Selling pressure rises
By Colin Twiggs
June 6th, 2011 6:30 a.m. ET (8:30 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 Jones Global Index has twice broken its long-term ascending trendline, indicating that the primary trend is losing momentum. The 21-day Twiggs Money Flow fall below zero warns of selling pressure. Failure of support at 258 would test primary support at 250. Recovery above 266 is unlikely, but would signal a fresh advance.
USA
Dow Jones Industrial Average
The Dow is undergoing a correction, headed for the long-term trendline below 12000. Bearish divergence on 21-day Twiggs Money Flow continues to warn of selling pressure. Primary support remains at 11600.
* Target calculation: 12400 + ( 12400 - 11600 ) = 13200
S&P 500
The S&P 500 is undergoing a similar correction. Bearish divergence on 13-week Twiggs Money Flow warns of selling pressure. Failure of support at 1300 would test the primary level at 1250.
* Target calculation: 1350 + ( 1350 - 1250 ) = 1450
Transport
Fedex 21-day Twiggs Money Flow descent below zero warns of selling pressure. Failure of support at 85 would confirm another primary down-trend. UPS is also testing support at its 6-month low. A primary reversal on the two would have negative implications for the broader economy.
Technology
The Nasdaq 100 is headed for a test of primary support at 2200. Bearish divergence on 21-day Twiggs Money Flow continues to warn of strong selling pressure.
* Target calculation: 2400 + ( 2400 - 2200 ) = 2600
Canada: TSX
The TSX Composite Index is again testing former primary support at 13500. Downward breakout would signal a primary down-trend; follow-through below 13400 would confirm. Rising 21-day Twiggs Money Flow, however, indicates buying support. Respect of 13400 would strengthen the signal.
United Kingdom
The FTSE 100 found support at 5850, indicated by long tails and rising 21-day Twiggs Money Flow. But the longer-term picture for Twiggs Money Flow is bearish and failure of support would signal a test of the primary level at 5600.
* Target calculation: 6100 + ( 6100 - 5600 ) = 6600
Germany
The DAX is headed for a test of the rising trendline. Breach of support at 7000 would confirm. Descent of 21-day Twiggs Money Flow below zero confirms strong selling pressure.
* Target calculation: 7500 + ( 7500 - 6500 ) = 8500
France
The CAC-40 likewise displays strong selling pressure, with 21-day Twiggs Money Flow below zero. Failure of medium-term support at 3880 would test primary support at 3700.
India
The Sensex is testing 18600 Monday. Breakout would indicate another bear rally, but the higher trough suggests that the down-trend is ending. Recovery above the descending trendline would confirm. The small bullish divergence on 21-day Twiggs Money Flow indicates short-term buying pressure.
Singapore
The Straits Times Index is headed for another test of 3100 Monday. Breakout would test primary support at 2920.
Japan
The Nikkei 225 broke medium-term support at 9400 Monday, signaling a test of primary support at 8600. Descending 21-day Twiggs Money Flow confirms selling pressure.
South Korea
The Seoul Composite Index continues to test resistance at 2150; breakout would signal an advance to 2300*. The sharp fall on 21-day Twiggs Money Flow, however, warns of selling pressure. Reversal below 2040 would test primary support at 1920.
* Target calculation: 2100 + ( 2100 - 1900 ) = 2300
Taiwan
The Dow Jones Taiwan Index is also strengthening. Breakout above 216 would signal a fresh advance. Breakout above the descending trendine on 21-day Twiggs Money Flow would confirm buying pressure.
* Target calculation: 220 + ( 220 - 195 ) = 245
China
The Shanghai Composite Index is closed Monday, after recovering above support at 2700. Narrow consolidation between 2700 and 2750 would be a bearish sign. Twiggs Money Flow (21-day) below zero indicates selling pressure. Reversal below 2650 would confirm the primary down-trend signaled by the Shenzhen Index.
The Shenzhen Composite Index retraced to test the new band of resistance, between 1130 and 1140. Descending 21-day Twiggs Money Flow confirms selling pressure.
* Target calculation: 1140 - ( 1300 - 1140 ) = 980
The Hang Seng Index is headed for another test of primary support at 22200. Retreat below zero by 21-day Twiggs Money Flow would warn of strong selling pressure.
Brazil: Bovespa
The Bovespa Index recovered to test resistance at 65000. Respect would confirm the decline to 58000*, while breakout would test the descending trendline. Twiggs Money Flow continues to reflect selling pressure.
* Target calculation: 64000 - ( 70000 - 64000 ) = 58000
South Africa: JSE
The JSE Overall Index is again testing medium-term support at 31400; breach would test primary support at 30000. Respect would again test 33000. Reversal below zero by 21-day Twiggs Money Flow would increase selling pressure.
* Target calculation: 33000 + ( 33000 - 30000 ) = 36000
New Zealand: NZX
The NZ50 retreated below the rising trendline, warning of a correction to the long-term ascending trendline. Reversal below zero by 21-day Twiggs Money Flow would confirm selling pressure.
* Target calculation: 3425 + ( 3425 - 3300 ) = 3550
Australia: ASX
The All Ordinaries is headed for a test of primary support at 4600. Reversal below zero by 21-day Twiggs Money Flow would confirm selling pressure. Failure of support would signal a primary down-trend.
* Target calculation: 5000 + ( 5000 - 4600 ) = 5400
On the ASX 200, descending 13-week Twiggs Money Flow now indicates selling pressure. Breach of primary support at 4500 would confirm a primary down-trend.
Those entrusted with handling the funds of others should establish performance goals at the onset of their stewardship. Lacking such standards, managements are tempted to shoot the arrow of performance and then paint the bull's-eye around wherever it lands.
~
Warren Buffett
(His observation also applies to the Fed)