Research & Investment | REMAIN on alert

Research & Investment

 

REMAIN on alert

By Colin Twiggs
June 23, 2016 5:30 p.m. AEST (3:30 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.

I hope that I have achieved some balance in our portfolios by being long stocks that will benefit from a REMAIN vote today, while also being long gold stocks that would benefit from a BREXIT. Odds at the bookmakers firmly favor a REMAIN vote, but the favorites don’t always win. Volatility is likely to be high, so stay on the alert.

The S&P 500 has run into resistance at 2100, signaled by tall shadows on two recent candles, while declining 21-day Twiggs Money Flow warns of medium-term selling pressure. Reversal below 2050 would signal another test of support at 2000. Breach of primary support at 1820 to 1870 remains unlikely.

S&P 500 IndexDow Jones Industrial Average displays similar selling pressure on a weekly chart, with declining 13-week Money Flow. Breach of support at 17500 would warn of another test of primary support at 15500 to 16000.

Dow Jones Industrial AverageA CBOE Volatility Index (VIX) remains elevated, above 20, but long-term measures are unaffected.

S&P 500 VIXCanada’s TSX 60 has also run into resistance and reversal below 790 would warn of another test of primary support at 700.

TSX 60

Europe

Germany’s DAX recovered above 10000, signaling another test of resistance at 10500. Breakout would indicate a primary up-trend.

DAX* Target calculation: 10500 + ( 10500 – 9500 ) = 11500

The Footsie also rallied above support at 6000, indicating a test of 6500. Breakout above 6500 would signal a primary up-trend.

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

Asia

The Shanghai Composite Index continues to range between 2700 and 3100.

Shanghai Composite IndexJapan’s Nikkei 225 Index found support at 15500 but another test of primary support at 15000 appears likely.

Nikkei 225 Index* Target calculation: 15000 – ( 18000 – 15000 ) = 12000

India’s Sensex remains bullish, with a short retracement below 27000. Penetration of the descending trendline on 13-week Money Flow suggests that buying pressure is rising. Breakout above 27000 is likely and would offer a target of 28000. But expect another test of primary support in the next few months, signaled by penetration of the rising trendline, to create a solid base for further advances.

SENSEX

Australia

The ASX 200 made a false break below medium-term support at 5200 before rallying to 5300. Expect stubborn resistance at 5400, flagged by bearish divergence on 13-week Money Flow. Breach of support at the recent low of 5150 would warn of another test of primary support at 4750.

ASX 200The Banks Index is leading the decline, repeatedly testing primary support at 7200. Breach would offer a target of 6400*. Problems in this important sector are likely to affect the entire market.

ASX 300 Banks* Target calculation: 7200 – ( 8000 – 7200 ) = 6400

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