Colin Twiggs, Author at the patient investor

May 9, 2012

Forex: Australia, Canada and South Africa

Weakening commodity prices are dragging the Australian Dollar lower against the greenback. Breach of support at $1.02 indicates another test of primary support at $0.96. Reversal of 63-day Twiggs Momentum below zero already warns of a primary down-trend. Failure of primary support at $0.96 would confirm, offering a long-term target of $0.84*.

Australian Dollar/US Dollar

* Target calculation: 0.96 – ( 1.08 – 0.96 ) = 0.84

Canada’s Loonie is strengthening against the Australian Dollar, having penetrated its long-term descending trendline and with 63-day Twiggs Momentum recovering above zero. Breakout above parity would signal the start of a primary up-trend.
Canadian Dollar/Australian Dollar

The Loonie retreated against the greenback, testing support at $0.995 after a false break above $1.01. Failure of support would confirm a bull trap and test primary support at $0.95. Recovery above $1.01 remains as likely, however, and would signal a primary advance; respect of zero by 63-day Twiggs Momentum would strengthen the signal.

Canadian Dollar/US Dollar

* Target calculation: 1.01 + ( 1.01 – 0.96 ) = 1.06

The Aussie found support at R7.90 against the South African Rand. 63-Day Twiggs Momentum remains weak and reversal below zero would indicate a primary down-trend. Failure of support at R7.90 would warn of a correction to R7.50*. Recovery above R8.30, however, would signal a fresh primary advance.

Australian Dollar/South African Rand

* Target calculation: 8.00 – ( 8.50 – 8.00 ) = 7.50

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.

May 9, 2012

Forex: US Dollar/Japanese Yen

The US dollar is testing long-term support at ¥80. Failure would warn of weakness in the primary up-trend but 63-Day Twiggs Momentum holding above zero suggests continuation. Recovery above ¥82 would indicate a fresh primary advance, with a target of ¥90*.

US Dollar/ Japanese Yen

* Target calculation: 85 + ( 85 – 80 ) = 90

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.

May 9, 2012

Forex: Euro and Pound Sterling

The euro broke support at $1.30, completing a bearish descending triangle on the weekly chart and signaling another test of primary support at $1.26. In the longer term, breach of $1.26 would offer a target of $1.17*. Respect of the zero line (from below) by 63-day Twiggs Momentum strengthens the bear signal.

Euro

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

Pound Sterling is in a strong primary up-trend against the euro, with 63-day Twiggs Momentum completing troughs high above zero. Target of €1.255* for the current advance is about to be broken.

Pound Sterling

* Target calculation: 1.215 + ( 1.215 – 1.175 ) = 1.255

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.

May 9, 2012

Crude oil falls

Both Brent Crude and Nymex Light Crude are falling, with signs that the global economy is slowing and that tensions with Iran are easing. Brent is close to the 61.8% Fibonacci retracement level and a fall below $110/barrel would test primary support at $100. Reversal of 63-day Twiggs Momentum below zero would warn of a primary down-trend — and confirm a European recession. Recovery above $115 remains as likely, however, and would suggest a new primary advance.

ICE Brent Afternoon Markers Weekly Chart

Nymex WTI Light Crude has already penetrated its rising trendline and support at $103/barrel. Reversal of 63-day Twiggs Momentum below zero would strengthen the bear signal. Failure of support at $96 would confirm a primary down-trend — and warn of US recession.

Nymex WTI Light Crude Weekly Chart

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.

May 9, 2012

Commodity prices and the S&P 500

The CRB Commodities Index is testing primary support at 295 and respect of the zero line (from below) by 63-day Twiggs Momentum warns of another primary decline. Target for a breakout would be 265*. Divergence between commodities and the S&P 500 suggests that stocks are over-priced, with the Fed doing its best to depress bond yields and pump up stock prices ahead of the November election.

CRB Commodities Index and S&P 500 Index

* Target calculation: 295 – ( 325 – 295 ) = 265

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.

May 9, 2012

Gold breaks support at $1600/ounce

Spot Gold broke its long-term rising trendline and support at $1600, warning of a primary down-trend. Reversal of 63-day Twiggs Momentum below zero strengthens the signal. Failure of primary support at $1500 would confirm, offering a target of $1200*. Recovery above $1600 would indicate all bets are off.

