Colin Twiggs, Author at the patient investor

March 14, 2013

Forex: Euro declines while Aussie follows through

The euro retreated below support at $1.30, indicating a correction to primary support at $1.2650. A 63-day Twiggs Momentum trough close to zero would suggest a primary advance, with a long-term target of $1.50*.
Aussie Dollar/USD

* Target calculation: 1.35 + ( 1.35 – 1.20 ) = 1.50

Pound sterling found short-term support against the dollar but the long-term target for the decline is $1.43*. Declining 63-day Twiggs Momentum, below its 2011 lows, strengthens the signal.
Aussie Dollar/USD

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

The Aussie Dollar followed through after breaking out above $1.03, signaling a rally to $1.06. Reversal below $1.02 is now unlikely, but would warn that primary support at $1.015 is again under threat. Narrow fluctuation of 63-day Twiggs Momentum around zero suggests a ranging market.

Aussie Dollar/USD

The Canadian Loonie found medium-term support at $0.97 against the greenback, but we should still expect a test of primary support at $0.96. Failure would warn of a decline to $0.90*, but respect is just as likely and would signal a rally to $1.02.
Aussie Dollar/USD

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

The US dollar continues to advance against the Japanese Yen, suggesting that the 30-year down-trend is over. Expect resistance at ¥100, with a possible correction back to ¥90, but breakout would test the 2007 high above ¥120*.
Aussie Dollar/USD

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

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 14, 2013

Milton Friedman: The closest thing to a free lunch [video]

Milton Friedman, recipient of the 1976 Nobel Prize for Economic Science, leader of the Chicago School of economics, gave this prescient address at the Cato Institute in 1993. While lengthy [49:93] this superb performance shows one of the great minds of the 20th century at his best.

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 14, 2013

Jeremy Grantham: Why we are all toast if we don't change [video]

Charlie Rose interviews Jeremy Grantham

This lengthy [53:39] video is a must watch. Click on the image and video will open in a new window.

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 14, 2013

Gold finds support while the Dollar rises

Spot gold is testing primary support at $1500 to $1550. Reversal of 13-week Twiggs Momentum warns of a reversal and failure of support at $1500 would confirm. A Twiggs Momentum peak below zero would strengthen the signal.

Spot Gold
On the weekly chart we can see respect of support at $1550 is likely to be followed by a rally to test the February 26 high at $1620. That is likely to be followed by a re-test of support at $1550 but breakout above $1620 and the trend channel would indicate an advance to $1800.

My conclusion is similar to 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 central bank expansionary policies will counteract this. Watch out for bear traps. Respect of primary support around $1500 could present a buying opportunity.

Dollar Index

A stronger dollar contributes to weaker gold prices. Breakout of the Dollar Index above 84.00 would signal an advance to 89.00/90.00. Rising momentum suggests continuation of the up-trend.

Crude Oil

A long-term view shows Brent and Nymex Crude ranging at far higher prices than in the lead up to the GFC. High crude prices continue to inhibit the global recovery. Breakout of Nymex above $100/barrel and Brent Crude above $120 would signal a primary up-trend — and more bad news for the recovery — while failure of primary support at $84 and $106/barrel, respectively, would signal a primary down-trend.

Brent Crude and Nymex Crude

Commodities

Dow Jones-UBS Commodity Index found support at 126, but……
Commodities

The Continuous Commodity Index has already broken its equivalent support level. Respect of resistance at 29 would confirm another down-swing to test the June 2012 lows. The Dow Jones-UBS Index would most likely follow.
Continuous Commodities 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 12, 2013

Why British prosperity is hobbled by a rigged land market | Centre for European Reform

Simon Tilford, chief economist at the Centre for European Reform, writes:

The British have the least living space per head, the most expensive office rents and the most congested infrastructure of any EU-15 country. Thanks to a rapidly growing population – the result of a healthy birth-rate and immigration – these trends are worsening steadily. At the same time, the British economy is languishing in a prolonged slump brought on by a collapse of demand. The answer is obvious: Britain needs to build more. Unfortunately, the obstacles to development are formidable….

A similar problem to Australia: restricted land release drives up prices, making home ownership inaccessible to the younger generation while damaging the construction industry.

