Research & Investment | Markets lack enthusiasm

By Colin Twiggs
November 26th, 2015 6:00 p.m. AEDT (2:00 a.m. EST)

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.

North America

The S&P 500 hesitated at 2100, short candle ranges indicating a lack of interest ahead of the Thanksgiving holiday. Lower 21-day Twiggs Money Flow likewise indicates a lack of enthusiasm. Reversal below 2000 is unlikely but would warn of another test of primary support at 1870. Expect strong resistance at 2130 but an upward breakout remains more likely — and would signal a fresh advance to 2400*.

S&P 500 Index

* Target calculation: 2130 + ( 2130 – 1870 ) = 2390

Declining CBOE Volatility Index (VIX) below 20 indicates market risk is returning to normal.

S&P 500 VIX

Canada’s TSX 60 hesitated at 800, but the (bear) rally to 825 seems on track. The 13-week Twiggs Momentum peaks below zero continue to warn of a strong primary down-trend. Recovery above 825 is unlikely, while failure of support at 765 would confirm another decline.

TSX 60 Index

* Target calculation: 775 – ( 825 – 775 ) = 725

Europe

Germany’s DAX broke resistance at 11000, signaling another test of 12400. Rising 13-week Twiggs Money Flow indicates medium-term buying pressure. Reversal below medium-term support at 10600 is unlikely, but would warn of a decline to primary support at 9400/9500.

DAX

The Footsie is strengthening, with a 13-week Twiggs Money Flow trough above zero indicating medium-term buying pressure. Breakout above 6500 and the descending trendline would signal another test of 7000/7100. Reversal below 6100 is unlikely but would threaten primary support at 6000.

FTSE 100

Asia

The Shanghai Composite Index respected its new support level at 3500, indicating a test of resistance at 4000. 13-Week Twiggs Money Flow suggests modest buying pressure. Government intervention has created artificial support and I would adopt a cautious approach.

Dow Jones Shanghai Index

Japan’s Nikkei 225 found short-term resistance at 20000 but this is unlikely to impede the advance to 21000 for long. Rising 13-week Twiggs Money Flow indicates buying pressure.

Nikkei 225 Index

* Target calculation: 19000 + ( 19000 – 17000 ) = 21000

India’s Sensex remains weak, having retreated below the former band of primary support at 26000/26500. Reversal of 13-week Twiggs Money Flow below zero would warn of another down-swing, with a target of 23500*. Recovery above the upper trend channel at 27000 is unlikely, but would suggest a rally to 30000.

SENSEX

* Target calculation: 25000 – ( 26500 – 25000 ) = 23500

Australia

The ASX 200 is testing short-term support at 5200. Sharp decline on 21-day Twiggs Money Flow warns of selling pressure. Breach of 5200 would warn of another test of primary support at 5000. Respect of support is as likely, however, and would indicate a test of 5400. I suspect the index will range between 5000 and 5400 until the new year, possibly longer.

ASX 200

* Target calculation: 5000 – ( 6000 – 5000 ) = 4000

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