US: Signs a top is forming?

By Colin Twiggs
October 29th, 2012 3:00 a.m. ET (6:00 p.m. AET)

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US markets will be closed on Monday as New York braces for Hurricane Sandy.

The S&P 500 continues to test support at 1400. Bearish divergence on 63-day Twiggs Momentum warns that a top may be forming. Breach of support would strengthen the signal. The market is currently enjoying the "honeymoon" period in the lead up to the election. Reality is likely to bite after the results are in, as the government deals with some tough choices — like how to create jobs while reducing the budget deficit.

S&P 500

The Dow Jones Industrial Average is similarly testing support at 13000 on the weekly chart. Breach of support — and the primary trendline — would warn that a top is forming. A 13-week Twiggs Money Flow reversal below zero would indicate rising selling pressure, while a trough above the line would suggest another primary advance. Recovery above 13650 is unlikely at present but would confirm an advance.

Dow Jones Industrial Average

* Target calculation: 13000 + ( 13000 - 12000 ) = 14000

The markets are the same now as they were five or ten years ago because they keep changing — just like they did then.

~ Ed Seykota