Tag: Dow Jones Industrial Average

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S&P 500: Strong Ichimoku trend

Today we take a look at long-term trend strength in North American markets using a great trend tool, Ichimoku Cloud, with weekly charts. Ichimoku is only available on the latest beta version of Incredible Charts (Help >> Upgrade To Latest Beta Version), but will soon be released with Incredible Charts 7.0.

Ichimoku offers a number of trend signals:

  • The trend is upward when price is above the Cloud (and downward when price is below).
  • A green cloud indicates an up-trend, while a red cloud indicates a down-trend.
  • Long trades are taken when the blue line crosses above the red. In strong trends, blue may hold above red for extended periods.

The S&P 500 encountered resistance and is consolidating below its target of 1950*. The trend above a green cloud is further strengthened by the blue (Tenkan) holding above the red (Kijun) for an extended period. Continuation of the up-trend is likely and breakout above 1950 would signal an advance to 2000.

S&P 500

* Target calculation: 1850 + ( 1850 – 1750 ) = 1950

Dow Jones Industrial Average displays a similar strong trend with few blue (Tenkan) dips below the red (Kijun) line. Breakout above resistance at 17000 would signal an advance to 17500*. Reversal below 16500 is unlikely, but would warn of another correction.

Dow Jones Industrial Average

* Target calculation: 16500 + ( 16500 – 15500 ) = 17500

The Nasdaq 100 recovery of blue (Tenkan) above the red (Kijun) line offers a fresh entry signal. Resistance at 3800 is unlikely to hold and follow-through would confirm the target of 4000* for the advance. Reversal below 3700 is unlikely, but would warn of another correction.

Nasdaq 100

* Target calculation: 3700 + ( 3700 – 3400 ) = 4000

Another indication of trend strength is the CBOE Volatility Index (VIX), currently trading at levels last seen in 2005/2006, which indicates low risk typical of a bull market.

VIX Index

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Gold tumbles as Treasury yields fall

Overview:

  • Treasury yields fall
  • The Dollar strengthens slightly
  • Stocks are rising
  • Gold breaks support

Interest Rates and the Dollar

The yield on ten-year Treasury Notes broke primary support at 2.50 percent, warning of a decline to 2.00 percent*. Reversal of 13-week Twiggs Momentum below zero confirms weakness. Recovery above 2.80 is most unlikely at present, but would indicate another advance.

10-Year Treasury Yields

* Target calculation: 2.50 – ( 3.00 – 2.50 ) = 2.00

The Dollar Index is testing resistance at 80.50. Recovery of 13-week Twiggs Momentum above zero would increase the chances of a double-bottom reversal (to a primary up-trend), but respect of resistance remains as likely and would test primary support at 79.00. Another 13-week Twiggs Momentum peak below the zero line would signal continuation of the primary down-trend.

Dollar Index

* Target calculation: 79.0 – ( 81.5 – 79.0 ) = 76.5

Stocks and Housing

Falling long-term interest rates are likely to boost the housing sector and the broader stock market. The Dow Jones Industrial Average is heading for a test of the recent high at 16750. Rising 21-day Twiggs Money Flow signals medium-term buying pressure. Retracement that respects support at 16500 would confirm an advance to 17000*.

Dow Jones Industrial Average

* Target calculation: 16.5 – ( 16.5 – 16 ) = 17

Gold and Silver

Gold faces conflicting forces: low inflation reduces demand for precious metals, but low interest rates and a weaker Dollar increase demand. At present low inflation seems to have the upper hand, driving gold through support at $1300/$1280 per ounce. Expect a test of primary support at $1200. Reversal of 13-week Twiggs Momentum below zero reinforces the bear signal. Recovery above $1300 is most unlikely, but would warn of a bear trap and rally to $1400.

Spot Gold

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Dow and S&P 500 bullish, but Nasdaq cautious

Dow Jones Industrial Average broke resistance at its previous high of 16600, signaling a primary advance to 17500*. Recovery of 21-day Twiggs Money Flow above zero indicates medium-term buying pressure. Reversal below 16500 is unlikely, but would warn of a bull trap.

Dow Jones Industrial Average

* Target calculation: 16500 + ( 16500 – 15500 ) = 17500

The S&P 500 is testing resistance at its previous high of 1900. Breakout would confirm an advance to 1950*. The 21-day Twiggs Money Flow trough above zero indicates long-term buying pressure. Reversal below 1850 is unlikely, but would warn of a bull trap (and correction to test primary support at 1750).

