By Colin Twiggs
November 8, 2010 3:30 a.m. ET (7:30 a.m. AEDT)
We are witnessing a global resurgence in stocks, with the Dow Global index ($DJWO) breaking above its April high to indicate a primary advance to 280*. Rising Twiggs Momentum (21-day) indicates a strong up-trend.
* Target calculations: 242 + ( 242 - 204 ) = 280
The Dow broke above its April high of 11200, signaling a primary advance. The long term target is 12000*. Twiggs Money Flow (13-week) rising strongly indicates buying pressure. Expect retracement, however, to test the new support level in the medium term.
* Target calculation: 11000 + ( 11000 - 10000 ) = 12000
The S&P 500 rose above April high of 1220 to confirm the Dow breakout. Twiggs Momentum (21-day) rising high above its trendline indicates a strong up-trend. Long-term target for the breakout is 1420*.
* Target calculation: 1220 + ( 1220 - 1020 ) = 1420
Bellwether stock Fedex respected support at 86 and its rising trendline, signaling continuation of the primary up-trend. The Dow Transport index above its April high adds further confirmation of the Dow signal. A bullish sign for the broader economy.
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The Nasdaq 100 is headed for a test of its 2007 high of 2250. Twiggs Money Flow (21-day) in an up-trend above the zero line indicates strong buying pressure.
* Target calculation: 2050 + ( 2050 - 1750 ) = 2350
* Target calculation: 12300 + ( 12300 - 11200 ) = 13400
The FTSE 100 broke through its April high, signaling an advance to the 2007 high at 6750*. Twiggs Money Flow (21-day) recovery above the October high of 15% would confirm.
* Target calculation: 5800 + ( 5800 - 4800 ) = 6800
The DAX is advancing towards its target of 7000*. A strong rise on Twiggs Money Flow (13-week) indicates buying pressure.
* Target calculation: 6350 + ( 6350 - 5700 ) = 7000
The CAC-40 index is still headed for a test of its April high. Rising Twiggs Money Flow (13-week) again signals buying pressure.
* Target calculation: 3750 + ( 3750 - 3450 ) = 4050
The Sensex is testing the 2007 high of 21000. Rising Twiggs Money Flow (13-week) indicates strong buying pressure. Breakout would signal a strong primary advance into blue sky territory — with no significant resistance. Failure of support at 20000 is most unlikely, but would indicate another correction.
The Straits Times Index respected the rising trendline, indicating continuation of the primary up-trend. Bearish divergence on Twiggs Momentum (21-day) warns of a correction and reversal below 3120 would confirm, but Monday's advance to 3290 makes this highly unlikely.
* Target calculation: 3000 + ( 3000 - 2650 ) = 3350
The DJ Japan index ($JPDOW) reversed sharply above long-term support: a bullish sign. Breakout above 5650 would complete a broad double bottom, offering a target of 6000*. Twiggs Money Flow (13-week) recovery above the zero line would strengthen the signal.
* Target calculation $JPDOW: 5650 + ( 5650 - 5350 ) = 5950
The DJ South Korea index holding high above its rising trendline indicates strong momentum. Twiggs Money Flow (13-week) high above zero confirms strong buying pressure. Expect a test of the 2007 high at 2050.
* Target calculation: 1750 + ( 1750 - 1550 ) = 1950
The DJ China index respected the new support level at 380, indicating a fresh primary advance to 480*. Rising Twiggs Money Flow (13-week) indicates buying pressure. Reversal below the new support level is unlikely, but would warn of another correction.
* Target calculations: 380 + ( 380 - 280 ) = 480
A reader asked why I frequently use the DJ China index rather than the more popular Shanghai Composite. There are two reasons: firstly, the Shanghai and Shenzhen indices often give divergent signals while the DJ index gives a composite view; and second, the DJ index feed is continuously updated throughout the day, while our World Index feed is not.
Comparing the Shanghai and Shenzhen indices, the latter is the better performer. Rather like the Nasdaq versus the Dow.
The Hang Seng index respected the new support level at 23000, signaling a primary advance to 27000*. A strong primary up-trend. Rising Twiggs Money Flow (13-week) confirms buying pressure.
* Target calculation: 23000 + ( 23000 - 19000 ) = 27000
The Bovespa index broke resistance at 72000. Twiggs Momentum (21-day) holding above zero indicates a strong up-trend. Expect retracement to test the new support level, followed by a rally to the 2008 high at 73500/74000.
* Target calculation: 70000 + ( 70000 - 60000 ) = 80000
The All Ordinaries is advancing towards its target of 5000*. Reversal below the medium-term (olive) rising trendline would warn of a correction, as would Twiggs Momentum (21-day) falling below the 3% "support" level.
* Target calculation: 4650 + ( 4650 - 4250 ) = 5050
Bearish divergence of Twiggs Money Flow (21-day) on the ASX 200 warns of medium-term selling pressure; so any warnings of a correction should not be ignored.
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