The S&P 500 found short-term support at 1370 after penetrating the rising trendline on a weekly chart. Loss of momentum warns that a top is forming. Reversal of 63-day Twiggs Momentum below zero would strengthen the signal. Breach of support would test the primary level at 1270.
Note how the S&P 500 lately moves in increments of fifty: 1270, 1320, 1370, 1420, 1470…….
The Nasdaq 100 similarly penetrated its rising trendline — shown here on a monthly chart — warning that a top is forming. 63-Day Twiggs Momentum (not shown) is below zero, strengthening the signal. Breach of primary support at 2450 would confirm the primary down-trend signaled by bearish divergence on 13-week Twiggs Money Flow. Respect of primary support is unlikely, but would indicate another advance.
* Target calculation: 2400 – ( 2800 – 2400 ) = 2000
I don’t believe drawing a support line from 10/04/11 to 6/04/12 on the S&P 500 would be an accurate support level for the correction we’re currently in. The correction from May to October 2011 was a large/major correction compared to the smaller/minor corrections of April to June, and September 14 to current of this year. This makes the support line to steep.
I always enjoy reading your views of the markets. Thanks
Thanks for your views. I use horizontal lines to reflect support and trendlines to gauge momentum. According to the trendline and the indicator, momentum is falling, warning of a top. A correction to 1270 would reinforce this.