Colin Twiggs, Author at the patient investor

April 16, 2012

Europe’s Economic Suicide – NYTimes.com

Paul Krugman: If European leaders really wanted to save the euro they would be looking for an alternative course. And the shape of such an alternative is actually fairly clear. The Continent needs more expansionary monetary policies, in the form of a willingness — an announced willingness — on the part of the European Central Bank to accept somewhat higher inflation; it needs more expansionary fiscal policies, in the form of budgets in Germany that offset austerity in Spain and other troubled nations around the Continent’s periphery, rather than reinforcing it. Even with such policies, the peripheral nations would face years of hard times. But at least there would be some hope of recovery.

What we’re actually seeing, however, is complete inflexibility. In March, European leaders signed a fiscal pact that in effect locks in fiscal austerity as the response to any and all problems. Meanwhile, key officials at the central bank are making a point of emphasizing the bank’s willingness to raise rates at the slightest hint of higher inflation.

via Europe’s Economic Suicide – NYTimes.com.

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.

April 16, 2012

EconoMonitor : Last Days of Rome » How America Builds Its Way Back to Balance

Michael Moran: While China excels at building and even incrementally improving established product lines like GM’s Buicks and countless other Western and Japanese goods manufactured there, it has struggled to innovate. Even in 2010, the year China officially overtook Japan as the world’s second largest economy, no Chinese brand could viably be called a household name in any Asian market, let alone in the wider world. The annual global branding study by the market research firm TNS found in 2010 that, while consumer brands from Denmark, Finland, South Korea, and Switzerland make the top 20, no Chinese product or brand appeared in the top 1,000.

……China can claw its way up the value-added food chain and move its companies beyond the goal of building a better, cheaper Buick and into the high-end, high-margin markets for software, aerospace, robotics, and sophisticated engineering currently dominated by the United States, Europe, and Japan. But the progress to date has been almost impossible to measure, and the country’s substandard educational system, demographic and political challenges, and corruption suggest that this will be more of a Long March than a Great Leap Forward.

via EconoMonitor : Last Days of Rome » How America Builds Its Way Back to Balance.

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.

April 16, 2012

Japan & South Korea: strong buying pressure

Japan’s Nikkei 225 Index reflects strong buying support, with a long tail on last week’s candle. Recovery above 10000 would signal an advance to 11000*, the gap between the low (9400) and medium-term support at 9000 indicating strong buying pressure. 63-Day Twiggs Momentum confirms a strong primary up-trend.

Nikkei 225 Index

* Target calculation: 10 + ( 10 – 9 ) = 11

Dow Jones South Korea Index is holding above medium-term support at 425. Follow-through above 445 would confirm the advance to 480*. 13-Week Twiggs Money Flow respecting zero (from above) indicates a strong primary up-trend.

Dow Jones South Korea Index

* Target calculation: 420 + ( 420 – 360 ) = 480

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.

April 16, 2012

India & Singapore

Dow Jones Total Stock Market Index for India closed below support at 1800, warning of another correction, but 63-day Twiggs Momentum holding above zero continues to indicate a primary up-trend. Breakout above 1900 would signal an advance to 2100*.

Dow Jones Total Stock Market Index - India

* Target calculation: 1800 + ( 1800 – 1500 ) = 2100

BSE Sensex Index is testing support at 17000. Downward breakout would indicate another test of primary support at 15000. 13-Week Twiggs Money Flow respect of the zero line, however, would signal strong buying pressure. And recovery above the medium-term (orange) descending trendline would indicate a fresh primary advance, breakout above 18000 confirming the primary up-trend.

BSE Sensex Index

* Target calculation: 18 + ( 18 – 15 ) = 21

Singapore Straits Times Index continues to test resistance at 3000. 63-Day Twiggs Momentum holding above zero confirms the primary up-trend. Follow-through above 3050 would signal an advance to 3300*.

Singapore Straits Times Index

* Target calculation: 2900 + ( 2600 – 2500 ) = 3300

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.