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 12, 2013

Government Debt and Deficits Are Not the Problem. Private Debt Is. | Michael Hudson

Professor Michael Hudson writes:

Student loan debt, now the second largest debt in the US at around $1 trillion, is the one kind of debt that has been growing since 2008. It is depriving new graduates of the ability to start families and buy new homes. This debt is partly a byproduct of cutbacks in federal and local aid to the universities, and partly of turning them into profit centers – financializing education to squeeze out an economic surplus to invest in real estate and financial holdings, to pay much higher salaries to upper management (but not to professors, who are being replaced by part-time, un-tenured help), and especially to create a thriving high-profit, zero-risk, government guaranteed loan business for banks.

This is not really “socializing” student loans. Its social effects are regressive and negative. It is a bank-friendly giveaway that is helping polarize the economy.

via Government Debt and Deficits Are Not the Problem. Private Debt Is. | Michael Hudson.

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 12, 2013

What Victorians got right about school, and Silicon Valley has wrong | Quartz

Glenn Kelman writes:

For all the information schools impart, most are not very successful at raising students’ IQs, but many schools are very good at making their students more disciplined. And self-discipline, it turns out, is the only way to get through life in one piece; it is the trait most consistently correlated with life success.

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 12, 2013

ASX 200 advancing

The ASX 200 broke resistance at 5000 on the strength of strong buying pressure, signaled by rising 13-week Twiggs Money Flow. Retracement that respects the new support level would confirm an advance to 5500*.
ASX 200 Index

* Target calculation: 5000 + ( 5000 – 4500 ) = 5500

On the daily chart, mild bearish divergence on 21-day Twiggs Money Flow warns of retracement to test the new support level at 5000. Reversal below 4980 is unlikely but would warn of a correction.
ASX 200 Index

ASX small-caps ($XSO – ASX Small Ords) continue to under-perform the ASX 50 [$XFL]. The opposite of what one would expect in a bull market: treat it as a caution. The current $XSO down-swing should test the lower channel at 2300, presenting a buy opportunity for swing traders.

ASX 200 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 12, 2013

Asia finds support

Japan’s Nikkei 225 Index broke through its medium-term target of 12000. Selling pressure failed to materialize and the index is headed for its long-term target of 14000*.

Nikkei 225 Index

* Target calculation: 11000 + ( 11000 – 8000 ) = 14000

India’s Sensex found support at 18800. Penetration of the declining trendline indicates a rally to 20200. Breakout would signal a primary advance to 21000*, but bearish divergence continues to warn of selling pressure. Reversal below 19000 would warn of a correction to the primary trendline at 18000.

Sensex Index

* Target calculation: 20 + ( 20 – 19 ) = 21

Singapore’s Straits Times Index continues to consolidate below resistance at 3300. Buying support at 3250 is evident from higher volume at the 3250 level. Breakout above 3300 would signal a fresh primary advance, with a long-term target of the 2007 high at 3900*.

Straits Times Index

* Target calculation: 3300 + ( 3300 – 2700 ) = 3900

Hong Kong’s Hang Seng Index correction found support at 22500. Declining 13-week Twiggs Momentum indicates selling pressure. Expect another test of 22500; failure would signal a test of the primary trendline at 21000.

* Target calculation: 22 + ( 22 – 18 ) = 26

China’s Shanghai Composite also found support, at 2250. Respect would indicate another test of resistance at 2450, while failure would indicate a down-swing to primary support at 1950/2000. Rising 13-week Twiggs Momentum suggests a primary up-trend; a trough above zero would strengthen the signal. Breakout above 2450 would confirm.
Shanghai Composite Index

* Target calculation: 2450 + ( 2450 – 2250 ) = 2650

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 12, 2013

Canada: TSX good to go

Shallow retracement of the TSX Composite below resistance is a bullish sign. Rising troughs on 13-week Twiggs Money Flow indicate strong buying pressure. Breakout above 12900 would confirm a primary advance. Immediate target would be 13500*, with a long-term target of the 2011 high at 14300.

TSX Composite Index

* Target calculation: 13000 + ( 13000 – 12500 ) = 13500

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.