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Asia soars

By Colin Twiggs
September 20, 2010 3:00 a.m. ET (5:00 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.



Markets continue to recover from the recent slump, led by India, Singapore and South Korea. The Dow Global index ($DJWO) broke through resistance at 228, signaling the start of a primary up-trend. Rising 63-day Twiggs Momentum strengthens the signal.

Dow Jones Global Index

But we are approaching the end of the third quarter and fund managers may be supporting prices to window-dress their balance sheets. We can only be sure of the current resurgence when the quarter-end has passed. Expect a mid-October retracement to test the new support level.

USA

Dow Jones Industrial Average

The Dow is headed for a test of resistance at 10700. Twiggs Money Flow (21-day) recovered above 15%, signaling rising buying pressure. The index is unlikely to reverse direction before the month-end and may well break resistance, indicating an advance to 11500*, but it would be prudent to wait for retracement in October to test the new support level. Reversal below the former primary support level at 9900 is unlikely at present, but would indicate a primary down-swing, with a target of 8700*.

Dow Jones Industrial Average

* Target calculations: 10700 + ( 10700 - 9900 ) = 11500 and 9700 - ( 10700 - 9700 ) = 8700

S&P 500

The S&P 500 is testing resistance at 1130; breakout would indicate a primary advance to 1220*. Twiggs Money Flow holding above the zero line indicates buying pressure. Again, it would be prudent to wait until mid-October to check if support continues after the quarter-end. Reversal below 1030 is unlikely at present, but would confirm the primary down-trend.

Standard & Poors 500 chart

* Target calculation: 1130 + ( 1130 - 1050 ) = 1210

Transport

UPS and the Dow Transport Index encountered resistance at their August high. Fedex is headed for another test of primary support at its recent low; failure would be a bear signal for the broader economy.

UPS & Fedex

Technology

The Nasdaq 100 broke resistance at 1920 and is advancing to 2060*. Twiggs Money Flow (13-week) respect of the zero line indicates buying pressure. Expect retracement, however, to test the new support level in October.

Nasdaq 100

* Target calculation: 1920 + ( 1920 - 1770 ) = 2070

Canada: TSX

TSX Composite is headed for a test of primary resistance at 12300. Breakout would offer a target of 13400*. Rising 63-day Twiggs Momentum suggests an up-trend.

TSX Daily

* Target calculation: 12300 + ( 12300 - 11200 ) = 13400

United Kingdom: FTSE

The FTSE 100 is retracing to test the new support level at 5400. Respect would confirm the advance to 5800*. Bearish divergence on Twiggs Money Flow (13-week), however, warns of a reversal.

FTSE 100 Daily

* Target calculation: 5400 + ( 5400 - 5100 ) = 5700

Germany: DAX

The DAX is retracing to test the rising trendline and support at 5900. Failure would confirm the bearish divergences on Twiggs Money Flow (13-week) and 63-day Twiggs Momentum. Breakout above resistance at 6350 is unlikely at present, but would signal a primary advance to 6900*.

German DAX

* Target calculation: 6300 + ( 6300 - 5700 ) = 6900

France: CAC-40

The CAC-40 respected resistance at 3800. Twiggs Money Flow (13-week) holding below the zero line warns of selling pressure. Reversal below the rising trendline would test primary support at 3300.

France CAC-40

India: Sensex

The Sensex broke resistance at 18500 and is advancing to 20000*. Rising Twiggs Money Flow (13-week) signals strong buying pressure.

Sensex India

* Target calculation: 18000 + ( 18000 - 16000 ) = 20000

Singapore

The Straits Times Index broke resistance, signaling a primary advance to 3350*. Rising Twiggs Momentum (63-day) indicates an up-trend.

Singapore

* Target calculation: 3000 + ( 3000 - 2650 ) = 3350

Japan

The Nikkei 225 rallied in response to stimulus measures taken by the Japanese government. Expect a test of resistance at 10000, but the primary trend is likely to remain downward.

Japan

South Korea

The Seoul Composite Index broke resistance at 1790, signaling an advance to 1960*. Rising Twiggs Money Flow (13-week) indicates continued buying pressure.

South Korea

* Target calculation: 1760 + ( 1760 - 1560 ) = 1960

China

The Shanghai Composite Index encountered stout resistance at 2700. Reversal below 2600 would warn of another test of primary support at 2300. Bearish divergence on Twiggs Money Flow (13-week) signals selling pressure.

Shanghai Composite Index China

* Target calculations: 2700 + ( 2700 - 2400 ) = 3000

The HangSeng Index broke resistance at 21800, offering a medium-term target of 23000*. Rising Twiggs Money Flow (13-week) indicates buying pressure.

Hang Seng Index Hongkong

* Target calculations: 21800 + ( 21800 - 20600 ) = 23000

Australia: ASX

The All Ordinaries is retracing to test the new support level at 4620*. Respect would confirm the advance to 5000*. Twiggs Money Flow (21-day) holding above zero indicates buying pressure.

ASX All Ordinaries

* Target calculation: 4650 + ( 4650 - 4250 ) = 5050

The ASX 200 is on a similar path, with rising Twiggs Money Flow (13-week) indicating buying pressure. The ASX 200 is unlikely to reverse below 4600 at present, but the long-term picture will only clear when a retracement tests the new support level after month-end.

ASX 200


Hatred is gained as much by good works as by evil.

~ Niccolo Machiavelli

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