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October 21, 2002
These extracts from my daily trading diary are intended to
illustrate the techniques used in short-term trading and should
not be interpreted as investment advice. Full terms and
conditions can be found at Terms
of Use .
The Dow rose 2.6%, forming a continuation
flag, and closed at 8538 on average volume. A primary trend
reversal will be signaled if the index rises above 9130.
The Nasdaq Composite Index climbed 1.7% to close at 1309. The
primary trend will reverse if there is a break above 1426.
The S&P 500 is also forming a continuation
flag, closing up 1.7% at 899. The primary trend is down. The
index will complete a
double bottom reversal if it rises above 965.
The Chartcraft NYSE Bullish % Indicator reflects
a bear confirmed signal at 26% (October 18).
Texas Instruments reported third-quarter earnings of 11 cents per
share, compared to a loss of 3 cents a year ago, but warns that
fourth-quarter sales and earnings will fall below estimates.
Dow component 3M Co.
increased earnings by 38%, compared to the third quarter last
year, and raised its guidance for the fourth quarter.
New York: Spot gold was down 190 cents at $US 310.60.
The All Ordinaries closed down 19 points at 2948 on
reassuringly low volume. A break above 3150 will signal a
primary trend reversal.
MACD (26,12,9) and Slow Stochastic (20,3,3) are above their
signal lines. Twiggs money is whipsawing around the zero line
after a bullish divergence.
After a stage
2 up-trend CMQ broke through resistance at 3.00 and is now
forming a pennant/symmetrical triangle between 3.00 and 4.00.
Relative strength (price ratio: xao) continues to rise.
Congestion just below or above a resistance
level is normally a bullish sign. But, after being bullish for
some time, MACD and Twiggs money flow show bearish declines in
the last month.
The equivolume chart shows strong support at
3.00. Notice how support formed at the round number and not at
the high of day . The small correction between  and ,
on light volume, was a good time to increase ones position.
Alternatively, accumulate on day  at the breakout. Rallies
to  and  were on strong volume but this has faded on the
next two rallies at  and . I will only increase the
position if MACD and TMF hold above zero and price breaks above
3.80 on strong volume.
A break below 3.30 would be bearish.
Short-term: Long. The
Slow Stochastic and MACD are above their respective signal
Use stop losses to protect yourself against a sudden
Many people watch, but few
- Monty Roberts, Horse Sense for People.
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