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Dow bearish divergence

By Colin Twiggs
January 30th, 2012 10:00 p.m. ET (2:00 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.


Dow Jones Industrial Average is already in a primary up-trend, having completed a higher trough late last year, and is now testing the 2011 high of 12800. Retracement to 12300 and the rising trendline is likely. Respect would confirm the new up-trend, but a large bearish divergence on 13-week Twiggs Money Flow warns of failure and a cross below zero would indicate reversal to a primary down-trend.

Dow Jones Industrial Average

The Nasdaq 100 displays a similar bearish divergence on 13-week Twiggs Money Flow, warning of strong selling pressure. Retreat below 2400 would indicate a bull trap.

Nasdaq 100 Index

* Target calculations: 2400 + ( 2400 - 2150 ) = 2650

The S&P 500 has not yet reached its 2011 highs but retreat of 13-week Twiggs Money Flow below zero would warn of strong selling pressure and a primary trend reversal.

S&P 500 Index


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