Author: Colin Twiggs

Colin Twiggs is a former investment banker with almost 40 years of experience in financial markets. He founded PVT Capital (AFSL number 546090), which provides income and growth strategies to wholesale clients. Colin also co-founded Incredible Charts and writes the popular Patient Investor newsletter. Using a top-down approach, Colin identifies macro trends in the global economy and then combines fundamental and technical analysis to evaluate opportunities in sectors that stand to benefit. 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.
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ECB’s Nowotny Cautions Against ‘Single-Minded’ Austerity – Real Time Economics – WSJ

“The single-minded concentration on austerity policy (in the 1930s) led to mass unemployment, a breakdown of democratic systems and, at the end, to the catastrophe of Nazism,” said Ewald Nowotny [Austria’s central bank governor and member of ECB governing council] at a financial conference in Vienna. He added that central bankers during the start of the financial crisis had been very keen to avoid the mistakes of the 1930s.

Mr. Nowotny also cautioned against trying to impose a “moralistic” solution to the euro zone’s current debt problems. “It is not about punishing children who have behaved badly,” he said, adding that it was important not to let the concept of moral hazard turn into an excuse for not taking “practical initiatives.”

via ECB’s Nowotny Cautions Against ‘Single-Minded’ Austerity – Real Time Economics – WSJ.

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UK & Europe

The FTSE 100  is headed for resistance at 5600 but 21-day Twiggs Money Flow reversed below zero warning of short-term selling pressure. Failure of support at 5400 would mean another test of primary support at 5250, while respect would confirm the rally to 5600. In the longer term, breach of the descending trendline (at 5600) would indicate that the down-trend has ended.

FTSE 100 Index

Dow Jones Europe Index rallied off primary support at 210. Breach of medium-term resistance at 230 would suggest a rally to the primary descending trendline. 13-Week Twiggs Money Flow, however, continues to display long-term selling pressure. Breach of primary support would offer a long-term target of 160*. Breakout above 265 is unlikely but would indicate an advance to 310*.

Dow Jones Europe Index

* Target calculation: 260 + ( 260 – 210 ) = 310; 210 – ( 260 – 210 ) = 160

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India & Singapore

Dow Jones India 30 Titans broke resistance at 162 and is headed for a test of the descending trendline at 170. Rising 13-week Twiggs Money Flow suggests buying pressure and a test of the February high at 180; breakout would signal a primary up-trend.

Dow Jones India 30 Titans

* Target calculation: 180 + ( 180 – 150 ) = 210

Dow Jones Singapore Index rallied off support at 220 and is testing medium-term resistance at 230. Breakout would test the March high of 244. A “bounce” off  zero by 13-week Twiggs Money Flow indicates medium-term buying pressure.

Dow Jones Singapore Index

* Target calculation: 245 + ( 245 – 220 ) = 270

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S&P 500 and Dow: correction is over

The S&P 500 closed Friday above resistance at 1340, confirming the bullish divergence on 21-day Twiggs Money Flow (hat tip johnb). Expect retracement to test the new support level, followed by a rally to the March/April high of 1420. Wait for breakout on the Nasdaq 100 to confirm the Dow and S&P 500 signals.

S&P 500 Index

Dow Jones Industrial Average broke medium-term resistance at 12600/12700, indicating a rally to 13300. Expect retracement to first test the new support level. A bounce off the zero line by 13-week Twiggs Money Flow indicates medium-term buying pressure — and a likely rally — but the long-term bearish divergence remains and suggests strong resistance at 13300.

Dow Jones Industrial Average

Nasdaq 100 has penetrated its descending trendline, signaling a bottom, but has yet to break resistance at 2580 — which would signal an advance to 2800 and confirm the Dow/S&P signals. Bullish divergence on 21-day Twiggs Money Flow indicates medium-term buying pressure.

Nasdaq 100 Index

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Canada: TSX 60

The TSX 60 continues to test primary support at 640. Positive sentiment on US markets and from Greek election results is likely to fuel a rally. Breakout above 670 would confirm. Breach of the descending trendline would warn that a bottom is forming. Recovery of 63-day Twiggs Momentum above zero would complete a large bullish divergence, suggesting a primary up-trend. Respect of zero, however, would indicate continuation of the down-trend.

