Author: Colin Twiggs

Colin Twiggs is a former investment banker with almost 40 years of experience in financial markets. He co-founded Incredible Charts and writes the popular Trading Diary and Patient Investor newsletters. Using a top-down approach, Colin identifies key macro trends in the global economy before evaluating selected opportunities using a combination of fundamental and technical analysis. Focusing on interest rates and financial market liquidity as primary drivers of the economic cycle, he warned of the 2008/2009 and 2020 bear markets well ahead of actual events. He founded PVT Capital (AFSL No. 546090) in May 2023, which offers investment strategy and advice to wholesale clients.
Posted on

A Lull in Hostilities

Key Points

  • Hostilities in Lebanon faded.
  • Tankers transiting the Strait of Hormuz increased.
  • Brent Crude futures fell to $77.64 per barrel.
  • 2-year Treasury yields rose above 4.20% amid expectations of tighter Fed monetary policy.

Brent Crude futures (Aug’26) fell to $77.64 per barrel on reports of a lull in hostilities in Lebanon.

Brent Crude Futures (ICE August'26)

Prices fell more than 3% on Monday after ​the United States granted Iran a 60-day sanctions waiver following initial peace talks, ​and as officials reported a lull in hostilities in Lebanon under the ⁠broader agreement.

“The gradual increase in oil flows through the Strait of Hormuz continues to weigh ​on the market,” said ING analysts in a note.

Two crude tankers with just under 2 ​million barrels of oil sailed through the Strait of Hormuz on Monday, ship-tracking data showed, in a sign that traffic was picking up following weaker flows on Sunday due to concerns over passage through the ​waterway. (Reuters)

The text of the Memorandum of Understanding signed by the US and Iran can be separated into two parts. The MOU is mostly “talks about talks” where the parties merely agree to negotiate the terms of a Final Deal, but it contains an agreement to cease hostilities while negotiations take place, including:

  • Immediate termination of hostilities on all fronts, including Lebanon.
  • Ensuring the territorial integrity and sovereignty of Lebanon.
  • The US to lift its blockade of Iranian shipping.
  • The US to waive existing sanctions against Iranian crude oil and petroleum exports.
  • The US to release frozen or restricted funds and assets belonging to Iran.
  • Iran will make its “best efforts” to ensure the safe passage of shipping through the Strait of Hormuz.

The MOU offers Iran a financial reward in exchange for allowing safe passage through the Strait. The deal is tenuous, and already the IRGC has threatened to close the Strait due to ongoing hostilities in Lebanon.

Israel is not a signatory to the MOU, and will not readily agree to the first two terms if it feels that they compromise their national defense. The Gulf States are also not signatories, and will similarly defend their national interests.

Financial Markets

2-year Treasury yields climbed to 4.209%, more than 45 basis points above the Fed funds target range, in expectation of tighter Fed monetary policy.

2-Year Treasury Yield (CNBC)

The Chicago Fed National Financial Conditions Index below -0.50 continues to signal easy monetary conditions.

Chicago Fed National Financial Conditions Index

Bitcoin1 is testing primary support at 60,000, signaling a shift in financial markets to risk-off. A breach of support would warn of a market-wide contraction.

Bitcoin (BTC)

Treasury Markets

10-year Treasury yields firmed to 4.51%, suggesting another test of resistance at 4.75%.

10-Year Treasury Yield

Stocks

SpaceX retreated to test its June 12 opening price of 150.

SpaceX

The Magnificent 7 also lost ground, with the Roundhill Magnificent 7 ETF (MAGS) retreating below support at 68 on the weekly chart below. Declining Trend Index peaks warn of a correction.

Roundhill Magnificent 7 ETF (MAGS)

The S&P 500 also shows signs of secondary selling pressure.

S&P 500

Dollar & Gold

The Dollar strengthened amid expectations of higher short-term interest rates. Breakout of the US Dollar Index above 100.50 indicates an advance to 103, but first expect retracement to test support at 100.

Dollar Index

Gold is testing primary support at $4,000 per ounce, with declining Trend Index peaks warning of selling pressure. A breach of $4,000 would indicate another decline, but beware of a bear trap. Gold is in a secular uptrend that we expect to last for decades.

