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Trading Diary
August 21, 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
After an early rally the Dow closed weakly at 9424. Higher volume signals selling pressure.
The intermediate trend is up.
The primary trend is up.



The Nasdaq Composite closed up 17 points at 1778 on higher volume.
The intermediate trend has turned up.
The primary trend is up.


 


The S&P 500 also retreated to a weak close at 1003, up 3 points. Higher volume signals selling pressure.
The intermediate trend will reverse up if the index rises above 1015.
The primary trend is up.



The Chartcraft NYSE Bullish % Indicator rallied to 76.66% (August 21).

Market Strategy
Short-term: Long if the S&P500 is above 1005. Short if below 980.
Intermediate: Long if S&P 500 is above 1015. Short if below 960.
Long-term: Long if the index is above 950.


Jobless claims
New unemployment claims dropped last week to 386,000. (more)

Manufacturing
The Philadelphia Federal Reserve, whose manufacturing report for the Mid-Atlantic region is normally one of the first to reach the market, says that its index of factory business conditions jumped to 22.1 in August, a five-year high. (more)


Treasury yields
The yield on 10-year treasury notes rose to 4.51%.
The intermediate and primary trends are both up.




Gold
New York (17.56): Spot gold eased to $362.20.
The primary trend is up.



ASX Australia
The All Ordinaries gained 2 points to close at 3170. The long tail and high volume signal buying support. The last 3 days have formed a small pennant, a continuation signal in the intermediate up-trend.
The intermediate trend is up. A fall below 2978 would signal a reversal.
The primary trend is up.

Slow Stochastic (20,3,3) has whipsawed to below its signal line; MACD (26,12,9) is above; Twiggs Money Flow has turned up, continuing to signal accumulation.
Both MACD and Twiggs Money Flow (21) show bearish divergences.



Market Strategy
Short-term: Long if the All Ords is above 3171. Short if the intermediate trend reverses.
Intermediate: Long if the index is above 3171.
Long-term: Long if the index is above 2978 .

Adelaide Brighton [ABC]
Covered yesterday, August 20, 2003.
ABC closed marginally below the 1.30 support level, at 1.29, on strong volume. The correction is likely to test the supporting trendline at 1.20. This is unlikely to be a false break, immediately retreating back above support, because of the strong close and big volume.



Computershare [CPU]
Covered yesterday, August 20, 2003.
Volume is drying up on the pull-back to the 2.00 support level, a bullish sign. The best way to increase a long position is to place a buy-stop above the latest high; so that you enter on a reversal.



Previous entry points: both [e] and [e2] show low volume and volatility; while the breakout at [5] shows higher volume and volatility, as expected.


Challenger [CFG]
Last covered July 17, 2003.
CFG formed a bullish ascending triangle after breaking out of a stage 1 base. Price then broke down, in a bearish move, through the supporting trendline. It has since rallied and now threatens to break back above the trendline.
Twiggs Money Flow (100) signaled a bearish divergence from [d] to [f] but has since turned back up, signaling accumulation.



MACD showed a bearish divergence from [d] to [f], another warning sign.
Relative Strength also dipped below the 3-month baseline but has since rallied.



Equivolume best depicts the price/volume behavior over the past 6 months. We first have three equal highs at [1] [2] and [4], ignoring the false break at [2]. Two equal lows at [3] and [5] signal support at 0.50. Price then gaps below support, but strong volume and a weak close at [6] signal buying pressure. CFG then rallies on strong volume at [7], forming a power bar. The rally continues with good volume at [8], threatening to cross back above the trendline.



If price rises above 0.57 this will complete a bear trap, a particularly strong bull signal.
The target for the triangle breakout is 0.69: 0.57 + 0.57 - 0.45.

A fall below 0.50 would be bearish, with a close below 0.48 a stronger 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.



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

Colin Twiggs


The trick in life is not to worry about making a wrong decision;
it's learning when to correct!

~ Susan Jeffers: Feel The Fear And Do It Anyway.




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