ColinTwiggs, Author at the patient investor

September 28, 2011

Gold and crude suffer from strong dollar

Spot Gold is testing support at its initial target of $1600/ounce. The long tail is evidence of buying support, but failure would test $1500. The primary trend direction remains up and, despite gold experiencing a strong correction, is unlikely to change.

Spot Gold

* Target calculation: 1750 – ( 1900 – 1750 ) = 1600

Brent crude is testing support at $104/barrel while Nymex WTI crude is at $80/barrel. There is no sign of the divergence between the two grades closing. Both have signaled a primary down-trend, though Brent has yet to confirm with a break of its rising trendline.

Crude Oil

* Target calculation: 105 – ( 120 – 105 ) = 90

September 28, 2011

CDS signaling trouble for Chinese banks – macrobusiness.com.au

Credit markets are also now showing distrust in Chinese banks. Credit default swaps spreads for Bank of China and China Development Bank have surged according to Société Générale, and they are rising at much faster rates than the rest of Asia ex. Japan

via CDS signaling trouble for Chinese banks – macrobusiness.com.au | macrobusiness.com.au.

September 28, 2011

Commodities point to weaker Aussie and Canadian Dollar

CRB Commodities Index is testing support at 300 and the lower border of its trend channel. 63-day Twiggs Momentum holding below zero indicates a strong primary down-trend. Breakout below the trend channel would warn of a sharp decline, with a target of 260*. Respect is less likely, but would indicate a rally to test the upper trend channel.

CRB Commodities Index

* Target calculation: 300 – ( 340 – 300 ) = 260

Canada’s Loonie and the Aussie Dollar are both closely linked to commodity prices. A fall in the CRB index would lead to similar falls in the two currencies. CAD breakout below $0.9650 would signal a test of $0.94*.

CADUSD

* Target calculation: 1.00 – ( 1.06 – 1.00 ) = 0.94

Both currencies commenced a primary down-trend when they broke parity. An Aussie Dollar breakout below $0.97 would offer an identical target of $0.94*.

AUDUSD

* Target calculation: 1.02 – ( 1.10 – 1.02 ) = 0.94

September 28, 2011

Frau Merkel, it really is a euro crisis – Ambrose Evans-Pritchard

The reason this crisis keeps grinding ever deeper is because the euro itself is a machine for perpetual destruction. The currency is fundamentally warped and misaligned. It spans a 30pc gap in competitiveness between North and South. Intra-EMU current account deficits have become vast, chronic, and corrosive. Monetary Union is inherently poisonous.

The countries in trouble no longer have the policy tools — interest rates, QE, liquidity, and exchange rates — to lift themselves out of debt-deflation. Just as they had few tools to prevent a catastrophic credit bubble during the boom. Their travails were caused in great part by negative real interest rates set by the ECB (irresponsibly) for German needs.

via Frau Merkel, it really is a euro crisis – Telegraph Blogs.

September 28, 2011

Euro-Zone Bailout Plan Progresses – WSJ.com

While German officials say they are open in principle to using the EFSF’s limited war chest “as efficiently as possible,” they say these ideas are unlikely to work well unless the ECB cooperates. So far, the ECB has rejected calls to team up with the bailout fund.

Political resistance to such a “leveraging” of the EFSF is high in Germany’s parliament, which would have to approve such a move. Ms. Merkel’s government has tried to reassure its lawmakers this week that it has no plans to make German taxpayers shoulder even bigger risks.

via Euro-Zone Bailout Plan Progresses – WSJ.com.

September 28, 2011

Dollar rise as euro falls

The euro is testing short-term support against the greenback at $1.35/1.34. 63-Day Momentum (declining below zero) reminds we are in a primary down-trend. Failure of support would signal a decline to $1.30*.

EURUSD

* Target calculation: 1.40 – ( 1.50 – 1.40 ) = 1.30

The dollar has benefited from safe haven demand, commencing a primary advance as the euro falls. 63-Day Twiggs Momentum crossed to above zero, confirming the primary up-trend. Further retracement to test the new support level at 76.00 is likely, but respect would demonstrate strong buying support.

US Dollar Index

* Target calculation: 76 + ( 76 – 73 ) = 79

September 28, 2011

It’s Man vs. Machine and Man Is Losing – WSJ

Since the recession ended, businesses had increased their real spending on equipment and software by a strong 26%, while they have added almost nothing to their payrolls.

via It’s Man vs. Machine and Man Is Losing – Real Time Economics – WSJ.

September 28, 2011

ICI – Exchange-Traded Fund Assets, August 2011

The combined assets of the nation’s exchange-traded funds ETFs were $1.041 trillion in August, according to ICI.

via ICI – Exchange-Traded Fund Assets, August 2011.

A fall of 4.1% from July 2011.

September 28, 2011

India & Singapore

India’s SENSEX index ran into resistance at 16500 today. 13-Week Twiggs Money Flow holding below zero warns of strong selling pressure. Expect another test of support at 16000. Failure would signal a down-swing to 14500.

SENSEX

* Target calculation: 16000 – ( 17500 – 16000 ) = 14500

The Straits Times Index weakened to 2700 today after yesterday’s sharp rally. 63-Day Twiggs Momentum declining below zero reminds that we are in a strong primary down-trend. Failure of support at 2700 would signal a decline to 2400*.

Straits Times Index

* Target calculation: 2650 – ( 2900 – 2650 ) = 2400

September 28, 2011

ASX 200 compressed spring

Narrow range and strong volume signals strong opposition to the current rally. Like the release of a compressed spring, reversal below 4000 would lead to a sharp fall.

ASX 200 Index

* Target calculation: 4000 – ( 4500 – 4000 ) = 3500