Japan Signals Down-Trend

By Colin Twiggs
November 23, 3:00 a.m. ET (7:00 p.m. AET)

These extracts from my trading diary are for educational purposes and should not be interpreted as investment or trading advice. Full terms and conditions can be found at Terms of Use.

The Dow Industrial Average and S&P 500 warn of rising selling pressure. Asia-Pacific markets, however, are a mixed bag: China and India remain positive, Australia and Korea are more tentative, while Japan commenced a primary down-trend.

China

The Shanghai Composite Index is headed for a test of resistance at 3500; breakout would offer a target of 4300*. Rising Twiggs Money Flow (13-week) confirms buyer interest. Reversal below the rising trendline would warn of another test of 3000.

* Target calculations: 3500 + ( 3500 - 2700 ) = 4300

The Hang Seng Index continues to display a rising wedge, warning of reversal back to its base at 19500. Twiggs Money Flow (21-day) holding above zero, however, indicates buying support. Breakout above the upper border would offer a target of 25000*.

* Target calculation: 23000 + ( 23000 - 21000 ) = 25000

India: Sensex

The Sensex is headed for a test of resistance at 17500. Respect of resistance would signal a test of 15500, while breakout would offer a target of 20000*. Rising Twiggs Money Flow (13-week & 21-day) confirms buyer interest.

* Target calculation: 17500 + ( 17500 - 15000 ) = 20000

Japan: Nikkei

The Nikkei 225 broke through support at 9600, signaling a primary down-trend. Declining Twiggs Money Flow (13-week) confirms selling pressure. Expect retracement to test the new resistance level at 9600, followed by a test of support at 9000. The Nikkei is closed Monday for Labor Thanksgiving Day.

* Target calculation: 10600 + ( 10600 - 9600 ) = 11600

South Korea

The Seoul Composite recovered above resistance at 1600, indicating a weak correction. The index consolidated in a narrow band on Monday, indicating buyer interest. Twiggs Money Flow (21-day) recovery above zero would confirm.

Australia: ASX

The All Ordinaries is consolidating in a narrow band, between 4700 and 4800, indicating continuation of the rally. Target for a breakout would be 5000*, close to the upper border of the broadening wedge consolidation. Reversal below 4700, however, would warn of a secondary correction. Twiggs Money Flow (21-day) recovery above zero would confirm buying pressure.

* Target calculation: 4700 + ( 4800 - 4500 ) = 5000

The ASX 200 also displays a broadening wedge; breakout above 4800 would test the upper border. Declining Twiggs Money Flow (13-week), however, continues to signal selling pressure.

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