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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UK & Europe warn of primary down-trend

Dow Jones Europe Index broke medium-term support at 240, warning of another test of primary support at 210. Reversal of 63-day Twiggs Momentum warns of a primary down-trend. Failure of support would confirm.

Dow Jones Europe Index

The FTSE 100 broke medium-term support at 5600, indicating another test of primary support at 5000/5050. Breach of the rising trendline and retreat of 63-Day Twiggs Momentum below zero both warn of a primary down-trend. Failure of primary support would confirm.

FTSE 100 Index

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Australia: ASX 200

Australia’s ASX 200 is testing medium-term support at 4250. Failure would indicate a correction to test primary support at 4000. Bearish divergence and reversal of 21-day Twiggs Money Flow below zero warn of medium-term selling pressure.

ASX 200 Index Daily Chart

 

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Canada: TSX 60

The TSX 60 is testing primary support at 650. Failure would signal a primary down-trend, already indicated by 63-day Twiggs Momentum reversal below zero. 13-Week Twiggs Money Flow, however, continues to reflect reasonable buying pressure so we need to guard against a bear trap.

TSX 60 Index
TSX 60 Index Twiggs Money Flow

* Target calculation: 650 – ( 725 – 650 ) = 575

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S&P 500 and Nasdaq 100 correction

The S&P 500 broke support at 1340 to confirm the correction. Initial target is 1300. Reversal of 21-day Twiggs Money Flow below zero confirms medium-term selling pressure signaled by an earlier bearish divergence . Recovery above 1360 is most unlikely but would warn of a bear trap.

S&P 500 Index Daily Chart

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

A similar 21-day Twiggs Money Flow signal on the Nasdaq 100 warns of medium-term selling pressure. Retracement respected resistance at 2630, confirming a correction. Initial target is 2500*.

Nasdaq 100 Index

* Target calculation: 2630 – ( 2760 – 2630 ) = 2500

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CNBC: Is the US headed for another recession?

Lakshman Achuthan of ECRI sticks to his forecast of a double-dip:

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The Real Reasons People Drop Out of the Workforce

“Labor force participation for unskilled men has dropped off the table the last few decades,” [Timothy Taylor, managing editor of the Journal of Economic Perspectives] said. “Wages for that group aren’t high enough to encourage them to work. For a lot of those men, going on disability may be a better option. Working off the books may be going on. The benefits of working at $10 or $11 an hour just isn’t enticing 50-year-old men into the labor force,” he said.

Another factor in play: there were an estimated 2.3 million people in U.S. prisons at the end of 2010, the highest rate of incarceration in the world. That’s quadruple the number imprisoned in 1980. The rate of imprisonment has gone from 100 per 100,000 people in the mid-1970s to 500 per 100,000 today.

via The Real Reasons People Drop Out of the Workforce.

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Europe's nuclear brinkmanship with Greece is a lethal game – Telegraph Blogs

Ambrose Evans-Pritchard: Polls show that 70pc or even 80pc of Greeks still wish to stay in the euro, while at the same voting in large numbers for hard-Left and hard-Right parties committed to tearing up the Memorandum – a course of action that will take them straight out of the euro.

I do not wish to reproach the Greeks for cognitive dissonance. We all do this, and besides, euro membership is more than just a currency for Greece. It is the anchor of identity for an isolated Balkan nation living cheek by jowl with the Ottoman nemesis……..

The chief danger is not for Greece. It is for the rest of the eurozone. If the German political establishment is unwise enough to force Greece out of EMU on the assumption that the country is a special case, it will be disabused of this illusion very quickly.

via Europe’s nuclear brinkmanship with Greece is a lethal game – Telegraph Blogs.

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Dimon in the Rough: JP Morgan Loses $2B on Failed Trade

JPMorgan Chase & Co lost $2 billion on a failed hedge, an unexpected revelation that hit hard the bank that had been seen as the smartest and safest player through the credit crisis that began to erupt in 2007.

via Dimon in the Rough: JP Morgan Loses $2B on Failed Trade.

Comment: Writing good headlines is an art. Occasionally you find a gem like this. It wins my vote for headline of the week.

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German Adjustment – NYTimes.com

Paul Krugman: Germany believes that its successful adjustment was the result of its own virtue, but in reality it was successful in large part because of an inflationary boom in the rest of Europe.

And here’s the thing: the Germans are now demanding that the European periphery replicate its achievement (and actually surpass it, because the required adjustment is much bigger) without providing a comparably favorable environment — they’re demanding that Spain and others do what they never did, which is deflate their way to competitiveness.

This is a road to disaster.

via German Adjustment – NYTimes.com.

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Consumer Credit – Worse Than You Think | The Big Picture

Take out government-owned student loans and there has been virtually no rebound in consumer credit since the Great Recession ended. Restated, the consumer has not been borrowing since the Great Recession has ended. Rather, students took advantage of below-market rates on loans provided by the government starting in 2009…….“Most of the improvement in credit is a function of the explosion student loan debt,” said Neil Dutta, an economist at Bank of America Corp. in New York. “The reason student loan debt is exploding? Because the youth population is having difficulty finding work. Hardly a good reason for credit extension.”

via Consumer Credit – Worse Than You Think | The Big Picture.

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