Colin Twiggs, Author at the patient investor

July 4, 2012

Australian Dollar

The Aussie Dollar is forming an ascending flag after breaking resistance at $1.02 on the 2-Hour chart. Reversal below $1.025 would retrace to at least $1.01, while upward breakout from the flag would offer a target of $1.05*.

Australian Dollar/USD

* Target calculation: 1.03 + ( 1.02 – 1.00 ) = 1.05

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.

July 3, 2012

Australia: ASX 200

The ASX 200 continues to range between 3900/4000 and 4150. Twiggs Money Flow (21-day) oscillating around zero indicates uncertainty. Narrow consolidation below 4150 would be a bullish sign and breakout would test the May high of 4450. Reversal below 3900/4000 is less likely but would warn of a primary decline.

ASX 200 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.

July 3, 2012

Asian markets: India bullish while China weakens

Japan’s Nikkei 225 index is testing medium-term resistance at 9000/9100. Breakout would test 10000. Troughs below zero on 13-week Twiggs Money Flow indicate weakness.

Nikkei 225 Index

China’s Shanghai Composite Index is retracing to test resistance at 2250. Respect would confirm a primary down-trend — already signaled by 63-day Twiggs Momentum below zero.

Shanghai Composite Index

* Target calculation: 2250 – ( 2500 – 2250 ) = 2000

Wait for confirmation from a Shenzhen Composite index reversal below 880/900. A 63-day Twiggs Momentum peak below zero would strengthen the signal.

Shenzhen Composite Index

Singapore Straits Times Index broke through medium-term resistance at 2900, headed for a test of 3050. Recovery of 63-day Twiggs Momentum above zero suggests that the primary up-trend is intact.

Singapore Straits Times Index

* Target calculation: 3050 + ( 3050 – 2900 ) = 3200

India’s Sensex displays a healthy bullish divergence on 13-week Twiggs Money Flow, indicating reversal to a primary up-trend. Breakout above 17000 suggests another test of 18500. And breach of 18500 would confirm the primary up-trend.

Sensex Index

* Target calculation: 18500 + ( 18500 – 16000 ) = 21000

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.

July 3, 2012

UK and Europe: Tentative recovery

The FTSE 100 index broke resistance (and the descending trendline) at 5600/5620, suggesting the correction has ended. Oscillation of 63-day Twiggs Momentum around zero is narrowing, indicating hesitancy. Follow-through above 5650 would strengthen the breakout signal — as would recovery of 63-day Twiggs Momentum above zero — targeting 6000*. Reversal below 5600, however, would warn of a false signal.

FTSE 100 Index

* Target calculation: 5600 + ( 5600 – 5200 ) = 6000

Germany’s DAX is testing resistance at 6500; breakout would test the 2012 high of 7200. Rising 13-week Twiggs Money Flow (not shown) indicates buying pressure. Recovery of 63-day Twiggs Momentum above zero would strengthen the signal.

DAX Index

* Target calculation: 6500 + ( 6500 – 6000 ) = 7000

The Madrid General Index is headed for a test of medium-term resistance at 750/760. Bullish divergence on 13-week Twiggs Money Flow indicates buying pressure. Penetration of resistance — and the long-term descending trendline — would indicate a bottom is forming.

Madrid General Index

Italy’s MIB Index shows a similar bullish divergence on 13-week Twiggs Money Flow (not shown) — and on 63-day Twiggs Momentum. Recovery above 15000 would signal another test of long-term resistance at 17000.

MIB Index

* Target calculation: 15000 + ( 15000 – 13000 ) = 17000

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.

July 2, 2012

Treasury yields fall

10-Year Treasury yields are testing support at 1.55 percent. Falling yields suggest that the current stock market rally is likely to fail: money is flowing into bonds — not stocks. Failure of support would strengthen the warning. Recovery above 1.70 percent is less likely but would bolster the stock market rally.

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.

July 2, 2012

Canada: TSX 60

Canada’s TSX 60 index is headed for a test of medium-term resistance at 675. Breakout would also breach of the descending trendline, warning that the correction is over. Rising 21-day Twiggs Money Flow reflects medium-term buying pressure.

