Colin Twiggs, Author at the patient investor

September 11, 2012

ASX 200: Descending triangle

The hourly chart of the ASX 200 formed a small descending triangle since Friday, testing support at 4320. Descending peaks indicate selling pressure. Downward breakout would warn of another test of medium-term support at 4260. Upward breakout is unlikely but would indicate an advance to 4400.

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 11, 2012

Canada: TSX60 retraces

The TSX 60 retraced to test its new support level at 700 on the daily chart. Bearish divergence on 21-day Twiggs Money Flow warns of medium-term selling pressure. Retreat below 694 would warn of a bull trap; follow-through below 680 would confirm. Respect of 694 is unlikely, but would confirm a primary advance to 760*.

TSX 60 Index

* Target calculation: 700 + ( 700 – 640 ) = 760

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 11, 2012

Europe strengthening

The FTSE 100 found support at 5600 and is headed for a test of primary resistance at 6000/6100. Rising 13-week Twiggs Money Flow indicates buying pressure. Expect strong selling at resistance but breakout would offer a long-term target of 6750*.

FTSE 100 Index

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

Dow Jones Europe Index is headed for a test of primary resistance at 260/265. Breach of the descending trendline indicates a bottom. Bullish divergence on 63-day Twiggs Momentum suggests a primary up-trend, but only a trough above zero, or breakout above 265, would confirm.

Dow Jones Europe Index

* Target calculation: 260 + ( 260 – 210 ) = 310

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 11, 2012

S&P 500 retraces

The S&P 500 is retracing to test its new support level after breaking resistance at 1420. Respect would signal an advance to 1570*, while failure of support at 1400 would indicate a bull trap. Bearish divergence on 21-day Twiggs Money Flow continues to flag medium-term selling pressure. Breach of the lower trend channel — and support at 1400 — would warn of another test of primary support at 1300.

S&P 500 Index

* Target calculation: 1420 + ( 1420 – 1270 ) = 1570

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 10, 2012

ASX 200: Testing support

The weekly chart shows the ASX 200 finding support at 4260. Recovery of 63-day Twiggs Momentum above zero suggests a primary up-trend. Breakout above 4400 would confirm the signal. Failure of support at 4260, however, would warn of another test of primary support at 4000.

ASX 200 Index Weekly

The hourly chart shows Friday’s jump above resistance at 4320 followed by retracement to test the new support level. A lower high on Monday followed by another test of 4320 shows buyers lack enthusiasm. Failure of support would warn of another test of medium-term support at 4260.

ASX 200 Index Hourly

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 10, 2012

Asia: Markets bouyed by stimulus measures

Markets jumped Friday on announcement by the ECB of government bond purchases and China unveiling further stimulus measures. The Shanghai Composite is testing the first line of resistance at 2150. Respect of 2250 would warn of another down-swing, while penetration of the (secondary) descending trendline would indicate the primary down-trend is weakening. 63-Day Twiggs Momentum, a long way below zero, continues to reflect a primary down-trend.

Shanghai Composite Index

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

Hong Kong’s Hang Seng is again testing resistance at 20000. Upward breakout plus 63-day Twiggs Momentum recovery above zero would indicate an advance to 22000. Respect of resistance is unlikely, but would test primary support at 18000.

Hang Seng Index

India’s Sensex recovered above 17500, indicating an advance to 18500. A trough above zero on 13-week Twiggs Money Flow would indicate buying pressure.

Sensex Index

* Target calculation: 17.5 + ( 17.5 – 16.5 ) = 18.5

Singapore’s Straits Times Index found support at 3000. Respect would indicate a test of the upper trend channel, but the lower peak on 63-day Twiggs Momentum suggests a ranging market. Breach of support at 3000 would re-test the lower trend channel. Singapore Straits Times Index

The long tail on last week’s Nikkei 225 candle indicates short-term buying pressure and recovery above 9200 would signal an advance to 10200. 13-Week Twiggs Money Flow below zero, however, continues to indicate long-term selling pressure. Recovery above zero would reverse the signal, while failure of primary support at 8200 would confirm another down-swing.

Nikkei 225 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.