Spot Gold

* Target calculation: 1500 – (1800 – 1500) = 1200

The Gold Bugs Index, representing un-hedged gold stocks, has been suggesting a gold down-trend for some time.

Gold Bugs Index

The Dollar Index broke through resistance at 80 on the weekly chart and a 63-day Twiggs Momentum trough above zero indicates another rally. Expect a test of 82 in the next few weeks, mirrored by a weakening gold price.

US Dollar Index Weekly Chart

* Target calculation: 82 + ( 82 – 78 ) = 86

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.

May 9, 2012

Fannie Mae Profit Signals a Stabilizing Housing Market – NYTimes.com

[Fannie Mae] reported quarterly net income of $2.7 billion, up from a $6.5 billion loss in the first quarter of 2011……..Across the country, there are signs that the housing market is stabilizing. Home prices have continued to fall, but at a much slower pace. More Americans are buying houses than they were a year ago. Housing starts have climbed more than 10 percent in the last year, as home builders pick up construction of new homes and apartment buildings.

via Fannie Mae Profit Signals a Stabilizing Housing Market – NYTimes.com.

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.

May 8, 2012

ASX 200 retreats

Australia’s ASX 200 retreated below the band of resistance at 4350/4400. Recovery above 4400 would confirm the primary up-trend signaled by the 63-day Twiggs Momentum cross to above zero. Target for an advance would be the 2011 high at 4900*.

ASX 200 Index Weekly Chart

* Target calculation: 4400 + (4400 – 3900) = 4900

On the daily chart, however, bearish divergence on 21-day Twiggs Money Flow highlights medium-term selling pressure, warning of a correction. Breach of the rising trendline and support at 4250 would confirm, signaling another test of primary support at 4000.

ASX 200 Index Daily Chart

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.

May 8, 2012

China & Hong Kong

The Shanghai Composite Index is testing resistance at 2500. Recovery of 63-day Twiggs Momentum above zero indicates a primary up-trend. Breakout above 2500 would confirm the signal — and assist an Australian recovery.

Shanghai Composite Index

* Target calculation: 2500 + ( 2500 – 2250 ) = 2750

The Hang Seng is headed for another test of support at 20000. Failure would warn that the primary up-trend is weakening. Reversal of 63-day Twiggs Momentum below zero would strengthen a bear signal.
Hang Seng Index

* Target calculation: 20 + ( 20 – 17.5 ) = 22.5

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.

May 8, 2012

UK & Europe: France rejects austerity

Election of French Socialist Francois Hollande may lead to a similar rejection of austerity measures by Spain and Italy, creating a clear fault-line between the uncompromising German-led North and a more socialist French-led South. That could eventually lead to fracture of the euro-zone unless the two camps discover a new spirit of compromise. Be prepared for a rough ride.

The CAC-40 index rallied Monday and recovery above 3300 would indicate that the correction is over. Respect of the zero line by 13-week Twiggs Money Flow would signal buying pressure. Failure of support at 3100, however, would indicate another test of primary support at 2800.

France CAC-40 Index

Spain’s Madrid General Index continues in a strong primary down-trend, with 63-Day Twiggs Momentum oscillating below zero. Failure of support at the 2009 low of 700 would signal another primary decline.

Madrid General Index

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

63-Day Twiggs Momentum (below zero) also indicates a primary down-trend on Italy’s MIB Index but this week’s blue candle suggests support at 13500. Recovery above 15000 would signal another test of 17000. Failure of support, however, would offer a long-term target of 10000*.

Italy MIB Index

* Target calculation: 13500 – ( 17000 – 13500 ) = 10000

The German DAX continues to test the rising trendline and support at 6500. Rising 13-week Twiggs Money Flow suggests strong buying pressure. Respect of support would confirm the primary up-trend and test the 2011 high at 7600.

Germany DAX Index

London Stock Exchange was closed Monday. The FTSE 100 is again testing support at 5600 and failure would warn of another test of primary support at 5000/5050. Breach of the rising trendline would also signal that the up-trend is losing momentum. Retreat of 63-Day Twiggs Momentum below zero would warn of a primary down-trend.

FTSE 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.