A Ray Of Sunshine
By Colin Twiggs
September 7, 2010 4:30 a.m. ET (6:30 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.
Markets are recovering from the doom and gloom of the past few months. The Dow Global index ($DJWO) is headed for a test of resistance at 228. Breakout would signal the start of a primary up-trend. Twiggs Money Flow (13-week) recovery above the zero line strengthens the signal.
Reminder:
The end of the third quarter is approaching and we can only be certain of the current resurgence when the quarter-end has passed and temptation for fund managers to window-dress their balance sheets has subsided.
USA
Dow Jones Industrial Average
The Dow is headed for a test of resistance at 10700. Twiggs Money Flow (21-day) respect of the zero line suggests a new up-trend. Breakout above 10700 would offer a target of 11500*. Reversal below the former primary support level at 9900 is unlikely, but would indicate a primary down-swing, with a target of 8700*.
* Target calculations: 10700 + ( 10700 - 9900 ) = 11500 and 9700 - ( 10700 - 9700 ) = 8700
S&P 500
The S&P 500 is headed for a test of 1130; breakout would indicate a primary advance to 1210*. Twiggs Money Flow (13-week) recovery above zero strengthens the signal. Reversal below 1030 is unlikely, but would confirm the primary down-trend.
* Target calculation: 1130 + ( 1130 - 1050 ) = 1210
Transport
UPS confirmed that it is still in an up-trend. A Dow Transport Index breakout above 4500 would do likewise. Fedex remains in a down-trend until it rises above its August high.
Technology
The Nasdaq 100 is headed for a test of 1920; breakout would signal an advance to 2050*. Twiggs Money Flow (13-week) respect of the zero line indicates buying pressure. Reversal below 1770 is now unlikely, but would warn of a primary down-trend.
* Target calculation: 1920 + ( 1920 - 1770 ) = 2070
Canada: TSX
TSX Composite breached resistance at 11900, signaling a primary advance to 12300. 63-day Twiggs Momentum breakout above zero indicates a start of the up-trend.
United Kingdom: FTSE
The FTSE 100 broke through resistance at 5400, signaling a primary advance to test the April high of 5800. 63-day Twiggs Momentum breakout above zero strengthens the signal. Twiggs Money Flow (13-week) recovery above zero would indicate buying pressure.
* Target calculation: 5400 + ( 5400 - 5100 ) = 5700
Germany: DAX
The DAX rallied off support at 5900, headed for a test of resistance at 6350. Breakout would signal a fresh primary advance. Twiggs Money Flow (13-week) recovery above zero would strengthen the signal.
* Target calculation: 6300 + ( 6300 - 5700 ) = 6900
France: CAC-40
CAC-40 recovery above 3550 signals another test of resistance at 3800; breakout would indicate a test of 4050. Twiggs Money Flow (13-week) below the zero line indicates selling pressure. 63-day Twiggs Momentum breakout above zero, however, would suggest an advance.
India: Sensex
The Sensex broke through 18500, confirming the primary advance to 20000*. 63-day Twiggs Momentum Oscillator holding above zero strengthens the signal. Reversal below 18000 is unlikely, but would signal a decline to primary support at 16000.
* Target calculation: 18000 + ( 18000 - 16000 ) = 20000
Singapore
The Straits Times Index retraced to test the former resistance level at 3020 Tuesday. Respect would signal a primary up-trend, with a target of 3350*. Twiggs Momentum Oscillator (63-day) holding above zero strengthens the signal.
* Target calculation: 3000 + ( 3000 - 2650 ) = 3350
Japan
The Dow Jones Japan Index found support at 53.5. Respect would suggest a test of 60. Twiggs Money Flow (13-week) recovery above zero would indicate buying pressure. But the primary trend remains downward.
South Korea
The DJ South Korea index is testing resistance at 383; breakout would signal a primary advance with a target of 415*. Twiggs Money Flow (13-week) breakout above the declining rally would be a bullish sign. Reversal below 374 is unlikely, but would indicate a correction to test primary support at 335.
* Target calculation: 375 + ( 375 - 335 ) = 415
China
The Shanghai Composite Index is testing resistance at 2700. Breakout would signal an advance to 3000*. Rising Twiggs Money Flow (13-week) above zero signals buying pressure. 63-day Twiggs Momentum recovery above zero would strengthen the signal.
* Target calculations: 2700 + ( 2700 - 2400 ) = 3000
The Hang Seng Index recovered above 21000, signaling continuation of the primary up-trend. Twiggs Money Flow (13-week) respected the zero line, strengthening the signal. 63-day Momentum Oscillator rising above zero also indicates a primary up-trend.
Australia: ASX
The All Ordinaries is consolidating with a small doji below resistance at 4650. Breakout is likely and would signal an advance to 5000*. Twiggs Money Flow (21-day) respecting zero indicates medium-term buying pressure.
* Target calculation: 4650 + ( 4650 - 4250 ) = 5050
The longer term picture is improving, with rising Twiggs Money Flow (13-week) indicating buying pressure; breakout above 15% would strengthen the signal. 63-day Twiggs Momentum Oscillator recovery above zero would also indicate an up-trend.
The 20th Century was a horrible litany of absurd experiments and atrocities committed by intellectuals, or by elite groupings that claimed a higher knowledge. Simple folk usually have enough common sense to avoid the worst errors. Sometimes they need to take very stern action to stop intellectuals leading us to ruin.
~ Ambrose Evans-Pritchard