The S&P 500 displays a small broadening wedge (reverse pennant) on the daily chart. Respect of support at 1500 on the last down-swing (within the wedge) suggests an upward breakout. Watch for bearish divergence on 21-day Twiggs Money Flow — which would warn of retracement to the rising trendline.
The quarterly chart warns us to expect strong resistance at the 2000/2007 highs of 1550/1575. Recovery of 63-day Twiggs Momentum above 10% would increase likelihood of an upward breakout — with a target of 1750* — while retreat below zero would suggest a primary reversal.
* Target calculation: 1550 + ( 1550 – 1350 ) = 1750
The Dow is similarly testing long-term resistance, at 14000. Breakout is likely, with 13-week Twiggs Money Flow troughs at zero indicating long-term buying pressure.
I repeat my warning from last week:
These are times for cautious optimism. Central banks are flooding markets with freshly printed money, driving up stock prices, but this could create a bull trap if capital investment, employment and corporate earnings fail to respond.
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.
Commentary in the international blog sites indicates that retail investors are moving strongly into the stock market. This suggests that a further rise is likely, with the retailers’ orders increasingly being filled by departing professionals. Could be a spectacular retreat when it happens.
I am waiting to see how they react to some bad news. If ignored …. that would be bullish sign.
First of all, thanks for your interesting reports.
It is true that the market climb to heavy resistance line.
From the methodology that I developed and publish an en.forwardinvest.info I get the impression that the bullish wave did not accomplish yet and I expect anther 30-45 point on the S&P 500.
All the best,
YZ