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Dow and Fedex find support

By Colin Twiggs
August 5th, 2014 5:00 am EDT (7:00 pm AEST)

These extracts from my trading diary are for educational purposes. Any advice contained therein is provided for the general information of readers and does not have regard to any particular person's investment objectives, financial situation or needs and must not be construed as advice to buy, sell, hold or otherwise deal with any securities or other investments. Accordingly, no reader should act on the basis of any information contained therein without first having consulted a suitably qualified financial advisor. Full terms and conditions can be found at Terms of Use.



Research & Investment: Performance update

ASX200 Prime Momentum strategy returned +20.35%* for the 12 months ended 31st July 2014, outperforming the benchmark ASX200 Accumulation Index by +3.81%.

ASX200 Prime Momentum

Returns for July 2014 were 4.67%, so why the decline in rolling 12-month performance? Because performance for July 2013 (11.00%) is now excluded from the last 12 months. Another exceptional month was January 2014 (9.04%). Momentum performance tends to concentrate in a few good months each year which is why we are so averse to timing secondary corrections — if you miss one good month, it will hurt your annual performance.

The S&P 500 Prime Momentum strategy has been running nine months, since November 2013, and returned 8.92%* for the period, compared to 11.63% for the S&P 500 Total Return Index. A sell-off of momentum stocks affected performance since April, but macroeconomic and volatility filters indicate low risk typical of a bull market and we maintain full exposure to equities.

* Results are unaudited and subject to revision.

Dow and Fedex

Dow Jones Industrial Average is testing medium-term support at the December high of 16500. Respect of this line would indicate a healthy up-trend, while breach would warn of a correction to the primary trendline. Failure of primary support at 15400/15600 remains unlikely, but would warn of reversal to a down-trend. Completion of a 13-week Twiggs Money Flow trough above zero would suggest long-term buying pressure and another primary advance.

Dow Jones Industrial Average

* Target calculation: 16500 + ( 16500 - 15500 ) = 17500

The CBOE Volatility Index (VIX) remains below 20, suggesting continuation of the bull market.

VIX Index

Bellwether transport stock Fedex is also testing support at its December high ($144/$145). Respect would confirm a healthy up-trend — for both the stock and the economy. Likewise, a 13-week Twiggs Money Flow trough above zero would suggest long-term buying pressure and another primary advance. Breach of support is unlikely, but would warn of a test of primary support at $129/$130.

Fedex

* Target calculation: 145 + ( 145 - 130 ) = 160



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This our fathers bought for us long and long ago.

~ Rudyard Kipling, The Old Issue, 1899

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