Tag: resistance

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Dow runs out of buyers

Dow Jones Industrial Average failed to reach resistance at 11900/12000. Low volumes indicate a lack of interest from buyers rather than large numbers of sellers. Expect a test of support at 10600 to 10800. A strong surge in volume would indicate buying support, but failure is more likely and would offer a target of 9600*.

Dow Jones Industrial Average

* Target calculation: 10800 – ( 12000 – 10800 ) = 9600

The S&P 500 Index is similarly headed for a test of support at 1100/1120. 21-Day Twiggs Money Flow peaking below the zero line [bear] warns of strong selling pressure. Failure of support would offer a target of 1000*.

S&P500 Index

* Target calculation: 1120 – ( 1260 – 1120 ) = 980

The Nasdaq 100 Index fared better over the last few weeks, but a failed breakout above 2200 warns of another test of 2000. 13-Week Twiggs Money Flow reversal below zero would further strengthen the bear signal.

Nasdaq 100 Index

* Target calculation: 2000 – ( 2200 – 2000 ) = 1800

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Euro checks support

The euro is headed for another test of support at $1.40 after respecting resistance at $1.45. The descending triangle suggests a downward breakout with a target of $1.30. Momentum crossing below zero would strengthen the signal.

EURUSD

* Target calculation: 1.40 – ( 1.50 – 1.40 ) = 1.30

The pound sterling is also headed for a test of support, this time at $1.60. Breach of the rising trendline warns of trend weakness; a Momentum cross below zero would again strengthen the signal. Failure of support would offer a target of $1.53*.

GBPUSD

* Target calculation: 1.60 – ( 1.67 – 1.60 ) = 1.53

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Reminder: we’re in a bear market

Don’t be fooled by current month-end froth in the markets — into thinking that the bear market is over or that the early August plunge was a false signal. The S&P 500 Index has made little headway after completing a double bottom at 1200 despite average volumes indicating the absence of strong selling. 63-Day Momentum peaking below the zero line indicates a primary down-trend. Expect the bear rally to test resistance at 1250/1260 before a retreat to 1100. Breach of 1100 would find support at the 2010 low of 1000, but the calculated target is even lower*.

S&P500 Index

* Target calculation: 1100 – ( 1250 – 1100 ) = 950

The Nasdaq 100 performed better, clearing 2200 to complete a double bottom with a target of 2350*. Bullish divergence on 13-week Twiggs Money Flow indicates buying pressure. But this is a bear rally in the middle of a bear market, and further falls on the Dow/S&P 500 would drag the Nasdaq lower.

Nasdaq100 Index

* Target calculation: 2200 + ( 2200 – 2050 ) = 2350

Fedex and UPS remain in a primary down-trend, indicating that economic activity levels remain poor.

Fedex and UPS

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Rand weakens

A three-year chart shows strong support for the US dollar at R6.50. Earlier breach of the descending trendline and rising 63-day Twiggs Momentum both warn that the Rand is likely to weaken. Now we have a break above resistance at R7.00 testing the 2011 high of R7.35. Breakout would signal an advance to R8.00*.

South African Rand

* Target calculation: 7.30 + ( 7.30 – 6.50 ) = 8.10

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Commodities rally

The CRB Commodities Index did not follow gold lower and is testing resistance at 335. Respect of resistance, signaled by reversal below 325, would confirm the primary down-trend — offering a target of 295*. Penetration of the declining trendline is unlikely, but would warn that the down-trend is weakening.

CRB Commodities Index

* Target calculation: 315 – ( 335 – 315 ) = 295

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It’s a bear market

The Dow Jones Industrial Average rallied Tuesday on fairly light volume. Expect resistance at 11500. This is a bear market, with reactions to good news likely to be short — and declines from bad news severe. Target for the next decline is 10000*.

Dow Jones Industrial Average

* Target calculation: 11000 – ( 12000 – 11000 ) = 10000

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Shanghai Composite confirms down-trend

The Shanghai Composite Index respected resistance at 2650, confirming the primary down-trend. Expect a test of 2350. 13-Week Twiggs Money Flow reversal below zero would warn of rising selling pressure. In the long term, failure of support at 2350 would offer a target of 1600*.

Shanghai Composite Index

* Target calculation: 2400 – ( 3200 – 2400 ) = 1600

Monday’s long tail on the Hang Seng Index and higher volume indicate short-term support at 19000. Expect a rally to test the recent high at 20500.

Hang Seng Index

* Target calculation: 19000 – ( 22000 – 19000 ) = 16000

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Bovespa and JSE weaken

The bear rally on the Brazilian Bovespa Index has run out of steam and we can expect another test of support at 48000. 13-Week Twiggs Money Flow below zero signals continued selling pressure. Failure would offer a target of 38000*.

Brazil Bovespa Index

* Target calculation: 48000 – ( 58000 – 48000 ) = 38000

The JSE bear rally respected resistance at 30000. Money Flow is stronger, but reversal below 28000 would offer a target of 26000*.

JSE Overall Index

* Target calculation: 28000 – ( 30000 – 28000 ) = 26000

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