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Western Bears, Eastern Tigers

By Colin Twiggs
June 23, 2007 4:00 a.m. EST (6:00 p.m. AEST)

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 at the upper border of its 3-year trend channel while Twiggs Money Flow is falling rapidly, warning of another secondary correction.

dow jones industrial average medium-term chart

Long Term: The primary trend is up, with support at 12000 and 12800.

Short Term: Friday's strong red candle and large volume depict an attempted rally overwhelmed by sellers, with the index retracing towards a test of support at 13250. Penetration of support would warn of a secondary correction. Reversal above 13700, signaling resumption of the primary advance, is unlikely.

dow jones industrial average short term chart





The Dow Jones Transportation Average continues to consolidate above support at 5000, normally a bullish sign, but Twiggs Money Flow has fallen sharply. A close below 5000 would signal weakness. Both UPS and Fedex display uncertainty.

dow jones transport average





The Nasdaq Composite closed the gap from last week's doji star; the failed up-swing in an ascending broadening wedge formation suggests that a downward breakout is likely.

Long Term: The primary trend remains upwards, with support at 2340 and 2500 (from 2525).

nasdaq composite

The S&P 500 is consolidating below resistance at 1530 while Twiggs Money Flow (21-day) is falling sharply. Reversal below last week's low of 1490 would warn of a secondary correction. Continued consolidation would be bullish; and a rise above 1540, though unlikely in the present circumstances, would signal resumption of the primary advance.

Long Term: The primary trend remains up, with support levels at 1460 and 1375.

standard and poors 500





LSE: United Kingdom

The FTSE 100 is losing momentum, having failed to test the upper trend channel, and is headed for a test of support at 6450. Twiggs Money Flow is falling sharply and failure of support would warn of a secondary correction to test primary support at 6000. Recovery above 6750, signaling resumption of a strong up-trend, remains equally likely.

Long Term: The primary up-trend continues.

ftse 100

Japan: Nikkei

The Nikkei 225 is testing resistance at the February 2007 high of 18215. Twiggs Money Flow breakout above the previous 3 month high signals accumulation and increases the likelihood of an upward breakout.

Long Term: The primary trend remains up, with primary support at 16600.

nikkei 225

China: Hang Seng

The Hang Seng broke through 21000 and is now testing resistance at 22000. Twiggs Money Flow rising steeply signals strong accumulation. The calculated target is 23300 (21000+[21000-18700]). Retracement to test the new support level at 21000 remains a possibility, but reversal below this level is unlikely.

hang seng index





ASX: Australia

The All Ordinaries displays a broadening top formation at the upper border of the trend channel. The sharp rise in Twiggs Money Flow (21-day) may overstate accumulation - see Short Term below. Downward breakout would warn of a secondary correction. Upward breakout, indicating that the trend may be accelerating into a blow-off, is not as likely.

Long Term: The primary trend remains up, with support at 5650 and 6000.

all ords medium-term

Short Term: Long tails in the recent rally signal distribution and large volumes warn of significant resistance at 6400. Watch for a failed up-swing in the broadening top formation which would signal that a downward breakout is likely.

all ords short-term

No sane man is unafraid in battle, but discipline produces in him a form of vicarious courage.

There is only one type of discipline, perfect discipline.

~ General George S. Patton Jnr.

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



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