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by 31 May 2003.

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We have extended the cut-off until mid-May - to fit in with the introduction of US charts.




Trading Diary
May 7, 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 inside day, signaling uncertainty. The index closed 0.3% lower at 8560 on lower volume.
The intermediate trend is down. I prefer to wait for a clear break above resistance (8600) to signal the start of an up-trend. A fall below 8328 will signal continuation.
The primary trend is down; a rise above 9076 will signal a reversal.

The S&P 500 retreated 5 points to close at 929, forming an inside day.
The slow intermediate up-trend continues, with resistance overhead at 935.
The primary trend is down; a rise above 954 will signal a reversal.

The Nasdaq Composite retreated back below resistance, closing down 1.1% at 1506.
The intermediate trend is up, with resistance overhead at 1521.
The primary trend is up.

The Chartcraft NYSE Bullish % Indicator continues to rise, reaching 56.38% on May 6, following a Bull Correction buy signal on April 3. 

Market Strategy
Short-term: Long if the S&P 500 rises above 937; short if the S&P intermediate trend reverses down (or falls below 898).
Intermediate: Long if the Dow/S&P primary trend reverses upwards; short if the intermediate trend (S&P) reverses down.
Long-term: There are already two bull signals: the March 17 follow through day and the April 3 NYSE Bullish % signal. Wait for confirmation from a Dow/S&P primary trend reversal.


Bear market insights
McKinsey & Co report that the 40% fall in the S&P 500 over the past 3 years is attributable to large cap stocks in three major sectors: information technology, telecommunications and materials. Six of the other seven sectors showed positive returns. (more)

Cisco
The network equipment manufacturer reports earnings above expectations, but gives a cautious fourth-quarter outlook. (more)




Gold
New York (17.37): Spot gold eased to $US 341.60.



ASX Australia
The All Ordinaries rallied above the previous day's high of 2949 but closed back at 2944 on higher volume.
The intermediate up-trend continues but the indicators show that it is weakening; a break below Monday's low of 2926 will signal a reversal.
The primary trend is down. A rise above 3062 will signal reversal to an up-trend.

MACD (26,12,9) and Slow Stochastic (20,3,3) are below their signal lines and the Stochastic has fallen below 80%, a further bear signal; Twiggs Money Flow (21) is below its upward trendline but continues to signal accumulation.





Market Strategy
Short-term: Long only if the All Ordinaries index rises above 2950; short if it falls below 2926.
Intermediate: Long if the primary trend reverses up (XAO above 3062); short if the XAO falls below 2926.
Long-term: There is already a bull signal: the March 18 follow through. Wait for confirmation from a primary trend reversal.


Brambles [BIL]
Last covered on July 17, 2002.
BIL is among several Industrial stocks showing signs of a recovery. After a classic downward spike (selling climax) on heavy volume at [1], Brambles made a false (marginal) break of support at [2], before rallying strongly to complete a double bottom reversal with a break above 5.00.

Twiggs Money Flow (100-day and 21-day) show bullish divergences between [1] and [2].





The daily chart shows the gap down signaling the selling climax at [1].
Another significant gap, sometimes referred to as a hole-in-the-wall gap, above the downward trendline at [2], is a strong bull signal. 

Relative Strength (price ratio: xao) has leveled after a lengthy decline and MACD shows a bullish divergence at [2].





The equivolume chart highlights the heavy volume on the hole-in-the-wall "breakaway" gap at [a]. 
The break above resistance at [b] shows heavy selling pressure, with weak closes at [b] and [c] and strong volume at [c].
The pull-back at [d] only lasted one day but showed significant volume.
The subsequent rally to [e] shows weak closes and thin volume. Expect further consolidation above 5.00

A break below 4.60 would be a bear signal.





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