Colin Twiggs, Author at the patient investor

November 27, 2012

China: Shanghai breaks support

China’s Shanghai Composite Index followed the DJ Shanghai Index, breaking primary support at 2000 to warn of a down-swing to 1850*. Completion of another 63-day Twiggs Momentum peak, this time deep below zero, would indicate a strong primary down-trend. Recovery above 2000 is unlikely but would suggest a bear trap.

Shanghai Composite Index

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

Dow Jones Shanghai Index earlier broke support at 250, signaling a primary decline. 13-Week Twiggs Money Flow below zero warns of selling pressure.

Dow Jones Shanghai Index

* Target calculation: 250 – ( 270 – 250 ) = 230

Hong Kong’s Hang Seng Index is far stronger, testing resistance at 22000. But a sharp fall on 13-week Twiggs Money Flow warns of medium-term selling pressure. Breakout above 22000 would signal an advance to 24000* but reversal below 21000 is as likely and would indicate a test of the rising trendline at 20000.

Hang Seng Index

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

Colin Twiggs

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.

November 27, 2012

EconoMonitor » The U.S. is sliding down an investment slope

Thomas Grennes & Andris Strazds highlight the contraction in US private investment since the GFC:

Recent evidence…….suggests that while U.S. GDP growth has surpassed its pre-crisis level, investment has been declining. A comparison with China would not be appropriate due to differences in growth rates and the level of economic development, but even a comparison with the EU-15 is not flattering to the U.S. A look at the Gross Fixed Capital Formation to GDP ratio shows that since the onset of the financial crisis in 2007 the U.S. has been lagging behind the EU-15 countries with respect to investment in long-term assets…….

The chances of China successfully switching from an export-driven economy to internal markets are small. And the US is unlikely to materially lift exports. So their conclusion appears unavoidable.

If insufficient investment results in the U.S. having to adjust by lowering consumption rather than increasing output, the rest of the world will also have to adjust in a way that is reducing growth; namely, produce less.

via EconoMonitor : Thoughts From Across the Atlantic » The U.S. Is Sliding Down an Investment Slope.

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.

November 26, 2012

France to ArcelorMittal: if you don’t like losing money, get out of France – Quartz

By Simone Foxman

It’s clear that [Arnaud Montebourg, France’s Minister of Industrial Renewal] is confusing the culprit with the victim. The continued failure of European politicians to resolve the region’s debt and banking problems for good has finally caught up with companies across the euro area. Those firms that waited for a more competitive, more integrated, and more stable monetary union have been forced to cut their losses and change their strategies to survive, as politicians bicker at the bargaining table……

via France to ArcelorMittal: if you don’t like losing money, get out of France – Quartz.

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.

November 26, 2012

Mark Carney Named New BOE Governor | WSJ.com

Mark Carney, who currently runs Canada’s central bank, will be the next governor of the Bank of England, the British government announced Monday, in a surprise pick that underscores U.K. officials’ thirst for fresh blood at the powerful institution……

via Mark Carney Named New BOE Governor – WSJ.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.

November 26, 2012

Europe: DAX heads for 7500

Germany’s Dax rallied off support at 7000 and is headed for a test of resistance at 7500. Breakout would signal an advance to 8000*. Oscillation of 13-week Twiggs Money Flow above zero indicates buying pressure. 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 headed for another test of resistance at 265. Breakout would signal an advance to 285*. Reversal below 245 would warn of a correction to test primary support at 210. A 13-week Twiggs Money Flow trough above zero would indicate buying pressure.

Dow Jones Europe Index

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

The FTSE 100 rallied off support at 5600 and is headed for another test of 6000. Breakout would signal an advance to 6400*. Reversal below 5600 is unlikely but would warn of a test of primary support at 5250. Narrowing 63-day Twiggs Momentum, however, warns of a ranging market.

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.

November 26, 2012

Canada: TSX Composite rallies

The TSX Composite is headed for another test of resistance at 12500. Breakout would signal an advance, offering a target of 13250*. Rising 63-day Twiggs Momentum suggests a primary up-trend. Reversal below 11750 is unlikely but would test primary support at 11200.

TSX Composite Index

* Target calculation: 12500 + ( 12500 – 11750 ) = 13250

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.

November 26, 2012

US rally but signs of a top

The S&P 500 broke resistance at 1400 and the descending trendline on the daily chart, indicating that the correction is ending. Expect retracement to test support. A higher trough would be a bullish sign.

S&P 500 Index

The weekly chart still shows bearish divergence on 63-day Twiggs Momentum and reversal below zero would warn of a primary down-trend. Breach of resistance at 1425 would signal another advance but expect resistance at 1475.

S&P 500 Index

The Nasdaq 100 is similarly headed for a test of 2800. Bearish divergence on 63-day Twiggs Momentum warns that a top is forming. Respect of 2800 would strengthen the signal, indicating reversal to a primary down-trend.

Nasdaq 100 Index

* Target calculation: 2400 – ( 2800 – 2400 ) = 2000

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.

November 24, 2012

The “Export Price Norm” saved Australia from the Great Recession « The Market Monetarist

The Market Monetarist writes how a combination of luck and good policy saved Australia from recession.

Milton Friedman once said never to underestimate the importance of luck of nations. I believe that is very true and I think the same goes for central banks. Some nations came through the shock in 2008-9 much better than other nations and obviously better policy and particularly better monetary policy played a key role. However, luck certainly also played a role…..

via The “Export Price Norm” saved Australia from the Great Recession « The Market Monetarist.

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.

November 23, 2012

Australia: Housing affordability still poor

Interesting article by Leith van Onselen on Australian housing affordability.

Today it takes “380 weeks on the average wage (just over seven year’s income) to buy a typical house. This is down from around 430 weeks average wages (just over eight year’s income) required to buy a home in 2008 and 2010.”

Good news. But compare that to less than 250 weeks in 1995 — and less than 200 weeks in 1987.

In 1960, it took homebuyers just 7500 hours [188 weeks on the average wage] to pay off the average mortgage.

via Housing affordability improves but still poor | | MacroBusiness.

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.

November 22, 2012

Sterling threatens euro support

Pound Sterling is headed for another test of support at €1.225/€1.230 on the weekly chart against the euro. Reversal of 63-day Twiggs Momentum below zero warns of a primary down-trend. Breach of support and the rising trendline would confirm the signal. Respect of support is unlikely, but would test €1.260 in the medium-term.

Pound Sterling

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.