China Builds Up Steam
By Colin Twiggs
July 7, 2007 2:30 a.m. EST (4:30 p.m. AEST)
Most markets took a breather this week and the Dow Jones Industrial Average was no exception, consolidating at the upper border of its 3-year trend channel. Twiggs Money Flow recovered sharply, signaling short-term accumulation.
Long Term: The primary trend is up, with support at 12000 and 12800.
Short Term: Breakout below 13250 would warn of a secondary correction, while a rise above 13700 would signal another primary advance - and possible acceleration into a blow-off. Low volumes are attributable to the Independence Day holiday.
The Dow Jones Transportation Average respected support
at 5000 and is now rallying to test 5300. Breakout above this
level would be a bull signal. Twiggs Money Flow recovered
sharply to signal short-term accumulation. Reversal below 5000
is not expected and would signal trend weakness.
Fedex and UPS both appear bullish, echoing the index.
The Nasdaq Composite displays a failed down-swing in the
ascending broadening wedge pattern: signaling that an upward
breakout is likely. Twiggs Money Flow is edging lower, but
watch for a break of the downward trendline.
Long Term: The primary trend remains upwards, with support at 2340 and 2500 (from 2525).
The S&P 500 continues with similar consolidation to
the Dow. A rise above 1540 would signal another primary
advance, while breakout below 1490 would warn of a secondary
correction. Twiggs Money Flow has recovered above zero,
signaling short-term accumulation.
Long Term: The primary trend remains up, with support levels at 1460 and 1375.
Active or Reactive?
Many investors follow active strategies but end up being reactive, rotating in and out of stocks at the wrong time.
Colin Twiggs' free weekly review of macro-economic & technical indicators will help you identify market risk and improve your timing.
The FTSE 100 is rallying towards the upper border of an
ascending broadening wedge. A swing that fails to reach the
upper border would be bearish, while an upward breakout would
signal another primary advance - towards the all-time high of
6900/7000. Twiggs Money Flow threatens to break above the
downward trendline, which would be a bullish sign.
Long Term: The primary up-trend continues, with support at 6000 and 6450.
The Nikkei 225 shows short-term distribution on
Twiggs Money Flow, but narrow consolidation below
resistance at 18215 would be a bullish sign. The target for an
upward breakout is 19800 (18200+[18200-16600]). A fall below
the trend channel is not expected, but would signal another
test of primary support at 16600.
Long Term: The primary trend remains up.
China is going gangbusters, with the Hang Seng index powering through resistance at 22000 and now headed for a test of 23000. Twiggs Money Flow is close to completing a bullish trough above zero, signaling strong accumulation. Reversal below 21600 is not expected and would signal a test of the new support level at 21000.
The All Ordinaries consolidates at the upper border of
the trend channel. Downward breakout would warn of a secondary
correction, while upward breakout would signal another advance
- and an accelerating up-trend, possibly leading to a blow-off.
Twiggs Money Flow (21-day) continues to display a long-term
bearish divergence, though a break of the downward trendline
would end this.
Long Term: The primary trend remains up, with support at 5650 and 6000.
Short Term: The broadening top formation lost its shape and now resembles a regular rectangle, with support at 6200 and resistance at 6420. Look for a failed swing or breakout to indicate future direction. Higher volumes on Monday and Tuesday signal selling into the rally, but this has faded.
If you know the enemy and know yourself, you need not fear the
result of a hundred battles. If you know yourself but not the
enemy, for every victory gained you will also suffer a defeat.
If you know neither the enemy nor yourself, you will succumb in
~ Sun Tzu
To understand my approach, please read Technical Analysis & Predictions in About The Trading Diary.