US markets show promise of recovery
By Colin Twiggs
December 5th, 2011 4:30 a.m. ET (8:30 p.m. AET)
We are not out of the woods yet, but the S&P 500 weekly chart is starting to diverge from its mid-2008 pattern. Headed for a test of the descending trendline and resistance at 1300, an index breakout would signal a primary advance to 1450* and the end of the bear market. Recovery of 63-day Twiggs Momentum above zero would support this.
* Target calculation: 1300 + ( 1300 - 1150 ) = 1450
Dow Jones Industrial Average, however, displays short-term resistance between 12000 and 12300 on the daily chart. Reversal of 21-day Twiggs Money Flow below zero would warn of rising selling pressure.
* Target calculation: 12300 + ( 12300 - 11200 ) = 13400
Nasdaq 100 Index is headed for resistance at 2400. Upward breakout would offer a target of 2750*. Bearish divergence on 13-week Twiggs Money Flow warns of selling pressure, but breakout above the descending trendline would negate this.
* Target calculation: 2400 + ( 2400 - 2050 ) = 2750
The FTSE 100 index is headed for resistance at 5700. Breakout would signal an advance to the 2011 highs at 6100. Rising 13-week Twiggs Money Flow indicates buying pressure.
* Target calculation: 5700 + ( 5700 - 5200 ) = 6200
The Dow Jones Euro Stoxx 50 also shows signs of recovery, heading for a test of the descending trendline and resistance at 2500. Breakout would signal a primary advance to 2900* and the end of the bear market. Momentum is rising but remains a long way below the zero line. Respect of 2500 would be a bear signal not only for the euro-zone, but for the global economy.
* Target calculation: 2500 + ( 2500 - 2100 ) = 2900
The first panacea for a mismanaged nation is inflation of the currency; the second is war. Both bring a temporary prosperity; both bring a permanent ruin. But both are the refuge of political and economic opportunists.
~ Ernest Hemingway