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Trading Diary
July 18, 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
Lifted by Microsoft, the Dow rallied 1.5% on Friday on lower volume, closing the week up 0.8% at 9188.
The intermediate trend is up. The index has formed a bullish symmetrical triangle above support at 9000.
The primary trend is up.



The S&P 500 formed a weak hook reversal on low volume, closing the week 5 points lower at 993.
The intermediate up-trend is weakening, with the index falling below the last short-term low of 984. The index is in an ascending triangle, from [1] to [2]; a bullish sign, especially when above a major support level such as 950. However, MACD and Twiggs Money Flow display bearish divergences; so we have to wait until there is a clear signal.
The primary trend is up.



The Nasdaq Composite formed a hammer reversal, closing up 11 points at 1709, but on lower volume.
The intermediate trend is up. Price respecting support at 1680 will signal trend strength. 
The primary trend is up.



The Chartcraft NYSE Bullish % Indicator is down 0.8% on last week at 75.39% (July 18).

Market Strategy
Short-term: Long if the S&P500 is above 1015. Short if below 979.
Intermediate: Long if S&P 500 is above 1015. Short if below 962.
Long-term: Long.


Consumer confidence
The University of Michigan consumer sentiment index increased to 90.3 from 89.7 in June. (more)


Treasuries
Treasury yields ended higher, the 10-year note closing at 3.99% on Friday.
The intermediate trend is up; the primary trend is down.




Gold
New York (13.30): Spot gold closed the week up $2.55 at $347.05.
The primary trend is up.



ASX Australia
The All Ordinaries has formed a small bullish pennant, with a second inside day closing at 3065 on lower volume.
The index has formed two equal highs over the last month, not a bearish sign in an up-trend unless the index closes below the intervening trough of 2979.
The intermediate trend is up.
The primary trend is up (marginally).

Slow Stochastic (20,3,3) is above its signal line; MACD (26,12,9) is above; Twiggs Money Flow signals accumulation.




Market Strategy
Short-term: Long if the All Ords is above 3075. Short if the index falls below 3050.
Intermediate: Long if the index is above 3075; short if below 2979.
Long-term: Long.

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


Sectors: Relative Strength
A stock screen of the ASX 200 using % Price Move (1 month: +5%) is at 48 stocks (compared to 131 on April 11, 2003; and 8 on March 14, 2003).
  • Oil & Gas Exploration & Production (7)
  • Diversified Financial Services (4)
  • Gold (3)
  • Diversified Metals & Mining (3)

Daily Trading Diary
Stocks analyzed during the week were:
  • Timbercorp - TIM
  • Harvey Norman - HVN
  • CSL Limited - CSL
  • Challenger - CFG


Perfect Your Market Timing
Learn how to manage your market risk.





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


Absolute Law: Never overtrade.
To take an interest larger than the capital justifies is to invite disaster.
With such an interest, a fluctuation in the market unnerves the operator,
and his judgment becomes worthless.

~ S.A. Nelson: The ABC of Stock Speculation (1902).





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