Crude rises as markets fall
By Colin Twiggs
June 14th, 2011 4:00 a.m. ET (6:00 p.m. AET)
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.
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.
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.
* Target calculation: 12400 + ( 12400 - 11600 ) = 13200
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.
* Target calculation: 1350 + ( 1350 - 1250 ) = 1450 or 1250 - ( 1350 - 1250 ) = 1150
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.
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*.
* Target calculation: 2400 + ( 2400 - 2200 ) = 2600 or 2200 - ( 2400 - 2200 ) = 2000
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.
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*.
* Target calculation: 6100 + ( 6100 - 5600 ) = 6600 or 5600 - ( 6100 - 5600 ) = 5100
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.
* Target calculation: 7500 + ( 7500 - 6500 ) = 8500
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.
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.
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.
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.
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.
* Target calculation: 2100 + ( 2100 - 1900 ) = 2300
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.
* Target calculation: 220 + ( 220 - 195 ) = 245
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.
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.
* 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.
The Bovespa Index is testing support at 62000. Failure would confirm the decline to 58000*. Twiggs Money Flow below zero reflects continued selling pressure.
* Target calculation: 64000 - ( 70000 - 64000 ) = 58000
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.
* Target calculation: 33000 + ( 33000 - 30000 ) = 36000
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.
* Target calculation: 3425 + ( 3425 - 3300 ) = 3550
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.
* 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.
Virtuous motives, trammeled by inertia and timidity,
are no match for armed and resolute wickedness.
~ Winston Churchill