S&P 500 breakout
By Colin Twiggs
April 3rd, 2014 3:00 am EDT (6:00 pm AEDT)
Research & Investment: Performance update
Our ASX200 Prime Momentum strategy returned +42.10%* for the 12 months ended 31st March 2014, compared to +13.46% for the benchmark ASX200 Accumulation Index.
* Results are unaudited and subject to revision.
The S&P 500 Prime Momentum strategy has only been running five months, since November 2013, but returned 8.73%* for the period, compared to 6.28% for the S&P 500 Total Return Index.
S&P 500 breakout
Completion of a narrow consolidation on the S&P 500 weekly chart and a shallow correction (still pending) on the Nasdaq 100 would suggest a strong up-trend.
The S&P 500 broke through resistance at 1875/1880, signaling an advance to 1950*. Layering above 1850 throughout March reflected strong selling, with bearish divergence on 21-day Twiggs Money Flow warning of medium-term selling pressure, but upward breakout indicates that buyers have prevailed. Reversal below 1875 is unlikely, but would warn of a bull trap — as would a peak below the descending trendline on Twiggs Money Flow.
* Target calculation: 1850 + ( 1850 - 1750 ) = 1950
CBOE Volatility Index (VIX) at 13 indicates low risk typical of a bull market.
The Nasdaq 100 found support at 3550 and the (secondary) ascending trendline. Recovery above 3700 would confirm another advance, but continued bearish divergence on 13-week Twiggs Money Flow would warn of persistent selling pressure.
* Target calculation: 3750 + ( 3750 - 3550 ) = 3950
Canada's TSX 60 broke through resistance at 820, signaling an advance to 850*. Sharp divergence on 13-week Twiggs Money Flow is testimony to the level of selling encountered at the resistance level. Completion of a trough high above zero would signal a strong up-trend. Reversal below 810 is unlikely, but would warn of a bull trap.
* Target calculation: 810 + ( 810 - 770 ) = 850
TSX 60 VIX is exceptionally low at 9, typical of a strong bull market.
Never let the fear of striking out keep you from playing the game.
~ Babe Ruth