The S&P 500 index is headed for medium-term support at 1160. 21-Day Twiggs Money Flow warns of (medium-term) selling pressure. If support at 1160 fails, primary support at 1075/1100 is unlikely to hold — offering a target of 900*. Reversal below the rising trendline on 63-day Twiggs Momentum would indicate continuation of the primary down-trend.
* Target calculation: 1100 – ( 1300 – 1100 ) = 900
Dow Jones Europe index is also headed for primary support, at 205. Failure is likely and would offer a target of 160*. Reversal of 13-week Twiggs Money Flow below zero would warn of rising selling pressure.
* Target calculation: 210 – ( 260 – 210 ) = 160
Hi Colin,
What is your reasoning behind “Primary support at 1075/1100 is unlikely to hold — offering a target of 900”.
There is fair support / resistance band between 1050 and1125 going back to March 2010. There is also a weak rising triangle as well as a rising trendline, on the momentum oscillator. This should put the odds in favour of the S&P500 not dropping to 900.
However, as you say “Reversal below the rising trendline on 63-day Twiggs Momentum would indicate continuation of the primary down-trend”.
Thanks for you great posts.
“….If support at 1160 fails, primary support at 1075/1100 is unlikely to hold”
Three factors: (1) We are already in a bear market, having broken primary support at 1250; (2) A false “recovery” above 1250, as in 2008; and (3) Rising selling pressure as indicated by 21-day Twiggs Money Flow.
Regards, Colin