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August 7, 2012

Europe and Footsie recovering

Madrid General Index is testing resistance at 720. Breakout would complete a double bottom, offering a target of 840*. Bullish divergence on 63-day Twiggs Momentum indicates a resurgence, but we are some way off a recovery above zero which would signal a primary up-trend.

Madrid General Index

Dow Jones Europe Index displays a strong bullish divergence on 63-day Twiggs Momentum, indicating a (primary trend) reversal. Recovery above zero would strengthen the signal. Penetration of the descending trendline would suggest a test of resistance at 265.

Dow Jones Europe Index

The FTSE 100 is headed for a test resistance at 6000. A trough at zero on 13-week Twiggs Money Flow suggests buying pressure but expect strong resistance at 6000 because of the number of previous reversals at this level.

FTSE 100 Index

Colin Twiggs

Colin Twiggs is a former investment banker with almost 40 years of experience in financial markets. He founded PVT Capital (AFSL number 546090), which provides income and growth strategies to wholesale clients.

Colin also co-founded Incredible Charts and writes the popular Patient Investor newsletter.

Using a top-down approach, Colin identifies macro trends in the global economy and then combines fundamental and technical analysis to evaluate opportunities in sectors that stand to benefit.

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.

July 31, 2012

Europe: DAX and Footsie buying pressure

Germany’s DAX is headed for a test of resistance at the 2012 high of 7200. A trough above zero on 13-week Twiggs Money Flow indicates strong buying pressure. We should see stubborn resistance at 7200 but also strong support at 6500 if there is a retracement.

DAX Index

The FTSE 100 is testing resistance at 5700 while 21-day Twiggs Money Flow bottoming above zero indicates (medium-term) buying pressure. Breakout would offer a target of 5900*.

FTSE 100 Index

* Target calculation: 5700 + ( 5700 – 5500 ) = 5900

Colin Twiggs

Colin also co-founded Incredible Charts and writes the popular Patient Investor newsletter.

Using a top-down approach, Colin identifies macro trends in the global economy and then combines fundamental and technical analysis to evaluate opportunities in sectors that stand to benefit.

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.

November 14, 2011

Europe consolidates

The FTSE Italian MIB index found support at 15000. Expect an upsurge in response to news that Mario Monti has been asked to form a new government. Breakout above 17000 would signal a rally to 19000. Rising 13-week Twiggs Money Flow indicates consistent buying pressure over the past few weeks.

FTSE MIB Index

* Target calculation: 17 + ( 17 – 15 ) = 19

France’s CAC-40 index similarly found support at 3000. Recovery above 3400 would offer a target of 3800, but 63-day Twiggs Momentum, a long way below zero, indicates a primary down-trend.

CAC-40 Index

* Target calculation: 2800 – ( 3400 – 2800 ) = 2200 AND 3400 + ( 3400 – 3000 ) = 3800

The German DAX found support at 5700. Recovery above 6400 would offer a target of 7100, while failure of support would warn of another test of primary support at 5000.

DAX Index

* Target calculation: 6400 + ( 6400 – 5700 ) = 7100

The FTSE 100 is also consolidating above medium-term support — this time at 5350. 13-Week Twiggs Money Flow continues to signal strong buying pressure. Breakout above 5700 would re-test the 2011 highs at 6100. Failure of support is unlikely, but would warn of another test of primary support at 4800.

FTSE 100 Index

* Target calculation: 5700 + ( 5700 – 5300 ) = 6100

We need to remember, however, that this is still a bear market. We have seen one or two favorable news headlines but very little substance. And the European economy faces strong headwinds over the next few years.

October 31, 2011

Europe rebounds

The FTSE 100 index is headed for a test of its 2011 high at 6000/6100. Rising 13-week Twiggs Money Flow signals strong buying pressure. Expect retracement to test support at 5400. Respect would confirm a primary up-trend; failure would re-test support at 4800.

FTSE 100 Index

* Target calculation: 5400 + ( 5400 – 4800 ) = 6000

Germany’s DAX is testing resistance at 6500. Retracement would test support at 5600. A 63-day Twiggs Momentum peak that respects the zero line would warn that the bear market will continue.

DAX Index

* Target calculation: 5700 + ( 5700 – 5000 ) = 6400

Italy is the latest canary in the coal mine. The FTSE MIB index rallied to test its secondary descending trendline at 17000. Respect would warn of another test of primary support at 13000, while breakout would offer a target of 19000*. The primary trend remains downward despite 13-week Twiggs Money Flow having crossed above zero.