TSX 60 Index

* Target calculation: 680 + ( 680 – 640 ) = 720

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.

July 2, 2012

US: Wait for Nasdaq confirmation

The S&P 500 closed above medium-term resistance at 1360. I am normally wary of quarter-end prices moves as fund managers have a vested interest in boosting their performance bonuses. But the breakout appears to have a legitimate basis, with Germany’s key concessions at the Euro summit, and should test the 2012 high of 1420. 63-Day Twiggs Momentum holding above zero suggests the primary trend is intact. Reversal below the new support level (1360), however, would indicate a false signal. Falling 10-year treasury yields warn of another flight to safety (unless the Fed is driving down yields through its “Twist” operations) and we need to exercise caution.

S&P 500 Index

* Target calculation: 1360 + ( 1360 – 1300 ) = 1420

Wait for the Nasdaq 100 to break resistance at 2630 and confirm the S&P signal. Rising 21-day Twiggs Money Flow indicates medium-term buying pressure.

Nasdaq 100 Index

* Target calculation: 2650 + ( 2650 – 2500 ) = 2800

Bellwether transport stock Fedex (weekly chart) completed a double top reversal in April but since then has oscillated around the former neckline at $88. 63-Day Twiggs Momentum also recovered above zero. Follow-through above $92 would suggest that the correction is over and broader economic activity is recovering. Reversal below $85 is unlikely but would warn of a primary down-trend.

Fedex weekly

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.

July 1, 2012

China’s failed gamble for growth

Zarathustra: The idea of this gamble is simple. With the financial crisis in 2008 hitting the developed world, it naturally affected external demand. The Chinese knew these. At the end of 2007, trade surplus accounted for more than 7.5% of GDP. Currently, the same number is at its low single digit, probably 2% or so. No longer is China’s growth driven by trade. It is now driven largely by domestic demand.

And this is where the gamble lies. The massive stimulus was meant to stimulate domestic demand for a few years, in hope that perhaps the rest of the world will recover, and hence external demand would have recovered. Or else, in hope that domestic demand will become strong enough and sustainable so that the economy no longer depends on the health of the rest of the world…..

via China’s failed gamble for growth.

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.

July 1, 2012

Stocks Out of Fashion Amid a Bonding With Bonds – WSJ.com

Since the start of 2007, a cumulative $350 billion has flowed out of stock funds and a little over $1 trillion has moved into bond funds….. In 2011, 45% was in stock funds and 25% in bonds; in 2005, the mix was 55% for stocks and 15% in bonds…..

via AHEAD OF THE TAPE: Stocks Out of Fashion Amid a Bonding With Bonds – WSJ.com.

Comment:~ Low bond yields and higher risk premiums on stocks (stock earnings yield minus bond yield) highlight investors flight to safety. But this is no guarantee that bonds will continue to out-perform stocks. Bond yields must be close to hitting a “floor” and, with no further capital gains, investor returns will be meagre — while stocks grow increasingly attractive.

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.

June 30, 2012

Merkel Concessions at Euro Crisis Summit Smarter than they Seem – SPIEGEL ONLINE

Christian Rickens: Merkel’s concession is more than compensated for by a diplomatic victory she scored in the run-up to the summit: Late last week, she managed to get new French President François Hollande to sign off on her fiscal pact, which is deeply unpopular in Paris, in return for her support on the €130 billion ($165 billion) European Union “growth pact.”

The inequality of the deal is difficult to overstate. The growth pact is made up of little more than empty promises and dreams that can never come true. Though it won’t spur any growth in Europe, at least it won’t cost Germans any more money either.

Should one be looking for a summit loser, in fact, it necessary to look no further than Hollande. Not Angela Merkel. She merely did what she always does on the EU stage. She made compromises. And pretty clever ones at that.

via Merkel Concessions at Euro Crisis Summit Smarter than they Seem – SPIEGEL ONLINE.

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.