Tag: NASDAQ 100

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S&P 500 and Nasdaq bullish while Dow hesitates

The S&P 500 broke through resistance at 1730, signaling an advance to 1790/1800*. Follow-through above 1750 would confirm. 21-Day Twiggs Money Flow troughs close to zero indicate buying pressure. Reversal below 1730 is unlikely at present, but would warn of a test of primary support at 1650.

S&P 500

* Target calculation: 1710 + ( 1710 – 1630 ) = 1790

VIX below 15 signals low market risk.

VIX Index

Dow Jones Industrial Average is headed for a test of 15700, but bearish divergence on 13-week Twiggs Money Flow continues to warn of a reversal. Breach of 14800 would confirm. Overall sentiment remains positive, however, and TMF recovery above the descending trendline (20%) would be a bullish sign. Breakout above 15700 would offer a target of 16600*.

Dow Jones Industrial Average

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

The Nasdaq 100 is contrastingly bullish, with 13-week Twiggs Money Flow troughs well above zero signaling strong buying pressure.

Nasdaq 100

* Target calculation: 3050 + ( 3050 – 2800 ) = 3300

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S&P 500 breakout

The S&P 500 and NASDAQ 100 broke through resistance to signal a primary advance. Dow Industrial Average has yet to confirm. Timing of the breakout is significant, with November elections looming and the Fed doing its best to prime the pump. September/October is a tentative time of the year, with risk of a “Spring sell-off” following the quarter end, as in 2007. Traders may ride the “election rally” but investors need be more cautious. The market is being driven by macro-economic signals (quantitative easing) rather than earnings.

All is not well: Europe is in recession, China headed for a sharp contraction, and some tough choices will have to be made in the US after the election euphoria is over. Balance sheet expansion (QE) by the Fed, ECB and PBOC is likely but inflation will be muted by private sector deleveraging. And QE will be scaled back as soon as credit contraction eases.

The S&P 500 broke through resistance at 1420 to signal an advance to 1570*. A 63-day Twiggs Momentum trough above zero reflects the primary up-trend. Retracement that respects support at 1400 would confirm the signal.

S&P 500 Index

* Target calculation: 1420 + ( 1420 – 1270 ) = 1570

Dow Jones Industrial Average is testing resistance at 13300. Breakout would strengthen the S&P 500 signal. Rising 13-week Twiggs Money Flow indicates buying pressure.

Dow Jones Industrial Average

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US breakout

The S&P 500 index followed through to confirm the breakout above resistance at 1300, signaling the start of a primary up-trend. Rising 13-week Twiggs Money Flow indicates selling pressure. Target for the advance is 1440*.

S&P500 Index

* Target calculation: 1300 + ( 1300 – 1160 ) = 1440

Nasdaq 100 shows a stronger breakout above 2400, with similar buying pressure reflected on 13-week Twiggs Money Flow. Initial target for the primary advance is 2600*.

Nasdaq 100 Index

* Target calculation: 2400 + ( 2400 – 2200 ) = 2600

Bellwether transport stocks, Fedex and UPS, reinforce the S&P and Nasdaq signal with new highs signaling a primary up-trend.

Fedex and UPS
Always bear in mind that the primary up-trend rests on unstable foundations (private sector deleveraging offset by deep government sector deficits) and may not last much longer than the November elections.

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Now for the correction

Several weeks ago, when asked what it would take to reverse the bear market, I replied that it would take 3 strong blue candles on the weekly chart followed by a correction — of at least two red candles — that respects the earlier low. We have had three strong blue candles. Now for the correction.

On the S&P 500 expect retracement to test support at 1200 or 1250. Respect of 1250 would signal a strong up-trend, while failure of support at 1200 would warn of another test of primary support at 1100. A trough on 13-week Twiggs Money Flow that respects the zero line would also indicate strong buying pressure.

S&P 500 Index

* Target calculation: 1225 + ( 1225 – 1100 ) = 1350

Dow Jones Industrial Average weekly chart displays a similar picture. Expect retracement to test support at 11500. A peak on 63-day Twiggs Momentum that respects the zero line would be bearish — warning of continuation of the primary down-trend.

Dow Jones Industrial Average

* Target calculation: 11500 + ( 11500 – 10500 ) = 12500

The Nasdaq 100 is testing resistance at 2400 — close to the 2011 high. Breakout would signal a primary advance to 2800*, while respect would warn of another test of primary support at 2000. Bullish divergence on 13-week Twiggs Money Flow has warned of a reversal for several weeks.

Nasdaq 100 Index

* Target calculation: 2400 + ( 2400 – 2000 ) = 2800

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Dow not yet out of the woods

Dow Jones Industrial Average followed through on its breakout above the 10600-11700 trading range but expect some resistance at 12000. The index looks set for a decent rally after narrow consolidation below resistance at 11700. Target for the breakout is 12600*.

Dow Jones Industrial Average

* Target calculation: 11600 + ( 11600 – 10600 ) = 12600

Yields on 10-year Treasury notes also rallied as funds flowed back into stocks, but we are not yet out of the woods.

10-Year Treasury Yield

There is bound to be a relief rally when EU leaders announce details of their rescue package — followed by a pull-back when traders figure out the costs involved. The danger is that Germany and France do an “Ireland” and rescue the banks but put themselves at risk. Both have public debt to GDP ratios close to 80 percent and it would not take much to push them into the danger zone. If they are down-graded then the kids are home alone — there will be no adults left in the room. A down-grade would raise their cost of funding and place their own budgets under pressure.

