Buyers remain weak

By Colin Twiggs
April 18th, 2011 5:00 a.m. ET (7:00 p.m. AET)

These extracts from my trading diary are for educational purposes and should not be interpreted as investment or trading advice. Full terms and conditions can be found at Terms of Use.

The Dow Global index retreated below resistance at 267/268 before finding short-term support at 263. Bearish divergence on 21-day Twiggs Money Flow indicates selling pressure. Failure of 263 would warn of a correction to test support at 250.

USA

Dow Jones Industrial Average

The Dow found short-term support at 12200, but bearish divergence on 21-day Twiggs Money Flow continues to warn of selling pressure. Failure of support would indicate a correction to test primary support at 11550, while recovery above 12400 would signal an advance to 13200*.

* Target calculation: 12400 + ( 12400 - 11600 ) = 13200

S&P 500

The S&P 500 displays similar weakness on 21-day Twiggs Money Flow, and failure of 1300 would test primary support at 1250. Breakout above 1350 is less likely, but would offer a target of 1450*.

* Target calculation: 1350 + ( 1350 - 1250 ) = 1450

Transport

Bellwether stock Fedex is headed for a test of primary support at 85. Failure would warn of a reversal. The Dow Transport Index is stronger, however, testing the upper border of a broadening wedge pattern; upward breakout would signal a fresh advance.

Technology

The Nasdaq 100 is under-performing relative to the S&P 500 — another sign that the market is soft. Declining 13-week Twiggs Money Flow also warns of selling pressure. Failure of support at 2200 would signal a reversal.

Canada: TSX

The $CADOW shows a similar bearish divergence on 21-day Twiggs Money Flow, warning of selling pressure.

With the TSX Composite, bearish divergence on Twiggs Momentum also suggests weakness. Reversal below 13500 would signal a reversal.

United Kingdom

The FTSE 100 retreated from resistance at 6100. Twiggs Money Flow gives conflicting signals, with a decline similar to $CADOW on the 21-day indicator, while the longer term 13-week is rising strongly. Of the two, the daily indicator is more accurate and should take precedence. The only reason that I use the cruder, weekly indicator is for its ability to highlight major divergences which can become obscured in the daily movement. Reversal below 5850 would test primary support at 5500 to 5600.

* Target calculation: 6100 + ( 6100 - 5600 ) = 6600

Germany

The DAX found support at 7100 after a steep rally, the short retracement indicates buying pressure — also signaled by rising 21-day Twiggs Money Flow. Expect a test of 7450.

France

The CAC-40 encountered resistance at 4050. Expect another test, but respect would warn of a correction.

India

The Sensex reversed below short-term support at 19200 Monday, warning of another test of primary support at 17500. Twiggs Money Flow (13-week) below zero indicates that sellers continue to dominate.

Singapore

The Straits Times Index is also testing short-term support, at 3130. Failure would warn of another test of primary support.

Japan

The Nikkei 225 is headed for short-term support at 9400. Respect would continue the advance towards 10200, but failure would warn of another test of primary support between 8600 and 8800.

South Korea

The Seoul Composite Index broke through resistance at 2120, signaling an advance to 2250*. Rising 21-day Twiggs Money Flow indicates strong buying pressure. Reversal below 2080 is unlikely, but would test support at 2000.

* Target calculation: 2100 + ( 2100 - 1950 ) = 2250

Taiwan

The Dow Jones Taiwan Index is weaker and reversal below 204 would test primary support at 196. Respect of 204, however, would signal continuation of the advance to 219.

China

The Shanghai Composite Index broke medium-term resistance at 3000, while rising 13-week Twiggs Money Flow indicates buying pressure. Breakout above 3150 would confirm a primary up-trend.

* Target calculations: 3100 + ( 3100 - 2700 ) = 3500

The Hang Seng Index is testing short-term support at 23800 Monday. Failure would warn of another correction. Respect would mean another attempt at 24400 — with breakout confirming a primary up-trend.

Brazil: Bovespa

The Bovespa Index retreated to test medium-term support at 66000, bearish divergence on 21-day Twiggs Money Flow indicating short-term selling pressure. Failure of 66000 would test primary support at 64000.

* Target calculation: 68000 + ( 68000 - 64000 ) = 72000

South Africa: JSE

The JSE Overall Index retreated from resistance at 33000, but the overall impression remains bullish. Breakout above resistance would offer a target of 36000*.

* Target calculation: 33000 + ( 33000 - 30000 ) = 36000

New Zealand: NZX

The NZX50 broke out of its short term consolidation Monday to signal continuation of the advance to 3550*. Bearish divergence on 13-week Twiggs Money Flow, however, warns of weakness.

* Target calculation: 3425 + ( 3425 - 3300 ) = 3550

Australia: ASX

The All Ordinaries retreated below support at 5000, but 21-day Twiggs Money Flow (21-day) continues to look bullish. Expect another test of 5070. Breakout would offer a target of 5400*.

* Target calculation: 5000 + ( 5000 - 4600 ) = 5400

Respect of support at 4800 on the ASX 200 would indicate another test of 5000. Breakout would signal a primary advance.

All difficult things have their origin in that which is easy, and great things in that which is small.....Do the difficult things while they are easy and do the great things while they are small.

~ Lao Tzu: The Te-Tao Ching (circa 500 BC)