S&P 500

* Target calculation: 1850 + ( 1850 – 1750 ) = 1950

CBOE Volatility Index (VIX) at 12 indicates low risk typical of a bull market.

VIX Index

The Nasdaq 100 broke 3600, suggesting another advance, but only breakout above 3750 would confirm. Bearish divergence on 13-week Twiggs Money Flow and a cross below zero warns of selling pressure. Reversal below 3400 is unlikely, but would warn of a down-swing to the primary trendline.

Nasdaq 100

* Target calculation: 3700 + ( 3700 – 3400 ) = 4000

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S&P 500 meets resistance

The S&P 500 encountered stout resistance at 1850, highlighted by today’s false breakout. Follow-through above 1860 would indicate that buyers out-number sellers, signaling an advance to 1950*. Reversal below 1825 is unlikely, but would warn of another correction. The long-term trend remains bullish, with repeated 21-day Twiggs Money Flow troughs above the zero line.

S&P 500

* Target calculation: 1850 + ( 1850 – 1750 ) = 1950

CBOE Volatility Index (VIX) below 20 reflects low risk typical of a bull market.

VIX Index

Dow Jones Industrial Average is weaker. Large bearish divergence on 13-week Twiggs Money Flow warns of selling pressure. Reversal below 16000 would warn of a correction to test primary support at 15400.

Dow Jones Industrial Average

* Target calculation: 16500 + ( 16500 – 15500 ) = 17500

The Nasdaq 100, on the other hand, remains bullish. Reversal below 3600, especially after last week’s doji star candlestick formation, would warn of a test of primary support at 3400. Decline of 13-week Twiggs Money Flow below its recent low would strengthen the signal. Breakout above 3700, however, would offer a target of 3800*.

Nasdaq 100

* Target calculation: 3600 + ( 3600 – 3400 ) = 3800

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Dow scare tactics

I wish I had a dollar for every time the 1929 Dow has been superimposed over the current index. Like this effort at Zero Hedge.

Dow Jones

Why did the analyst select a period of two years? Because that is the period that fits.

Dow Jones

If we compare the period 1920 to 1933 to the last 13 years, 2001 to 2014, there is a significant difference.

Dow Jones 2001 to 2014

By 1929 the Dow had climbed roughly 400%, while by 2014 the Dow gained roughly 50% over a similar time period.

Superimposing charts one on top of the other has no sound basis in technical analysis and should be viewed as an attempt to scare the market into a sell-off. A correction may be overdue, but there are always potential buyers hoping for much lower prices.

Hat tip to John B. for sending me the Zero Hedge chart.

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Bullish outlook despite retracement

Dow Jones Industrial Average retraced to test short-term support at 16000. Breach would suggest a correction to test the rising trendline at 15500. Mild bearish divergence on 13-week Twiggs Money Flow warns of medium-term selling pressure. Target for the advance is 16600* and respect of support at 15500 would suggest another advance.

Dow Jones Industrial Average

* Target calculation: 15700 + ( 15700 – 14800 ) = 16600

The S&P 500 is also testing short-term support, but at 1800*. Bearish divergence on 13-week Twiggs Money Flow warns of medium-term selling pressure. Breach of support would signal a correction to the rising trendline around 1730. Respect of the trendline would indicate a healthy up-trend.

S&P 500

* Target calculation: 1725 + ( 1725 – 1650 ) = 1800

CBOE Volatility Index (VIX) below 15 continues to indicate low market risk.

VIX Index

Bellwether transport stock Fedex displays a huge surge on the monthly chart, with rising Twiggs Money Flow indicating strong buying pressure. A bullish sign for the US economy.

Fedex

* Target calculation: 100 + ( 100 – 70 ) = 130

The Nasdaq 100 continues its accelerating up-trend. Rising Twiggs Money Flow, with higher troughs above the zero line, indicates strong buying pressure. Target for the advance is 3550*. Reversal below 3350 would warn of a correction. Short corrections and narrow consolidations are typical of an accelerating trend. Unsustainable in the long-term, accelerating trends almost inevitably lead to a sharp correction.

Nasdaq 100

* Target calculation: 3400 + ( 3400 – 3250 ) = 3550

Overall, I am bullish on the US market. Attempting to time entries and exits from secondary movements is expensive and our strategy at Research & Investment is to remain in the market unless risks become elevated.

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Dow leads US climb

Dow Jones Industrial Average is advancing strongly, with rising 13-week Twiggs Money Flow indicating medium-term buying pressure. Target for the advance is 16600*. Retracement to test the new support level remains likely, however, and respect would confirm the advance. Reversal below 15700 is unlikely, but would test the secondary rising trendline around 15500.

