S&P 500 and Nasdaq test key resistance

On the monthly chart, the S&P 500 Index is testing resistance at 1420. A trough above zero on 13-week Twiggs Money Flow indicates buying pressure. Breakout above 1420 would signal an advance to the 2007 high at 1560*.

* Target calculation: 1420 + ( 1420 – 1280 ) = 1560

The Nasdaq 100 is similarly testing resistance at 2800 on the weekly chart. Breakout would offer a target of 3150*. A 63-day Twiggs Momentum trough above zero indicates continuation of the primary up-trend.

* Target calculation: 2800 + ( 2800 – 2450 ) = 3150

10-Year Treasury Yields recovered above initial resistance at 1.70 percent. Expect an attempt at the primary level of 2.40 percent. The Fed purchased $5 billion of Treasury notes/bonds (nominal) and MBS last week; so they are not the cause of the rise. Investors appear to be flowing out of Treasuries and driving stocks higher.

Colin Twiggs

Colin Twiggs is a former investment banker with almost 40 years of experience in financial markets. He founded PVT Capital (AFSL number 546090), which provides income and growth strategies to wholesale clients.

Colin also co-founded Incredible Charts and writes the popular Patient Investor newsletter.

Using a top-down approach, Colin identifies macro trends in the global economy and then combines fundamental and technical analysis to evaluate opportunities in sectors that stand to benefit.

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.