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Money Management
The Diary has in the past placed too much emphasis on entry and exit points and not enough on money management -- the key to successful trading. Even if you only make 50% correct calls, you can still profit, provided that you cut your losses short and stay with the trend when you get it right. Unsuccessful traders tend to take profits too quickly and fail to cut their losses when the trend goes against them.




Trading Diary
August 6, 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 held above support at 9000, closing slightly up at 9062 . 
The intermediate trend is up but the index has penetrated the supporting trendline. A break below 9000 will signal a reversal.
MACD and Twiggs Money show bearish divergences.
The primary trend is up.



The S&P 500 tested resistance at 974 but closed back down at 967 on higher volume, 2 points up on Tuesday.
The intermediate trend is down.
MACD and Twiggs Money Flow (21) display bearish divergences.
The primary trend is up.



The Nasdaq Composite lost another 20 points, closing at 1653 on higher volume.
The intermediate trend is down. Support is at 1600.
The primary trend is up.


 


The Chartcraft NYSE Bullish % Indicator retreated a further 0.5% to 74.50% (August 5).

Market Strategy
Short-term: Long if the S&P500 is above 1000. Short if below 974.
Intermediate: Long if S&P 500 is above 1015. Short if below 950.
Long-term: Long is the index is above 1000.


Service sector gains
The Institute for Supply Management (ISM) service sector index climbed to 65.1 from 60.6 in June. (more)

Treasury yields
The yield on 10-year treasury notes lost 15 points to 4.29%.
The intermediate and primary trends are both up.



Gold
New York (19.14): Spot gold has leveled at $351.20.
The primary trend is still upwards.



ASX Australia
The All Ordinaries displays further indecision, failing to make progress despite strong volume. The index closed 4 points lower at 3119.
The intermediate trend is up. A fall below 2978 would signal a reversal.
The primary trend is up.

Slow Stochastic (20,3,3) has crossed below 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 3127. Short if the index falls below 2978.
Intermediate: Long if the index is above 3127.
Long-term: Long if the index is above 2978 .

Health Care [XHJ]
Several stocks in the Health Care sector are making new highs: Healthscope, Ramsay, Sigma and DCA. The rest are fairly flat, with OPSM, Resmed and Sonic showing some early bullish signs.



Healthscope [HSP]
Last covered April 29, 2003.
Healthscope has rallied sharply and is approaching the stock's previous high.
Twiggs Money Flow (100) signals strong accumulation and Relative Strength (price ratio: xao) has made a 3-month high.



 Volume is light and price will probably encounter heavy resistance at 2.80. We are likely to see a period of consolidation before a breakout.



Ramsay Health Care [RHC]
Last covered April 30, 2002.
Ramsay has rallied off a double bottom, completed May 2003. 
Twiggs Money Flow (100) still signals distribution, while Relative Strength (price ratio: xao) has made a 3-month high.



Again, volume is light on the latest rally and we can expect a re-test of support levels.



DCA Group [DVC]
Last covered on August 15, 2002.
DCA is making new highs after a strong rally.
Twiggs Money Flow (100) signals accumulation. Relative Strength (price ratio: xao) is rising but the latest rally has yet to make a new high.



Volume on the latest rally is again light, with price struggling to break through resistance at 2.25.
Further consolidation is likely, before enough buying pressure builds to fuel another rally.



Sigma [SIG]
Last covered April 29, 2003.
Sigma resumed its' stage 2 rally after a lengthy mid-point consolidation.
Twiggs Money Flow (100) signals strong accumulation. Relative Strength (price ratio: xao) is rising but, again, the latest rally has yet to make a new high. MACD shows a bearish divergence.



On the daily volume chart SIG displays equal highs at [a] and [c]. This is not particularly bearish during an up-trend but there is a distinct dry up of volume at [c]. A fall below support at 6.05, the low of [b], will signal a secondary correction.



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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


Rules Conditional # 4

Public opinion is not to be ignored.
A strong speculative current is for the time being overwhelming,
and should be closely watched.
The rule is to act cautiously with public opinion, against it, boldly.

......Every speculator knows the danger of too much "company".

~ SA Nelson: The ABC of Stock Speculation (1903).




 
Stock Screens: Bollinger bands

Intermediate corrections often end close to the 50-day moving average. To highlight up-trending stocks close to the MA:

(1) Select Bollinger bands;
(2) Enter 0 as the 50-day Minimum;
(3) Enter 30 as the 50-day Maximum;
(3) Submit.

For down-trending stocks the Minimum would be -30 and 0 the Maximum.





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