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Trading Diary
April 16, 2003

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 .




USA
The Dow formed an outside day, closing down 1.7% at 8257 on strong volume. The index has not yet broken the lower border of the bullish ascending triangle formed over the last 4 weeks.
The intermediate trend is down. A rise above 8552 will signal reversal to an up-trend; a fall below 8109 will signal continuation.
Monday 17th's follow through remains valid (as long as the index holds above 7763).
The primary trend is down.

The Nasdaq Composite displayed a strong open-close reversal signal below resistance at 1430. The close was up 0.3% at 1394.
The intermediate trend is down. A rise above the equal highs at 1430 will signal a reversal; a fall below 1351 will signal continuation.
The primary trend is up.

The S&P 500 formed a key reversal below resistance at 904, closing down 11 points at 879.
The intermediate trend is down; a fall below 862 will signal continuation, a rise above 904 will signal reversal.
The primary trend is down.

The Chartcraft NYSE Bullish % Indicator is at 46% (April 15), after completing a Bull Correction buy signal. 

Market Strategy
Short-term: Long if the Dow rises above 8552; short if the Dow falls below 8109.
Intermediate: Long only when the Dow/S&P primary trend reverses upwards; go short if the Dow falls below 8109.
Long-term: There are already two bull signals: the March 17 follow through day and the NYSE Bullish % signal. Wait for confirmation from a Dow/S&P primary trend reversal.


The Dow: Coke and smoke
A downgrade by Legg Mason, citing poor earnings quality, caused Coke to fall by more than 6%. Tobacco giant Altria, formerly Philip Morris, reported first-quarter earnings of $1.07, against $1.09 a year earlier, causing a 2% drop.  (more)

Tech stocks
Tech stocks were affected by disappointing results from Sun Microsystems, AMD and Apple. (
Sun)(AMD)(Apple)




Gold
New York (18.58): Spot gold has rallied to $US 326.80.



ASX Australia
The All Ordinaries closed up 12 points at 2944 on average volume. We now face a key period as the index attempts to break above resistance at 2947 and hold above the primary trendline.
The intermediate up-trend continues. The trendline has been broken; so we should be alert for signs of a reversal. 
The primary trend is down.

Slow Stochastic (20,3,3) has crossed to above its signal line; MACD (26,12,9) is above its signal line; Twiggs Money Flow (21) signals accumulation.





Market Strategy
Short-term: Long if the index rises above 2947 (keep stops tight in case of a false break); short if the index falls below 2888.
Intermediate: Long if the primary trend reverses up (XAO above 3062); short if the intermediate trend reverses down (below 2888).
Long-term: There is already a bull signal: the March 18 follow through day. Wait for confirmation from the primary trend reversal.


AMP Limited [AMP]
Last mentioned on December 12, 2002.
AMP has broken above its high at [C] commencing an intermediate up-trend.

Relative Strength (price ratio: xao) is falling; but Twiggs Money Flow (100) is rising.





The breakout above the intermediate trendline at [D] is on strong volume 

MACD and Twiggs Money Flow (21) are bullish.





Beware of sharp V-bottoms: they have a high failure rate. The rally is likely to fail at the primary trendline [X] - [B] and return to re-test support at 6.00.

V-bottoms: This is an extension of the theory for support/resistance levels.
Stockholders who bought at higher levels are more inclined to sell when the stock starts to recover, creating resistance. 
This is only negated when sufficient stock has passed into the hands of new owners. New stockholders who bought at lower prices will be more bullish and less inclined to sell when prices rise. Hence a breakout from a broad base is more likely to succeed -- there is a large body of stockholders who bought at low prices.


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The weekly Trading Diary offers fundamental analysis of the
economy and technical analysis of major market indices,
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Colin Twiggs


All religions, arts and sciences are branches of the same tree.
All these aspirations are directed toward ennobling man's life,
 lifting it from the sphere of mere physical existence
and leading the individual towards freedom.

- Albert Einstein.







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