The Dollar Index is headed for another test of resistance at 80 on the strength of the euro crisis. Respect of the zero line by 63-day Twiggs Momentum suggests a primary up-trend. Breakout above 80 on the index (or 5% on TMO) would confirm, offering a medium-term target of 85*.
* Target calculation: 80 + ( 80 – 75 ) = 85
The weekly chart of India’s Sensex shows the index testing resistance at 18000 — which coincides with the descending trendline. Upward breakout would indicate that the primary down-trend is weakening, while respect would test primary support at 16000. 13-Week Twiggs Money Flow remains weak, despite earlier bullish divergence, and reversal below zero would warn of renewed selling pressure.
* Target calculation: 16 – ( 18 – 16 ) = 14
Singapore’s Straits Times Index is testing resistance at 2900. Respect would signal another test of primary support at 2500. Declining 63-day Twiggs Momentum continues to signal a primary down-trend.
* Target calculation: 2500 – ( 2900 – 2500 ) = 2100
The Loonie pulled back to test support at $0.975 against the greenback. Failure would re-test the primary level at $0.94. 63-Day Twiggs Momentum holding below zero suggests continuation of the primary down-trend. Breakout above $1.01 is unlikely — unless we see a similar breakout on the CRB Commodities Index.
* Target calculation: 0.94 – ( 1.01 – 0.94 ) = 0.87
The euro retreated below $1.40 and is now consolidating at $1.36. Failure of medium-term support would test the primary level at $1.32. In the long-term, breach of $1.32 (if the Greeks vote “No”) would offer a target of $1.22*. 63-Day Twiggs Momentum holding below the zero line suggests continuation of the primary down-trend.
* Target calculation: 1.32 – (1.42 – 1.32 ) = 1.22
63-Day Twiggs Momentum similarly suggests continuation of the primary down-trend for the Pound. Breach of primary support at $1.53 would confirm, offering a target of $1.46*.
* Target calculation: 1.53 – ( 1.60 – 1.53 ) = 1.46
The Dollar Index is consolidating below resistance at 77.50. Breach of the descending trendline suggests the correction is over and recovery of 63-day Twiggs Momentum above the zero line indicates that the primary trend remains upward. Breakout above 77.50 would offer a medium-term target of 80*.
* Target calculation: 77.50 + ( 77.50 – 75.00 ) = 80.00
India’s Sensex index retraced to test the new support level at 17500. The primary trend remains downward but respect of support at 17500 would confirm a rally to the descending trendline. Bullish divergence followed by a cross to above zero on 13-week Twiggs Money Flow indicates buying support.
* Target calculation: 17 + ( 17 – 16 ) = 18
The Singapore Straits Times Index is testing the band of resistance at 2900/2950. Respect would indicate another test of primary support at 2500, while breakout would offer a target of 3300*. 63-Day Twiggs Momentum below zero indicates that the index is still in a primary down-trend.
* Target calculation: 2900 +( 2900 – 2500 ) = 3300
Dow Jones Shanghai Index is advancing to resistance at 330 and the descending trendline. Respect would indicate another primary decline, with a target of 250*, while breakout would signal that a bottom is forming.
* Target calculation: 290 – ( 330 – 290 ) = 250
The FTSE 100 index is headed for a test of its 2011 high at 6000/6100. Rising 13-week Twiggs Money Flow signals strong buying pressure. Expect retracement to test support at 5400. Respect would confirm a primary up-trend; failure would re-test support at 4800.
* Target calculation: 5400 + ( 5400 – 4800 ) = 6000
Germany’s DAX is testing resistance at 6500. Retracement would test support at 5600. A 63-day Twiggs Momentum peak that respects the zero line would warn that the bear market will continue.
* Target calculation: 5700 + ( 5700 – 5000 ) = 6400
Italy is the latest canary in the coal mine. The FTSE MIB index rallied to test its secondary descending trendline at 17000. Respect would warn of another test of primary support at 13000, while breakout would offer a target of 19000*. The primary trend remains downward despite 13-week Twiggs Money Flow having crossed above zero.
* Target calculation: 17 + ( 17 – 15 ) = 19
Several weeks ago, when asked what it would take to reverse the bear market, I replied that it would take 3 strong blue candles on the weekly chart followed by a correction — of at least two red candles — that respects the earlier low. We have had three strong blue candles. Now for the correction.
On the S&P 500 expect retracement to test support at 1200 or 1250. Respect of 1250 would signal a strong up-trend, while failure of support at 1200 would warn of another test of primary support at 1100. A trough on 13-week Twiggs Money Flow that respects the zero line would also indicate strong buying pressure.
* Target calculation: 1225 + ( 1225 – 1100 ) = 1350
Dow Jones Industrial Average weekly chart displays a similar picture. Expect retracement to test support at 11500. A peak on 63-day Twiggs Momentum that respects the zero line would be bearish — warning of continuation of the primary down-trend.
* Target calculation: 11500 + ( 11500 – 10500 ) = 12500
The Nasdaq 100 is testing resistance at 2400 — close to the 2011 high. Breakout would signal a primary advance to 2800*, while respect would warn of another test of primary support at 2000. Bullish divergence on 13-week Twiggs Money Flow has warned of a reversal for several weeks.
* Target calculation: 2400 + ( 2400 – 2000 ) = 2800
The Dollar Index failed to confirm the primary up-trend, breaking support at 76 with a sharp fall in response to news of a resolution to the euro-zone debt crisis. Expect a test of primary support at 73. Breach of the rising trendline on 63-day Twiggs Momentum would confirm.
Expect gold and commodities to rally as a result of the weakening dollar.
Dow Jones Industrial Average broke through resistance at 12000. On the monthly chart we can see the index is headed for a test of its 2011 high at 13000. Breakout would signal an advance to 15000*. Bearish divergence on 63-Day Twiggs Momentum, however, continues to warn of a primary down-trend; and respect of 13000 would indicate another test of primary support at 11000.
* Target calculation: 13 + ( 13 – 11 ) = 15
Looking at the weekly chart, retracement to test the new support level at 12000 is likely. Respect would confirm the primary advance, while failure would signal another test of primary support at 10500/11000. A 13-week Twiggs Money Flow trough above the zero line would indicate strong buying pressure.
* Target calculation: 12 + ( 12 – 11 ) = 13