September 7, 2012

S&P 500 breakout

The S&P 500 and NASDAQ 100 broke through resistance to signal a primary advance. Dow Industrial Average has yet to confirm. Timing of the breakout is significant, with November elections looming and the Fed doing its best to prime the pump. September/October is a tentative time of the year, with risk of a “Spring sell-off” following the quarter end, as in 2007. Traders may ride the “election rally” but investors need be more cautious. The market is being driven by macro-economic signals (quantitative easing) rather than earnings.

All is not well: Europe is in recession, China headed for a sharp contraction, and some tough choices will have to be made in the US after the election euphoria is over. Balance sheet expansion (QE) by the Fed, ECB and PBOC is likely but inflation will be muted by private sector deleveraging. And QE will be scaled back as soon as credit contraction eases.

The S&P 500 broke through resistance at 1420 to signal an advance to 1570*. A 63-day Twiggs Momentum trough above zero reflects the primary up-trend. Retracement that respects support at 1400 would confirm the signal.

S&P 500 Index

* Target calculation: 1420 + ( 1420 – 1270 ) = 1570

Dow Jones Industrial Average is testing resistance at 13300. Breakout would strengthen the S&P 500 signal. Rising 13-week Twiggs Money Flow indicates buying pressure.

Dow Jones Industrial Average

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 7, 2012

Forex: Euro, Pound Sterling, Canadian Loonie, Australian Dollar and Japanese Yen

The Euro is headed for $1.275, unaffected so far by the announcement that the ECB will purchase government bonds in the secondary market. Expect strong resistance at $1.275, reversal below the lower trend channel would warn of a correction.

Euro/USD

Pound Sterling is weakening against the euro, with a descending triangle testing support at €1.255. Failure of support would indicate a test of €1.230. 63-Day Twiggs Momentum is falling, but continues to indicate a primary up-trend.

Pound Sterling/Euro

* Target calculation: 1.255 – ( 1.285 – 1.255 ) = 1.225

Canada’s Loonie is testing resistance against the greenback at $1.02. Breakout would indicate an advance to the 2011 highs at $1.06. Reversal below parity is unlikely, but would test primary support at $0.95/$0.96. Rising 63-day Twiggs Momentum suggests a primary up-trend.

Canadian Loonie/Aussie Dollar

The Aussie Dollar found support at $1.02 against the greenback. Expect a test of $1.04. Breakout would indicate $1.06, while respect would warn of a down-swing to parity. Recovery of 63-day Twiggs Momentum above zero suggests an up-trend.

Aussie Dollar/USD

The Australian Dollar found support against the yen at ¥79.50/¥80.00. Recovery above ¥83.50 would indicate a test of ¥88.00. Rising 63-day Twiggs Momentum suggests a primary up-trend. Reversal below ¥79.50 is unlikely, but would indicate another test of primary support at ¥74.

US Dollar/Japanese Yen

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 6, 2012

Pro-Growth and Pro-Wall Street is an Oxymoron | Beat the Press

Dean Baker responds to a NYT opinion that “Mr. Clinton is the president who made the sustained case to Democrats that they had to be pro-growth and pro-Wall Street, not just to get elected, but also to build a more modern economy.”

President Clinton’s policies set the country on a course of bubble driven growth. The prosperity of the last four years of his administration was driven by an unsustainable stock bubble. The collapse of the bubble was responsible for the recession of 2001 and the deficits that get the Washington establishment types so excited. It was difficult for the economy to recover from this downturn which led to, at the time, the longest period without job growth since the Great Depression. When the economy finally did recover from this downturn and start to create jobs it was on the back of the housing bubble.

via Pro-Growth and Pro-Wall Street is an Oxymoron | Beat the Press.

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 6, 2012

ECB Unveils Bond-Buying Program – WSJ.com

By GEOFFREY T. SMITH

The ECB will buy in the secondary market only government bonds with remaining maturities between one and three years without announcing any limits in advance, and as long as the government in question is under a program approved by the euro zone.

The measures will primarily benefit fiscally troubled countries like Spain and Italy, which are facing difficulties financing their budget deficits…

via ECB Unveils Bond-Buying Program – 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.