ColinTwiggs, Author at the patient investor

September 7, 2011

Denial is not a river in Egypt

Dow Jones Industrial Average rallied, suggesting a second higher low above primary support at 10600/10800. Expect a test of 11900/12000, but this does not mean the bear market is about to reverse. We are still in the early “denial stage” of the bear market, identified by sporadic bargain-hunting, high volatility and a general lack of direction. Declining volume indicates a lack of enthusiasm from buyers and sellers. Failure of primary support would change that, leading to a sharp fall to 10000*.

Dow Jones Industrial Average

* Target calculation: 11000 – ( 12000 – 11000 ) = 10000

September 6, 2011

Number for the day is 45.0%

The percentage of containers that were shipped empty from the Port of Los Angeles during the 2011 financial year was 48.42% (or 1.8 million twenty-foot units). Incoming containers received empty were a mere 3.42%. Our number for the day is the net 45.0% of incoming containers that are returned empty to their port of destination.

Shippers attempt to fill containers on their return journey, even at super-low rates, in order to offset the cost of completing the round-trip. Empty containers indicate failure to locate manufactured goods that can compete in these export markets. This affects not only the shipper, but the entire economy. You see, those containers leaving the West Coast are not really empty. They contain something far more valuable than the goods being imported. They contain manufacturing jobs — and the infrastructure, skills and know-how to support them.

In 2012, if you need an independent gauge of how successful the President’s jobs program has been, check this number.

September 6, 2011

Harpex Container Index stalls

The Harpex Index of container ship rates is retreating. Failure of support at 600 would warn of another test of the 2010 low. The index, calculated by Harper Petersen ship brokers, reflects international demand for container vessels and is a useful measure of international trade in light manufactured goods. Falling international trade would have the greatest impact on export-oriented Asian markets like China, Taiwan, Japan and South Korea.

Harpex Container Ship Index

September 6, 2011

ASX 200 threatens support

The ASX 200 is headed for another test of support at 4000. Declining volume displays no evidence of bargain-buying. Failure of support is likely and would offer a target of 3500*.

ASX 200 Index

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

September 6, 2011

Flight to safety

10-Year Treasury yields fell to a new low on Friday, warning of further falls in the stock market as investors seek save havens in Treasurys and precious metals.

10-Year Treasury Yields

September 5, 2011

JSE Overall Index retreats

The JSE Overall Index retreated below the former primary support level of 30000, strong volume [R] warning of selling pressure. Breach of the rising trendline would indicate another test of support at 28400. Failure of support would offer a target of 26000*, but this is not yet a foregone conclusion, with an up-tick in volume [S] indicating some buying support.

Johannesburg Overall Index

* Target calculation: 28.5 – ( 31 – 28.5 ) = 26

September 5, 2011

Bovespa

The Brazilian Bovespa Index encountered strong resistance at 58000, the spike in volume [R] warning of selling pressure. Breach of the rising trendline would warn that the rally is fading and another test of support at 48000 is likely. Failure of support would offer a target of 38000*.

Brazil Bovespa Index

* Target calculation: 48 – ( 58 – 48 ) = 38

September 5, 2011

Australia Investor Confidence at Lowest Level Since 2009 – WSJ.com

Australians face rising electricity bills, fuel prices and mortgage rates, and the increasing cost of living has been exacting a toll on the economy.

Neither consumers nor businesses are in the mood to borrow in a major way. Veda’s quarterly Consumer Credit Demand Index, released Monday, showed consumer credit demand has dropped 5.1% since March. Business credit growth was flat in July, after having not posted growth for four straight months, St. George Bank economist Janu Chan said. In the year to July, business credit contracted 1.9%. “Lackluster growth in business credit is consistent with softening business confidence, and adds to evidence that certain sectors of the economy are doing it tough,” Ms. Chan said in a note.

via Australia Investor Confidence at Lowest Level Since 2009 – WSJ.com.

September 5, 2011

Fighting Australia’s “hot money” problem – macrobusiness.com.au

Australia is a large net borrower from the rest of the world. A large deficit in a capital account along with a deficit in the balance of trade while the currency is rising are all strong evidence that Australia has a problem with currency speculation.

Currency speculation, sometimes called “hot money” , needs to be controlled because it can cause some serious imbalances in the local economy both on the way in, and on the way out. There are a number of well-known symptoms for hot money in-flows, these include:

• Asset bubbles

• Currency appreciation

• Inflation

via Fighting Australia’s “hot money” problem – macrobusiness.com.au.

September 5, 2011

Euro tests primary support at $1.40

The euro broke its medium-term trendline against the dollar at [TX] and is headed for another test of primary support at $1.40. Failure of support would offer a target of $1.30*.

EURUSD

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