Author: 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.
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Tim Harford — Don’t take growth for granted

By Tim Harford

Economic growth is a modern invention: 20th-century growth rates were far higher than those in the 19th century, and pre-1750 growth rates were almost imperceptible by modern standards. Many have seen this as an encouraging trend, but [economist Robert Gordon] draws a different lesson: growth is a recent phenomenon, so why assume that it will last?

……Demographics and debt accumulation have both speeded up growth in the past and, as the pendulum swings back, demographics and debt repayment will reduce it in the future…….

via Tim Harford — Don’t take growth for granted.

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Czech foreign minister: The West is losing to Putin | The Cable

By Josh Rogin

“We are not going back to Stalin, we are going back to Nicholas I,” said Karel Schwarzenberg, the Czech minister of foreign affairs, in an exclusive interview with The Cable. “It was under Nicholas that the great part of Central Asia was conquered by the Russians and Putin is quite successfully getting them under the control of Russia again, and the West is losing.”

…..”The Pacific basin is now more important [to the US] than Europe, it’s perfectly understandable,” he said. “I think in Europe we have to learn that we have to care much more ourselves, for our own security.”

via Czech foreign minister: The West is losing to Putin | The Cable.

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Fiscal consolidation in Sweden: A role model? | vox

By Martin Flodén, Associate Professor at Stockholm University

Fiscal austerity was effective during the Swedish economic crisis, but that insight is not particularly helpful today. Austerity would have been more complicated both economically and politically if it had not been supported by currency depreciation and strong external demand, and crisis countries today do not benefit from such developments. Attempts to consolidate before growth had resumed failed in Sweden. One possible interpretation of these observations is that prospects to consolidate are bleak until competitiveness has been restored in crisis economies…….

via Fiscal consolidation in Sweden: A role model? | vox.

Hat tip to Delusional Economics

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Caterpillar Cuts Outlook on Weak End Demand | PRAGMATIC CAPITALISM

Caterpillar outlook on the worldwide economy:

“MODEST GROWTH LIKELY, BUT RECESSION REMAINS POSSIBLE.

Much of Europe already mired in recession.”

via Caterpillar Cuts Outlook on Weak End Demand…. | PRAGMATIC CAPITALISM.

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Down with politics | WashingtonExaminer.com

By Gene Healy

Politics makes us worse because “politics is the mindkiller,” as intelligence theorist Eliezer Yudkowsky puts it……. we indulge our tribal hard-wiring by picking a political “team” and denouncing the “enemy.”

But our atavistic Red/Blue tribalism plays to the interests of “individual politicians in getting you to identify with them instead of judging them.”

……..We’ll get more of the same, Yudkowsky argues, until “Republifans and Demofans … stop enthusiastically cheering for rich lawyers because they wear certain colors, and begin judging them as employees severely derelict in their duties.”

via Down with politics | WashingtonExaminer.com.

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Australia: ASX 200 resistance

Last week’s short candle on strong volume indicates the ASX 200 is running into resistance at 4400/4450. Reversal below the rising trendline would suggest another correction.

ASX 200 Index

The hourly chart broke through its rising trendline, and first line of support at 4395/4400, on Monday morning. Retracement that respects resistance at 4400 would  warn of a down-swing to 4250.

ASX 200 Index Hourly

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Europe rising

Madrid General Index continues to indicate strong buying pressure, with 13-week Twiggs Money Flow rising steeply. Expect a test of resistance at 900.

Madrid General Index

* Target calculation: 725 + ( 725 – 600 ) = 850

Germany’s DAX is testing long-term resistance at 7500/7600. Troughs above zero on 13-week Twiggs Money Flow indicate strong buying pressure. Breakout would signal an advance to 8400*.

DAX Index

* Target calculation: 7200 + ( 7200 – 6000 ) = 8400

The FTSE 100 tests short-term support at 5860 on the daily chart. Shallow retracement suggests an advance to primary resistance at 6000/6100. Recovery above 5900 would strengthen the signal. 21-Day Twiggs Money Flow troughs above zero indicate buying pressure. Expect strong resistance at 6000, because of the number of previous peaks at this level, but breakout would offer a long-term target of 6750*.

FTSE 100 Index

* Target calculation: 6000 + ( 6000 – 5250 ) = 6750

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Canada: TSX60 tests support

The TSX 60 is retracing to test support at 700. Respect would indicate an advance to the 2012 high of 725. Rising 63-day Twiggs Momentum suggests a primary up-trend; a trough above zero would strengthen the signal. Only breakout above 725 would confirm.

TSX 60 Index

* Target calculation: 725 + ( 725 – 640 ) = 810

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US: Fedex warns of declining activity

Bellwether transport stock Fedex fell hard in the last week, testing support at $84. Breakout would confirm the primary down-trend signaled by 63-day Twiggs Momentum below zero. A down-trend on Fedex would warn of slowing activity in the broader economy.

Fedex

A daily chart of the S&P 500 index shows narrow consolidation above 1450. Bearish divergence on 21-day Twiggs Money Flow continues to warn of selling pressure. Reversal below 1450 would indicate a test of 1400.

S&P 500 Index

Weekly chart of the Nasdaq 100 shows the index hesitating below 2900. Expect retracement to test the new support level at 2800.

Nasdaq 100 Index

* Target calculation: 2800 + ( 2800 – 2450 ) = 3150

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Asia: India strong but China, Japan weaken

China’s Shanghai Composite Index followed through below recent support at 2050. Declining 13-week Twiggs Money Flow, below zero, indicates selling pressure. Target for the decline is 1800*.

Shanghai Composite Index

* Target calculation: 2150 – ( 2500 – 2150 ) = 1800

South Korea’s Seoul Composite Index is headed for a test of 2050. The 13-week Twiggs Money Flow trough above zero suggests a primary up-trend. Breakout above 2050 would confirm.

Seoul Composite Index

* Target calculation: 2050 + ( 2050 – 1750 ) = 2350

India’s Sensex broke through 18500, confirming the primary up-trend. The trough above zero on 13-week Twiggs Money Flow indicates buying pressure. Expect retracement to test the new support level.

Sensex Index

* Target calculation: 18.5 + ( 18.5 – 16.0 ) = 21.0

Singapore’s Straits Times Index is testing medium-term resistance at 3100. Rising 63-day Twiggs Momentum, above zero, indicates a primary up-trend.  Breakout above 3100 would indicate an advance to 3300*.

Singapore Straits Times Index

* Target calculation: 3000 + ( 3000 – 2700 ) = 3300

Japan’s Nikkei 225 retreated below the new support level at 9200. Reversal of 13-week Twiggs Money Flow below zero warns of a bull trap. Follow-through below 9000 would confirm.

Nikkei 225 Index

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

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