Retail Sales In The Spotlight

By Colin Twiggs
July 14, 2007 3:30 a.m. EST (5:30 p.m. AEST)

These extracts from my 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: Dow, Nasdaq and S&P500

Markets acquired new energy after improved sales reported by some chain stores. With consumer confidence surging to a 6-month high, the market appeared set for a lift-off. But the Commerce Department rained on the parade, releasing June retail sales figures down a disappointing 0.9%.

The Dow Jones Industrial Average broke out above its 10-week consolidation, signaling another primary advance and establishing a new, steeper trend channel. Twiggs Money Flow signals accumulation.

Long Term: The primary trend is up, with support at 13200.

Short Term: A retracement (or consolidation) to test new support at 13700 is expected. Reversal below 13500 is unlikely and would warn of a bull trap.

The Dow Jones Transportation Average made a bullish breakout above 5300 accompanied by strong rises in Fedex and UPS. Reversal below 5000 is not expected and would signal trend weakness.

The Nasdaq Composite made an upward breakout from the ascending broadening wedge pattern, while Twiggs Money Flow signals accumulation. Expect further gains.

Long Term: The primary trend remains upwards, with support at 2340 and 2500 (from 2525).

The S&P 500 broke through resistance at 1540, after a bullish failed down-swing, signaling another primary advance. Retracement (or consolidation) to test the new support level is likely.

Long Term: The primary trend remains up, with support at 1490.

LSE: United Kingdom

The FTSE 100 completed a bullish failed down-swing and is testing resistance at 6750. Breakout would signal an advance to the all-time high of 6900/7000. Twiggs Money Flow is consolidating below the downward trendline and upward breakout would be a bullish sign.

Long Term: The primary up-trend continues, with support at 6000 and 6450.

Japan: Nikkei

The Nikkei 225 shows a bullish consolidation below resistance at 18300. Twiggs Money Flow signals short-term distribution but longer term accumulation (the indicator is respecting zero). The target for an upward breakout is 19800 (18200+[18200-16600]). A fall below 17900/18000 is not expected - and would warn of a test of primary support at 16600.

Long Term: The primary trend remains up.

China: Hang Seng & Shanghai

The Hang Seng index continues to accelerate, breaking through 23000 and converging with Shanghai which has been running ahead for some time. Twiggs Money Flow signals strong accumulation, having completed a trough high above zero.

The Shanghai Composite index is consolidating above 3400, with declining volume indicating that the market is losing momentum. A small bullish pennant signals that a test of resistance at 4350 is likely.

ASX: Australia

The All Ordinaries is testing resistance at the top of the 10-week consolidation at the upper border of the trend channel. Upward breakout is likely after similar breakouts in US markets and would warn that the primary trend is accelerating - establishing a new trend channel drawn in light blue. Accelerating trends increase the risk of a blow-off (a sharp rise followed by an equally sharp fall). A Twiggs Money Flow (21-day) rise above 0.2 would signal strong accumulation.

Long Term: The primary trend remains up, with support at 5650 and 6000. A clear upward breakout would shift primary support to 6200.

Short Term: The failed down-swing is bullish, signaling continuation of the up-trend, but this has been countered by a bearish gravestone candle on Friday. A fall below 6350 would signal a test of support at 6200, while respect of 6350 (or a rise above Friday's high) would indicate another rally.

For a long time it had seemed to me that life was about to begin - real life. But there was always some obstacle in the way. Something to be got through first, some unfinished business, time still to be served, a debt to be paid. Then life would begin. At last it dawned on me that these obstacles were my life.

~ Fr. Alfred D'Souza

To understand my approach, please read Technical Analysis & Predictions in About The Trading Diary.