The S&P 500 rallied off support at 1840/1850 but a weak close warns of further resistance. Bearish divergence on 21-day Twiggs Money Flow (not shown) indicates medium-term selling pressure. I have highlighted daily Volume that is more than 1 standard deviation outside the 50-day moving average on the graph below. The latest red bar showed strong resistance at triple-witching hour, but the last two rallies on low volume also suggest a lack of commitment from buyers. Reversal below 1840 would signal a correction. Breakout above 1880 is less likely, but would signal an advance to 1950*.
* Target calculation: 1850 + ( 1850 – 1750 ) = 1950
CBOE Volatility Index (VIX) below 15, however, continues to indicate low risk typical of a bull market.
The Nasdaq 100 below 3600 indicates a correction. Penetration of the (secondary) rising trendline would strengthen the signal. Sharply falling 21-day Twiggs Money Flow, following bearish divergence, warns of strong selling pressure and a test of primary support at 3400/3420. Recovery above 3650 is unlikely, but would indicate another advance.
* Target calculation: 3600 + ( 3600 – 3400 ) = 3800
Bellwether Transport stock Fedex is headed for another test of primary support at $128/$130. Reversal of 13-week Twiggs Money Flow below zero warns of strong selling pressure and a primary down-trend. Failure of primary support would confirm, suggesting a broad economic slow-down.
Hi Colin,
I am curious how you explain a rising twiggs money flow with a decrease in the stock price. Take for example FDN. It’s an ETF. It has tanked this past week yet the MF is at an all time high.
Matt
Twiggs Money Flow (13-week) has been declining since the start of 2013. 21-Day TMF even worse at -20%. What time frame are you using?