Broad market rally
By Colin Twiggs
February 19th, 2015 2:00 p.m. AEDT (10:00 p.m. ET)
Advice herein is provided for the general information of readers and does not have regard to any particular person's investment objectives, financial situation or needs. Accordingly, no reader should act on the basis of any information contained herein without first having consulted a suitably qualified financial advisor.
Major indices across the US, Europe and Japan are displaying strong performance. China and India appear to be encountering stronger resistance, but should also be buoyed by the broad recovery.
Bellwether transport stock Fedex (FDX) is headed for another test of resistance at $182/$184. Breakout would signal a primary advance, with a target of $200*, indicating that economic activity is improving.
* Target calculation: 184 + ( 184 - 168 ) = 200
The S&P 500 is testing resistance at 2100. Breakout would offer a medium-term target of 2200*. Rising 13-week Twiggs Money Flow indicates medium-term buying pressure. Respect of 2100 is unlikely, but would suggest another test of primary support at 2000.
* Target calculation: 2100 + ( 2100 - 2000 ) = 2200
The Nasdaq 100 successfully penetrated resistance at 4300/4350, signaling an advance to 4500*. Oscillation of 13-week Twiggs Money Flow high above zero suggests strong buying pressure. Expect retracement to test the new support level, but breach is unlikely and would warn of another correction.
* Target calculation: 4300 + ( 4300 - 4100 ) = 4500
CBOE Volatility Index broke out below the recent triangle, indicating risk has reverted from Moderate to Low.
Germany's DAX is testing resistance at 11000*. Rising 13-week Twiggs Momentum troughs above zero indicate a strong up-trend. Retracement that respects medium-term support at 10600 would strengthen the bull signal.
* Target calculation: 10000 + ( 10000 - 9000 ) = 11000
The Footsie is also testing long-term resistance at 6900. Breakout would signal a fresh primary advance, with a long-term target of 8000*. Follow-through above 7000 would confirm. Momentum is rising, but it will take considerable impetus to break through the December 1999 high of 6950.
* Target calculation: 7000 + ( 7000 - 6000 ) = 8000
China's Shanghai Composite Index found support at 3050, but declining 13-week Twiggs Money Flow warns of medium-term selling pressure. Respect of resistance at 3400 is likely. Reversal below 3050 would warn of a test of the primary trendline at 2700. The stimulus effect of lower energy prices may cushion the fall but economic activity is declining.
Japan's Nikkei 225 Index continues to test resistance at its 2007 high of 18000. Rising 13-week Twiggs Money Flow reflects medium-term buying pressure. Breakout above 18000 would signal another primary advance, with a target of 20000*.
* Target calculation: 18000 + ( 18000 - 16000 ) = 20000
India's SENSEX found support at 28000 and recovery above 29000 signals another test of 30000. A lower peak on 13-week Twiggs Money Flow reflects medium-term selling pressure. Respect of resistance at 30000 is likely, while breach of support at 28000 would test primary support at 26500.
* Target calculation: 29000 + ( 29000 - 27000 ) = 31000
The ASX 200 is headed for a test of 6000 after breaking out of the recent flag continuation pattern. Rising 21-day Twiggs Money Flow indicates short-term buying pressure. Reversal below support at 5850 is unlikely, but would warn of a correction.
* Target calculation: 5650 + ( 5650 - 5150 ) = 6150
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~ Marcus Aurelius
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