Spot Gold

Energy

The Dow Jones Global Oil & Gas Index broke support at 575, signaling a primary downtrend.

Dow Jones Global Oil & Gas Index

Uranium

Sprott Uranium Miners ETF2 (URNM) broke primary support at 58, also signaling a downtrend.

Sprott Uranium Miners ETF (URNM)

Copper

Copper is testing support at 13,500, and declining Trend Index peaks warn of selling pressure. A breach of support would warn of a bull trap, with a decline to test the 50-week moving average.

Copper

Sprott Copper Miners ETF2 (COPP) reinforces the bearish copper chart, retreating from resistance between 44 and 45 while Trend Index peaks below zero warn of persistent selling pressure.

Sprott Copper Miners ETF (COPP)

Lithium

Sprott Lithium Miners ETF2 (LITP) is also retreating, and a fall below 13 would test primary support at 11.

Sprott Lithium Miners ETF (LITP)

Critical Minerals

Sprott Critical Materials ETF2 (SETM) shows similar signs of selling pressure, and another test of primary support at 30 is likely.

Sprott Critical Materials ETF (SETM)

Conclusion

Brent Crude and oil and gas stocks are falling as the Strait of Hormuz is tentatively reopened, but the real test will be the impact of global strategic reserves. A continued decline would cause a rebound in energy prices.

Financial markets are shedding high-risk assets amid expectations of tighter monetary policy. Declining Trend Index peaks on the S&P 500 signal a correction.

The Dollar is strengthening, and Gold is headed for another test of support at $4,000 per ounce, but these moves run counter to their secular trends where we expect Dollar weakness and Gold strength.

Energy metals are experiencing a broad sell-off amid expectations of lower oil and gas prices if the Strait of Hormuz is reopened.

Uncertainty remains high, and we expect elevated volatility in the months ahead. We adopt a defensive stance, with minimal exposure to high-multiple growth stocks and long-duration financial assets. Value stocks with stable income streams and short-duration financial assets are a haven in times of volatility, but we still expect a secular uptrend in Gold and maintain our position.

Acknowledgments

Notes

  1. Cryptocurrencies are the highest-risk asset class, and we analyze Bitcoin (BTC) solely to identify risk sentiment in financial markets. Our analysis is not a recommendation to buy or sell BTC, nor is it a commentary on the merits of cryptocurrency.
  2. We analyze exchange-traded funds (ETFs) to determine market sentiment towards a specific sector, industry, or commodity. The analysis is not a recommendation to buy or sell, nor is it a commentary on the merits of the particular ETF.
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When Is a Deal Not a Deal?

Key Points

  • President Trump announces an imminent peace deal with Iran — for the 40th time.

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PPI Shock But Optimism Over Rate Cut Grows

Key Points

  • The Producer Price Index (PPI) grew by 1.06% in May, for the second straight month, at an annualized rate of 12.7%.
  • Annual PPI growth rose to 6.4%.
  • Bank credit growing faster than real GDP reflects rising inflationary pressure.
  • Bitcoin continues to test support at 60,000, signaling risk-off across financial markets.
  • Stocks and Gold are rising as optimism over a peace deal grows.

The monthly Producer Price Index (PPI) grew 1.06% in May, matching the April figure, with an annualized rate of 12.7%.

Producer Price Index (PPI) - Monthly

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US Market Snapshot

Bull-Bear Market Index
Stock Market Pricing Indicator

The gauge on the left indicates whether the market is in a bull or bear phase, and the indicator on the right reflects the current valuation of the stock market. Stock market pricing indicates whether stocks are cheap or expensive in relation to earnings, but it is a poor indicator of market timing. We do not recommend selling stocks because market valuations are high; however, we recommend exercising caution when adding new positions.

Bull/Bear Market

We have revised the bull-bear market leading indicator to improve its responsiveness, stripping it down to a composite of five key indicators. At present, two of five indicators signal risk-off, indicating medium risk of a US bear market.

