sitesearch
 

Recovery Gathers Momentum

By Colin Twiggs
March 8, 2010 00:30 a.m. ET (4:30 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.



North American and European markets are recovering, with momentum rising and the FTSE 100 signaling a primary advance to 6000. Asian markets are slower to recover, but rising bulk shipping rates are an encouraging sign for resources stocks.

Commodities & Resources Stocks

The Baltic Dry Index is testing resistance at 3300; breakout would signal the end of the correction and a surge in shipments of bulk commodities — especially since new deliveries of Capemax vessels in the last 6 months have increased available tonnage. Reversal below support at 2550 is unlikely, but would test primary support at 2150.

Baltic Dry Index

USA

Dow Jones Industrial Average

The Dow broke through resistance at 10450, signaling a test of the January high at 10750. Rising Twiggs Money Flow (21-day) confirms buying pressure. Breakout above 10450 would offer a target of 11500*. Reversal below 9900 is most unlikely, but would signal a primary down-trend.

Dow Jones Industrial Average

* Target calculation: 10700 + ( 10700 - 9900 ) = 11500

S&P 500

The S&P 500 is headed for a test of 1150. Recovery above the descending trendline on Twiggs Money Flow (13-week) signals buying pressure. Upward breakout would offer a target of 1250*. Reversal below 1050 is most unlikely, but would signal a primary down-trend.

Standard & Poors 500 chart

* Target calculation: 1150 + ( 1150 - 1050 ) = 1250

Transport

Fedex, UPS and the Dow Transport Average all indicate that the secondary correction has ended.

Dow Jones Transportation Average

Technology

The Nasdaq 100 is testing resistance at 1900. Recovery above the descending trendline on Twiggs Money Flow (13-week) indicates buying pressure. Upward breakout would offer a target of 2050*. Reversal below 1730 is most unlikely, but would signal a primary down-trend.

Nasdaq 100

* Target calculation: 1900 + ( 1900 - 1750 ) = 2050

Canada: TSX

The TSX Composite is testing 12000; breakout would signal an advance to 13000*. Twiggs Money Flow (13-week) above the descending trendline indicates buying pressure. Reversal below 11100 is most unlikely, but would signal a primary down-trend.

TSX Daily

* Target calculation: 12000 + ( 12000 - 11000 ) = 13000

United Kingdom: FTSE

The FTSE 100 broke through resistance at 5550, signaling an advance to 6000*. Twiggs Money Flow (13-week) above the declining trendline indicates buying pressure. Short-term resistance at 5600 is unlikely to halt the advance.

FTSE 100 Daily

* Target calculation: 5500 + ( 5500 - 5000 ) = 6000

Germany: DAX

The DAX is headed for a test of 6050; breakout would signal an advance to 6600*. Twiggs Money Flow (13-week) below zero, indicates moderate buying pressure, but breakout above the trendline would support the advance. Reversal below support at 5400 is most unlikely, but would signal a primary down-trend.

German DAX

* Target calculation: 6000 +( 6000 - 5400 ) = 6600

India: Sensex

The Sensex recovered above 16500, signaling a test of 17800. Upward breakout would offer a target of 20000*. Twiggs Money Flow (13-week) above the declining trendline indicates buying pressure. Reversal below support at 15500 is now unlikely, but would warn of a primary down-trend.

Sensex India

* Target calculation: 17800 + ( 17800 - 15700 ) = 19900

Japan: Nikkei

The Nikkei 225 breakout above the ascending triangle Monday indicates a test of 11000. Twiggs Money Flow (13-week) respected zero, but the bearish divergence continues to warn of weakness. Reversal below 9900 would signal a test of primary support at 9000.

nikkei 225 japan

South Korea

The Seoul Composite broke through resistance at 1630, the upper border of an ascending triangle, to signal a test of 1720. Twiggs Money Flow (13-week) respected zero but the bearish divergence indicates weakness. Reversal below primary support at 1520 is unlikely, but would signal a primary down-trend.

Seoul Composite Index

China

The Shanghai Composite Index is headed for another test of short-term resistance at 3100 Monday, having found support at 3000. Breakout above the declining trendline would indicate that the correction is weakening, while reversal below 2900 would test primary support at 2650. Declining Twiggs Money Flow (13-week) continues to warn of selling pressure; recovery above the declining trendline would indicate a reversal.

Shanghai Composite Index China

The Hang Seng Index gapped above 21000 Monday, indicating that the primary down-trend is weakening. Twiggs Money Flow (13-week) recovery above the declining trendline would confirm, while respect of the zero line (from below) would warn of selling pressure.

Hang Seng Index Hongkong

Australia: ASX

The All Ordinaries broke through short-term resistance at 4740, indicating a test of 5000. Rising Twiggs Money Flow (21-day) indicates buying pressure. Reversal through support at 4500 is now unlikely, but would signal a primary down-trend.

ASX All Ordinaries

The longer-term ASX 200 chart reflects broad consolidation between 4500 and 5000; breakout will signal future direction. Twiggs Money Flow (13-week) recovery above the declining trendline indicates buying pressure. Breakout above 5000 would offer a target of 5500*, while reversal below the base would offer a target of 4000*.

ASX 200

* Target calculations: 5000 + ( 5000 - 4500 ) = 5500 and 4500 - ( 5000 - 4500 ) = 4000



If you do what you've always done, you'll get what you've always gotten.

~ Tony Robbins

Perfect Your Market Timing
Learn how to manage your market risk.





The weekly Trading Diary offers fundamental analysis of the
economy and technical analysis of major market indices,
gold, crude oil and forex.
The monthly What's New newsletter covers new articles
on Trading and the Economy, as well as new software updates.


 
Top of Page