Western Bears, Eastern Tigers
By Colin Twiggs
June 23, 2007 4:00 a.m. EST (6:00 p.m. AEST)
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.
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.
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.
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
Long Term: The primary trend remains upwards, with support at 2340 and 2500 (from 2525).
The S&P 500 is consolidating below resistance at
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.
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.
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
Long Term: The primary trend remains up, with primary support at 16600.
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.
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
Long Term: The primary trend remains up, with support at 5650 and 6000.
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.
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.