The US remains hesitant under the uncertainty of fiscal cliff negotiations. The S&P 500 broke medium-term resistance at 1425 but a tall shadow on today’s candle indicates short-term selling pressure. Expect a test of the new support level before further advances signaled by medium-term buying pressure on 21-day Twiggs Money Flow (holding above zero). Respect of 1425 would signal an advance to the September/October high of 1475.
* Target calculation: 1475 + ( 1475 – 1350 ) = 1600
The Nasdaq 100 weekly chart is testing medium-term resistance at 2700. Breakout would signal an advance to 2800/2900. Falling 63-day Twiggs Momentum, however, warns of a primary down-trend; strengthened if the indicator reverses below zero. Profit-taking on stocks like AAPL, to recognize capital gains ahead of fiscal cliff measures, may be adding to selling pressure.
* Target calculation: 2450 – ( 2900 – 2450 ) = 2000
Colin Twiggs is a former investment banker with almost 40 years of experience in financial markets. He co-founded Incredible Charts and writes the popular Trading Diary and Patient Investor newsletters.
Using a top-down approach, Colin identifies key macro trends in the global economy before evaluating selected opportunities using a combination of fundamental and technical analysis.
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.
He founded PVT Capital (AFSL No. 546090) in May 2023, which offers investment strategy and advice to wholesale clients.