Bull/Bear Market Indicator

Cyclical Employment

Cyclical employment improved to 27.540 million, 132K below its preceding peak of 27.671 million in September 2024. A decline of 300K from the preceding peak would signal risk-off. Cyclical Employment

Heavy Truck Sales

The 12-month average of heavy truck sales declined to 32,300 units in April 2026, continuing the risk-off signal. Heavy truck sales reflect the transportation industry's confidence in the economic outlook. A fall of more than 10% below the preceding peak signals risk-off, while a 10% rise above a trough indicates risk-on. Heavy Truck Sales (Units)

Stock Pricing

US stock pricing increased slightly to 96.08 from 96.05 percent last week, compared to its high of 96.66 four weeks ago and the recent low of 91.79 ten weeks ago.

US Stock Market Value Indicator

We use z-scores to measure each indicator's current position relative to its historical data, with results expressed in standard deviations from the mean. We then calculate an average of the five readings and convert that to a percentile. The higher the stock market price measure is relative to the historical mean, the greater the risk of a sharp drawdown.

Shiller CAPE

Robert Shiller's CAPE smoothes out business-cycle effects by comparing the S&P 500 index to a 10-year average of inflation-adjusted earnings. The CAPE ratio jumped to 40.31 from 39.94 last week. The recent peak of 41.33 from three weeks ago is the second-highest in history, behind the Dotcom bubble in 1999-2000, with values far above the long-term average of 22.4. Robert Shiller's S&P 500 CAPE Ratio

Conclusion

The Bull-Bear indicator suggests the US economy is slowing, but not yet in a recession.

Pricing is growing more extreme, increasing the risk of a significant drawdown.

Acknowledgments

Managing Risk

To find out more, go to Managing Risk on the top menu, or see:

Posted on

ASX Market Snapshot

Bull-Bear Market Leading Index
Stock Market Pricing Indicator

The gauge on the left indicates whether the market is in a bull or bear phase, while the one on the right reflects the current valuation of the stock market. Stock market pricing indicates whether stocks are cheap or expensive in relation to earnings, but it is a poor indicator of market timing. We do not recommend selling stocks when market valuations are high, but we advise caution when adding new positions.

Bull/Bear Market

The ASX Bull-Bear Leading Index is at 54, down from 64 last week, signaling a bear market. Two of four Australian indicators signal risk-off after the 3-month moving average of NAB Forward Orders fell to -2 for May 2026. One of two Chinese indicators signals risk-off, and the ASX 200 Financials Index is testing primary support, so we are on bear watch. ASX Bull/Bear Market Indicator Australian leading indicators carry a 40% weighting in the ASX Leading Index, China 20%, and the US Leading Index the remaining 40%.

Financial Sector

The ASX 200 Financials Index (XFJ) is below its 50-week weighted moving average and testing primary support at 9000. A breach of 9000, confirmed by follow-through below 8900, would flag a primary downtrend — a risk-off signal. ASX 200 Financials Index

Housing Approvals

Activity in the Australian housing sector is improving, with the 3-month moving average of private housing approvals rising to 17.4K in April. A cross of 3-month MA values (navy) to below the 20-year MA (red) would signal risk-off. Australian Private Housing Approvals

Stock Pricing

ASX stock pricing recovered to 75.52 from a low of 73.96 percent last week. Our highest reading was 92.23 percent in August 2025, with a low of 67.85 percent in April 2025.

ASX Stock Market Value Indicator

We use z-scores to measure each indicator's current position relative to its historical data, with results expressed in standard deviations from the mean. We then calculate an average of the five readings and convert that to a percentile. The higher stock market prices are relative to their historical mean, the greater the risk of a sharp drawdown.

Conclusion

The Bull-Bear indicator suggests that the Australian economy is slowing. Two Australian indicators — NAB Forward Orders and the ASX 200 Financial Index — are close to the threshold but do not yet signal risk-off. However, they keep us on bear alert.

Meanwhile, valuations remain high, increasing the risk of a drawdown.

Acknowledgments

Managing Risk

To find out more, go to Managing Risk on the top menu, or see:

Posted on

Shift from Growth to Value

Key Points

  • The Dow jumped 1.7% to a new high above 51500, outstripping the S&P 500, which gained 0.4%.
  • The Russell 1000 shows a shift from Growth to Value.
  • Bitcoin is testing primary support at 62000, signaling a market shift to risk-off.

The Dow jumped 1.7% to a new high above 51500, boosted by a strong shift to value stocks in the blue-chip index. Rising Trend Index troughs confirm buying pressure.

