Chinese checkers in Paris
By Colin Twiggs
February 21st, 2011 4:00 a.m. ET (8:00 p.m. AEDT)
Western markets are strengthening, while eastern markets, apart from China, remain subdued. The world faces two major uncertainties at present: the outcome of pro-democracy demonstrations sweeping the Arab world, and the meaning (or lack thereof) of a convoluted 53-word sentence in the the G-20 communique from Paris.
The Dow Global index ($DJWO) continues its upward surge, with rising Twiggs Money Flow (21-day) indicating buying pressure. Penetration of the rising (olive) trendline would warn of a correction. Breach of support at 236 is unlikely, but would signal a primary reversal.
* Target calculations: 250 + ( 250 - 236 ) = 264
The Dow reinforces the signal, with Twiggs Money Flow (21-day) rising strongly. Expect a test of 12600*. Penetration of the (olive) trendline would warn of a correction. Reversal below 11000 is most unlikely, but would signal a primary reversal.
* Target calculation: 11200 + ( 11200 - 9800 ) = 12600
The broader S&P 500 reflects even stronger buying pressure on Twiggs Money Flow than the Dow. The advance offers a target of 1420*.
* Target calculation: 1220 + ( 1220 - 1020 ) = 1420
Fedex broke through resistance at the 2010 high of 96, signaling a fresh primary advance. UPS and Fedex advancing together predict stronger economic growth.
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The Nasdaq 100 is also advancing but there is a bearish divergence on Twiggs Momentum. Penetration of the rising olive trendline would confirm that momentum is slowing and warn of a correction. Rising Twiggs Money Flow (21-day), however, continues to indicate buying pressure.
* Target calculation: 2050 + ( 2050 - 1750 ) = 2350
Twiggs Momentum respected the zero line, but Twiggs Money Flow on the $CADOW continues to warn of a correction. Penetration of the recent rising trendline would strengthen the warning, suggesting a test of the longer-term, green trendline.
The FTSE 100 index follow-through above 6050 signals an advance to the 2007 high at 6750*.
* Target calculation: 5800 + ( 5800 - 4800 ) = 6800
The DAX continues its strong rally. The bearish ascending broadening wedge pattern favors a downward breakout and retracement to 6550, but a further strong rise, high above zero, on 13-week Twiggs Money Flow makes this unlikely.
The CAC-40 also displays a recovery on 13-week Twiggs Money Flow, indicating buying pressure. Retracement that respects 4050 would suggest a long-term target of 4750*. Retreat below 4000 is unlikely, but would signal a test of the rising green trendline around 3750.
* Target calculation: 4050 + ( 4050 - 3350 ) = 4750
The Sensex remains in a primary down-trend. Having encountered resistance at 18500 the index is retracing to test support at 17500. Failure would signal a decline to 16500*. Twiggs Money Flow (13-week) below zero indicates strong selling pressure.
* Target calculation: 17500 - ( 18500 - 17500 ) = 16500
The Straits Times Index broke support at 3120, signaling a primary down-trend. An $SGDOW breakout below 250 would confirm the signal.
* STI Target: 3100 - ( 3300 - 3100 ) = 2900
The Nikkei 225 and $JPDOW are advancing towards resistance at their 2010 high. Rising Twiggs Money Flow (13-week) reflects increased buying pressure. Breakout above 66 on the $JPDOW (or 11400 on N225) would signal a primary advance, offering a long-term target of 79* (14000* on the N225).
* Target calculation: 66 + ( 66 - 53 ) = 79; 11400 + ( 11400 - 8800 ) = 14000
The Seoul Composite Index and $KRDOW penetration of their rising trendlines warn of a strong correction. Breakout below short-term support at 425 on $KRDOW would confirm. Bearish divergence on Twiggs Money Flow (13-week) strengthens the signal.
The Dow Jones Taiwan Index rallied off support at 205, but bearish divergence on Twiggs Money Flow (13-week) continues to warn of a correction. A lower peak would confirm.
The Shanghai Composite Index rallied Monday despite a 0.5% increase in bank reserve requirements — further evidence that we are witnessing a bottom. But the primary down-trend continues — until there is a breakout above 3150.
* Target calculations: 2800 - ( 3100 - 2900 ) = 2600
The Hang Seng Index drifted sideways Monday, struggling to break clear of 23500. Twiggs Money Flow (13-week) continues to display a large bearish divergence, warning of a primary down-trend. Reversal below 22600 would confirm, while recovery above 24400 would indicate a fresh primary advance.
* Target calculation: 25000 + ( 25000 - 22500 ) = 27500
The Bovespa Index remains in a primary down-trend, but recovery above 67000 and bullish divergence on Twiggs Money Flow (21-day) suggest that a bottom is forming.
* Target calculation: 67000 + ( 72000 - 67000 ) = 62000
The All Ordinaries retreated below 5000, with a slight divergence on Twiggs Money Flow (21-day) warning of retracement. The primary advance is expected to continue, confirmed if retracement respects support at 4950, offering a long-term target of 5750*.
* Target calculation: 5000 + ( 5000 - 4250 ) = 5750
ASX 200 Twiggs Momentum continues to oscillate above the zero line, indicating a healthy up-trend. Breakout above 5000 would signal a fresh primary advance.
* Target calculation: 4800 + ( 4800 - 4600 ) = 5000
In all things success depends on preparation, and without such preparation there is sure to be failure.
~ The Analects of Confucius