ColinTwiggs, Author at the patient investor

August 8, 2011

Brazil and South Africa

The Brazilian Bovespa Index broke support at the 2010 low of 58000. The strong primary down-trend brushed aside expected support at 55000, offering a long-term target of 44000*. 13-Week Twiggs Money Flow below zero confirms strong selling pressure.

Brazilian Bovespa Index

* Target calculation: 58000 – ( 72000 – 58000 ) = 44000

The South African JSE Overall Index broke through 30000 to indicate a primary down-trend. Expect retracement to test the new resistance level but 13-week Twiggs Money Flow below zero warns of selling pressure. Support at 29000 is not likely to hold and, with the calculated target at 27000*, the next major support level is 26000.

JSE Overall Index

* Target calculation: 30000 – ( 33000 – 30000 ) = 27000

August 8, 2011

ASX trampled

The ASX 200 was trampled Monday by the stampeding herd, reaching its medium-term target of 4000* in 4 days. There are no signs of a retracement so far. This could even re-test the 2009 low of 3200 in the next few weeks.

ASX 200

* Target calculation: 4500 – ( 5000 – 4500 ) = 4000

August 8, 2011

US & Canada target levels

The Dow Jones Industrial Average broke primary support at 11800 but encountered buying Friday around the former primary level of 11500. We may witness retracement to test resistance at 11800, but this is expected to be overwhelmed by sellers. Medium-term target for the down-swing is 10800*.

Dow Jones Industrial Average

* Target calculation: 11800 – ( 12800 – 11800 ) = 10800

The Nasdaq 100 fared better, recovering above primary support at 2180. But Twiggs Money Flow below zero, and the earlier bearish divergence, warn of strong selling pressure. Failure of support is likely and would offer a target of 1920*.

Nasdaq 100 Index

* Target calculation: 2180 – ( 2440 – 2180 ) = 1920

The TSX Composite Index was one of the first markets to enter a primary down-trend and has now confirmed with a break below the latest support level at 12750. Expect some support at the target of 12000* but the July 2010 low of 11000 beckons.

TSX Composite Index

* Target calculation: 12750 – ( 13500 – 12750 ) = 12000

August 8, 2011

UK & Europe

The FTSE 100 continued on its downward path, approaching its calculated target at 5100*. Expect some retracement this week, but I would not place much reliance on support at 5100 — strongly suspecting that we will see a test of the June 2010 low at 4800.

FTSE 100 Index

* Target calculation: 5600 – ( 6600 – 5600 ) = 5100

The German DAX index has already passed its initial target of 6500 and is headed for a test of 5600.

German DAX Index

* Target calculation: 6500 – ( 7600 – 6500 ) = 5400

August 7, 2011

NZ open foretells losses

The Dow Jones New Zealand Index ($NZDOW) gapped down at Monday’s open, foretelling a miserable day for Asian markets.

August 7, 2011

US stampede

A friend at golf yesterday, who still holds a number of stocks, asked if they are likely to fall any further. My answer was that holding on to stocks in this market is like standing in front of a stampeding herd in the hope that it will stop before it reaches you. There may be a short retracement early in the week, but strong selling is expected to overwhelm buying support. On August 3rd I gave the probability of a down-turn as 75 percent. The odds are now about as close to 100 percent as you can get.

The S&P 500 followed through below support at 1250, confirming the primary down-trend. Friday’s brief rally was swamped by further sell orders. The herd has started to move. We are beyond the tipping point.

August 7, 2011

Quote: bull market

I think it was a long step forward in my trading education when I realized at last that when old Mr Partridge kept on telling other customers, “Well, you know this is a bull market!” he really meant to tell them that the big money was not in the individual fluctuations but in the main movements — that is, not in reading the tape but in sizing up the entire market and its trend.

~ Jesse Livermore in Reminiscences of a Stock Operator by Edwin Lefevre

August 7, 2011

ASX 200 in primary down-trend

Posted August 3, 2011 8:00 p.m. ET (10:00 a.m. AET) on Trading Diary.

After several tentative attempts, the ASX 200 broke through support at 4500, following Brazil into a primary down-trend. Wednesday’s follow-through below 4450 confirmed the signal. 21-Day Money Flow below zero indicates selling pressure. Expect retracement to test resistance at 4500, but target for the breakout is 4000*.

* Target calculations: 4500 – ( 5000 – 4500 ) = 4000

August 7, 2011

China tests primary support

Posted August 3, 2011 8:00 p.m. ET (10:00 a.m. AET) on Trading Diary.

The Shanghai Composite Index is testing primary support at 2650 on the weekly chart. Follow-through below 2600 would confirm a primary down-trend. Declining 13-week Twiggs Money Flow again warns of selling pressure.

August 7, 2011April 18, 2024

UK & Europe crash

Posted August 3, 2011 8:00 p.m. ET (10:00 a.m. AET) on Trading Diary.

The FTSE 100 followed through below 5600 after breaking primary support at 5650, confirming a primary down-trend.

The DAX similarly broke primary support at 7000 on the weekly chart and is now testing its earlier support level at 6500 — breach of that would be the final nail in the coffin. Bearish divergence on 13-week Twiggs Money Flow has been warning of selling pressure for several months.