Dow Jones Industrial Average

The S&P 500 lagged, with a 0.4% gain, though it remains in a strong uptrend.

S&P 500

The recent rally in Growth stocks (IWF) relative to Value stocks (IWD) in the Russell 1000 threatens to reverse with a break of the rising trendline.

Russell 1000 Large Cap Value ETF (IWD) vs. Russell 1000 Large Cap Growth ETF (IWF)

A shift from Growth to Value would reinforce the Bitcoin1 risk-off signal below. A breach of primary support at 62,000 would signal another decline, reflecting market attempts to shed risk assets.

Bitcoin (BTC)

The war with Iran has also upended the Treasury market, with the 2-year Treasury yield jumping above 3.6% at the beginning of March, ending the primary downtrend. The reversal signals no more rate cuts, with the rally now exceeding the Fed funds target range of 3.5% to 3.75% as expectations for rate hikes grow.

2-Year Treasury Yield

The economy is at full employment, with job openings exceeding unemployment for the first time in 12 months.

Job Openings

Inflation is rising, with CPI likely to follow Brent crude higher.

CPI & Brent Crude

It would be unreasonable to expect the new Fed Chair to push for rate hikes at his first meeting, but we are likely to see a switch to a tightening bias.

Conclusion

The Dow is gaining on the S&P 500 as financial markets shift to a risk-off stance.

Kevin Warsh will chair his first FOMC meeting on June 16-17. 2-year Treasury yields indicate the bond market does not expect further rate cuts. The FOMC will likely switch to a tightening bias to calm market fears of rising inflation.

Acknowledgments

Notes

  1. Cryptocurrencies are the highest-risk asset class, and we analyze Bitcoin (BTC) solely to identify risk sentiment in financial markets. Our analysis is not a recommendation to buy or sell BTC, nor is it a commentary on the merits of cryptocurrency.
Posted on

Markets in Risk-Off Despite High Stock Prices

Key Points

  • Bitcoin tests support at 70,000, signaling risk-off.
  • Stocks continue their uptrend.
  • Consumers continue to spend, but the falling saving rate suggests they are under pressure.
  • Manufacturers are building inventories ahead of expected price rises and supply chain disruptions.

Bitcoin1 is testing support at 70,000. The steep downtrend warns that financial markets are increasingly risk-averse.

Bitcoin (BTC)

However, indices like the NASDAQ remain in a strong uptrend, with the Invesco QQQ ETF close to our target of 750.

Invesco Nasdaq 100 ETF (QQQ)

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US Market Snapshot

Bull-Bear Market Index
Stock Market Pricing Indicator

The gauge on the left indicates whether the market is in a bull or bear phase, and the indicator on the right reflects the current valuation of the stock market. Stock market pricing indicates whether stocks are cheap or expensive in relation to earnings, but it is a poor indicator of market timing. We do not recommend selling stocks because market valuations are high; however, we recommend exercising caution when adding new positions.

Bull/Bear Market

We have revised the bull-bear market leading indicator to improve its responsiveness, stripping it down to a composite of five key indicators. At present, two of five indicators signal risk-off, indicating medium risk of a US bear market.

Bull/Bear Market Indicator

Stock Pricing

US stock pricing increased slightly to 96.08 from 96.05 percent last week, compared to its high of 96.66 four weeks ago and the recent low of 91.79 ten weeks ago.

US Stock Market Value Indicator

We use z-scores to measure each indicator's current position relative to its historical data, with results expressed in standard deviations from the mean. We then calculate an average of the five readings and convert that to a percentile. The higher the stock market price measure is relative to the historical mean, the greater the risk of a sharp drawdown.

Buffett Indicator

Warren Buffett's favorite long-term measure of stock market valuation provides a stable valuation ratio largely unaffected by fluctuating profit margins. The ratio of stock market capitalization to GDP increased to 3.21 from 3.19 last week, approaching its recent high of 3.24 from three weeks ago, and well above its long-term average of 1.2. Buffett Indicator: Stock Market Capitalization to GDP

Shiller CAPE

Robert Shiller's CAPE smoothes out business-cycle effects by comparing the S&P 500 index to a 10-year average of inflation-adjusted earnings. The CAPE ratio jumped to 40.31 from 39.94 last week. The recent peak of 41.33 from three weeks ago is the second-highest in history, behind the Dotcom bubble in 1999-2000, with values far above the long-term average of 22.4. Robert Shiller's S&P 500 CAPE Ratio

Conclusion

The Bull-Bear indicator suggests the US economy is slowing, but not yet in a recession.

