The Essential Guide to Color Knitting Techniques
I've found some more information on the topic of using Z-twist yarn for twined knitting. It comes from the book in the photo above. Margaret explains twined knitting as being worked with the two ends of a centre pull ball of yarn. The knitter alternates between the two strands, twisting them between every stitch. The technique produces a strong durable fabric. Traditionally it's worked with both single and two colour patterning. The yarn which is recommended for the technique is a 2-ply Z-twist. As I mentioned in an earlier Yarn Substitutions and Yarn Characteristics post, S-twist yarns are normally what we find in commercial yarns. Margaret recommends if you want to try this technique with a S-twist yarn to "look for one which is loosely plied, because the constant twisting of twined knitting will add twist to it". If you do have access to a Z-twist yarn she recommends that you look for those with tight plies as in this case the technique will remove some of the twist.