Nasdaq accelerates while Dow and S&P 500 hesitate

By Colin Twiggs
November 4th, 2013 12:30 am EST (4:30 pm AEDT)

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The Nasdaq 100 continues its accelerating up-trend — as indicated by successively steeper trendlines and a rising trendline on 13-week Twiggs Momentum. Accelerating trends, or blow-offs, are well-known for rapid gains but inevitably end with a sharp fall.

* Target calculation: 2900 + ( 2900 - 2500 ) = 3400

The CBOE Volatility Index (VIX) remains below 15, indicating low market risk.

The S&P 500 is edging higher on the weekly chart, but bearish divergence on 13-week Twiggs Money Flow warns of rising selling pressure. Reversal below the secondary trendline at 1700 would indicate a correction to the primary trendline and primary support at 1630.

* Target calculation: 1730 + ( 1730 - 1650 ) = 1810

Dow Jones Industrial Average is testing resistance at 15700. Breakout would offer a target of 16600*. Respect of the descending trendline on 13-week Twiggs Money Flow, however, would confirm the earlier bearish divergence and warn of a correction to primary support at 14800. Breach of 14800 remains unlikely, but would signal a reversal.

* Target calculation: 15700 + ( 15700 - 14800 ) = 16600

Canada's TSX 60 is retracing after a strong spurt. Duration of retracements reflect trend strength. Another trough above zero on 13-week Twiggs Money Flow would suggest strong buying pressure. Reversal below 740 is most unlikely, but would warn of trend weakness.

* Target calculation: 740 + ( 740 - 680 ) = 800

TSX 60 VIX below 15 also reflects low market risk.

A long habit of not thinking a thing wrong gives it the superficial appearance of being right, and raises at first a formidable outcry in defense of custom. But the tumult soon subsides. Time makes more converts than reason.

~ Thomas Paine