Colin Twiggs, Author at the patient investor

September 24, 2012

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

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.

September 24, 2012

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

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.

September 24, 2012

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

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.

September 24, 2012

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

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.

September 24, 2012

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

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.

September 23, 2012

Anatomy of a flash crash | Fiscal Times

By John Kemp

ANATOMY OF A FLASH CRASH

In their report on the 2010 equity market crash, the SEC and CFTC staff found that “against a backdrop of unusually high volatility and thinning liquidity, a large fundamental trader (a mutual fund complex) initiated a sell program to sell a total of 75,000 E-mini contracts (valued at approximately $4.1 billion) as a hedge to an existing equity position”.

“This large fundamental trader chose to execute this sell program via an automated execution algorithm (“Sell Algorithm”) that was programmed to feed orders into the June 2010 E-Mini market to target an execution rate set to 9% of the trading volume calculated over the previous minute, but without regard to price or time,” the report noted. “On May 6, when markets were already under stress, the Sell Algorithm chosen by the large trader to only target trading volume, and neither price nor time, executed the sell program extremely rapidly in just 20 minutes”…………..

via When Oil Prices Drop in a ‘Flash’: Is It Real?.

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.

September 23, 2012

When Oil Prices Drop in a 'Flash': Is It Real?

By John Kemp

The CFTC is looking into Monday’s oil price drop and is collaborating with Britain’s Financial Services Authority FSA which regulates the London-based Brent market. CME Group, which operates one of the two principal oil markets, has described the drop as a “coordinated selloff” not caused by any technical failures. Intercontinental Exchange ICE, which runs the main Brent contract, has declined to comment on whether it saw any unusually big orders placed during the period. It did, however, say: “Following rumors regarding the Strategic Petroleum Reserve SPR, volume was widely distributed and oil prices declined over a period of time. Circuit breakers were not triggered and markets were orderly.”

via When Oil Prices Drop in a 'Flash': Is It Real?.

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.

September 22, 2012

More than 67 million Americans dependent on government

Interesting charts from The Heritage Foundation: The 2012 Index of Dependence on Government
By William Beach and Patrick Tyrrell – February 8, 2012

The percentage of US citizens who do not pay federal income taxes, and who are not claimed as dependents by someone who does pay them, has climbed more than four-fold from a low of 12 percent in the late 1960s to 49.5 percent in 2009.

Index

More than 70 percent of federal spending goes to programs that encourage dependence.

Index

The Index of Dependence on Government multiplies each program’s yearly expenditure by its weight. The total of the weighted values is the Index score for that year. The Index is calculated using the following weights:

Housing: 30 percent
Health Care and Welfare: 25 percent
Retirement: 20 percent
Higher Education: 15 percent
Rural and Agricultural Services: 10 percent

Index

More than 67 million Americans receive assistance through the programs included in the Index.

Index

If we add government employees, the number dependent on government increases to more than 91 million.

Index

Reproduced with permission from The Heritage Foundation
Read the full report at The 2012 Index of Dependence on Government

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.

September 22, 2012

As the U.S. Borrows, Who Lends? – NYTimes.com

By Floyd Norris

Estimates by the Treasury Department released this week indicated that over the 12 months through July, China reduced its position in Treasury securities by $165 billion, cutting them to $1.15 trillion despite making a small amount of purchases in July. And the Federal Reserve reported that, as of Wednesday, it owned $1.65 trillion in Treasury securities, $17 billion less than it had owned a year earlier.

…..China’s selling of Treasuries over the 12-month period was offset by the actions of Japan, another country whose trade surplus with the United States remains large. The Japanese are estimated to have increased their holdings by $232 billion over the 12 months, to $1.12 trillion. Those figures include both government and private holders of Treasuries.

via As the U.S. Borrows, Who Lends? – 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.

September 21, 2012

Ray Dalio: Market Insights | CNBC

Ray Dalio, founder of Bridgewater Associates, the world’s largest hedge fund, discusses his biggest worry — social disruption due to mismanagement of the de-leveraging by governments — and other market insights.

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Also PIMCO’s Mohammed El-Erian on the benefits and risks of ECB intervention in the eurozone debt crisis.

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.