TSX 60 Index

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Asia-Pacific stocks surge on Greek election results

ASX 200 Index is testing resistance at 4120 after Greek voters narrowly favored the New Democracy party in Sunday’s election — meaning that Greece is likely to remain in the euro-zone. Bullish divergence on 21-day Twiggs Money Flow indicates medium term buying pressure — following breach of the descending trendline suggested that the correction was over. Follow-through above 4150 would strengthen the signal, offering a target of the May high at 4450.

ASX 200 Index

Dow Jones South Korea Index respected support at 402. Breakout above 420 would confirm that the down-trend is over. Recovery of 63-day Twiggs Momentum above zero would strengthen the signal.

Dow Jones South Korea Index

Dow Jones Japan Index is testing the descending trendline and short-term resistance at 49. 63-Day Twiggs Momentum still reflects a primary down-trend, but breach of the descending trendline would warn that a bottom is forming.

Dow Jones Japan Index

Dow Jones Hong Kong Index is testing medium-term resistance at 388. Breach of the descending trendline warns that a bottom is forming. Upward breakout would indicate a rally to 440. Recovery of 63-day Twiggs Momentum above zero would strengthen the signal.

Dow Jones Hong Kong Index

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Greece’s Election Results: Déjà vu All Over Again? | TIME.com

Joanna Kakissis: The conservative New Democracy (ND) party eked out a victory in Sunday’s parliamentary elections, edging out the leftist Syriza party, which is strongly opposed to the austerity measures imposed as part of the country’s bailout. The margin was less than three percentage points….New Democracy failed to win an outright parliamentary majority and must join forced with at least one party to govern…. Greek media are speculating that the conservatives might join force with their traditional rival, the Socialist PASOK party, which came in a distant third on Sunday.

via Greece’s Election Results: Déjà vu All Over Again? | World | TIME.com.

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Regulators Weigh Easing of Global Bank Rules – WSJ.com

Following months of intense industry pressure, regulators say they now plan to make it easier for banks to comply with a key provision of new international banking rules that will require lenders to maintain sufficiently deep pools of safe, liquid assets—like cash and government bonds—that can survive market meltdowns and other crises…..Among the planned changes, one would allow a wider variety of assets—such as gold and equities—to count toward banks’ liquidity buffers, according to people involved in the talks.

….Some experts warn that loosening the rules could lead banks to rely on assets that later become unsafe. “The widening of the definition [of eligible assets] can spell trouble, because we may discover illiquidity precisely when the liquidity is needed,” said Anat Admati, a professor at Stanford University’s Graduate School of Business.

via Regulators Weigh Easing of Global Bank Rules – WSJ.com.

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The future of natural gas – an interview with Raymond Learsy – On Line Opinion

Raymond Learsy: Let me show you this. It is from a study that MIT made ….. it goes into a great deal of detail that natural gas will result in demand reduction and displacement of coal-fired power by a gas-fired generation. And because of its more limited CO2 emissions further de-carbonization of the energy sector will be required and natural gas provides a cost effective bridge to such a low carbon future. In other words, natural gas, the way it’s structured, it’s enormous availability (we are finding more and more of it since these articles have been written), and it’s extraordinary low cost, present a very real danger to other forms of hydrocarbons…..At $2.50 an MMBtu, the amount of energy that is delivered by that quotient of natural gas, the price of oil would have to be around fifteen dollars a barrel.

via The future of natural gas – an interview with Raymond Learsy – On Line Opinion – 13/6/2012.

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Greek “final exit polls” suggest a New Democracy/Pasok coalition | The Big Picture

Greek “final exit polls” please remember these are Greek “final exit polls” suggest that New Democracy and Syriza and Pasok will have 159 seats in the 300 seat Parliament. The important point is to win, as the party with the most votes gets an additional 50 seats in Parliament. Its still pretty close but it looks from the “final exit polls” that there will be a sigh of relief in equity markets tomorrow.

via Greek “final exit polls” suggest a New Democracy/Pasok coalition | The Big Picture.

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