Author: ColinTwiggs

Posted on

UK & Europe

Dow Jones UK index retreated below support/resistance (the lighter shaded candle reflects an incomplete week) at the October 2011 high, suggesting a bull trap. Bearish divergence on 13-week Twiggs Money Flow warns of strong selling pressure.

DJ UK Index


The FTSE 100 shows a similar bearish divergence on 13-week Twiggs Money Flow. Reversal of 63-day Twiggs Momentum below the zero line would strengthen the bull trap signal.

FTSE 100 Index


Dow Jones Europe index is testing medium-term support at 240. Breach of the green ascending trendline would warn of another test of primary support at 210 — as would 63-day Twiggs Momentum respecting the zero line.

DJ Europe Index

Posted on

Dow and S&P bearish divergence

Dow Jones Industrial Average is already in a primary up-trend, having completed a higher trough late last year, and is now testing the 2011 high of 12800. Retracement to 12300 and the rising trendline is likely. Respect would confirm the new up-trend, but a large bearish divergence on 13-week Twiggs Money Flow warns of failure and a cross below zero would indicate reversal to a primary down-trend.

Dow Jones Industrial Average


The Nasdaq 100 displays a similar bearish divergence on 13-week Twiggs Money Flow, warning of strong selling pressure. Retreat below 2400 would indicate a bull trap.

Nasdaq 100 Index

* Target calculation: 2400 + ( 2400 – 2150 ) = 2650

The S&P 500 has not yet reached its 2011 highs but retreat of 13-week Twiggs Money Flow below zero would warn of strong selling pressure and a primary trend reversal.

S&P 500 Index

Posted on

Baltic Dry Index reflects falling demand from China

The Baltic Dry Index has fallen by more than 60 percent in the last 3 months, headed for a test of its 2008 low at 600. The index reflects bulk international shipping rates and is dominated by Capesize iron ore and coal shipments to China. Its fall coincides with a 23 percent drop in iron ore spot prices over the last quarter of 2011. Falling demand for raw materials from China warns that economic activity is slowing rapidly and there may not be a soft landing.

Baltic Dry Index

Australia and other resource-rich economies will need to brace themselves for a sharp fall in exports over the year ahead.

Posted on

Living In A QE World | Jim Bianco

Central banks are ruling markets to a degree this generation has not seen. Collectively they are printing money to a degree never seen in human history.

So how does this process get reversed? How do central banks pull back trillions of dollars of money printing without throwing markets into a tailspin? Frankly, no one knows, least of all central banks as they continue to make new money printing records.

…..When/If these central banks go too far, as was eventually the case with home prices, expanding balance sheets will no longer be looked upon in a positive light. Instead they will be viewed in the same light as CDOs backed by sub-prime mortgages were when home prices were falling. The heads of these central banks will no longer be put on a pedestal but looked upon as eight Alan Greenspans that caused a financial crisis.

via Living In A QE World | The Big Picture.

Posted on

Business Sector Is More Open for Business – Real Time Economics – WSJ

The business investment momentum is continuing into 2012. New orders for nondefense capital goods excluding aircraft–a proxy for future business spending–increased 2.9% in December, reversing the two previous monthly drops. The backlog of unfilled orders is also on the rise. Fulfilling that pent-up demand means more industrial production in 2012.

via Business Sector Is More Open for Business – Real Time Economics – WSJ.

Posted on

The winners and losers of QE3 – macrobusiness.com.au

The Committee will regularly review the size and composition of its securities holdings and is prepared to adjust those holdings as appropriate to promote a stronger economic recovery in a context of price stability.

That’s a clear declaration of intended QE3 if conditions are met. The two conditions are price stability and inadequate employment growth. Price stability now has a number with the Fed also announcing a new inflation target of 2%. Anything under that number potentially triggers QE3.

via The winners and losers of QE3 – macrobusiness.com.au | macrobusiness.com.au.

Posted on

What’s Going on With Debt in U.S.? – Real Time Economics – WSJ

The chart shows clearly the build up of debt heading into the bust, and the subsequent deleveraging. Overall public and private debt, by this measure, peaked at 302% of GDP in the first quarter of 2009. Since then, it has fallen to 279% as the economy has grown and some private players have lightened their debt loads.

US Debt by Sector as Percentage of GDP

via What’s Going on With Debt in U.S.? – Real Time Economics – WSJ.

Comment: ~ The Financial sector can be ignored as this merely acts as a conduit for, and mirrors, the other sectors. My concern is that Government debt is growing at a faster rate than the fall in Household and Nonfinancial Corporations debt. That is unsustainable and is likely to reverse after the November elections. At which point the economy will contract.

Posted on

King Says BOE Ready to Act – WSJ.com

[BOE Governor Mervyn King] kept the door open for more stimulus in his speech Tuesday. “With inflation falling back and wage growth subdued, there is scope for interest rates to remain low and, if necessary, for further asset purchases, to prevent inflation falling below the 2% target,” he said. The annual rate of inflation in the U.K. dipped to 4.2% in December from 4.8% a month earlier, and is expected to slow sharply this year.

via King Says BOE Ready to Act – WSJ.com.

Posted on

Gold & Commodities: Copper breakout as dollar weakens

The US Dollar Index has retraced to test medium-term support at 79.50. Respect would confirm a strong primary up-trend, while failure would suggest trend weakness. 63-Day Twiggs Momentum above zero still indicates a primary up-trend, but breach of the rising trendline warns that the up-trend is slowing. A weakening dollar is likely to cause stronger commodity prices.

Dollar Index

* Target calculation: 80 + ( 80 – 75 ) = 85

The weekly chart shows spot gold testing its descending trendline. Respect would indicate another test of primary support at $1500/ounce, while breakout would suggest that a bottom is forming. Reversal of 63-day Twiggs Momentum below zero would complete an iceberg pattern, warning of a primary down-trend. The bull-trend of the last few years was driven by quantitative easing (QE1 and QE2) from the Fed. We are unlikely to see another bull-trend without QE3.

Spot Gold

* Target calculation: 1600 – ( 1800 – 1600 ) = 1400

Copper broke through resistance at $8000/tonne, completing a higher trough and signaling a primary up-trend. Recovery of 63-day Twiggs Momentum above zero would strengthen the signal. The primary up-trend in this bellwether commodity suggests an economic recovery is under way.

Copper A Grade

* Target calculation: 8000 + ( 8000 – 7200 ) = 8800

The broader CRB Commodities Index, however, lags behind. Breach of the descending trendline indicates a base is forming, but only recovery above 325 would signal a primary up-trend. Cross-over of 63-day Twiggs Momentum above zero would strengthen the bull signal.

CRB Commodities Index


Brent crude is also forming a base, after breaching its descending trendline. Breakout above 115 would signal the start of a primary up-trend.

Brent Crude Afternoon Markers

* Target calculation: 115 + ( 115 – 105 ) = 125

Powered by WordPress / WordPress Maintenance Service By Website Helper