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Trading Diary
May 12, 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 rallied 1.4% to close at 8726 on higher volume; making a clear break above resistance.
The intermediate trend is up.
The primary trend is down; a rise above 9076 will signal a reversal.

The S&P 500 broke through resistance at 935, closing 12 points up at 945.
The intermediate up-trend continues.
The primary trend is down; a rise above 954 will signal a reversal.

The Nasdaq Composite rallied 1.4% to close at 1541, breaking resistance at 1521.
The intermediate trend is up.
The break above 1521 provides clear confirmation that the index is in a primary up-trend.

The Chartcraft NYSE Bullish % Indicator rose to 57.62% on May 9, following a Bull Correction buy signal on April 3. 

Market Strategy

Short-term: Long if the S&P 500 is above 935; short if the S&P intermediate trend reverses down (or falls below 897).

Intermediate: Long if the Dow/S&P primary trend turns 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.

Where is the dollar going?
A weaker dollar may make local US manufacturers more competitive, but may also introduce inflation - a double-edged sword. (more)

Gold
New York (17.59): Spot gold has climbed to $US 351.00.
On the five-year chart gold has respected the long-term upward trendline.

ASX Australia

The All Ordinaries rallied 18 points to close at 2946 after Friday's hammer reversal. Low volume signals a lack of commitment by buyers. Expect the index to rally after the strong US performance.
The intermediate up-trend is weak; a close below Monday's low of 2926 will signal a reversal.
The primary trend is down. A rise above 3062 will signal 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 is 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 2919.
Long-term: There is already a bull signal: the March 18 follow through. Wait for confirmation from a primary trend reversal.

GUD Holdings
The manufacturer of filtration products, pumps and appliances has maintained a stage 2 up-trend for the last 18 months after breaking out of a broad base. The stock has rallied sharply after the latest correction, closing at a new high of 4.30.

Relative Strength (price ratio: xao) is rising; MACD and Twiggs Money Flow (21-day) are bullish.

On the equivolume chart we can see a symmetrical triangle formed from [2] to [9], with a breakout at [a].
Earlier, the over-square bar at [1] had exhausted buying support, resulting in a weak rally to [2] and a strong correction to [3].
Strong selling was evident at [6] but had dissipated by [8]. The next rally broke above the previous high and carried to the 4.30 resistance level, overcoming selling pressure with strong volume.
The high at [10] failed to break through resistance and we now see a weak correction at [11]. Volume is light and we should see further consolidation, between the high of [8] and resistance at 4.30, before another test of the resistance level.

The target for the triangle breakout is 4.69 (4.06 + [4.30 - 3.67]).

New! Understanding the Trading Diary has been expanded to offer further assistance to readers.

Colin Twiggs

He who only sees the obvious, wins his battles with difficulty;
he who looks below the surface of things, wins with ease.

- Sun Tzu: The Art of War.

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