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Trading Diary
August 26, 2003

These extracts from my daily trading diary are for educational purposes and should not be interpreted as investment advice. Full terms and conditions can be found at Terms of Use .




USA
The Dow made a hammer reversal with a long tail, closing up 0.2% on higher volume.
The intermediate trend is up.
The primary trend is up.



The Nasdaq Composite also displayed a long tail, closing up 7 points at 1771 on higher volume.
Equal highs in an up-trend are not particularly bearish - unless the index falls below the intervening low (1640).
The intermediate trend is up.
The primary trend is up.


 


The S&P 500 displayed a similar hammer reversal to the Dow, closing 3 points higher at 997 on higher volume.
The intermediate trend is down.
The primary trend is up.



The Chartcraft NYSE Bullish % Indicator closed slightly up at 76.79% (August 25).

Market Strategy
Short-term: Long if the S&P500 is above 1000. Short if below 984.
Intermediate: Long if S&P 500 is above 1015. Short if below 960.
Long-term: Long is the index is above 960.


Durable goods orders rise
Led by a surge in car sales, demand for durable goods increased by roughly 1 per cent, while inventories fell by a similar amount. (more)

Consumer confidence climbs
The Conference Board index of consumer confidence increased to 81.3, from a revised 77 in July. (more)

Treasury yields
The yield on 10-year treasury notes closed at 4.49%.
The intermediate and primary trends are both up.




Gold
New York (19.12): Spot gold jumped 3 dollars in the morning session to $364.20.
The primary trend is up.



ASX Australia
The All Ordinaries closed 8 points lower at 3167. Strong volume is a bearish sign, somewhat tempered by the fairly weak close.



The intermediate and primary trends are up.
Slow Stochastic (20,3,3) and MACD (26,12,9) have crossed to below their signal lines; MACD and Twiggs Money Flow (21) display bearish divergences.


Market Strategy
Short-term: Long if the All Ords is above 3182. Short if the intermediate trend reverses.
Intermediate: Long if the index is above 3182.
Long-term: Long if the index is above 2978 .

Diversified Commercial Services
This normally quiet industry has also popped up in my weekly stock screens.

Brambles [BIL] has formed a broad stage 1 base after a lengthy down-trend.
Price broke out of the base at [3] but then retreated to range in a narrow band below resistance at 5.00, a bullish sign.
Twiggs Money Flow (100) signaled strong distribution for the past year but now shows a bullish divergence and threatens to rise above zero, an even stronger signal.
Relative Strength is still fairly weak, while MACD is neutral.



On the daily volume chart we can see four key areas:
  • The cathartic sell-off at [1] which signaled the start of the stage 1 base;
  • A marginal break of the previous low, followed by a gap above the trendline at [2], a strong intermediate bull signal;
  • A repeat of the same pattern at [3], establishing another support level; and
  • Repeated tests of resistance at 5.00, so far on low volume [4].
A break above 5.00 on strong volume will be a bull signal, while more prudent traders may wait for a pull-back that respects the new support level. A fall below 4.40 would be bearish.



Collection House [CLH] appears to be moving into a stage 1 base after breaking the downward trendline. Relative strength and Twiggs Money Flow (100) are still fairly weak, while MACD shows a bullish divergence.



Coates [COA] has formed a broad stage 3 top.
Twiggs Money Flow (100), which has signaled strong accumulation for the past 18 months has fallen below zero after a bearish divergence.
Relative Strength is level while MACD displays a bearish divergence.



Spotless [SPT] has bolted out of the starting gates after breaking above resistance at 4.00; accompanied by heavy volume. Like many such bolters, there is a fair chance that it will run out of energy and sink back to test support levels; a typical V-bottom scenario.
Relative Strength and MACD are rising, while Twiggs Money Flow (100) ranges in a narrow band around zero. 



Tempo [TEM] appears to be heading into a stage 1 base, forming an ascending triangle in the process.
However, Relative Strength is still weak and Twiggs Money Flow (100) shows a strong bearish divergence.
MACD is fairly bullish.



Transfield [TSE] has resumed a healthy stage 2 up-trend after a secondary correction towards the end of last year.
Relative Strength is rising and MACD has completed a bullish trough above zero, but there are some warning signs on the horizon.
MACD displays a bearish divergence, while Twiggs Money Flow shows an even stronger divergence. 



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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


Tseng Tzu said: "Each day I examine myself in three ways:
 In doing things for others, have I been disloyal?
In my interactions with friends, have I been untrustworthy?
Have I not practiced what I have preached?".

~ The Analects of Confucius.





Indicator smoothing has been removed as an option under Advanced Features and is now permanently available.
When you select an indicator on the Indicator Panel, it will, wherever practical, 
offer a moving average option. The box is positioned at the bottom of the center panel.



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You can now view back issues at the Daily Trading Diary Archives.


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