendline is unlikely, but would suggest that the down-trend has ended.

India’s Sensex rallied sharply after finding support at 18000/18500. Follow-through above 19500 would confirm another test of resistance at 20500.  Rising 13-week Twiggs Money Flow indicates medium-term buying pressure. Reversal below 18500 is unlikely, but would signal a primary down-trend.

Rising Asian markets, especially China, are lifting the ASX 200, but weakness on the Dow or S&P 500 could reverse this. Recovery above 5150 and respect of the rising trendline suggest another test of resistance at 5250. Rising 21-day Twiggs Money Flow indicates short/medium-term buying pressure. Breakout above 5250 would signal another primary advance. Respect of resistance remains as likely, however, and reversal below 5000 would warn of another test of primary support at 4650.

* Target calculation: 5250 + ( 5250 – 4650 ) = 5850

Global markets bearish but ASX, India find support

US markets are closed for Labor Day. The S&P 500 ended last week testing its rising trendline and support at 1630. Breach would reinforce the bearish divergence on 21-day Twiggs Money Flow, indicating a test of primary support at 1560. Recovery above the descending trendline is unlikely at present, but would warn the correction is ending. In the long-term, failure of primary support would offer a target of 1400*.

* Target calculation: 1550 – ( 1700 – 1550 ) = 1400

VIX below 20 suggests a bull market.

The FTSE 100 closed above initial resistance at 6500. Follow-through would suggest the correction is over and another attempt at 6750 likely. Strong bearish divergence on 13-week Twiggs Money Flow, however, warns of selling pressure and breakout above 6750 is unlikely. Reversal below 6400 would warn of a test of primary support at 6000.

Germany’s DAX encountered stubborn resistance at 8500. Reversal below 8000 would test primary support at 7600, while breakout above 8500 would offer a target of 9000*.

* Target calculation: 8400 + ( 8400 – 7800 ) = 9000

Japan’s Nikkei 225 recovered above 13500 and follow-through above the descending trendline would suggest the correction is over and another test of resistance at 15000 is likely. Reversal below 13200, however, would indicate a test of primary support at 12500. Earlier bearish divergence on 13-week Twiggs Money Flow warns of long-term selling pressure.

China’s Shanghai Composite is testing resistance at 2100/2120. Bearish divergence on 13-week Twiggs Money Flow warns of selling pressure. Reversal below 2050 would indicate another test of primary support at 1950. Breakout above 2200 and the descending trendline is unlikely, but would suggest that the down-trend is ending.

India’s Sensex encountered strong support at 18000/18500, evidenced by the long tails on the weekly candles and rising 13-week Twiggs Money Flow.  Expect another test of resistance at 20500. Follow-through above 19000 would strengthen the signal.

The ASX 200 is headed for a test of 5250 after breaking resistance at 5150. Rising 13-week Twiggs Money Flow indicates medium-term buying pressure. Breakout above 5250 would be a welcome sign, suggesting another primary advance, but respect of resistance and a lower peak on Twiggs Money Flow would warn of a reversal.

* Target calculation: 5250 + ( 5250 – 4750 ) = 5750

Global selling pressure

The S&P 500 Index broke medium-term support at 1650 and is headed for a test of the rising trendline. Respect would indicate the primary up-trend is intact, but bearish divergence on 13-week Twiggs Money Flow warns of selling pressure. This is also evidenced by the marginal new high in August. A test of primary support at 1560 is likely. Breach would offer a target of 1400*.

* Target calculation: 1550 – ( 1700 – 1550 ) = 1400

Dow Jones Europe Index also displays marginal new highs in May and August. Penetration of the rising trendline indicates the up-trend is losing momentum — also indicated by bearish divergence on 13-week Twiggs Momentum. Reversal below support at 290 would strengthen the warning, but only failure of support at 270 would signal a trend reversal.

China’s Shanghai Composite Index ran into strong resistance at 2100. Declining 13-week Twiggs Money Flow (below zero) warns of selling pressure. Reversal below 2050 would indicate another test of primary support at 1950, suggesting a decline to 1800*. Breakout above 2200 and the descending trendline is unlikely, but would signal that a bottom has formed.

Japan’s Nikkei 225 broke medium-term support at 13500. Follow-through below 13250 would indicate a correction to primary support at 12500. Penetration of the rising trendline suggests that the primary up-trend is losing momentum. Earlier bearish divergence on 13-week Twiggs Money Flow also warns of a reversal. Recovery above the declining trendline is less likely, but would indicate the correction has ended.

India’s Sensex broke primary support at 18500, following through below 18000 to remove any doubt. The primary trend has reversed after a triple top and now offers a target of 16500*. Declining 13-week Twiggs Money Flow confirms selling pressure. Recovery above 18500 is unlikely, but would warn of a bear trap.

