bull trap Archives - the patient investor

January 30, 2012

China: Shanghai & Hang Seng

China’s Shanghai Composite index retreated below resistance at 2300, from the 2010 low. Expect a down-swing to test the lower trend channel at 2000*. 63-day Twiggs Momentum oscillating below zero indicates a strong primary down-trend.

Shanghai Composite Index

* Target calculation: 2150 – ( 2300 – 2150 ) = 2000

Hong Kong’s Hang Seng index is more bullish, but retreat below the new support level at 20000 would indicate hesitancy. And breach of the rising (green) trendline would warn of a bull trap — as would respect of the zero line (from below) by 63-day Twiggs Momentum.

Hang Seng Index

* Target calculation: 20 + ( 20 – 18 ) = 22

September 27, 2011April 18, 2024

Canada: TSX 60 bull trap

TSX 60 Index also displays an evening star warning. Reversal below 660 would complete a bull trap, indicating a down-swing to 590*. 21-Day Twiggs Money Flow below zero warns of (medium-term) selling pressure.

TSX 60 Index

* Target calculation: 660 – ( 730 – 660 ) = 590

September 22, 2011

Gold finds safe haven support

Softening of gold prices from the “stronger” dollar is being offset by demand for gold as a safe haven from the looming euro-zone crisis. Respect of support at 1750 would indicate another test of $1900; confirmed if spot recovers above $1830. The pattern remains bullish at present, but breakout below $1750 would warn of a double top and correction to $1500/$1600* (depending on whether you take the base as $1700 or $1750).

Spot Gold

* Target calculation: 1900 + (1900 – 1750 ) = 2050 and 1750 – (1900 – 1750 ) = 1600

Gold miners such as AMEX Gold Bugs Index ($HUI) continue to test support after their recent breakout. Failure of support at 600 would warn of a bull trap and weaker spot prices.

Amex Gold Bugs Index

* Target calculation: 600 + ( 600 – 500 ) = 700