iceberg Archives - the patient investor

November 24, 2011

Commodities and Crude Oil

Brent Crude is testing medium-term support at $105/barrel. Failure is likely if the dollar continues to strengthen and would mean a test of the $99/$100 primary level. Reversal of 63-day Twiggs Momentum below -5% would complete an iceberg pattern, indicating a solid primary down-trend. Breach of primary support would offer a target of $85/barrel*.

Brent Crude Afternoon Markers

* Target calculation: 100 – ( 115 – 100 ) = 85

Roughly only 10% of an iceberg is visible at sea, with most of the ice-mass hidden below the water-line. Similarly, an “iceberg” pattern on a chart describes a situation where +/- 90% of Twiggs Momentum (or a similar indicator) is below zero with only a small peak protruding above.

CRB Commodities Index is similarly headed for a test of primary support, at 295. 63-Day Twiggs Momentum deep below zero indicates a strong primary down-trend. Failure of support would offer a target of 265*.

CRB Commodities Index

* Target calculation: 295 – ( 325 – 295 ) = 265

That would have a negative impact on the Aussie Dollar and Canadian Loonie which closely track commodity prices.

November 20, 2011

Nasdaq, Dow warn of correction

The NASDAQ 100 index broke support at 2300 on the weekly chart, warning of a correction to test primary support at 2000. A large bearish divergence on 13-week Twiggs Money Flow now warns of a primary down-trend; reversal below zero would strengthen the signal. Failure of support at 2000 would confirm.

Nasdaq 100 Index

* Target calculation: 2000 – ( 2400 – 2000 ) = 1600

Dow Jones Industrial Average broke out below its recent pennant, warning of another test of primary support at 10600. Breach of support at 11600 would confirm the signal. Reversal of 63-day Twiggs Momentum below its recent lows (-4%) would complete an “iceberg” — with the indicator just peaking above the zero line — indicating a primary down-trend.

Dow Jones Industrial Average

* Target calculation: 10600 – ( 12200 – 10600 ) = 9000

November 17, 2011

Aussie and Loonie test support

The Aussie is testing support at parity against the greenback. The “iceberg” on 63-day Twiggs Momentum indicates a primary down-trend. Failure of parity would test primary support at $0.94 and, in the long-term, breach of primary support would signal a decline to $0.80*.

AUDUSD

* Target calculation: 0.94 – ( 1.08 – 0.94 ) = 0.80

63-Day Twiggs Momentum indicates a stronger down-trend on Canada’s Loonie. Failure of support at $0.975 would test primary support at $0.94 and, in the long-term, breach of the $0.94 level would signal decline to $0.80*.

CADUSD

* Target calculation: 0.94 – ( 1.01 – 0.94 ) = 0.87

The Aussie and Loonie normally move in sympathy with the CRB Commodities Index and a CRB break of its primary down-trend would warn of a reversal on the above two currencies.