Dow Jones Industrial Average

* Target calculation: 15700 + ( 15700 – 14800 ) = 16600

The S&P 500 is testing resistance at the target of 1800*. Rising 13-week Twiggs Money Flow indicates medium-term buying pressure. Reversal below 1750 would warn of a correction to the secondary trendline at 1700. Short corrections are indicative of strong buying pressure.

S&P 500

* Target calculation: 1725 + ( 1725 – 1650 ) = 1800

CBOE Volatility Index (VIX) continues below 15, indicating low market risk.

VIX Index

The Nasdaq 100 continues its accelerating up-trend. Rising Twiggs Money Flow, with higher troughs above the zero line, indicates strong buying pressure. Target for the advance is 3550*. Reversal below the latest trendline would warn of a correction. Short corrections and narrow consolidations reflect an accelerating trend, or blow-off. Steep gains, however, almost inevitably end with a sharp fall.

Nasdaq 100

* Target calculation: 3400 + ( 3400 – 3250 ) = 3550

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Dow follows through

Dow Jones Industrial Average followed through above 15800 after breaking resistance at 15700 to signal a fresh advance. Expect retracement to again test 15700 in the next few weeks, but respect of the new support level strengthens the breakout signal. Long-term target for the advance is 16600*.  Rising 21-day Twiggs Money Flow indicates medium-term buying pressure. Reversal below 15500 is unlikely, but would warn of another test of primary support at 14800.

Dow Jones Industrial Average

* Target calculation: 15700 + ( 15700 – 14800 ) = 16600

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Dow signals fresh advance

Dow Jones Industrial Average broke resistance at 15700, ending the consolidation of recent months and signaling an advance to 16600*. Expect retracement to test the new support level in the next few weeks. Respect would confirm the advance. Penetration of the descending trendline on 13-week Twiggs Money Flow indicates medium-term buying pressure. Reversal below 15500 is unlikely, but would warn of another test of primary support at 14800.

Dow Jones Industrial Average

* Target calculation: 15700 + ( 15700 – 14800 ) = 16600

The S&P 500 is testing short-term resistance at 1775. Breakout would offer a short-term target of 1800*. Bearish divergence on 13-week Twiggs Money Flow appears to have ended. Reversal below 1750 is unlikely at present, but would indicate a correction to at least 1710.

S&P 500

* Target calculation: 1775 + ( 1775 – 1750 ) = 1800

CBOE Volatility Index (VIX) below 15 continues to indicate low market risk.

VIX Index

The Nasdaq 100 continues its accelerating up-trend, with Twiggs Money Flow indicating strong buying pressure. Short retracement is likely and breakout above 3400 would suggest another advance. Accelerating trends, or blow-offs, enjoy rapid gains but inevitably end with a sharp fall.

Nasdaq 100

* Target calculation: 2900 + ( 2900 – 2500 ) = 3400

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Nasdaq accelerates while Dow and S&P500 hesitate

The Nasdaq 100 continues its accelerating up-trend — as indicated by successively steeper trendlines and a rising trendline on 13-week Twiggs Momentum. Accelerating trends, or blow-offs, are well-known for rapid gains but inevitably end with a sharp fall.

Nasdaq 100

* Target calculation: 2900 + ( 2900 – 2500 ) = 3400

The CBOE Volatility Index (VIX) remains below 15, indicating low market risk.

VIX Index

The S&P 500 is edging higher on the weekly chart, but bearish divergence on 13-week Twiggs Money Flow warns of rising selling pressure. Reversal below the secondary trendline at 1700 would indicate a correction to the primary trendline and primary support at 1630.

S&P 500

* Target calculation: 1730 + ( 1730 – 1650 ) = 1810

Dow Jones Industrial Average is testing resistance at 15700. Breakout would offer a target of 16600*. Respect of the descending trendline on 13-week Twiggs Money Flow, however, would confirm the earlier bearish divergence and warn of a correction to primary support at 14800. Breach of 14800 remains unlikely, but would signal a reversal.

Dow Jones Industrial Average

* Target calculation: 15700 + ( 15700 – 14800 ) = 16600

Canada’s TSX 60 is retracing after a strong spurt. Duration of retracements reflect trend strength. Another trough above zero on 13-week Twiggs Money Flow would suggest strong buying pressure. Reversal below 740 is most unlikely, but would warn of trend weakness.

TSX 60

* Target calculation: 740 + ( 740 – 680 ) = 800

TSX 60 VIX below 15 also reflects low market risk.

TSX 60 VIX

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