Monday USA Update

By Colin Twiggs
August 28, 2006 10:25 p.m. ET (12:25 a.m. AET)

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The Nasdaq 100 completed a small flag at [M], a continuation signal that would normally mean a test of resistance at 1630. However, the low volume is cause for concern -- we should see an upsurge in volume at the breakout. If volumes remain low over the next few days, the signal is not to be trusted. Twiggs Money Flow (21-day), however, is holding above the zero line, an encouraging sign.





The Dow Jones Industrial Average also completed a small flag, but the weak close and low volume indicate that further consolidation between 11250 and 11400 is likely. Consolidation above a new support level (11250), however, is a bullish sign in an up-trend. Twiggs Money Flow (21-day)is holding above the zero line, another positive sign.





The S&P 500 completed a similar pattern, with a weak close accompanied by low volume. Watch for a breakout above short-term resistance (1303) to signal a test of the 6-month high of 1325. The breakout should be accompanied by stronger volume, showing buyers commitment. Twiggs Money Flow (21-day) is rising -- a positive sign.










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Colin Twiggs

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.