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Trading Diary
May 27, 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 made another follow through day, closing up more than 2.0% at 8781 on strong volume.
The intermediate trend is up. The rise above 8766 signals continuation.
The primary trend is down; a rise above 9076 will signal a reversal.

The S&P 500 rallied 2.0% to close at 951.
The intermediate trend is up. The rise above 948 signals continuation.
The primary trend is down; a rise above 954 will signal an up-trend.

The Nasdaq Composite jumped 3.0% to close at 1556.
The intermediate trend is up. The rise above 1552 signals continuation.
The index is in a primary up-trend.

The Chartcraft NYSE Bullish % Indicator is at 62.56% on May 23; following a Bull Correction buy signal (April 3).


Market Strategy
Short-term: Long if the S&P 500 rises above 954.
Intermediate: Long if the primary trend reverses up (S&P rises above 954).
Long-term: There are already two bull signals: the March 17 follow through day and the April 3 NYSE Bullish % signal. Long if the S&P 500 primary trend turns upwards.

Tech confidence boost
A better than expected consumer confidence report boosted tech stocks, including blue chips Microsoft, IBM and Dell. (more)




Gold
New York (18.15): Spot gold dropped sharply, currently trading at $US 365.20.
On the five-year chart gold has respected the long-term upward trendline.



ASX Australia
The All Ordinaries lost 14 points to close at 2951 on higher volume. The index is likely to rally on the back of the US performance.
The intermediate trend is down but on a weak signal. A rise above 2973 will signal reversal.
The primary trend is down. A rise above 3062 will signal an up-trend.

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





Market Strategy
Short-term: Long if the All Ords rises above 2973; short if the XAO falls below 2908.
Intermediate: Long if the primary trend reverses up ( crosses 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.


Oil Search [OSH]
Last covered on April 22, 2003.
I find that the 3-Month % Of High stock screen turns up a number of breakouts from stage 1 bases. OSH has formed a broad base after a lengthy down-trend. Twiggs Money Flow (100) has climbed above zero, signaling accumulation. 





On the weekly chart, OSH has formed a double bottom at [c] and [e]. Possibly a triple bottom if one considers [a].
The pattern is completed by a breakout at [f].
Note the higher volume at [c] and [f], with a lower spike at [e].

Relative Strength (price ratio: xao) and MACD are rising; Twiggs Money Flow (21) respected the zero line, a strong bull signal.





The equivolume chart highlights the cathartic "shake out" at [c] and the lower volume at the second bottom at [e].
The rally to [f] shows strong volume, but some weak closes indicate selling into the rally.
Volume at [1], after the breakout, appears thin.





Conservative traders will wait for a pull-back which respects the support line at 0.73, the high of [d], before taking long entries. 
This presents an opportunity to place tight stops just below the low of the pull-back.

A break below 0.69, the low of [f], would be bearish, signaling a re-test of the base support levels.


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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


The power of acute observation is commonly called cynicism
by those who have not got it.

- George Bernard Shaw



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