Author: 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.
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Asia: India & Japan retreat

India’s Sensex displays a bearish divergence on 13-week Twiggs Money Flow, warning selling pressure. Breach of the secondary trendline — and medium-term support at 19500 — would indicate a correction to 18000.

Sensex Index

* Target calculation: 19 + ( 19 – 18 ) = 20

Japan’s Nikkei 225 Index is retreating from its 2010 high of 11500 on the monthly chart. Reversal below 11000 would suggest a correction to 10000. Respect of support, however, would indicate a fresh primary advance.

Nikkei 225 Index

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

China’s Shanghai Composite Index was closed last week for Chinese New Year.

Hong Kong’s Hang Seng Index re-opened Thursday, finding support at 23000.  Breakout above 24000 would test the 2010 high of 25000.  Troughs high above the zero line on 13-week Twiggs Money Flow indicate buying pressure. Reversal below 23000 is unlikely but would warn of a correction.

Shanghai Composite Index

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Europe: FTSE advances while DAX retreats

The FTSE 100 is advancing toward long-term resistance at 6750 on the monthly chart. Rising troughs on 13-week  Twiggs Money Flow indicate long-term buying pressure.

FTSE 100 Index

* Target calculation: 6000 + ( 6000 – 5250 ) = 6750

Germany’s DAX is testing support at 7500. Bearish divergence on 13-week Twiggs Money Flow warns of selling pressure. Failure of 7500 would indicate a correction to test the rising trendline — and support at 7000.

DAX Index

* Target calculation: 7500 + ( 7500 – 7000 ) = 8000

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Canada: TSX retreats

The TSX Composite retreated from resistance at 12800. Reversal of 21-day Twiggs Money Flow below zero warns of selling pressure. Breakout below 12650 would confirm a correction. Expect support at 12500.

TSX Composite Index
Rising troughs on long-term (13-week) Twiggs Money Flow, however, suggest that a base is forming. Breakout above 13000 would indicate a primary advance, offering a target of 15000*.
TSX Composite Index

* Target calculation: 13000 + ( 13000 – 11000 ) = 15000

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S&P 500 still cautious

The S&P 500 is testing short-term resistance at 1525 on the daily chart. Breakout would signal an advance to 1550. Bearish divergence on 21-day Twiggs Money Flow, however, warns of retracement to the rising trendline.

S&P 500 Index

The quarterly chart warns us to expect strong resistance at the 2000/2007 highs of 1550/1575. Recovery of 63-day  Twiggs Momentum above 10% would increase likelihood of an upward breakout — with a target of 1750* — while retreat below zero would suggest a primary reversal.
S&P 500 Index

* Target calculation: 1550 + ( 1550 – 1350 ) = 1750

The Nasdaq 100 is testing resistance at 2800 on the monthly chart. Breakout would suggest a primary advance to 3200* but bearish divergence on 13-week Twiggs Money Flow warns of a reversal. Breach of the rising trendline would strengthen the signal.
S&P 500 Index

* Target calculation: 2800 + ( 2800 – 2400 ) = 3200

I repeat my warning of the last few weeks:

These are times for cautious optimism. Central banks are flooding markets with freshly printed money, driving up stock prices, but this could create a bull trap if capital investment, employment and corporate earnings fail to respond.

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Russian video of meteorite explosion

Published on 15 Feb 2013
Video Courtesy: Roman Belchenko

A meteorite explosion was seen from different regions of Russia and even from abroad – as far away as Kazakstan, where a dashboard camera belonging to Roman Belchenko captured meteorite fall. The meteorite shattered over several major cities, including Chelyabinsk, where the blast waves blew out windows and disrupted mobile service.

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Industry policy cannot offset the Australian dollar | MacroBusiness

Houses & Holes at Macrobusiness writes:

Adding a couple of $100 million to industry innovation support is just not going to cut it. Our authorities should do exactly what the rest of the world is doing. Go to the G20 and join the chorus of indignity directed at currency manipulation, come home and drive down using every available tool. That is essentially what the recommendations of the Manufacturing Taskforce aimed at doing. If you think nothing can be done, ask yourself, why are we the only ones not doing it?

Read more at Industry policy cannot offset the Australian dollar | | MacroBusiness.

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Sweden has reformed its welfare state to deliver both efficiency and equity | EUROPP

Will Tanner writes:

At face value, the Swedish welfare state is an unlikely poster child for sustainable government. In 2011-12, government spending was 53.1 per cent of GDP, paid for by taxes on the average worker of 42.7 per cent. The country’s “cradle to grave” social security system has long been used as evidence that government can and should be bigger, not smaller. Despite this, the Swedish state is showing policymakers the world over how to deliver high quality services at low cost.

Read more at Sweden has reformed its welfare state to deliver both efficiency and equity – the UK should learn from its example. | EUROPP.

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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.

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

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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

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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

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