FTSE Italian MIB Index

* Target calculation: 17 + ( 17 – 15 ) = 19

October 17, 2011

Europe

Germany’s DAX index is testing resistance at 6000. Penetration of the descending trendline on 13-week Twiggs Money Flow indicates no more than a secondary reaction (bear market rally). Breakout above 6000 would offer a target of 6500, while respect of resistance would re-visit primary support at 5000.

DAX Index

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

The FTSE 100 is headed for a test of 5600 after breaking resistance at 5400. Rising 13-week Twiggs MoneyFlow indicates a strong bear market rally rather than a reversal.

FTSE 100 Index

* Target calculation: 4800 – ( 5600 – 4800 ) = 4000

October 10, 2011

FTSE 100 buyers scarce

The FTSE 100 index encountered resistance at 5400. Low volume indicates that buyers were scarce and another test of support at 5000 is likely. We are in a primary down-trend and failure of support would signal a decline to 4400*.

FTSE 100 Index

* Target calculation: 5000 – ( 5600 – 5000 ) = 4400

The DAX index is starting to rally on the weekly chart, with 13-week Twiggs Money Flow indicating medium-term buying pressure. Expect a test of 6000, but again we are in a primary down-trend and another test of 5000 is likely. Failure of support would signal a decline to 4000*.

German DAX Index

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

October 3, 2011

Footsie and DAX test support

The FTSE 100 is testing support at 5000. Failure would warn of a down-swing to 4400*, but long tails and rising 21-day Twiggs Money Flow indicate medium-term buying pressure. Respect of support is likely and would continue the line between 5000 and 5450.

FTSE 100 Index

* Target calculation: 5000 – ( 5600 – 5000 ) = 4400

Germany’s DAX index displays similar medium-term buying pressure on 21-day Twiggs Money Flow. Respect of support at 5000 is likely and recovery above 5700 would indicate another bear rally.

DAX Index

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

September 27, 2011

Europe: DAX and Footsie jump on bailout hopes

Germany’s DAX Index gapped above its secondary trend channel (or large flag) on hopes that the EFSF bailout rumor will materialize. The index is due for a secondary reaction, with bullish divergence on 21-day Twiggs Money Flow indicating medium-term buying pressure. Expect resistance at 6100. The bear market continues, however, and reversal below 5000 would offer a target of 4000*.

DAX Index

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

The FTSE 100 continues its narrow line between 5000 and 5450, with divergence on 21-day Twiggs Money Flow indicating (medium-term) buying pressure. Again, the bear market is likely to continue and failure of support at 5000 would signal another down-swing — with a target of 4400*.

FTSE 100 Index

* Target calculation: 5000 – ( 5600 – 5000 ) = 4400

September 19, 2011

DAX key reversal; FTSE rally fades

Germany’s DAX Index shows a strong key reversal [R] on the weekly chart. Expect a rally, but we are in a bear market and resistance at 6500 is likely to hold. Reversal below 5400 would warn of another down-swing.

DAX Index

* Target calculation: 5500 – ( 6500 – 5500 ) = 4500

The FTSE 100 fell at Monday’s open, but the weekly chart displays a particularly volatile consolidation edging higher. Breakout above 5400 would indicate a test of 5600/5700. Again, we are in a bear market; respect of resistance is likely and would warn of another test of 4800.

FTSE 100 Index

* Target calculation: 5000 – ( 5600 – 5000 ) = 4400

September 12, 2011

European indices warn of another down-swing

The German DAX Index broke support at 5500 to warn of a down-swing to 4500*. Declining 13-week Twiggs Money Flow below zero indicates strong selling pressure.

German DAX index

* Target calculation: 5500 – ( 6500 – 5500 ) = 4500

In France, the CAC-40 Index reversed below support at 3000, led by a sell-off in French banks. Expect support at the 2009 low of 2500, though the calculated target is even lower. 13-Week Twiggs Money Flow again signals strong selling pressure.

France CAC-40 Index

* Target calculation: 3000 – ( 3700 – 3000 ) = 2300

The FTSE 100 is consolidating above 5000, but is likely to be dragged lower if major European trading partners fall. Breach of support would offer a target of 4400*.

UK FTSE 100 Index

* Target calculation: 5000 – ( 5600 – 5000 ) = 4400