Tuesday Update
By Colin Twiggs
August 15, 2006 5:15 a.m. ET
August 15, 2006 5:15 a.m. ET
Apologies for the erratic delivery over the past few weeks. I
have now returned home and can settle into a normal
routine.
Your feedback is greatly appreciated.
These extracts from my daily trading diary are for educational purposes and should not be interpreted as investment advice. Full terms and conditions can be found at Terms of Use.
Your feedback is greatly appreciated.
These extracts from my daily trading diary are for educational purposes and should not be interpreted as investment advice. Full terms and conditions can be found at Terms of Use.
USA
The overall state of the market is best summed up by the
monthly chart of the Dow Industrial Average. After
testing resistance at the previous high of 11600, the average
has pulled back to test support at 10700. A close below this
level would signal a primary down-trend, while a close above
the recent highs of 11250/11300 would signal another test of
11600 and a possible breakout to a new high.
Short-term support sits at 11050 and resistance at 11250/11300.
Twiggs Money Flow (21-day) remains well below zero,
signaling
distribution.
The Nasdaq 100 is consolidating in a narrow range below
1520. A close below 1480 would be bearish, while a close below
1450 would confirm the down-trend. No sharp move has developed
after the downward breakout, so reversal above 1520 would be
just as likely -- if
Twiggs Money Flow (21-day) was not signaling strong
distribution.
The S&P 500 displays a similar pattern to the Dow,
with short-term resistance at 1280/1290 and support at 1260.
Twiggs Money Flow (21-day) below zero signals
distribution, warning of another test of primary support at
1220.
Gold
Spot gold made a downward breakout from a large symmetrical triangle, with a target of $450 (630 - (730 - 550)). A close below support at $600 would confirm the signal, but beware of reversal if the dollar weakens.
Spot gold made a downward breakout from a large symmetrical triangle, with a target of $450 (630 - (730 - 550)). A close below support at $600 would confirm the signal, but beware of reversal if the dollar weakens.
Source: Netdania
Currencies
Contrary to expectations, the US Dollar Index has strengthened since the recent pause in rate hikes, but the intermediate trend remains downward. Reversal below recent support at 84.50 would confirm another test of major support at 83.50 -- and gold would be likely to rally.
Contrary to expectations, the US Dollar Index has strengthened since the recent pause in rate hikes, but the intermediate trend remains downward. Reversal below recent support at 84.50 would confirm another test of major support at 83.50 -- and gold would be likely to rally.
Source: Netdania
United Kingdom
The FTSE 100 appears to have respected support at 5800 -- confirmed if there is a close above 5900. Twiggs Money Flow (21-day) is trending upwards, signaling accumulation.
The FTSE 100 appears to have respected support at 5800 -- confirmed if there is a close above 5900. Twiggs Money Flow (21-day) is trending upwards, signaling accumulation.
Japan
The Nikkei 225 broke through resistance at 15700, signaling the start of an up-trend that should test the earlier high of 17500. Tuesday has remained flat, but as long as the index remains above the new 15700 support level, the trend looks positive.
The Nikkei 225 broke through resistance at 15700, signaling the start of an up-trend that should test the earlier high of 17500. Tuesday has remained flat, but as long as the index remains above the new 15700 support level, the trend looks positive.
ASX Australia
The All Ordinaries consolidation has shifted slightly, ranging between 4900 and 5000. As duration of the consolidation lengthens, the direction of the breakout increases in significance. A close above 5000 would be bullish, while a close below 4900 would mean a test of primary support at 4800. Twiggs Money Flow (21-day) appears to be edging higher, but remains uncertain.
The All Ordinaries consolidation has shifted slightly, ranging between 4900 and 5000. As duration of the consolidation lengthens, the direction of the breakout increases in significance. A close above 5000 would be bullish, while a close below 4900 would mean a test of primary support at 4800. Twiggs Money Flow (21-day) appears to be edging higher, but remains uncertain.
For more background information, read About
the Trading Diary.
Author: Colin Twiggs is a former investment banker with almost 40 years of experience in financial markets. He co-founded Incredible Charts and writes the popular Trading Diary and Patient Investor newsletters.
Using a top-down approach, Colin identifies key macro trends in the global economy before evaluating selected opportunities using a combination of fundamental and technical analysis.
Focusing on interest rates and financial market liquidity as primary drivers of the economic cycle, he warned of the 2008/2009 and 2020 bear markets well ahead of actual events.
He founded PVT Capital (AFSL No. 546090) in May 2023, which offers investment strategy and advice to wholesale clients.