The FTSE 100 continues to test support at 6600. Upward breakout from the recent flag formation would signal an advance to the December 1999 high of 6950/7000*. Falling 13-week Twiggs Money Flow suggests medium-term selling pressure, but a trough above zero would be a long-term bull signal. Breach of 6600 would warn of a correction to primary support and the rising trendline at 6400.
* Target calculation: 6700 + ( 6700 – 6400 ) = 7000
Dow Jones Euro Stoxx 50 continues its test of resistance at 3100 on the monthly chart. Rising 13-week Twiggs Momentum suggests a primary up-trend. Breakout above 3100 would signal an advance to 3500*. Reversal below 3000 is unlikely, but would indicate a correction to the rising trendline.
* Target calculation: 3000 + ( 3000 – 2500 ) = 3500
Germany’s DAX leads the way with a strong advance to 9500*. Steeply rising 13-week Twiggs Money Flow signals strong buying pressure. Respect of the target at 9500 would suggest a correction to the rising trendline and support at 8500.
* Target calculation: 8500 + ( 8500 – 7500 ) = 9500
clearly over bought?
I suspect that top-performing (over-bought) markets will out-perform under-performing markets over the medium-term (say 6 to 12 months) — the same as momentum research has shown for stocks.