ColinTwiggs, Author at the patient investor

July 1, 2014

Explaining Richard Koo to Paul Krugman | SNBCHF.com

George Dorgan writes:

….Prof. Steve Keen’s and Richard Koo’s recipe is to increase public debt, when the private sector is de-leveraging and to reduce public debt when the private sector is leveraging. According to Keen, the Americans are currently doing the complete opposite of what they should do. They should continue reducing private liabilities, but they should increase public spending.

The Fed wants the average American to spend, even deficit spending, while the state is doing austerity. According to Keen, the current increase of private US debt could lead to a new recession.

July 1, 2014

Will Inflation Remain Low? | FRBSF

From Yifan Cao and Adam Shapiro at the Federal Reserve Bank of San Francisco:

The well-known Phillips curve suggests that future inflation depends on current and past inflation and a measure of economic slack or resource utilization. Using the unemployment gap to measure slack, a simple Phillips curve currently predicts that inflation will remain quite low through 2015. Two variations of the model, which impose a higher anchor for inflation expectations or focus only on a short-term unemployment gap, still predict that inflation will remain low, albeit higher than implied by the basic model.

June 30, 2014

Shanghai rally

Dow Jones Shanghai Index rallied Monday, headed for another test of resistance at 270/272. Momentum is rising, but only recovery above 282/284 (with TMO above zero) would signal a trend change. Further consolidation is more likely, ranging between 258 and 284. Downward breakout, unlikely at present, would warn of a decline to 240*.

Dow Jones Shanghai Index

* Target calculation: 260 – ( 280 – 260 ) = 240

June 30, 2014

Canada: TSX 60 up-trend continues

Canada’s TSX 60 continues towards its target of the 2008 high at 900. Rising troughs on 13-week Twiggs Money Flow signal strong buying pressure. Reversal below support at 845 remains unlikely.

TSX 60

June 30, 2014

Europe: Mild selling pressure

DAX again retraced to test support at 9750/9800. A small decline on 13-week Twiggs Money Flow indicates mild (medium-term) selling pressure. Failure of support would warn of a correction to the primary trendline. Respect is less likely, but would suggest a fresh advance; confirmed by breakout above 10000.

DAX

* Target calculation: 9750 + ( 9750 – 9000 ) = 10500

The Footsie shows similar selling pressure to the DAX, with a mild decline on 13-week Twiggs Money Flow. The long tail on last week’s candle suggests support at 6700 and the rising trendline. Recovery above 6900 would signal an advance to 7200*. But reversal below 6700 is as likely and would warn of a correction to primary support at 6400/6500.

FTSE 100

* Target calculation: 6800 + ( 6800 – 6400 ) = 7200

June 30, 2014

ASX 200 selling pressure

The ASX 200 is once again testing support at 5380/5400. Declining 21-day Twiggs Money Flow below zero indicates medium-term selling pressure. Correction to 5300 is likely. The primary trend remains upward and this should prove a good entry point for long-term investors. Recovery above 5470 is unlikely at present, but would signal another primary advance.

ASX 200

* Target calculation: 5550 + ( 5550 – 5400 ) = 5700

ASX 200 VIX remains low, indicative of a bull market.

ASX 200

June 30, 2014

Japan and India test new support

Japan’s Nikkei 225 retraced to test its new support level around 15000. Respect would confirm a rally to 16000. Completion of a 13-week Twiggs Money Flow trough above zero indicates long-term buying pressure. Reversal below 14800 is unlikely, but would warn of another test of primary support at 14000.

Nikkei 225

* Target calculation: 16000 + ( 16000 – 14000 ) = 18000

India’s Sensex is far stronger — retracing to test its new support level at 25000. Bearish divergence on 13-week Twiggs Money Flow warns of medium-term selling pressure. Breach of support would warn of a correction to 24000. But the primary trend is upward and recovery above 25500 would signal another advance.

Sensex

* Target calculation: 21000 + ( 21000 – 16000 ) = 26000

June 28, 2014

Asymmetrical warfare: Russia’s little green men are here to stay [podcast]

It’s been called hybrid warfare, asymmetrical warfare, and ambiguous warfare. But warfare it is, and Russia appears to have perfected using it to achieve its geopolitical aims.

The Little Green Men are probably here to stay. Is there any way to counter them?

http://www.rferl.org/audio/Audio/1166373.html

June 28, 2014

Desperately seeking moderate Syrian rebels | Threat Matrix

By Lisa Lundquist:

Following the news that the Obama administration, in a sudden about-face, is asking Congress for $500 million to train and equip “vetted” members of the “moderate” Syrian opposition, The Associated Press yesterday published a list, headlined “Syrian rebels likely to receive US aid.” The list raises more questions than it answers — two of the listed groups have been designated by the US as terrorist organizations….

June 28, 2014

S&P 500 unfazed

Summary:

S&P 500 continues a primary advance.
China respects primary support.
ASX 200 continues to signal weakness.
Momentum investors need to hold positions.

The S&P 500 retraced to test its latest support level at 1950 after a downward GDP revision for the first quarter. Respect indicates medium-term buying pressure — also evidenced by rising 21-day Twiggs Money Flow. Follow-through above 1970 would confirm a test of 2000*. Reversal below 1950 is unlikely, but penetration of the secondary trendline would warn of a correction.

S&P 500

* Target calculation: 1900 + ( 1900 – 1800 ) = 2000

The CBOE Volatility Index (VIX) remains low, indicative of a bull market.

S&P 500 VIX

The Shanghai Composite Index respected primary support at 1990/2000. 21-Day Twiggs Money Flow oscillating above zero indicates buying support, but this may be due to the managed “soft landing”. What we do know is that a fall below zero would definitely signal selling pressure. Breach of support would signal a decline to 1850*. The primary trend is expected to continue its downward path, but further ranging between 2000 and 2150 is likely. An abrupt fall is a fairly remote possibility.

Shanghai Composite

* Target calculation: 2000 – ( 2150 – 2000 ) = 1850

The ASX 200 made a false break above 5470, but 21-day Twiggs Money Flow below zero warns of medium-term selling pressure. Breach of support remains likely and would indicate a correction to 5300. The long-term trend, however, remains upward. Support at 5300/5400 would offer a great entry point for long-term investors. Recovery above 5470 is unlikely at present, but would signal a test of resistance at 5550.

ASX 200

* Target calculation: 5400 + ( 5400 – 5000 ) = 5800

I repeat my warning from last week: Momentum investors should not attempt to time secondary corrections and need to endure the present volatility in order to reach their intended investment goals.