Colin Twiggs, Author at the patient investor

February 15, 2013

U.S.-EU Trade Deal: Obama Makes Risky Bet on Europe’s Future | Fiscal Times

David Francis writes:

The U.S. and European Union together already account for nearly half of global GDP and a third of global trade flows, with some $2.7 billion worth of goods and services exchanged daily. [A trade agreement] …..would increase trade between the partners by $120 billion within five years, according to a study by the U.S. Chamber of Commerce. At the same time, it would add some $180 billion to U.S.-EU gross domestic product. Estimates put forth by the European Commission suggest a new trade pact could increase annual GDP by 0.5 percent in the EU and 0.4 percent in the U.S. by 2027.

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.

February 14, 2013

Sterling falls

Sterling retracement respected resistance at $1.58 and the pound is now headed for a test of primary support at $1.53*. Reversal of 63-day Twiggs Momentum below -5% would warn of a downward breakout, offering a target of $1.43.
Pound Sterling/USD

* Target calculation: 1.58 – ( 1.63 – 1.58 ) = 1.53

The fall against the euro is even more dramatic. The brief rally to $1.18 was snuffed out and short-term support at €1.15 is not secure. Expect a test of the 2011 low at €1.10.
Pound Sterling/USD

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.

February 14, 2013

Aussie Dollar tests trendline

The Aussie Dollar retreated above its former support level at $1.03 on the daily chart. Breakout above $1.04 — and the declining trendline — would indicate a bear trap, while reversal below $1.03 would test primary support at $1.015. Retreat of 63-day Twiggs Momentum below zero would favor a down-swing.

Aussie Dollar/USD

* Target calculation: 1.03 – ( 1.06 – 1.03 ) = 1.00

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.

February 14, 2013

Euro tests support

The Euro retreated below its new support level at $1.35 on the weekly chart. Expect a test of $1.32 and the rising trendline. Respect would indicate a primary advance with a target of $1.42*. Rising 63-day Twiggs Momentum (above zero) suggests continuation of the primary up-trend. Failure of support at $1.32, however, would indicate a bull trap — with a target of $1.27.

Euro/USD

* Target calculation: 1.37 + ( 1.37 – 1.32 ) = 1.42

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.

February 14, 2013

Cause of the 2007/8 crash and threatened double-dip in 2010

Here is the smoking gun. Note the sharp contraction in the US monetary base before the last two recessions and again in 2010. Monetary base (M0) is plotted net of excess bank reserves on deposit with the Fed, which are not in circulation. The Fed responded after the contraction had taken place, instead of anticipating it.

Monetary Base minus Excess Reserves

The long-term problem is that the monetary base should not be expanding at 10 percent a year. More like 3% to 5% — in line with real GDP growth.

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.

February 13, 2013

Dollar Index weakens

The Dollar Index is testing primary support at 78.50. Breach would signal a down-swing with a target around 75*. Twiggs Momentum oscillating below zero suggests further weakness. Recovery above 81, however, would indicate that the down-trend is over.

US Dollar Index

* Target calculation: 78.5 – ( 81.5 – 78.5 ) = 75.5

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.

February 13, 2013

Time for U.S. to Disengage from North Korea Crisis | Cato Institute

Doug Bandow suggests:

Washington should begin contemplating, within earshot of Beijing, getting out of the way of its allies if the North continues to develop nuclear weapons. The message to China should be: if your client state continues its present course, you may face a nuclear-armed Japan. If that happens, blame your buddies in Pyongyang.

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.

February 13, 2013

Commodities declining

63-day Twiggs Momentum is forming another peak below zero, warning of further downside on the Dow Jones-UBS Commodity Index. Reversal below -5% would strengthen the bear signal. Failure of support at 136 would warn of another test of the 2012 low at 126. Recovery above 144 is unlikely but would suggest a rally to 152.

US Dollar Index

* Target calculation: 150 + ( 150 – 125 ) = 175

Rising commodities — other than gold and oil where other factors need to be considered — would suggest a recovering global economy and further gains for stocks in the year ahead. A fall in commodities, however, would warn of slack global demand and a more bearish outlook for stocks.

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.

February 13, 2013

Gold weakens while crude rises

Gold is undergoing a correction on the weekly chart. Breach of support at 1625 would indicate another test of primary support at $1525. Retreat of 63-day Twiggs Momentum below zero warns of a primary down-trend. Recovery above $1700 per ounce, however, would indicate that the correction is over.

Spot Gold

Crude oil, however, is rising, with Brent Crude breaking resistance at $117/barrel to signal a primary up-trend. Twiggs Momentum rising above zero already suggests an up-trend. Recovery of Nymex WTI above $99/barrel would confirm.

US Dollar Index

* Target calculation: 116 + ( 116 – 106 ) = 126

Normally gold and crude move together. A divergence would be highlighted by the gold-oil ratio (below). A decline to 10 is normally taken as buying signal, but in recent years fluctuations have been a lot narrower — between 12 and 18.
Spot Gold

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.

February 13, 2013

ASX 200 passes first test

The ASX 200 passed its first test after breaking long-term resistance at 5000. The index retraced to test the new support level [test #1] in the first hour of trading today but rallied strongly thereafter. Respect of support strengthens the breakout signal but expect further tests in the weeks ahead. Respect in the Daily and Weekly time frames would confirm the primary advance, with a long-term target of 6000*.

ASX 200 Index

* Target calculation: 5000 + ( 5000 – 4000 ) = 6000

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.