Colin Twiggs, Author at the patient investor

December 5, 2012

PSY Gangnam Style

Some kids in US 2nd Infantry Division stationed in South Korea have fun with Gangnam style

With thanks to Ryan.

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.

December 5, 2012

S&P 500 hesitant

Two doji candles on the S&P 500 daily chart indicate indecision. Fiscal cliff negotiations are unlikely to be resolved quickly and another test of primary support at 1350 seems inevitable. Failure of short-term support at 1400 is likely and would signal a test of primary support. While breakout above 1425 is unlikely it would test resistance at 1475. Reversal of 21-day Twiggs Money Flow below zero would indicate selling pressure, but a higher trough (above/below zero) would suggest continuation of the advance to 1475.

S&P 500 Index

Colin Twiggs

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.

December 4, 2012

High-Speed Traders Profit at Expense of Ordinary Investors, a Study Says | NYTimes.com

NATHANIEL POPPER and CHRISTOPHER LEONARD write:

The chief economist at the Commodity Futures Trading Commission, Andrei Kirilenko, reports in a coming study that high-frequency traders make an average profit of as much as $5.05 each time they go up against small traders buying and selling one of the most widely used financial contracts [E-mini S&P 500 Futures].

via High-Speed Traders Profit at Expense of Ordinary Investors, a Study Says – NYTimes.com.

Colin Twiggs

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.

December 4, 2012

How Regulations Led to High-Frequency Trading

John Carney writes that high frequency trading is an unintended consequence of regulatory action to remove market specialists:

High frequency trading grew up in the aftermath of a decades-long struggle by Congress, the SEC, and the stock exchanges to stamp out the specialists, who were accused of front-running customers, favoritism and interfering with the smooth operations of markets…….. Things really came to a head after the dot-com crash, when everyone was looking for someone to blame for all that money lost. By 2005, the government passed a series of market reforms that were aimed directly at eliminating the specialists. In the wake of those reforms, commissions fell, pricing improved, exchanges became more competitive—and high-frequency trading arose.

Seems they have swapped one set of problems for another.

The safest way for retail investors or traders to minimize the cost of HFT market interference may be to participate in opening or closing auctions where bids are matched by algorithm.

via How Regulations Led to High-Frequency Trading.

Colin Twiggs

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.

December 4, 2012

Muslim, Zionist and proud | Ynetnews

British Muslim Kasim Hafeez writes about his visit to Israel:

I did not encounter an apartheid racist state, but rather, quite the opposite. I was confronted by synagogues, mosques and churches, by Jews and Arabs living together, by minorities playing huge parts in all areas of Israeli life, from the military to the judiciary. It was shocking and eye-opening. This wasn’t the evil Zionist Israel that I had been told about.

Perhaps there is a future for Israel/Palestine after all.

via Muslim, Zionist and proud – Israel Opinion, Ynetnews.

Colin Twiggs

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.

December 4, 2012

Fed set to unveil extra asset purchases – FT.com

Robin Harding at FT writes:

The other issue on the agenda is replacing the FOMC’s current forecast that rates will stay low until mid-2015 with a set of preconditions for the economy to reach before it considers raising rates. “I now think a threshold of 6.5 per cent for the unemployment rate and an inflation safeguard of 2.5 per cent . . . would be appropriate,” said Charles Evans, president of the Chicago Fed…..

The problem is that both of these thresholds are moving targets:

Unemployment is based on surveys and only includes those who have actively sought a job in recent weeks. It fluctuates with the participation rate.
Inflation is also subjective, dependent on the basket of goods measured and estimates of housing inflation that are subject to manipulation.

Targeting nominal GDP growth would be far more accurate.

via Fed set to unveil extra asset purchases – FT.com.

Colin Twiggs

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.

December 4, 2012

Australia: ASX 200 retreats

The ASX 200 found resistance at 4540 after a strong rally. Reversal below 4500 would indicate retracement to test support at 4450. Breach of the falling trendline indicates the correction is over. Respect of 4450 would confirm. A 21-day Twiggs Money Flow trough above zero would signal medium-term buying pressure. Breakout above 4580 would indicate a primary advance to 4800*.

ASX 200 Index

* Target calculation: 4580 + ( 4580 – 4350 ) = 4810

Colin Twiggs

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.

December 4, 2012

Asia: India strengthens

India’s Sensex broke through 19000 to confirm an advance to 20000*. Oscillation of 13-week Twiggs Money Flow above zero indicates long-term buying pressure.

Sensex Index

* Target calculation: 19 + ( 19 – 18 ) = 20

Singapore’s Straits Times Index is testing resistance at 3100. Breakout would indicate a test of the upper trend channel at 3260*. Respect would test the lower channel at 2900. The 63-day Twiggs Momentum trough above zero suggests a primary advance.

Singapore Straits Times Index

* Target calculation: 3100 + ( 3100 – 2940 ) = 3260

Japan’s Nikkei 225 Index is retracing to test the new support level at 9200/9300. Respect would confirm an advance to 10200*. Rising 63-day Twiggs Momentum suggests a primary up-trend; look for a trough above zero to confirm.

Nikkei 225 Index

* Target calculation: 9200 + ( 9200 – 8200 ) = 10200

Colin Twiggs

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.

December 4, 2012

China: Controlled descent

China’s Shanghai Composite Index monthly chart displays controlled descent rather than free-fall, declining in layers of roughly 200 points since early 2010. After breaking support at 2000, expect a decline to 1800*. Oscillation of 63-day Twiggs Momentum below zero reflects the primary down-trend. Recovery above 2000 is most unlikely but would suggest a bear trap.

Shanghai Composite Index

* Target calculation: 2000 – ( 2200 – 2000 ) = 1800

The Shenzhen Composite Index offers a target of 600* after breaking support at 800 on the monthly chart. 13-Week Twiggs Money Flow below zero indicates selling pressure.

Shenzhen Composite Index

* Target calculation: 800 – ( 1000 – 800 ) = 600

Hong Kong’s Hang Seng Index respected resistance at 22000. Bearish divergence on 13-week Twiggs Money Flow warns of medium-term selling pressure. Reversal below 21000 would indicate a test of the rising trendline at 20000. Recovery above 22000 is unlikely at present but would signal an advance to 24000*

Hang Seng Index

* Target calculation: 22 + ( 22 – 20 ) = 24

Colin Twiggs

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.

December 3, 2012

Europe: DAX at 7500

Germany’s DAX is testing resistance at 7500 but bearish divergence on 13-week Twiggs Money Flow warns of medium-term selling pressure. Breakout would signal an advance to 8000*, while respect of 7500 would indicate another test of primary support at 7000. Reversal below 7000 is unlikely but would warn that a top is forming.

DAX Index

* Target calculation: 7500+ ( 7500 – 7000 ) = 8000

Dow Jones Europe Index is similarly testing resistance at 265. Again, bearish divergence on 13-week Twiggs Money Flow warns of medium-term selling pressure. Breakout above 265 would offer a target of 285*. Reversal below 245 is unlikely but would indicate a decline to 210.

Dow Jones Europe Index

* Target calculation: 265 + ( 265 – 245 ) = 285

The FTSE 100 is in a similar position: headed for a test of 6000. Breakout would signal an advance to 6400*. But bearish divergence on 13-week Twiggs Money Flow warns of medium-term selling pressure. Reversal below 5600 would test support at 5250.

FTSE 100 Index

* Target calculation: 6000 + ( 6000 – 5600 ) = 6400

Colin Twiggs

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.