Dow bearish divergence

By Colin Twiggs
January 30th, 2012 10:00 p.m. ET (2:00 p.m. AET)

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Dow Jones Industrial Average is already in a primary up-trend, having completed a higher trough late last year, and is now testing the 2011 high of 12800. Retracement to 12300 and the rising trendline is likely. Respect would confirm the new up-trend, but a large bearish divergence on 13-week Twiggs Money Flow warns of failure and a cross below zero would indicate reversal to a primary down-trend.

The Nasdaq 100 displays a similar bearish divergence on 13-week Twiggs Money Flow, warning of strong selling pressure. Retreat below 2400 would indicate a bull trap.

* Target calculations: 2400 + ( 2400 - 2150 ) = 2650

The S&P 500 has not yet reached its 2011 highs but retreat of 13-week Twiggs Money Flow below zero would warn of strong selling pressure and a primary trend reversal.

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