April 16, 2012

Hong Kong & China: Soft Landing

A weekly chart of the Hang Seng Index, with a long tail on last week’s candle, indicates respect of the 20000 support level. A 13-week Twiggs Money Flow trough above the zero line indicates buying pressure. Follow-through above 21000 would indicate an advance to 23000*, confirming the primary up-trend.

Hang Seng Index

* Target calculation: 21.5 + ( 21.5 – 20 ) = 23

Dow Jones Shanghai Index respected support at the 2010 low of 275, indicating that a bottom is forming. Recovery of 63-day Twiggs Momentum above zero would signal a primary up-trend. Breakout above resistance at 310 would confirm, offering an initial target of 345*.

Dow Jones Shanghai Index

* Target calculation: 310 + ( 310 – 275 ) = 345

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.

April 16, 2012

ASX 200 bullish ascending triangle

The weekly chart of the ASX 200 shows the index testing resistance at 4350/4400 in a bullish ascending triangle. Recovery of 63-day Twiggs Momentum above zero suggests a primary up-trend. We need to be cautious because of bearish sentiment in the US and Europe but breakout above 4400 would signal the start of a primary up-trend, with an initial advance to 5000*.

ASX 200 Index

* Target calculation: 4400 + ( 4400 – 3800 ) = 5000

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.

April 16, 2012

UK & Europe: Madrid in trouble

The monthly chart of the Madrid General Index highlights the extent of Spain’s problems, with the index breaking support at 750 and headed for its 2009 low of 700. A 63-day Twiggs Momentum peak below the zero line warns of a strong down-trend. Failure of 700 would signal a decline to 600*.

Madrid General Index

* Target calculation: 750 – ( 900 – 750 ) = 600

The broader Dow Jones Europe Index is undergoing a correction on the weekly chart. The sharp fall on 13-week Twiggs Money Flow warns of selling pressure. Failure of medium-term support at 240 is likely and would suggest another test of primary support at 210. Respect of support is unlikely but would indicate that the primary up-trend is intact.

Dow Jones Europe Index

The FTSE 100 is testing support at 5600. Respect would confirm the primary up-trend, indicating an advance to 6400*.
A 13-week Twiggs Money Flow trough above the zero line would signal continued buying pressure. Failure of support, however, would warn that the up-trend is weakening.

FTSE 100 Index

* Target calculation: 6000 + ( 6000 – 5600 ) = 6400

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.

April 16, 2012

Canada: TSX 60

Canada’s TSX 60 Index broke the band of support at 700, warning of a correction to 650. Reversal of 63-day Twiggs Momentum below zero warns the earlier primary up-trend was a false signal. Expect a test of primary support at 650. Recovery above 700 is unlikely but would indicate resumption of the primary up-trend.

TSX 60 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.

April 16, 2012

Selling pressure on S&P 500 and Nasdaq 100

The S&P 500 is testing support at 1350 after penetrating its rising trendline. Failure of support would indicate a correction with an initial target of 1300. Respect of 1300 — and of the zero line by 13-week Twiggs Money Flow — would signal that the primary up-trend is intact and may present a buying opportunity for the more adventurous.

S&P 500 Index Weekly Chart

On the daily chart, recovery of the S&P 500 above 1400 would suggest a new primary advance, while breach of support at 1350 would signal a correction. Bearish divergence on 21-day Twiggs Money Flow indicates medium-term selling pressure.

S&P 500 Index Daily Chart

A similar (21-day Twiggs Money Flow) bearish divergence on the Nasdaq 100 warns of a correction. Breach of the rising trendline strengthens the signal. Follow-through below 2700 would confirm, offering an initial target of 2400.

Nasdaq 100 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.

April 16, 2012

Fedex double top

Bellwether transport stock Fedex completed a double top reversal with a break through the neckline at $88. Retracement found resistance at $90 and reversal below the original neckline at $88 would signal a primary down-trend. Follow-through below Tuesday’s low would confirm. Bearish divergence on 13-week Twiggs Money Flow warns of strong selling pressure. A primary down-trend on Fedex normally warns of slowing activity in the broader economy.

Fedex

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.