S&P 500 and Dow: correction is over

By Colin Twiggs
June 18th, 2012 1:00 a.m. ET (5:00 p.m. AET)

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The S&P 500 closed Friday above resistance at 1340, confirming the bullish divergence on 21-day Twiggs Money Flow (hat tip johnb). Expect retracement to test the new support level, followed by a rally to the March/April high of 1420. Wait for breakout on the Nasdaq 100 to confirm the Dow and S&P 500 signals.

S&P 500

Dow Jones Industrial Average broke medium-term resistance at 12600/12700, indicating a rally to 13300. Expect retracement to first test the new support level. A bounce off the zero line by 13-week Twiggs Money Flow indicates medium-term buying pressure — and a likely rally — but the long-term bearish divergence remains and suggests strong resistance at 13300.

Dow Jones Industrial Average

Nasdaq 100 has penetrated its descending trendline, signaling a bottom, but has yet to break resistance at 2580 — which would signal an advance to 2800 and confirm the Dow/S&P signals. Bullish divergence on 21-day Twiggs Money Flow indicates medium-term buying pressure.

Nasdaq 100

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