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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Spain's Economy Shows Fresh Strain – WSJ.com

Spain’s economy showed fresh strain as retail sales fell at a record pace in April, showing the government’s austerity program is strangling consumption and suggesting deepening recession. Data Tuesday from the National Statistics Institute, or INE, showed seasonally adjusted retail sales fell 9.8% on the year in April, compared with a 3.8% drop in March. The decline was the sharpest since INE started collecting the data in January 2004. Household spending is dropping as unemployment approaches 25% of the work force.

via Spain’s Economy Shows Fresh Strain – WSJ.com.

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Australia: ASX 200 consolidation

Asia consolidated today and the ASX 200 was no exception, rallying off short-term support at 4020. Declining 21-day Twiggs Money Flow continues to warn of medium-term selling pressure. Respect of resistance at 4150 would indicate a test of primary support at 3980/4000.  Failure of support would offer a target of 3600*.

ASX 200 Index

* Target calculation: 4000 – ( 4400 – 4000 ) = 3600

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Hong Kong & China

Hong Kong’s Hang Seng Index is consolidating above 18500 on the weekly chart.  Reversal of 13-week Twiggs Money Flow below zero warns of selling pressure, strengthening the bear signal from 63-day Twiggs Momentum. Breach of 18500 would test primary support at 17500 — and breach of 17500 would offer a target of 15000*. Recovery above 20000 remains unlikely but would warn of a bear trap.

Hang Seng Index

* Target calculation: 17500 – ( 20000 – 17500 ) = 15000

Shanghai Composite Index is headed for a test of primary support at 2250; breach would offer a target of 2000*. Reversal of 63-day Twiggs Momentum below zero indicates continuation of the primary down-trend. Recovery above 2500 is unlikely but would signal a primary advance.

Shanghai Composite Index

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

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UK & Europe

Dow Jones Europe Index found medium-term support at 220 but reversal of  13-week Twiggs Money Flow below zero warns of strong selling pressure. Breach of primary support at 210 would signal a decline to 160*, close to the 2009 low. Respect of support is less likely but would indicate a rally to 260.

Dow Jones Europe Index

* Target calculation: 210 – ( 260 – 210 ) = 160

The FTSE 100 is consolidating above 5250 on the weekly chart. 13-Week Twiggs Money Flow remains above zero but 63-day Twiggs Momentum warns of a primary down-trend. Failure of primary support at 5000/5100 would confirm.

FTSE 100 Index

* Target calculation: 5000 – ( 6000 – 5000 ) = 4000

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Canadian bear trap?

Canada’s TSX 60 index recovered above primary support at 650. Follow-through above the April low of 675 would indicate a bear trap, presenting an early buy opportunity for aggressive traders. The more cautious may be inclined to wait for recovery above 730, especially as 63-day Twiggs Momentum (below zero) continues to warn of a primary down-trend.  Reversal below 640 is more likely and would signal a decline to 580*.

TSX 60 Index

* Target calculation: 650 – ( 720 – 650 ) = 580

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US: S&P 500 and Nasdaq consolidate

The S&P 500 finished the week having twice respected support at the 50% Fibonacci retracement level of 1292/1296 on the hourly chart. Recovery above resistance at 1330 would indicate the end of the secondary correction.

S&P 500 Index Hourly Chart

21-Day Twiggs Money Flow below zero, however, continues to warn of selling pressure. Reversal below 1290 remains likely and would test primary support at 1150.

S&P 500 Index Daily Chart

On the weekly chart, the Nasdaq 100 continues to test support at 2500. Breach of the rising trendline would warn that the primary up-trend is weakening. The sharp fall on 13-week Twiggs Money Flow indicates selling pressure and reversal below zero would suggest a primary down-trend.

Nasdaq 100 Index

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Swiss Prepare Plans in Case of Euro's Demise – WSJ.com

Anita Greil: Switzerland is considering capital controls to fight a sharp rise in the Swiss franc in the event of a euro-zone collapse.

……In the 1970s, Switzerland used such extreme measures to curb excessive demand for its currency. The country prohibited foreign investments in Swiss securities and real estate, and introduced negative interest rates on foreign deposits. Both tools failed to stem the Swiss franc’s rise, which only halted after the central bank introduced a temporary peg to the deutsche mark, Germany’s currency at the time.

via Swiss Prepare Plans in Case of Euro’s Demise – WSJ.com.

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Abstruse Goose » Fill it up with unregulated

Fill it up with unregulated — Greek/CDS humor:

Abstruse Goose: Trading CDS

via Abstruse Goose » fill it up with unregulated.

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Forex: Japanese Yen

The US Dollar broke support at ¥80 Japanese Yen and is now at the 61.8% Fibonacci level. Failure of short-term support at ¥79 would indicate another test of primary support at ¥76. The long-term bearish divergence on 63-day Twiggs Momentum continues, however, and a trough above zero would indicate a fresh primary advance. Breakout above ¥84 would confirm.

USD/Japanese Yen

* Target calculation: 84 + ( 84 – 80 ) = 88

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Forex: UK and Europe

The Euro is testing primary support at $1.26 against the greenback. A peak below zero on 63-day Twiggs Momentum indicates continuation of the primary down-trend. Failure of support would test the 2010 low of $1.19/$1.20.

Euro/USD

* Target calculation: 1.26 – ( 1.35 – 1.26 ) = 1.17

Pound Sterling continues to test resistance at €1.26 against the euro. 63-Day Twiggs Momentum high above zero indicates a strong up-trend. Weak retracement which fails to test the new support level around  €1.22 would indicate an accelerating/exponential up-trend.

Pound sterling/Euro

* Target calculation: 1.26 + ( 1.26 – 1.22 ) = 1.30

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