US & Canada Archives - Page 130 of 171

July 31, 2012

S&P 500 and Nasdaq 100 correction

The monthly chart of the S&P 500 shows 63-day Twiggs Momentum has been falling for about two years but is now threatening to form a trough above zero which would signal resumption of the primary up-trend. Breakout above 1420 would confirm, offering a target of the 2007 high at 1550*. Respect of resistance, however, would mean more of the same gloomy outlook — our steady diet over the past few months.

S&P 500 Index Daily Chart

* Target calculation: 1400 + ( 1400 – 1250 ) = 1550

Respect of 2400 on the Nasdaq 100 monthly chart is also a bullish sign. Breakout above 2800 would offer a target of 3200*.

Nasdaq 100 Index

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

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.

July 30, 2012

Corporate Profit Streak Faces a Threat – WSJ.com

KATE LINEBAUGH: In the third quarter, earnings by companies in the S&P 500 are expected to shrink for the first time since just after the recession ended, according to Thomson Reuters, which surveys Wall Street analysts…..declining by about 0.4% from the year-earlier quarter…..That follows what will likely have been three straight quarters of decelerating profit growth.

via Corporate Profit Streak Faces a Threat – WSJ.com.

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.

July 28, 2012

Towns Cut Costs by Sending Work Next Door – WSJ.com

Towns and cities in the US are using a novel way of cutting costs as tax revenues shrink: out-source administrative functions to neighboring towns or to local counties. Here is an excerpt from an article by Joel Millman in the Wall Street Journal:

Molalla, 30 miles south of Portland, is part of a trend spreading across Oregon among towns and cities facing fiscal crises and seeking to cut spending. The towns of Lowell and Westfir, populations 1,045 and 300, say they outsourced their traffic patrols and criminal complaints to nearby Oak Ridge, population 3,200.

Oak Ridge, in turn, closed its 911 dispatch service—which had been costing nearly $400,000 a year—by paying the Lane County Sheriff’s Department $93,000 to take its calls. Earlier this year, the city of Eugene contracted with Lane County to take over some legal work.

…Oregon’s public sector is catching up to a trend that has already taken off in some other states as cities and towns consolidate operations. Often called “service contracting,” or “service sharing,” this type of outsourcing lets cities keep the work local and maintain a connection with voters, instead of privatizing operations to a commercial venture that might be located far away.

If this idea catches on it could lead to widespread savings at town, city, county and even state level as neighbors reduce costs by sharing duplicated functions.

via Towns Cut Costs by Sending Work Next Door – WSJ.com.

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.

July 28, 2012

Study: High-Speed Trading Hurts Long-Term Investors – WSJ.com

SCOTT PATTERSON: Investors trying to trade cost-effectively often find themselves standing in line behind the fleet-footed traders and are forced to wait to execute their trades, which in turn can cause poorer results, the report [by Pragma Securities LLC — a research and trading firm] says. The upshot: Investors are often paying more for many blue-chip stocks than they would have otherwise.

The results contradict a number of industry and academic studies that claim high-speed trading has cut costs for investors.

via Study: High-Speed Trading Hurts Long-Term Investors – WSJ.com.

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.

July 28, 2012

David Stockman

David Stockman, former Director of the Office of Management and Budget under President Ronald Reagan, gives Alex Daley a run-down of the Fed’s performance.

Duration 30:43

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.

July 27, 2012

Treasury yields: What a difference a day makes

10-Year Treasury yields gapped above resistance at 1.45 percent and the descending trendline, signaling an outflow from Treasuries and into stocks. Breakout above 1.70 percent would suggest a primary down-trend for bonds (price is the inverse of yield) and an up-trend for stocks.

10-Year Treasury Yields

* Target calculation: 1.45 – ( 1.70 – 1.45 ) = 1.20

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.

July 27, 2012

Forex: Euro, Pound Sterling, Yen, Aussie, Loonie, Rand

The euro is testing resistance at $1.23/$1.24 against the greenback. Breakout above resistance and the descending trendline would warn that the primary down-trend is weakening and a bottom is forming . Negative values on 63 -day Twiggs Momentum continue to indicate a primary down-trend and respect of resistance would favor another decline.

