By Colin Twiggs
July 15, 2009 10:30 p.m. ET (12:30 a.m. AET)
The S&P 500 failed to break through support at 880 and rallied strongly, warning of a bear trap. A strong bull signal. Breakout above resistance at 950 would confirm — and signal a primary advance with an immediate target of 1000.
The Dow reversed above 8600 warning of a bear trap — strengthened if 8800 is penetrated. Breakout above 9000 would signal a primary advance with a target of 10000. The sharp climb in Twiggs Money Flow (21-Day) signals buying pressure.
An FTSE 100 rise above 4350 would likewise warn of a bear trap. Breakout above 4500 would signal a primary advance with a target of 4900.
The DAX recovered above 4900, again warning of a bear trap. Breakout above 5150 would signal a primary advance with a target of 5750.
Nikkei 225 is weaker, with Twiggs Money Flow (21-Day) a long way below zero. Recovery above 10000 is unlikely, but would signal a primary advance to 11000.
CRB Commodities Index respected support at 230. Recovery above 245 would indicate another primary advance with a target of 310. Confirmed if resistance at 270 is penetrated.
The upturn on global CRU Steel Price Indexes signals recovery in demand for steel — indicating an upturn in manufacturing/construction activity.
Less optimistic is the the PMI Manufacturing Index. While improving, it remains below 50, signaling contraction.
Average hours of production workers fell to a record low of 33 hours/week, warning of spare capacity and continued high unemployment. The one positive is that inflation is likely to remain muted over the next 6 to 12 months.
Remember that we live in difficult times. Markets are exceptionally volatile and our economic woes are far from over. The contraction may be easing, but this is not a blue sky recovery. We are a long way from a bull market.
Nothing is more difficult, and therefore more precious, than to be able to decide.
~ Napoleon Bonaparte (1769 - 1821)