Colin Twiggs, Author at the patient investor

March 8, 2013

Milton Friedman – The Free Lunch myth [video]

Milton Friedman, recipient of the 1976 Nobel Prize for Economic Science, was one of the most recognizable and influential proponents of liberty and markets in the 20th century, and the leader of the Chicago School of economics. Here he gives his views on the myth of the free lunch.

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.

March 8, 2013

Milton Friedman: The foundations of freedom [video]

Nobel Laureate Dr. Milton Friedman gives his thoughts on the importance of maintaining the foundations of freedom, in 2009.

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.

March 8, 2013

Forex: Aussie consolidates above primary support while Euro weakens

The euro is testing medium-term support at $1.30. Breach of the rising trendline against the greenback already warns of trend weakness; failure of $1.30 would test primary support at $1.25. Reversal of 63-day Twiggs Momentum below zero would warn of a primary down-trend, while a trough above zero would suggest another advance, with a target of $1.42*.
Aussie Dollar/USD

* Target calculation: 1.36 + ( 1.36 – 1.30 ) = 1.42

Pound sterling broke long-term support at $1.53 against the greenback, offering a target of $1.43*. Fall of 63-day Twiggs Momentum below 2011 lows strengthens the signal.
Aussie Dollar/USD

* Target calculation: 1.53 – ( 1.63 – 1.53 ) = 1.43

The Aussie Dollar is consolidating between $1.02 and $1.03 after respecting primary support at $1.015. Breakout above $1.03 and the declining trendline would suggest a rally to $1.06. Reversal below $1.02 would warn that primary support is again under threat. Narrow fluctuation of 63-day Twiggs Momentum around zero suggests a ranging market.

Aussie Dollar/USD

The Canadian Loonie is headed for a test of primary support at $0.96. Breach of support would offer a long-term target of $0.90*, but respect is just as likely and would signal a rally to $1.06.
Aussie Dollar/USD

* Target calculation: 0.96 – ( 1.02 – 0.96 ) = 0.90

The US dollar has broken its long-term declining trendline against the Japanese Yen, suggesting that the 30-year decline is over and the greenback likely to appreciate for some time. Advance to ¥100 is likely to be followed by a correction to test new support at ¥90 before breakout to test the 2007 high around ¥120*.
Aussie Dollar/USD

* Target calculation: 100 – ( 100 – 80 ) = 120

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.

March 8, 2013

Dollar Index headed for 84.00

The Dollar Index is advancing strongly, headed for a test of the 2012 high at 84*. Recovery of 63-day Twiggs Momentum above zero suggests a primary up-trend. Retracement to test the new support level at 81.50 remains likely.

US Dollar Index

* Target calculation: 81.5 + ( 81.5 – 79 ) = 84

Gold has fallen as a result of dollar strength, testing primary support at $1550. Support between $1500 and $1550 remains strong, however, and we are unlikely to see a breakout below this level.

US Dollar 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.

March 8, 2013

Far from being a disaster, the results of the Italian election could be a turning point for Italy and the Eurozone. | EUROPP

Jonathan Hopkin argues that austerity has failed to produce results in Southern Europe and calls for European leaders to reconsider their approach:

…..perhaps the most important result of the election is that it will likely prove to be a turning point in the way in which the European Union deals with the debt crisis in the South. As was the case in Greece, the attempt to impose technocratic rule on a debtor nation to implement austerity and reform has been a political and economic disaster…… The Monti experiment produced no clear economic gains and has been decisively rejected at the polls. It would be reckless in the extreme of Europe’s leaders not to reconsider their approach.

via Far from being a disaster, the results of the Italian election could be a turning point for Italy and the Eurozone. | EUROPP.

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.

March 8, 2013

Quantitative easing does not address the fundamental problems underpinning struggling western economies. | EUROPP

John Doukas questions the benefits of quantitative easing:

…excessive money supply fails to increase real economic activity because it raises the labour cost while it lowers the cost of capital. Depressing yields at home, as a result of quantitative easing, in an open economy setting, leads yield-seeking investors into higher-risk investments such as emerging markets.

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.

March 8, 2013

Schindler's List Theme – Itzhak Perlman

Written by John Williams, played by Itzhak Perlman

http://youtu.be/XLK5OWU2YGw

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.

March 7, 2013

Australia: Highest cost of living

Purchasing power parities (PPPs), exchange rates, and relative prices, by country, 2011

At 1.61, Australia has higher relative prices than Norway, Denmark, Sweden and Japan (listed in descending order). 61% higher than the US and 48% higher than the UK.

Index

Source: BLS

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.

March 7, 2013

Commodities break support

Dow Jones-UBS Commodity Index broke primary support at 136, signaling another down-swing. Target for the breakout is the 2012 low at 126. A peak below zero on 63-day Twiggs Momentum already warns of a primary down-trend.

US Dollar Index

* Target calculation: 136 – ( 144 – 136 ) = 128

A fall in commodities warns of slack global demand and a bearish outlook for stocks. The large divergence between DJ-UBS Commodity Index and the S&P 500 should be treated as a caution.
US Dollar 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.

March 7, 2013

Gold tests $1550/ounce

Spot gold is consolidating between $1570 and $1585/ounce on the 2-hourly chart. Upward breakout would re-test the February 26 high at $1620. Downward breakout would test support at $1550.

Spot Gold
This can be seen on the weekly chart, where respect of support at $1550 would test the upper trend channel at $1620. Breakout would indicate that the correction is over. Failure of support would warn that the long-term up-trend is over and follow-through below $1500 would confirm a primary down-trend.
Spot Gold
My conclusion is the same as last week:

I am not yet convinced that gold is headed for a primary down-trend. We may be in a low-inflation/deflationary environment right now but how long will it take for central bank expansionary policies to overcome this? Watch out for bear traps. Respect of primary support around $1500 could present a buying opportunity.

Crude Oil

Brent Crude and Nymex Crude continue to weaken but, for the moment, remain in a primary up-trend.retreated below support at $117/barrel, on concerns over the global economy. Failure of primary support at $106 and $84/barrel, respectively, would signal a primary down-trend. Falling crude would be a bearish sign for gold: demand for gold increases when crude rises.

US Dollar 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.