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Dow Support At 12000

By Colin Twiggs
March 17, 2007 1.00 a.m. ET (5:00 p.m. AET)

These extracts from my 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.

USA: Dow, Nasdaq and S&P500

The Dow Jones Industrial Average is holding below the 100-day moving average, warning of a secondary correction. Penetration of support at 12000 would confirm. Twiggs Money Flow (21-day) continues its down-trend; a fall below zero would signal short-term selling, while a rally that fails to rise above zero would signal long-term distribution.

dow jones industrial average medium-term

Long Term: The average remains in a primary up-trend. Respect of the May 2006 peak of 11600 would signal a healthy up-trend, while a fall below the June 2006 low of 10700 would signal reversal to a down-trend.

Short Term: The Dow is consolidating between 12000 and 12350, with an attempted breakout at [W] meeting solid support. The bullish sign was negated two days later, however, with the narrow candle and large volume at [F] warning of committed selling. A rise above 12200 on Monday would be bullish, but a drop below 12100 is more likely and would signal another test of support at 12000.

dow jones industrial average short term





The Dow Jones Transportation Average holding below 5000 is mildly bearish. and a drop below 4100 would signal that the primary trend has reversed. Probabilities appear about even for (i) a fall below 4500, warning of a test of primary support at 4100, and (ii) recovery above 5000, signaling that the up-trend has resumed.

dow jones transport average

Fedex is ranging sideways, but UPS is falling and a break below the August 2006 low would warn that the economy is slowing.





The Nasdaq Composite is in a bearish consolidation below the 100-day moving average. Penetration of support at 2340 would signal a test of the July 2006 low of 2000, while a (less likely) rise above 2400 would be a healthy sign for the primary up-trend.

Long Term: A fall below 2000 would signal reversal to a primary down-trend.

nasdaq composite

The S&P 500 is consolidating below the 100-Day moving average and appears headed for a test of the lower border of the trend channel, (drawn at 2 standard deviations around a linear regression line). Twiggs Money Flow (21-day) bearish divergence warns of distribution.

Long Term: The primary trend is up. A healthy correction would respect the first line of support at 1325 (near the lower channel line), while a fall below 1220 would signal reversal to a down-trend.

standard and poors 500





LSE: United Kingdom

The FTSE 100 is testing support at 6000 and the lower border of the trend channel, (drawn at 2 standard deviations around a linear regression line). Twiggs Money Flow (21-day) holding above zero signals accumulation. A fall below 6000 would warn of a test of primary support at 5500, while a close above 6250 would signal recovery.

Long Term: The primary up-trend continues.

ftse 100

Nikkei: Japan

The Nikkei 225 is testing the long-term (green) trendline; failure would signal that the up-trend is losing momentum. Twiggs Money Flow (21-day) is falling faster than the index, signaling short/medium term weakness.

Long Term: The primary trend remains up, with support at the June 2006 low of 14200.

nikkei 225





ASX: Australia

The All Ordinaries has so far respected the 100-Day moving average. A downward break would test the lower border of the trend channel, while a rally above Tuesday's high would signal a test of the upper border. Twiggs Money Flow (21-day) continues to respect the zero line, signaling short-term support.

Long Term: The first line of primary support is at the May 2006 high of 5300. A fall below the June 2006 low of 4800 would signal reversal to a down-trend.

all ords long-term

Short Term: Thursday's large volume shows committed buying but this was negated by the narrow candle and strong volume on Friday, warning of resistance. A rise above 5900 would signal a rally to test 6000 -- and that the correction is most likely over. A fall below Wednesday's low, however, would signal a test of support at 5650 and that the correction is likely to continue.

all ords short-term

I never buy at the bottom and I always sell too soon.

~ Baron Rothschild in Reminiscences of a Stock Operator by Edwin Lefevre (1923)


To understand my approach to technical analysis, please read Technical Analysis & Predictions in About The Trading Diary.



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