S&P 500 breakout

By Colin Twiggs
April 3rd, 2014 3:00 am EDT (6:00 pm AEDT)

These extracts from my trading diary are for educational purposes. Any advice contained therein is provided for the general information of readers and does not have regard to any particular person's investment objectives, financial situation or needs and must not be construed as advice to buy, sell, hold or otherwise deal with any securities or other investments. Accordingly, no reader should act on the basis of any information contained therein without first having consulted a suitably qualified financial advisor. Full terms and conditions can be found at Terms of Use.

Research & Investment: Performance update

Our ASX200 Prime Momentum strategy returned +42.10%* for the 12 months ended 31st March 2014, compared to +13.46% for the benchmark ASX200 Accumulation Index.

* Results are unaudited and subject to revision.

ASX200 Prime Momentum

The S&P 500 Prime Momentum strategy has only been running five months, since November 2013, but returned 8.73%* for the period, compared to 6.28% for the S&P 500 Total Return Index.

S&P 500 breakout

Completion of a narrow consolidation on the S&P 500 weekly chart and a shallow correction (still pending) on the Nasdaq 100 would suggest a strong up-trend.

The S&P 500 broke through resistance at 1875/1880, signaling an advance to 1950*. Layering above 1850 throughout March reflected strong selling, with bearish divergence on 21-day Twiggs Money Flow warning of medium-term selling pressure, but upward breakout indicates that buyers have prevailed. Reversal below 1875 is unlikely, but would warn of a bull trap — as would a peak below the descending trendline on Twiggs Money Flow.

S&P 500

* Target calculation: 1850 + ( 1850 - 1750 ) = 1950

CBOE Volatility Index (VIX) at 13 indicates low risk typical of a bull market.

VIX Index

The Nasdaq 100 found support at 3550 and the (secondary) ascending trendline. Recovery above 3700 would confirm another advance, but continued bearish divergence on 13-week Twiggs Money Flow would warn of persistent selling pressure.

Nasdaq 100

* Target calculation: 3750 + ( 3750 - 3550 ) = 3950

Canada's TSX 60 broke through resistance at 820, signaling an advance to 850*. Sharp divergence on 13-week Twiggs Money Flow is testimony to the level of selling encountered at the resistance level. Completion of a trough high above zero would signal a strong up-trend. Reversal below 810 is unlikely, but would warn of a bull trap.

TSX 60

* Target calculation: 810 + ( 810 - 770 ) = 850

TSX 60 VIX is exceptionally low at 9, typical of a strong bull market.


Never let the fear of striking out keep you from playing the game.

~ Babe Ruth