The S&P 500 is also testing resistance at 1260; breakout would confirm a Dow signal. 13-Week Twiggs Money Flow is rising but no bullish divergence means this could be secondary (medium-term) buying pressure.

S&P 500 Index

* Target calculation: 1120 + ( 1220 – 1120 ) = 1320

Nasdaq 100 index displays an ascending broadening wedge as it approaches resistance at 2400. The ascending wedge is a bearish pattern: Bulkowski maintains that it breaks out downward 73% of the time. Target would be the base of the pattern at 2000. Bullish divergence on 13-Week Twiggs Money Flow, however, indicates strong buying pressure. Breakout above 2450 would signal a primary advance to 2600*.

Nasdaq 100 Index

* Target calculation: 2400 + ( 2400 – 2200 ) = 2600

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Nasdaq hints at recovery

Dow Jones Industrial Average is testing resistance at 11700. Breakout would warn of a primary advance, but the market is prone to false signals because of excessive volatility and it would be prudent to wait for confirmation. Respect of 11700, or a false break above 11700, would re-visit support at 10600.

Dow Jones Industrial Average

* Target calculation: 11000 – ( 12000 – 11000 ) = 10000

The S&P 500 is similarly testing resistance at 1230 on the weekly chart. Breakout would signal an advance to 1350, while respect would indicate another test of 1100. Breakout above the declining trendline on 13-week Twiggs Money Flow suggests nothing more than a secondary reaction (bear market rally). See the monthly chart.

S&P 500 Index

* Target calculation: 1100 – ( 1250 – 1100 ) = 950

The Nasdaq 100 index, however, broke through 2350 and is headed for its July high. Bullish divergence on 13-week Twiggs Money Flow indicates reversal to an up-trend. Breakout above 2440 would confirm, offering a target of 2800*.

Nasdaq 100 Index

* Target calculation: 2400 + ( 2400 – 2000 ) = 2800

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NASDAQ bullish divergence

NASDAQ 100 index respected primary support at 2040 before rallying strongly on the weekly chart. Bullish divergence on 13-week Twiggs Money Flow indicates buying pressure. Breakout above 2340 would complete a double bottom. Reversal below 2000 is less likely, but would warn of a decline to 1700*. A word of caution: we are in a highly volatile market — do not act on signals without confirmation from other indexes.

NASDAQ 100 Index

* Target calculation: 2000 – ( 2300 – 2000 ) = 1700

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Dow threatens decline to 10000

Dow Jones Industrial Average is testing the band of support between 10600 and 10800. An up-tick in volume indicates some buying support but this appears insufficient to withstand downward pressure. Failure of support at 10600 is likely and would signal a primary decline to 10000*.

Dow Jones Industrial Average

* Target calculation: 11000 – (12000 – 11000 ) = 10000

The S&P 500 index is similarly testing support at 1100, while 21-day Twiggs Money Flow declining below zero warns of selling pressure. Breach of 1100 would signal a primary decline to 950*.

S&P 500 Index

* Target calculation: 1100 – ( 1250 – 1100 ) = 950

The NASDAQ 100 is headed for a test of support at 2040. Reversal  of 13-week Twiggs Money Flow below zero warns of a primary down-trend. Breach of support would signal another decline with a target of 1700*.

NASDAQ 100 Index

* Target calculation: 2000 – ( 2300 – 2000 ) = 1700

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US rally encounters resistance

Dow Jones Industrial Average tall shadow (or wick) on the latest candlestick [R] indicates rising selling pressure. With excitement about a European bailout deal fading, expect a test of support at 10600. Failure would indicate another down-swing, with a target of 10000*.

Dow Jones Industrial Average

* Target calculation: 11000 – ( 12000 – 11000 ) = 10000

S&P 500 Index shows continued consolidation between 1120 and 1220 on the weekly chart. 13-Week Twiggs Money Flow below zero indicates selling pressure. Failure of support at 1120 would test the 2010 low at 1020*/1000.

S&P 500 Index

* Target calculation: 1120 – ( 1220 – 1120 ) = 1020

NASDAQ 100 Index shows an evening star reversal warning, completed if price reverses below 2200. 63-Day Twiggs Momentum holding below zero reminds that we are in a primary down-trend. Breach of the lower trend channel would warn of another down-swing, with a target of 1750*.

NASDAQ 100 Index

* Target calculation: 2050 – ( 2350 – 2050 ) = 1750

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Bear rally and triple-witching

A narrow range with large volume often acts like a compressed spring — absorbing buying pressure before launching a sharp move in the opposite direction. The spike in volume [W] on Dow Jones Industrial Average was due to triple-witching hour on Friday, but we should nevertheless be wary of a fall below 11400, which would indicate another test of 10600.

Dow Jones Industrial Average

* Target calculation: 11000 – ( 12000 – 11000 ) = 10000

The weekly chart of S&P 500 shows a similar bear rally. Expect a test of 1250/1260. But 63-day Momentum below zero reminds that the index is in a primary down-trend; a peak below the zero line would warn of another down-swing.

S&P 500 Index

* Target calculation: 1125 – ( 1250 – 1125 ) = 1000

NASDAQ 100 Index displays a particularly strong rally, but this remains a bear market. Expect strong resistance at 2400. Failure of support would offer a target of 1700*.

NASDAQ 100 Index

* Target calculation: 2050 – ( 2400 – 2050 ) = 1700

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