Colin Twiggs, Author at the patient investor

September 19, 2012

Japan Eases Monetary Policy in Surprise Move – WSJ.com

By MEGUMI FUJIKAWA And TATSUO ITO

TOKYO—The Bank of Japan took surprisingly strong steps to further ease its monetary policy on Wednesday, following similar steps by the Federal Reserve, as it tries to tackle entrenched deflation, an export-sapping strong yen and the impact of slowing global growth.

The central bank’s policy board decided at the end of a two-day meeting to increase the size of its asset-purchase program—the main tool for monetary easing with near-zero interest rates—to ¥80 trillion ($1.01 trillion) from ¥70 trillion.

via Japan Eases Monetary Policy in Surprise Move – WSJ.com.

Competitive devaluations, started by the ECB and followed by the Fed, PBOC and BOJ. Let the fun begin!

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 18, 2012

Australia: ASX 200 rising

Short bars on the S&P 500 retracement are a bullish sign, respect of short-term support at 1450 would suggest a strong advance.

The ASX 200 is strengthening in sympathy, despite poor performance of Chinese markets. Breakout above 4400 would strengthen the primary up-trend signal, from rising 63-day Twiggs Momentum. Follow-through above 4450 would confirm.

ASX 200 Index

* Target calculation: 4450 + ( 4450 – 4000 ) = 4900

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 18, 2012

Asia Update

Dow Jones China index is retracing to test primary support at 245. Declining 63-day Twiggs Momentum, below zero, continues to indicate a primary down-trend. Failure of support would offer a target of 200*.

Dow Jones China Broad Index

* Target calculation: 250 – ( 300 – 250 ) = 200

Hong Kong’s Hang Seng penetrated the descending trendline at 22000, indicating an advance to 22000. Recovery of 63-day Twiggs Momentum above zero suggests a primary up-trend. Breakout above 22000 would confirm.

Hang Seng Index

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 respected support at 3000. Rising 63-day Twiggs Momentum, above zero, indicates a primary up-trend. Follow-through above 3100 would indicate an advance to 3300*.

Singapore Straits Times Index

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

Japan’s Nikkei 225 is testing resistance at 9200. Breakout would signal a primary advance to 10200. Recovery of 13-week Twiggs Money Flow above zero indicates rising buying pressure.

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 18, 2012

Job Creators in Chief | Global Macro Monitor

By Global Macro Monitor

Let us begin by saying we don’t like the title of this post and believe it is misleading.

The President cannot, in our opinion, directly create permanent jobs in the private sector. Of course, he can hire federal workers and/or direct taxpayer funds to, say, defense or infrastructure projects, which creates, though temporary, a derived demand for labor. More important, however, is the administration’s policies that incentivize private sector hiring through creating an environment that empowers businesses and entrepreneurs and gives them confidence to expand capacity.

….In the short term, however, quantitative easing and negative real interest rates can generate asset bubbles, which can affect the real economy and hiring. But the experience of the collapse of two major bubbles in just a little over a decade illustrates there is always pay back and the monetary induced artificial boom will eventually turn to bust.

via Global Macro Monitor | Monitoring the Global Economy.

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 18, 2012

“This is No Way to Run a Government!” – Gates | The Fiscal Times

By JOSH BOAK

Nothing has stumped Gates [former Secretary of Defense and CIA director Bob Gates — who served eight of the last nine presidents], who oversaw the $700 billion military budget until last year, quite like the country’s current Congressional gridlock and the government’s ineffective efforts to stop runaway deficit spending.

“We’ve lost the ability to execute even the most basic functions of government,” he said.

via “This is No Way to Run a Government!” – Gates | The Fiscal Times.

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 18, 2012

Why is China afraid of the Louisiana Purchase? | Foreign Policy

By Joshua Keating

The buying and selling of territory between states is a lot less common than it was in the days when European powers held vast overseas empires and there was significantly more terra nullius to be claimed….

On the other hand, given how many territorial disputes China is involved in at the moment, a study of how these conflicts have been resolved peacably in the past might not be a terrible idea.

via Why is China afraid of the Louisiana Purchase? | FP Passport.

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 18, 2012

Dangerous Waters | Foreign Policy

BY STEPHANIE KLEINE-AHLBRANDT

The wave of anti-Japanese protests that swept across dozens of cities in China this weekend, prompted by Tokyo’s purchase of three disputed islands, has obscured a potentially more worrying development that risks drawing the two countries into a larger conflict: China’s adoption of a legal framework empowering it to expel foreign vessels in disputed waters in the East China Sea.

……More frequent Chinese patrols in the area, along with the Japanese Coast Guard continuing to patrol near the islands, raises the risk of maritime clashes higher than it has ever been. Although the two countries have dealt with past run-ins — such as when the Japanese Coast Guard arrested a Chinese skipper in 2010 after his boat collided with a Japanese vessel — and succeeded in cooling tensions, the current situation is of a different order. That act could be attributed to an overzealous Chinese fisherman. But now, a skirmish between official law enforcement vessels in the current context could prove irresolvable.

via Dangerous Waters – By Stephanie Kleine-Ahlbrandt | Foreign Policy.

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 18, 2012

Europe’s Balance of Payments account shows sizeable portfolio inflow

By Marc Chandler

Look at the turn around in the current account. In the 12-months through July, the euro area recorded a seasonally adjusted cumulative current account surplus of almost 63 bln euros, which is about 0.7% of the region’s GDP. The comparable figure in the 12-months through July 2011 was a deficit of a little more than 22 bln euros….

The weakness of the euro area economies has slowed imports and several countries, including some in the periphery, have seen a pick up in exports. Growth differentials probably is the more significant explanation, but we do recognize that from last November through July, the euro had declined about 10% on a trade-weighted basis……

While the current account is intuitively clear, the financial account is surprising. As the euro was falling in July to multi-year lows, talk circulated of capital flight. Yet, the financial account showed a net inflow of 18 bln euros of combined portfolio and direct investment.

via Europe’s Balance of Payments account shows sizeable portfolio inflow.

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 18, 2012

Europe strengthening

The FTSE 100 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, 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

Europe is recovering strongly, with Dow Jones Europe Index testing primary resistance at 260/265. Rising 13-week Twiggs Money Flow indicates buying pressure. Breakout above 265 would signal an advance to 310*.

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 18, 2012

Canada: TSX60 wedge

The TSX 60 is headed for the upper channel of its broadening wedge at 725 on the daily chart. Bearish divergence on 21-day Twiggs Money Flow warns of medium-term selling pressure. Retreat below 700 would warn of a swing to the lower wedge border.

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.