By Colin Twiggs
December 1, 4:00 a.m. ET (8:00 p.m. AET)
Upward momentum on major indexes is slowing. The S&P 500 is consolidating around 1100, within an ascending broadening wedge pattern; reversal below 1080 would indicate a failed up-swing, warning of a correction to the base of the pattern at 980. Asia-Pacific markets remain mixed: Shanghai and India are positive, Australia, Hong Kong and Korea more tentative, while Japan is in a primary down-trend.
The Shanghai Composite Index found support at 3100. Tuesday followed through above 3200, indicating a test of resistance at 3500; breakout would offer a target of 4300*. Twiggs Money Flow (21-day) holding well above the zero line confirms buyer support.
* Target calculations: 3500 + ( 3500 - 2700 ) = 4300
The Hang Seng Index broke downwards from a bearish rising wedge formation, signaling a correction back to the base at 19500. Twiggs Money Flow (21-day) crossing below zero would strengthen the signal. Tuesday's recovery above 22000, closing the recent gap, however, warns of a false signal. Follow-through above 22200 would confirm.
The Sensex found support at 16500 and is headed for a test of resistance at 17500. Breakout would offer a target of 20000*. Rising Twiggs Money Flow (13-week & 21-day) confirms buyer interest.
* Target calculation: 17500 + ( 17500 - 15000 ) = 20000
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The Nikkei 225 is retracing to test the new resistance level at 9600; respect would confirm the primary down-trend. Declining Twiggs Money Flow (13-week) indicates selling pressure; respect of zero on a retracement would strengthen the signal. Expect further support at 9000.
* Target calculation: 9600 - ( 10400 - 9600 ) = 8800
The Seoul Composite consolidating within the body of Friday's large red candle, favors continuation of the down-swing, to test the lower border of the trend channel. Twiggs Money Flow (21-day) holding below zero indicates continued selling pressure.
The All Ordinaries broke through support at 4700, indicating a failed up-swing. The subsequent rally recovered lost ground, but Tuesday's follow-through looks anemic. Breakout above 4800 is unlikely, but would signal a test of the upper border of the broadening wedge pattern. Reversal below Tuesday's low (say 4650 to be certain) would indicate a failed up-swing and downward breakout from the broadening wedge consolidation — with a target of 4100*. Twiggs Money Flow (21-day) respect of the zero line would confirm selling pressure.
* Target calculation: 4500 - ( 4900 - 4500 ) = 4100
The ASX 200 displays a similar broadening wedge. Breakout above 4800 would test the upper border, while reversal below 4500 would signal a correction. Declining Twiggs Money Flow (13-week) confirms selling pressure.
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