Posted on by ColinTwiggs

Markets warn of correction

Before we examine the US and Australian markets, please take a look at the two charts below and tell me whether the trend is up or down. If you have a five-year old or six-year old handy, try asking them.

S&P 500

And the second one:

ASX 200

The trend on both is clear. If we invert the charts, you will recognize the S&P 500:

S&P 500

The S&P 500 breach of support at 1840 warns of a secondary correction and a sharp fall on 13-week Twiggs Money suggests selling pressure similar to the correction in late 2012. But the primary trend is up.

Likewise the ASX 200. The index retreated from 5500 and follow-through below 5380 would warn of a secondary correction. But 13-week Twiggs Money Flow oscillating above zero indicates buying pressure and the primary trend remains upward.

ASX 200

Momentum stocks are experiencing a sell-off, but our strategy is to hold existing positions. Attempting to time entries and exits in secondary corrections erodes performance. None of our market filters indicate elevated risk and we are confident that this is a bull market.

2 Replies to “Markets warn of correction”

  1. Colin

    I switched to cash a few days ago on the basis the major international equity indices were peaking. I don’t expect a reversal in a day or two, A ten or twenty percent downside is on the cards.

    Happy to get back in when I seen the tide turn.

  2. Hello Colin, back in March I was telling all my folks to get short the NDX 100 on the number three high.(Visualizing the 1-2-3 top formation on the charts.) I got short the index at 3711 and told all my readers to stay short. It has been a very profitable ride so far and my Gann Wave technical analysis is calling for another 20 to 30% correction. I also have been telling all my folk to short the Emerging Markets index’s, stocks and funds as of Wednesday of this week. Looking for a 40% correction in this area. Gann Wave technical is a trend changing indicator that is 99% correct if you start the count correctly. Playing the waves making gains in an up and down markets are so much fun. I will post a indicator when Gann Wave predicts the trend change to up. Happy Trading, Michael McCreary, Henry NE

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