Dow signals fresh advance

By Colin Twiggs
November 12th, 2013 8:30 am ET (8:30 pm AEDT)

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Dow Jones Industrial Average broke resistance at 15700, ending the consolidation of recent months and signaling an advance to 16600*. Expect retracement to test the new support level in the next few weeks. Respect would confirm the advance. Penetration of the descending trendline on 13-week Twiggs Money Flow indicates medium-term buying pressure. Reversal below 15500 is unlikely, but would warn of another test of primary support at 14800.

Dow Jones Industrial Average

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

The S&P 500 is testing short-term resistance at 1775. Breakout would offer a short-term target of 1800*. Bearish divergence on 13-week Twiggs Money Flow appears to have ended. Reversal below 1750 is unlikely at present, but would indicate a correction to at least 1710.

S&P 500

* Target calculation: 1775 + ( 1775 - 1750 ) = 1800

CBOE Volatility Index (VIX) below 15 continues to indicate low market risk.

VIX Index

The Nasdaq 100 continues its accelerating up-trend, with Twiggs Money Flow indicating strong buying pressure. Short retracement is likely and breakout above 3400 would suggest another advance. Accelerating trends, or blow-offs, enjoy rapid gains but inevitably end with a sharp fall.

Nasdaq 100

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

Canada's TSX 60 is consolidating in a narrow range at its medium-term target of 770 after a strong spurt. This is a bullish sign and follow-through above 775 would signal a further advance to 800*. Rising 13-week Twiggs Money Flow suggests buying pressure. Reversal below 740 is most unlikely.

TSX 60

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

TSX 60 VIX is above 15 but still in the low risk range.

TSX 60 VIX

We are what we repeatedly do. Excellence then, is not an act, but a habit.

~ Aristotle

Colin Twiggs

Author: Colin Twiggs is a former investment banker with almost 40 years of experience in financial markets. He co-founded Incredible Charts and writes the popular Trading Diary and Patient Investor newsletters.

Using a top-down approach, Colin identifies key macro trends in the global economy before evaluating selected opportunities using a combination of fundamental and technical analysis.

Focusing on interest rates and financial market liquidity as primary drivers of the economic cycle, he warned of the 2008/2009 and 2020 bear markets well ahead of actual events.

He founded PVT Capital (AFSL No. 546090) in May 2023, which offers investment strategy and advice to wholesale clients.