* Target calculation: 18500 – ( 20500 – 18500 ) = 16500

The ASX 200 is consolidating in a broadening top around the 2010/2011 high of 5000. Correction to 4900 would be quite acceptable, garnering support for an advance to the upper border, but breach of 4900 would indicate a failed swing, warning of reversal to a primary down-trend. Failure of primary support at 4650 would confirm. Bearish divergence on 13-week Twiggs Money Flow indicates selling pressure; strengthened if the indicator reverses below zero. Respect of support at 5000 is less likely, despite the long tail on today’s candle, but would offer a target of 5300*.

* Target calculation: 5150 + ( 5150 – 5000 ) = 5300

China rally spurs ASX advance

China’s Shanghai Composite Index rallied from support at 1950 to test medium-term resistance at 2100 on the weekly chart. Breakout would indicate a test of the descending trendline at 2200. The primary trend is down, but penetration of the trendline would suggest that a bottom has formed.

The Shenzhen Composite Index has been in a primary up-trend since May, but displayed weakness with a second, shaky test of support at 900. Troughs above zero on 13-week Twiggs Money Flow indicate the primary up-trend is intact. Breakout above the last high at 1040 would confirm — a bullish sign for the Shanghai Composite.

Japan’s Nikkei 225 is testing medium-term support at 13500. Breach would indicate a correction to primary support at 12500, but respect of the zero line by 21-day Twiggs Money Flow would suggest the primary up-trend is intact. Recovery above 14500 would strengthen the signal.

India’s Sensex respected primary support at 18500. Rising troughs on 13-week Twiggs Money Flow indicate moderate buying pressure. Expect another test of resistance at 20500 (i.e. a test of 20500 is likely). Breach of support, while unlikely, would warn of a primary down-trend — confirmed if there is follow-through below 18000.

* Target calculation: 20000 + ( 20000 – 18000 ) = 22000

The ASX 200 broke short-term resistance at 5120, signaling an advance to the May peak at 5250. Rising 21-day Twiggs Money Flow indicates buying pressure. Reversal below 5000 is unlikely, but would warn of a correction to at least 4850.

Breakout above 5250 would indicate another advance, but high volatility, shown by the broadening formation of the last few months, will require further evidence to confirm this.

* Target calculation: 5250 + ( 5250 – 4650 ) = 5850

ASX 200 finds resistance, China tests support

China’s Shanghai Composite Index continues to test long-term support at 1950. Breakout would signal a primary decline, with a target of the 2008 low at 1660. Reversal of 13-week Twiggs Money Flow below zero warns of rising selling pressure. Respect of 1950 is unlikely, but would indicate a rally to 2150.

Japan’s Nikkei 225 found resistance at 15000, but the primary trend is upward and retracement that respects the rising trendline would suggest another advance. Declining peaks on 13-week Twiggs Money Flow would indicate selling pressure.  Follow-through above 15000 would test the earlier high at 16000.

India’s Sensex is testing resistance at 20200. Breakout would signal an advance to 22000*. Recovery of 13-week Twiggs Money Flow above its May peak indicates buying pressure. Respect of resistance at 20200 is unlikely, but would re-test the rising trendline.

* Target calculation: 20000 + ( 20000 – 18000 ) = 22000

The ASX 200 is consolidating in a narrow band below resistance at 5000 — a bullish sign suggesting a test of the May peak at 5250. Highs of 5000 in 2010 and 2011 give this level additional significance and breakout would indicate an advance to 5850*. Follow-through above 5250 would confirm. Reversal of 21-day Twiggs Money Flow below zero merely indicates short-term selling pressure. Reversal below 4850 is unlikely, but would warn of another test of primary support at 4650.

* Target calculation: 5250 + ( 5250 – 4650 ) = 5850

ASX 200 consolidates while Asia rallies

China’s Shanghai Composite Index continued its rally on Monday, headed for a test of 2150. Last week’s tall shadow (or candlewick) indicates selling pressure. Respect of resistance is likely and reversal below 1950 would signal a primary decline, with a target of the 2008 low at 1700. Reversal of 13-week Twiggs Money Flow below zero would strengthen the bear signal.

Last week’s dragonfly doji on Japan’s Nikkei 225 also indicates selling pressure, but the higher close hints this may have been resolved. Monday’s open is flat and reversal below last week’s low would warn of another test of primary support at 12500. Penetration of the rising trendline or a lower peak on 13-week Twiggs Money Flow would warn of trend weakness, while breach of primary support at 12500 would signal reversal.  But that is some way off and follow-through above 15000 would suggest another advance; confirmed if resistance at 16000 is broken.

India’s Sensex is headed for another test of resistance at 20200. Breakout would signal an advance to 22000*. Recovery of 13-week Twiggs Money Flow above its May peak would indicate healthy buying pressure. Respect of resistance at 20200 is unlikely, but would re-test the rising trendline.

