Chart Forum Registration
Some readers have encountered difficulties
registering for the new Chart Forum.
The emailed hyperlink is sometimes severed if it wraps over 2
HTML still has its idiosyncracies.......we are working on a
October 23, 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 retreated in the morning but then
rallied in the afternoon to close up 0.5% at 8494 on higher
volume. A primary trend reversal will be signaled if the index
rises above 9130.
The Nasdaq Composite Index gained 2.2% to close at 1320. The
primary trend will reverse if there is a break above 1426.
The S&P 500 edged up 6 points to close at 896. The primary
trend is down. The index will complete a
double bottom reversal if it rises above 965.
The Chartcraft NYSE Bullish % Indicator has swung to a
bull alert signal at 34% (October 21).
AOL Time Warner
The media giant is forced to restate earnings by $US 97 million
over 2 years, because of overstatement of advertising revenue in
its AOL division. (more)
New York: Spot gold was down 80 cents at $US 311.60.
The All Ordinaries put in another strong day, closing up 26
points up at 2987 on higher 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. MACD shows a bullish divergence while Twiggs money
Coates Hire [COA]
After presenting a favorable entry point at [e] COA rallied
strongly before leveling off into a congestion pattern: either a
top or a consolidation before a further rally. Twiggs money flow
displays an impressive 12 months of accumulation, never once
crossing below zero.
The daily chart shows a head and shoulders reversal pattern, with
the head at  and shoulders at  and . MACD displays
weakness [-] after a bearish divergence. Price
broke below the neckline at  before rallying back above at
. Is this a bear trap?
The equivolume chart shows healthy volume at the first shoulder
 as expected. Instead of declining, volume at  is stronger,
but followed by a closing price reversal at . Price drops
sharply at , on comparatively thin volume, before a brief
rally at , again on stronger volume. Finally, volume at the
breakout  is weak, confirming that the pattern is not to be
trusted: In a healthy head and shoulders pattern, volume should
decline on each successive rally and increase on each successive
correction, ending with a sharp rise at the breakout.
The rally back to  was unable to overcome resistance at 2.20
and we can expect the stock to range further before giving a
Short-term: Long. The Slow Stochastic and
MACD are above their respective signal lines.
Medium-term: Long. Use stop losses to
protect yourself against a sudden reversal.
Thought for the
Stan's 9th Commandment:
Don't guess a bottom. What looks like a bargain can turn out to
be a very expensive stage 4 disaster.
Instead, buy on breakouts above resistance.
Weinstein, Secrets for Profiting in
Bull and Bear Markets.
Access the Trading Diary Archives.