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Monday USA Update

By Colin Twiggs
August 28, 2006 10:25 p.m. ET (12:25 a.m. AET)

These extracts from my daily trading diary are for educational purposes and should not be interpreted as investment advice. Full terms and conditions can be found at Terms of Use. Your feedback is greatly appreciated.


The Nasdaq 100 completed a small flag at [M], a continuation signal that would normally mean a test of resistance at 1630. However, the low volume is cause for concern -- we should see an upsurge in volume at the breakout. If volumes remain low over the next few days, the signal is not to be trusted. Twiggs Money Flow (21-day), however, is holding above the zero line, an encouraging sign.





The Dow Jones Industrial Average also completed a small flag, but the weak close and low volume indicate that further consolidation between 11250 and 11400 is likely. Consolidation above a new support level (11250), however, is a bullish sign in an up-trend. Twiggs Money Flow (21-day)is holding above the zero line, another positive sign.





The S&P 500 completed a similar pattern, with a weak close accompanied by low volume. Watch for a breakout above short-term resistance (1303) to signal a test of the 6-month high of 1325. The breakout should be accompanied by stronger volume, showing buyers commitment. Twiggs Money Flow (21-day) is rising -- a positive sign.







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