Pricing is growing more extreme, however, increasing the risk of a significant drawdown.

Acknowledgments

Managing Risk

To find out more, go to Managing Risk on the top menu, or see:

Posted on

ASX Market Snapshot

Bull-Bear Market Leading Index
Stock Market Pricing Indicator

The gauge on the left indicates whether the market is in a bull or bear phase, while the one on the right reflects the current valuation of the stock market. Stock market pricing indicates whether stocks are cheap or expensive in relation to earnings, but it is a poor indicator of market timing. We do not recommend selling stocks when market valuations are high, but we advise caution when adding new positions.

Bull/Bear Market

The ASX Bull-Bear Leading Index is at 54, down from 64 last week, signaling a bear market. Two of four Australian indicators signal risk-off after the 3-month moving average of NAB Forward Orders fell to -2 for May 2026. One of two Chinese indicators signals risk-off, and the ASX 200 Financials Index is testing primary support, so we are on bear watch. ASX Bull/Bear Market Indicator Australian leading indicators carry a 40% weighting in the ASX Leading Index, China 20%, and the US Leading Index the remaining 40%.

Financial Sector

The ASX 200 Financials Index (XFJ) is below its 50-week weighted moving average and testing primary support at 9000. A breach of 9000, confirmed by follow-through below 8900, would flag a primary downtrend — a risk-off signal. ASX 200 Financials Index

Stock Pricing

ASX stock pricing recovered to 75.52 from a low of 73.96 percent last week. Our highest reading was 92.23 percent in August 2025, with a low of 67.85 percent in April 2025.

ASX Stock Market Value Indicator

We use z-scores to measure each indicator's current position relative to its historical data, with results expressed in standard deviations from the mean. We then calculate an average of the five readings and convert that to a percentile. The higher stock market prices are relative to their historical mean, the greater the risk of a sharp drawdown.

Conclusion

The Bull-Bear indicator suggests that the Australian economy is slowing. Two Australian indicators are falling, and, while not yet signaling risk-off, they keep us on bear alert.

On the other hand, valuations remain high, increasing the risk of a drawdown.

Acknowledgments

Managing Risk

To find out more, go to Managing Risk on the top menu, or see:

Posted on

There is No Deal

Key Points

  • President Trump raised hopes that he is about to sign a deal with Iran that will allow shipping through the Strait of Hormuz.
  • Crude prices fell, along with long-term Treasury yields.
  • The US economy is slowing, with real GDP growth at an annualized rate of 1.6% in the first quarter.
  • Real personal income per capita declined for the third straight month.
  • Personal savings plunged, warning of a recession.

Brent crude is testing support at $90 per barrel on news of an “imminent deal” with Iran.

Brent Crude

Every time the 10-year Treasury yield reaches 4.5%, Axios runs a headline citing sources close to the President saying he is close to a deal. Crude oil futures plunge, but the deal never materializes.

WASHINGTON/CAIRO, May 28 (Reuters) – The United States and Iran reached ​an agreement on Thursday to extend their ceasefire and lift restrictions on shipping through the Strait of Hormuz, sources told Reuters, though U.S. President Donald Trump has yet to approve ‌it and Iranian state media said it had not been finalized.

According to four sources familiar with the matter, the agreement would extend the truce for another 60 days and allow traffic to flow through the strategic waterway while negotiators tackle difficult issues such as Iran’s nuclear program.

Trump has not yet approved the deal, the sources said. Iran has yet to comment on news of the proposed ​deal, which was first reported by Axios.

Ignore the BS and focus on the bottom line. There is no deal until an agreement is signed — and adhered to by all parties, including Bibi Netanyahu.

US Strategic Petroleum Reserves fell by another 9 million barrels in the week ending May 22.

EIA Strategic Petroleum Reserves (SPR)

If the Strait of Hormuz remains closed at the end of June, crude oil markets will panic over looming shortages.
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