Research & Investment | The storm is almost over

Research & Investment

 

The storm is almost over

By Colin Twiggs
May 26, 2016 5:00 p.m. AEST (3:00 a.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.

The storm is almost over ….for now. Ably supported by the Fed’s dovish retreat on interest rates, massive stock buybacks and another stimulus program by the Chinese, markets are growing in confidence. While there are still fundamental concerns, from a technical view stocks are regaining lost strength.

Short retracement of the S&P 500 below resistance at 2100 suggests a breakout ….as does a trough above zero on 13-week Momentum. Follow-through above 2130 would confirm, offering a target of between 2300 and 2400*.

S&P 500 Index* Target calculation: 2100 + ( 2100 – 1800 ) = 2400

Europe

Germany’s DAX recovered above 10000, signaling continuation of the rally. Recovery of 13-week Momentum above zero would be a bullish sign, while a trough above zero would indicate a primary up-trend.

DAXThe Footsie respected support at 6000, suggesting another advance. Follow-through above 6400 would signal a primary up-trend. 13-Week Momentum above zero is a bullish sign.

FTSE 100* Target calculation: 6400 + ( 6400 – 6000 ) = 6800

Asia

The Shanghai Composite Index remains weak, headed for another test of support at 2700 despite a surge of activity in housing. Indications that the Fed may raise interest rates in Juneincrease pressure on the Yuan. 13-Week Twiggs Momentum below zero continues to indicate a strong primary down-trend.

Shanghai Composite Index* Target calculation: 3000 – ( 3600 – 3000 ) = 2400

India’s Sensex is bullish, testing resistance at 26000 after a short retracement. Breakout above 26000 would indicate that a bottom is forming (the down-trend is losing momentum). Although retreat below 25000 would warn of another test of primary support, support is likely to hold. Recovery of 13-week Momentum above zero is a bullish sign. A trough above zero would signal a primary up-trend.

SENSEX

Australia

The ASX 200 is testing resistance at 5400. We are entering the seasonal sell-off before financial year end, so expect retracement to test support at 5200. In the present bullish climate, support is likely to hold. A trough above zero on 13-week Momentum would confirm a primary up-trend.

ASX 200* Target calculation: 4700 – ( 5400 – 4700 ) = 4000

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