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Trading Diary
May 9, 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 gained 1.3% to close at 8604 on higher volume.
The intermediate trend is edging upwards.
The primary trend is down; a rise above 9076 will signal a reversal.

The S&P 500 rallied 13 points to close at 933, testing resistance at 935.
The slow intermediate up-trend continues.
The primary trend is down; a rise above 954 will signal a reversal.

The Nasdaq Composite gained 2% to close at 1520, testing resistance at 1521.
The intermediate trend is up.
The primary trend is up.

The Chartcraft NYSE Bullish % Indicator closed almost unchanged at 57.00% on May 8, following a Bull Correction buy signal on April 3. 

Market Strategy
Short-term: Long if the S&P 500 is above 929; short if the S&P intermediate trend reverses down (or falls below 897).
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.


Is the US headed for a liquidity trap?
Debt reduction by uncertain consumers may lead to a liquidity trap similar to Japan. (more)




Gold
New York (16.44): Spot gold closed at $US 348.30.
On the five-year chart gold has respected the long-term upward trendline.



ASX Australia
The All Ordinaries has penetrated the long-term trendline on the weekly chart but has since corrected downwards. The fall in weekly volume over the past month is not as significant as it appears on the chart - because of the recent holidays.





On the daily chart XAO has formed a hammer reversal, opening and closing above the support level, at 2928 on lower volume. Expect the index to rally after the gains in US markets.
The intermediate up-trend is weakening; a close 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 trendline but still signals accumulation.





Market Strategy
Short-term: Long if the XAO rises above 2928; short if the XAO falls below 2919.
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.


Sector Analysis
Changes are highlighted in bold.
  • Energy [XEJ] - stage 1 (RS is level)
  • Materials [XMJ] - stage 3 (RS is falling)
  • Industrials [XNJ] - stage 4 (RS is rising)
  • Consumer Discretionary [XDJ] - stage 1 (RS is level)
  • Consumer Staples [XSJ] - stage 1 (RS is rising)
  • Health Care [XHJ] - stage 4 (RS is falling)
  • Property Trusts [XPJ] - stage 3 (RS is rising)
  • Financial excl. Property Trusts [XXJ] - stage 1 (RS is falling)
  • Information Technology [XIJ] - stage 4 (RS is falling)
  • Telecom Services [XTJ] - stage 4 (RS is falling)
  • Utilities [XUJ] - stage 2 (RS is rising)


Sectors: Relative Strength
A stock screen of the ASX 200 using % Price Move (1 month: +5%) returned a lower 61 stocks (compared to 131 on April 11, 2003; and 8 on March 14, 2003).
  • Diversified Financial (4)
  • Health Care Facilities (4)
  • Diversified Commercial (3)
  • Data Processing (3)
  • Diversified Metals& Mining (3)


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The weekly Trading Diary offers fundamental analysis of the
economy and technical analysis of major market indices,
gold, crude oil and forex.
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Colin Twiggs


The wise man bridges the gap by laying out the path
 by means of which he can get from where he is
 to where he wants to go.

- J.P.Morgan.



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