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Where oil goes, stocks will follow

By Colin Twiggs
April 4th, 2016 3:00 a.m. EDT (5:00 p.m. AEST)

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.



Where oil goes, stocks will follow. Crude oil prices are the canary in the coalmine at present. June 2016 Light Crude futures retreated from resistance at $43/barrel. Breach of medium-term support at $38 warns of another test of primary support at $32/barrel. Failure of support at $32 would offer a target of $22/barrel*, while respect of support would suggest that a bottom is forming.

June 2016 Light Crude Futures

* Target calculation: 32 - ( 42 - 32 ) = 22

The ASX started Monday with an early rally but ran into a spate of selling before the close. ASX 200 follow-through below 5000 would warn of a test of primary support at 4750. Declining 21-day Twiggs Money Flow, below zero, indicates medium-term selling pressure. Failure of primary support would reaffirm the long-term target of 4000*.

ASX 200

* Target calculation: 5000 - ( 6000 - 5000 ) = 4000



.....first check whether the market as a whole is rising or falling. In other words, are you in a bull market or bear market? If the latter, stay out. The odds are against you.

~ Nicholas Darvas: How I Made $2,000,000 In The Stock Market

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