* Target calculation: 20000 + ( 20000 – 18000 ) = 22000

The ASX 200 is consolidating below resistance at 5000. Narrow consolidation is a bullish sign, but reversal below 4850 would warn of another test of primary support at 4650. Breakout above 5000 remains likely and would indicate an advance to 5850* — confirmed if resistance at 5250 is broken. Breach of primary support is unlikely, but would signal a primary down-trend. Oscillation of 21-day Twiggs Money Flow above zero would indicate healthy buying pressure.

* Target calculation: 5250 + ( 5250 – 4650 ) = 5850

ASX 200 rallies despite weakness in Asia

An outside day reversal on Japan’s Nikkei 225 warns of retracement to test support at 13500. Respect of support — or a trough above the zero line on 21-day Twiggs Money Flow would indicate a healthy up-trend. Breach of the rising trendline is unlikely, but would warn of a test of primary support at 12500.

China’s Shanghai Composite Index is testing long-term support at 1950 — as shown on the monthly chart. Failure of support is likely and would warn of a test of the 2008 low at 1700. Reversal of 13-week Twiggs Money Flow below zero would strengthen the bear signal. Respect of support at 1950 is unlikely, but would indicate another test of 2400/2500.

India’s Sensex respected its rising trendline and is likely to test resistance at 20000. Breach of resistance would signal a primary advance, with a target of 22000*. Reversal below 18500 is unlikely, but would warn of reversal to a primary down-trend. Recovery of 13-week Twiggs Money Flow above zero would indicate buying pressure.

Singapore’s Straits Times Index remains weak after finding support at 3100. Reversal of 13-week Twiggs Money Flow below zero after bearish divergence would warn of a primary down-trend. Breach of support at 3100 would confirm. Recovery above 3300, while unlikely, would signal a fresh primary advance.

The ASX 200 broke resistance at 4860, indicating the correction is over. Follow-through above 4900 would strengthen the signal. Recovery of 21-day Twiggs Money Flow above zero indicates healthy medium-term buying pressure. Breach of resistance at 5000 would offer a long-term target of 5850*. Reversal below 4860 is unlikely, but would warn of another test of support at 4650.

* Target calculation: 5250 + ( 5250 – 4650 ) = 5850

Asia rallies but ASX meets resistance

Japan’s Nikkei 225 broke resistance at 13500, indicating the correction is over. Expect a re-test of the May high at 16000. Reversal below 13500, however, would mean another test of 12500. A trough above the zero line on 21-day Twiggs Money Flow would indicate a healthy primary up-trend.

Dow Jones Shanghai Index respected support at 250, the long tail on both the $DJSH and Shanghai Composite indicating strong buying pressure. Expect a rally to test resistance at 275 (2150 on the Shanghai Composite), but the primary trend remains downward and resistance at 275 (2150) is likely to hold.

India’s Sensex rallied off its rising trendline, suggesting that the primary up-trend will continue. Follow-through above 19500 would indicate a test of resistance at 20000/20200. Bearish divergence on 13-week Twiggs Money Flow continues to warn of a reversal and would only be refuted by a breakout above 20200 (or a rise above the May peak on TMF).

The ASX 200 respected its descending trendline at 4800 and is headed for another test of support at 4650. A peak below zero on 21-day Twiggs Money Flow would indicate a healthy down-trend. Breach of 4650 would test the key long-term support level of 4400, while respect would mean another test of 4900. In the longer term, respect of 4400 would be bullish, but failure of support would be a strong bear signal.

The ASX Small Ordinaries, by contrast, exhibits a stronger bullish divergence on 21-day Twiggs Money Flow, indicating buying support. Breakout above 1960 would indicate the latest primary decline is over, while reversal below 1880 would offer a target of 1800. Small Caps have been badly mauled over the last two years and at some point will present an opportunity to value investors. Unfortunately that end is not yet in sight.

ASX and Asian selling pressure

Japan’s Nikkei 225 Index respected support at 12500 and its long-term rising trendline, but another test is likely in the week ahead.  Follow-through above 13500 would indicate the correction is over, suggesting a re-test of resistance at 16000. Breach of 12500, however, is more likely, with bearish divergence on 13-week Twiggs Money Flow warning of a reversal.

Shanghai Composite Index is falling sharply. So far the down-trend has been gradual, with the PBOC looking to manufacture a soft landing. But 13-week Twiggs Money Flow crossing below zero warns of rising selling pressure. Breach of support at 1950 would offer a target of 1600*.

* Target calculation: 2000 – ( 2400 – 2000 ) = 1600

India’s Sensex breached its rising trendline, warning that the primary up-trend is weakening. Failure of support at 18000 would signal a primary down-trend. Declining 13-week Twiggs Money Flow indicates trend reversal is likely. Recovery above 19000 is unlikely, but would suggest a fresh primary advance.

