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Thursday, February 4, 2010

Correction Or Reversal?

By Colin Twiggs
February 2, 2010

These extracts from my trading diary are for educational purposes and should not be interpreted as investment or trading advice. Full terms and conditions can be found at Terms of Use.

Global markets are undergoing a secondary correction, signaled by large bearish divergence on (13-week) Twiggs Money Flow. The Hang Seng Index, however, reversed to a primary down-trend, warning of weakness in China, and a number of other indexes now threaten to follow.

Dow Jones Industrial Average
The Dow found support at 10000 after breaking through the lower border of the (rising) broadening wedge formation. Expect a brief rally followed by another test of support. Failure would signal a correction to 9000 — the base of the wedge. Twiggs Money Flow (21-day) breakout below zero would strengthen the (correction) signal. Recovery above 10500 is unlikely, but would indicate another advance.
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