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Trading Diary
May 22, 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 broke through resistance at 8523 on high volume, up 0.9% at 8594 at the close.
The intermediate upward trendline has been broken. A rise above 8766 will signal continuation; a fall below 8394 will signal a reversal.
The primary trend is down; a rise above 9076 will signal a reversal.

The S&P 500 gained 8 points to 931 at closing.
The intermediate upward trend is weak. A fall below 912 will signal reversal; a rise above 948, continuation.
The primary trend is down; a rise above 954 will signal an up-trend.





The Nasdaq Composite rallied 1.2% to 1507 at the close.
The intermediate trend is weak. A fall below 1478 will signal a down-trend; a rise above 1552 will signal continuation.
The index is in a primary up-trend.

The Chartcraft NYSE Bullish % Indicator recovered to 61.49% on May 21, following a Bull Correction buy signal on April 3. 

Market Strategy
Short-term: Long if the S&P 500 rises above 954; short if the S&P intermediate trend falls below 912.
Intermediate: Long only when 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.


Final tax cut
The House of Representatives and Senate leaders reach agreement on a $US 350 billion tax cut. (more)

TV advertising up
Advanced sales of TV advertising for the 2003-2004 season are up almost 10%. (more)




Gold
New York (16.04): Spot gold retreated to $US 367.60.
On the five-year chart gold has respected the long-term upward trendline.



ASX Australia
The All Ordinaries rallied off the false break on big volume, closing up 21 points at 2936. 
The intermediate trend is down but on a weak signal.
The primary trend is down. A rise above 3062 will signal an up-trend.

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





Market Strategy
Short-term: Long if the All Ords rises above 2964; short if the XAO falls below 2908.
Intermediate: Long if the primary trend reverses up (XAO above 3062); short if the XAO is below 2908.
Long-term: There is already a bull signal: the March 18 follow through. Wait for confirmation from a primary trend reversal.


Ridley Corporation [RIC]
Last covered on December 19, 2002.

Ridley has been in a stage 2 up-trend for the past 2 years. It has now started a correction after a marginal new high.

Twiggs Money Flow (100) shows a slight bearish divergence after a lengthy period of strong accumulation.





Relative Strength (price ratio: xao) appears to be turning downwards; MACD and Twiggs Money Flow (21-day) show bearish divergences.

Note the entry points at [a] and [d] on the daily chart: both volume and daily range dried up above the long-term supporting trendline.
The pennant at [b] signaled continuation.
Exits could be taken at [c] and [e] when price penetrated the intermediate trendline.
The marginal high at [f] made a gain of only 1 cent before retreating.

RIC has now reached the supporting trendline; the daily range has narrowed but volume is still high. This is a pivotal point: if price rallies above the long-term trendline we could see another intermediate up-swing.





However, a fall below support at 1.40 would be bearish.
And a fall below 1.32, completing the double top pattern, from [c] to [f], would be a strong bear signal.


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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.
The monthly What's New newsletter covers new articles
on Trading and the Economy, as well as new software updates.



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

Colin Twiggs


It does not do to leave a dragon out of 
your calculations, if you live near him.

- J.R.R. Tolkien, The Hobbit



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