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Trading Diary
May 23, 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 market will be closed Monday for Memorial Day.
The Dow formed an inside day, closing up 0.1% at 8601 on low volume.
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 also formed an inside day, closing 2 points up at 933.
The intermediate upward trend is weak. A fall below 912 will signal reversal; a rise above 948[b], continuation.
The primary trend is down; a rise above 954[a] will signal an up-trend.





The Nasdaq Composite gained 0.2% to close at 1510.
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 rose to 61.96% on May 22, following a Bull Correction buy signal on April 3. 

Market Strategy
Short-term: Long if the S&P 500 rises above 954[a]; short if the intermediate trend falls below 912.
Intermediate: Long if the primary trend reverses up (S&P rises above 954); short if the intermediate trend reverses down (falls below 912).
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.


Senate passes tax cut
The Senate passed the $US 350 billion tax cut by a slender 51-50. The bill will now be signed into law by President Bush. (more)




Gold
New York (15.30): Spot gold closed the week at $US 368.30.
On the five-year chart gold has respected the long-term upward trendline.



ASX Australia
The All Ordinaries rallied strongly to close at 2967, up 31 points on above-average volume.
The intermediate trend is down but on a weak signal. A rise above 2984[b] will signal reversal.
The primary trend is down. A rise above 3062[a] will signal an up-trend.

Slow Stochastic (20,3,3) has crossed to above its signal line; Twiggs Money Flow (21) shows a bullish signal, respecting the zero line at [+]; MACD (26,12,9) is below its signal line but threatens to complete a similar signal to TMF.





Market Strategy
Short-term: Long if the All Ords rises above 2984[b]; short if the XAO falls below 2908.
Intermediate: Long if the primary trend reverses up ( crosses above 3062[a] ); 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.


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 falling)
  • 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 2 (RS is rising)
  • Financial excl. Property Trusts [XXJ] - stage 1 (RS is rising)
  • Information Technology [XIJ] - stage 4 (RS is falling)
  • Telecom Services [XTJ] - stage 4 (RS is rising)
  • Utilities [XUJ] - stage 2 (RS is rising)
Financial-x-Property may be forming an inverted head and shoulders reversal pattern on the weekly chart; with shoulders at [a] and [d] and the head at [b]. The pattern will be completed if XXJ rises above the high of [c].





Sectors: Relative Strength
A stock screen of the ASX 200 using % Price Move (1 month: +5%) rose to 79 stocks (compared to 131 on April 11, 2003; and 8 on March 14, 2003).
  • REITs (14)
  • Gold (5)


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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.



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

Colin Twiggs


When the only tool you own is a hammer,
every problem begins to resemble a nail.

- Abraham Maslow



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