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Major rally

By Colin Twiggs
November 8, 2010 3:30 a.m. ET (7:30 a.m. AEDT)

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.


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.

Dow Jones Global Index

* Target calculations: 242 + ( 242 - 204 ) = 280

USA

Dow Jones Industrial Average

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.

Dow Jones Industrial Average

* Target calculation: 11000 + ( 11000 - 10000 ) = 12000

S&P 500

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*.

Standard & Poors 500 chart

* Target calculation: 1220 + ( 1220 - 1020 ) = 1420

Transport

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.

Fedex, Dow Transport Index

Technology

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.

Nasdaq 100

* Target calculation: 2050 + ( 2050 - 1750 ) = 2350

Canada: TSX

The TSX Composite is advancing towards its target of 13400* after breaking out of a narrow rectangle. Recovery of 21-day Twiggs Momentum indicates continuation of the up-trend.

TSX Daily

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

United Kingdom

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.

FTSE 100 Daily

* Target calculation: 5800 + ( 5800 - 4800 ) = 6800

Germany

The DAX is advancing towards its target of 7000*. A strong rise on Twiggs Money Flow (13-week) indicates buying pressure.

German DAX

* Target calculation: 6350 + ( 6350 - 5700 ) = 7000

France

The CAC-40 index is still headed for a test of its April high. Rising Twiggs Money Flow (13-week) again signals buying pressure.

France CAC-40

* Target calculation: 3750 + ( 3750 - 3450 ) = 4050

India

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.

Sensex India

Singapore

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.

Singapore

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

Japan

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.

Japan

* Target calculation $JPDOW: 5650 + ( 5650 - 5350 ) = 5950

South Korea

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.

South Korea

* Target calculation: 1750 + ( 1750 - 1550 ) = 1950

China

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.

DJ China index

* 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.

Shanghai Composite Index

Comparing the Shanghai and Shenzhen indices, the latter is the better performer. Rather like the Nasdaq versus the Dow.

Shenzhen Index

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.

Hang Seng Index Hongkong

* Target calculation: 23000 + ( 23000 - 19000 ) = 27000

Brazil

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.

Brazil Bovespa

* Target calculation: 70000 + ( 70000 - 60000 ) = 80000

Australia: ASX

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.

ASX All Ordinaries

* 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.

ASX 200


The expectations of life depend upon diligence; the craftsman who would perfect his work must first sharpen his tools.

~ Confucius

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