Index

* Target calculation: 1.205 – ( 1.240 – 1.205) = 1.170

Pound Sterling is retracing to find support against the euro. Friday’s doji signals uncertainty. Respect of €1.27 would mean that the up-trend is still accelerating, while respect of €1.255 would indicate a healthy trend.

Index

* Target calculation: 1.26 + ( 1.26 – 1.23 ) = 1.29

Canada’s Loonie is strengthening against the greenback on the weekly chart. Breakout above parity would confirm a test of $1.02*. Fluctuation of 63 -day Twiggs Momentum around zero, between 3% and -3%, would indicate a ranging market.

Index

The Aussie dollar is testing resistance at $1.045/$1.05 against the greenback. Breakout would offer an initial target of $1.08*. Recovery of 63 -day Twiggs Momentum above zero suggests a primary up-trend.

Index

* Target calculation: 1.05 + ( 1.05 – 1.02 ) = 1.08

The Aussie is also testing resistance at 82/82.50 Japanese yen. Breakout would offer an initial target of 84.50* and a medium-term target of ¥88.

Index

* Target calculation: 82 + ( 82 – 79.50 ) = 84.50

Against the South African Rand, the Aussie is retracing to test support at R8.50. Respect would offer an initial target of R9.00*. Rising 63 -day Twiggs Momentum continues to indicate a primary up-trend.

Index

* Target calculation: 8.75 + ( 8.75 – 8.50 ) = 9.00

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.

July 24, 2012

Christian Noyer: Monetizing public debt

Christian Noyer, Governor of the Bank of France and Chairman of the Board of Directors of the BIS: Some central banks have developed large-scale public debt acquisition programmes. They have done so for reasons relating to immediate macroeconomic stabilisation… to go beyond the zero-interest rate limit. The Eurosystem as well intervened on a much smaller scale when malfunctioning debt markets prevented the effective transmission of monetary policy impulses. There is not a single central bank that is seriously considering the monetisation of deficits with the more or less declared intention of reducing the weight of debt via inflation. In my view, this notion is nothing more than a financial analyst’s fantasy.

via Christian Noyer: Public and private debt – imbalances of global savings.
Comment:~ No central bank has declared an intention to monetize public debt (or deficits) — reducing public debt via inflation — but without a viable alternative how many will end up there? Gary Shilling points out that “competitive quantitative easing by central banks is now the order of the day.” The Bank of Japan last year “expanded its balance sheet by 11 percent, while the Federal Reserve’s increased 19 percent, the European Central Bank’s rose 36 percent and the Swiss National Bank’s grew 33 percent.” Japan, after 20 years of stagnation and with net public debt at 113% of GDP, illustrates the predicament facing many developed countries. If there was a plan B they would have tried it by now.

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.

July 24, 2012

Falling Treasury yields: Money is flowing out of stocks

Retracement of 10-Year Treasury yields respected the new resistance level after breaking support at 1.45 percent, signaling a decline to 1.20 percent*. There has been little change in Fed holdings over the past week that could distort bond flows. Declining yields reflect investors leaving stocks for the safety of bonds and warn of a stock market correction. Recovery above 1.70 percent is most unlikely– without QE3 — but would suggest another stock market rally.

10-Year Treasury Yields

* Target calculation: 1.45 – ( 1.70 – 1.45 ) = 1.20

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.

July 23, 2012

7-23 – The Housing “Supply” I See | Hanson Advisers

Bottom line: In order to permanently de-lever this housing market something must be done to address the 20 to 30 million homeowners in a negative or “effective” (lacking the equity to pay a Realtor 6% and put 20% down on a new house) negative equity position; with 2nd liens; and without the credit needed to qualify for a new vintage loan. That’s because repeat buyers are the “durable” demand cohort; not first-timer buyers and “investors” who come and go with the stimulus wind like we saw in 2010 and will again in the second half of this year.

via 7-23 – The Housing “Supply” I See | Hanson Advisers.

Hat tip to Barry Ritholz

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.