Apart from Japan, the outlook for Asia is bearish.

The ASX 200 is headed for a test of support at 4400, bearish divergence on 13-week Twiggs Money Flow having warned of a reversal. Failure of support at 4400 would re-test the 2011 lows, while respect would be bullish — suggesting another attempt at 5000.

Europe & Asia: Widespread selling pressure

Germany’s DAX respected support at 8000 on its recent retracement. Follow-through above 8500 would confirm a fresh primary advance. Bearish divergence on 13-week Twiggs Money Flow, however, warns of strong selling pressure. Retreat below 8000 would test the rising trendline around 7500.

The FTSE 100 also encountered resistance at its 2007 high, bearish divergence on 13-week Twiggs Money Flow signaling selling pressure. Expect a test of support at 6000. Recovery above 6750 is unlikely but would signal a fresh primary advance.

The Nikkei 225 found support at 12500. Reversal below this level would warn of a decline to 10000. Bearish divergence on 13-week Twiggs Money Flow warns of strong selling pressure. I was interested to read that George Soros was buying Japanese stocks. To me it seems premature.

India’s Sensex is headed for a test of medium-term support at 19000. Breach would test primary support at 18000. Respect would indicate another advance, but bearish divergence on 13-week Twiggs Money Flow continues to warn of reversal to a primary down-trend. Failure of primary support at 18000 would confirm.

Singapore’s Straits Times Index reversed below its new support level at 3300, warning of a bull trap. Follow-through below last week’s low would indicate a test of the long-term trendline around 3000.

The Shanghai Composite Index retreated sharply last week and is headed for another test of support at 2150. Breach would signal a fall to 1950. Declining 13-week Twiggs Money Flow warns of selling pressure. A weakening Shanghai Index is bearish for Australian resources stocks.

The ASX 200 found support at 4750, while bearish divergence on 13-week Twiggs Money Flow warns of strong selling pressure. The falling Aussie Dollar is forcing a retreat of offshore investors from the market, but the eventual boost to export earnings is likely to present a buying opportunity later. Expect a weak rally followed by decline to 4500.

Nikkei, ASX find support but India & China weaken

Dow Jones Japan index found support at its long-term rising trendline.  Follow-through above 77 would indicate the correction is over, suggesting an advance to 100*. Breach of the trendline, however would warn that the primary trend is weakening.

* Target calculation: 85 + ( 85 – 70 ) = 100

The ASX 200 also encountered buying pressure, with a hammer candlestick at the primary support level of 4900. Recovery above 5000 would indicate the correction is over, but breach remains as likely and would confirm the primary down-trend suggested by bearish divergence on 21-day Twiggs Money Flow.

India’s Sensex is testing medium-term support at 19600. Breach would signal a correction to test primary support at 18000. Bearish divergence on 21-day Twiggs Money Flow warns of selling pressure. Recovery above 20000 is unlikely, but would suggest an advance to 22000*.

* Target calculation: 20 + ( 20 – 18 ) = 22

Dow Jones Shanghai Index broke its rising trendline, warning that the rally is running out of steam. Failure of support at 294 would signal another test of primary support at 275. Respect of support is unlikely, but would indicate a test of primary resistance at 314.

The overall outlook for Asia remains bearish apart from Japan.

Shanghai rising but Nikkei, ASX selling pressure

Germany’s DAX is retracing to test the new support level at 8000. Respect would confirm a primary advance, but bearish divergence on 13-week Twiggs Money Flow warns of selling pressure — a fall below zero would warn of a reversal. Breach of 8000 would test the rising trendline around 7500.

Dow Jones Europe encountered strong resistance at 290, but remains in a primary up-trend. Penetration of the rising trendline would warn that the trend is losing momentum, while failure of support at 270 would signal a reversal.

The Nikkei 225 ran into massive selling between 15000 and 16000. The gravestone on the monthly chart, supported by bearish divergence on 13-week Twiggs Money Flow, warns of a reversal.

India’s Sensex is headed for a test of long-term resistance at 21000, but bearish divergence on 13-week Twiggs Money Flow warns of selling pressure. Respect of resistance would indicate another test of primary support at 18000.

The Shanghai Composite Index respected support at 2150 and is headed for another test of resistance at 2500. Breakout above 2500 would complete an inverted head and shoulders reversal (as indicated by orange + green arrows), signaling a primary up-trend. That is still some way off but would be good news for Australia’s beleaguered resources stocks.

The ASX 200 is headed for a test of primary support at 4900. Breach would also penetrate the rising trendline, indicating reversal to a primary down-trend. Bearish divergence on 13-week Twiggs Money Flow has been warning of strong selling pressure. The falling Aussie Dollar is forcing a retreat of offshore investors from the market, but the boost to export earnings is likely to present a buying opportunity for Australian investors when the correction is over.