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Crude rises as markets fall

By Colin Twiggs
June 14th, 2011 4:00 a.m. ET (6:00 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.


Oil commenced another rally, with Brent Crude breaking through resistance at $117 per barrel to signal another test of $126. High crude prices are a major contributing factor to the current slow-down, raising transport costs, placing upward pressure on consumer prices, and at the same time acting like an additional tax on consumers — reducing funds available for discretionary spending.

Brent Crude Oil

The Dow Jones Global Index primary up-trend is weakening, having broken its long-term ascending trendline and support at 258. Twiggs Money Flow (21-day) below zero warns of selling pressure. Expect a test of primary support at 250. Recovery above the descending trendline is unlikely at present, but would signal the end of the correction.

Dow Jones Global Index

USA

Dow Jones Industrial Average

The Dow is headed for a test of primary support at 11600; penetration of the long-term ascending trendline would confirm. Twiggs Money Flow (21-day) below zero indicates selling pressure.

Dow Jones Industrial Average

* Target calculation: 12400 + ( 12400 - 11600 ) = 13200

S&P 500

The S&P 500 is also headed for a test of primary support, at 1250. Breach of support would complete a double top with a target of 1150*. Bearish divergence on 13-week Twiggs Money Flow continues to warn of selling pressure.

Standard & Poors 500 chart

* Target calculation: 1350 + ( 1350 - 1250 ) = 1450 or 1250 - ( 1350 - 1250 ) = 1150

Transport

Fedex threatens to break through primary support at 85, confirming the primary down-trend signaled by UPS. A primary down-trend for the two would be a bear signal for the broader economy.

Dow Transport Index

Technology

The Nasdaq 100 is testing primary support at 2200. Bearish divergence on 13-week Twiggs Money Flow followed by a cross below zero warns of strong selling pressure. Breakout below 2200 would complete a double top reversal with a target of 2000*.

Nasdaq 100

* Target calculation: 2400 + ( 2400 - 2200 ) = 2600 or 2200 - ( 2400 - 2200 ) = 2000

Canada: TSX

The TSX Composite Index retreated below 13500, commencing a primary down-trend. A 13-week Twiggs Money Flow reversal below zero would strengthen the signal.

TSX Composite

United Kingdom

The FTSE 100 is testing its long-term ascending trendline after breaking medium-term support at 5850 to signal a correction. Penetration of the trendline would warn that the primary trend is weakening and would test support at 5600. Twiggs Money Flow (21-day) holding below zero warns of strong selling pressure. Breach of primary support at 5600 would offer a target of 5100*.

FTSE 100 Daily

* Target calculation: 6100 + ( 6100 - 5600 ) = 6600 or 5600 - ( 6100 - 5600 ) = 5100

Germany

The DAX is testing medium-term support at 7000 and the rising trendline. Twiggs Money Flow (21-day) below zero indicates selling pressure. Breach of 7000 would warn of a test of primary support at 6500. Respect of support is unlikely, but recovery above 7300 would indicate a fresh advance.

German DAX

* Target calculation: 7500 + ( 7500 - 6500 ) = 8500

France

The CAC-40 broke medium-term support at 3880 and the ascending trendline, warning of a test of primary support at 3700. A brief Twiggs Momentum appearance above the zero line suggests a down-trend.

France CAC-40

India

The Sensex rallied Tuesday, headed for another test of resistance at 18600. Breakout would suggest that the primary down-trend is weakening; and recovery above the April high would complete a reversal. The bullish divergence on 21-day Twiggs Money Flow, however, only indicates short-term buying pressure while the longer term picture remains bearish.

Sensex India

Singapore

The Straits Times Index broke through medium-term support at 3100, indicating a test of primary support at 2920. Twiggs Momentum's brief sojourn above the zero line suggests continuation of the down-trend.

Singapore

Japan

The Nikkei 225 is retracing to test the descending trendline at 9600 on Tuesday. Breakout would suggest another test of 10000, but the overall picture remains bearish, with declining 21-day Twiggs Money Flow indicating selling pressure. Failure of medium-term support at 9400 would test the primary level between 8600 and 8800.

Japan

South Korea

The Seoul Composite Index is testing medium-term support at 2040 and the ascending long-term trendline. Failure would test primary support at 1920. Declining 13-week Twiggs Money Flow warns of selling pressure.

South Korea

* Target calculation: 2100 + ( 2100 - 1900 ) = 2300

Taiwan

The Dow Jones Taiwan Index is ranging between 206 and 216. Breakout will indicate future direction, but declining 21-day Twiggs Money Flow favors another test of primary support at 196.

Taiwan Index

* Target calculation: 220 + ( 220 - 195 ) = 245

China

The Shanghai Composite Index is consolidating in a narrow range above primary support between 2700 and 2650 — a bearish sign. Rising Twiggs Money Flow (21-day) suggest short-term buying support, but the longer term outlook remains negative. Reversal below 2650 would confirm the primary down-trend signaled by the Shenzhen Index.

Shanghai Composite Index

The Shenzhen Composite Index respected resistance between 1130 and 1140. Follow-through below 1090 would confirm the primary down-trend. Rising 21-day Twiggs Money Flow, however, indicates further short-term buying support.

Shenzhen Index

* Target calculation: 1140 - ( 1300 - 1140 ) = 980

The Hang Seng Index is testing the band of primary support above 22200. Bullish divergence on 21-day Twiggs Money Flow, however, suggests buying support.

Hang Seng Index Hongkong

Brazil: Bovespa

The Bovespa Index is testing support at 62000. Failure would confirm the decline to 58000*. Twiggs Money Flow below zero reflects continued selling pressure.

Brazil Bovespa

* Target calculation: 64000 - ( 70000 - 64000 ) = 58000

South Africa: JSE

The JSE Overall Index broke medium-term support at 31400, indicating a test of primary support at 30000. Twiggs Money Flow (21-day) below zero would strengthen the signal.

JSE Overall Index

* Target calculation: 33000 + ( 33000 - 30000 ) = 36000

New Zealand: NZX

The NZ50 is undergoing a correction; failure of medium-term support at 3430 would test the long-term ascending trendline. Twiggs Money Flow (21-day) reversal below zero confirms selling pressure.

NZX 50 Index

* Target calculation: 3425 + ( 3425 - 3300 ) = 3550

Australia: ASX

The All Ordinaries is testing primary support at 4600. Bullish divergence on 21-day Twiggs Money Flow, however, signals buying pressure. Breakout above the trend channel would indicate that the correction is weakening. Failure of support at 4600, however, would signal a primary down-trend.

ASX All Ordinaries

* Target calculation: 5000 + ( 5000 - 4600 ) = 5400 or 4600 - ( 5000 - 4600 ) = 4200

The ASX 200 reflects similar buying support to the All Ords, but Twiggs Momentum deep below zero favors a down-trend. A rally that respects the zero line would strengthen the signal — and breach of primary support at 4500 would confirm.

ASX 200


Virtuous motives, trammeled by inertia and timidity,
are no match for armed and resolute wickedness.

~ Winston Churchill

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