November 19, 2005
The S&P 500 broke out above resistance at 1245 to make a new 3 year high. Some profit-taking took place at , with a red candle and strong volume, while the tall blue candle and strong volume at  show buyer commitment. The index may encounter further resistance, at 1250, but this is unlikely to hold. Look for confirmation from a retracement that respects the support level.
- airline JetBlue (market cap 2.0B; weighting 2.1%), which replaces the dropped airlines;
- trucking stock Landstar [LSTR] (market cap 2.5B; weighting of 4.5%); and
- shipping stock Overseas Shipholding [OSG] (market cap 2.0B; weighting of 5.5%).
Short-term yields are rising while long-term yields have pulled back below resistance at 4.60%. The yield differential (10-year T-notes minus 13-week T-bills) fell to 0.59%. The Fed continues to face a tough choice: continue to hike short-term rates and the yield curve will go negative, but ease off the rate hikes and inflation may take root. Either result will have negative consequences.
New York: Resistance at the upper border of the consolidation is broken and spot gold appears headed for a test of resistance at $500, closing at $485.20 on Friday. The earlier downward breakout proved to be a classic bear trap.
The FTSE 100 made a false break below support at 5420 on Wednesday (note the long tail and strong volume at ) before rallying towards the end of the week. Long shadows and big volume on Thursday/Friday signal strong selling and the failed breakout at  has bearish implications: expect another test of support at 5420. Twiggs Money Flow (21-day) is neutral, sitting at the zero line. There are two probable longer-term scenarios:
- a fall below short-term support at 5420 leading to a test of primary support at 5140;
- a breakout above 5500, with a target close to 6000: 5500 + (5500 - 5140) = 5860.
The Nikkei 225 has again commenced an accelerating curve. Accelerating trends are unsustainable and -- though we may see strong gains first -- allow for a correction back to the intermediate trendline. The bottom line is: tighten your stops in an accelerating curve. Twiggs Money Flow (21-day) signals strong accumulation. The primary up-trend should continue for some time, with a long-term target of 16400: 12000 + ( 12000 - 7600 [April 2003]) = 16400.
The All Ordinaries encountered some profit-taking during the week, with a doji on Tuesday, increased volume and a narrow range on Wednesday  and tall shadow on Thursday. Friday's strong blue candle , however, confirms that the market is still bullish and we can expect a strong test of resistance at 4620.
The line between failure and success is so fine that we scarcely know when we pass it;
so fine that we are often on the line and do not know it.
~ Elbert Hubbard