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Trading Diary
January 20, 2004

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 Industrial Average retreated to close at 10528 on lower volume, after testing resistance at 10600. 
The intermediate trend is up. Equal highs in an up-trend are not bearish, most resolving in a continuation of the trend. However, a fall below last Tuesday's low of 10367 would complete a double top reversal pattern, with a target of 10134: 10367-(10600-10367).
The primary trend is up. A fall below support at 9600 will signal reversal.

 


After gapping up at the opening, the Nasdaq Composite index formed a hanging man reversal pattern: testing back into the body of the previous day's candle before closing back near the open at 2148. I ascribe the strong volume to buying support (as the range was normal) which, to some extent would negate the reversal signal. 
The intermediate trend is up.
The primary trend is up. A fall below support at 1640 will signal reversal.


 


The S&P 500 signals indecision, closing almost unchanged at 1138. Strong volume is a bearish sign.
The intermediate trend is up. The next resistance level is at 1175. A fall below 1115 ( last Tuesday's low) would be bearish.
Short-term: Bullish if the S&P500 is above 1132. Bearish below 1115.

The primary trend is up. A fall below 1000 will signal reversal.
Intermediate: Bullish above 1115.
Long-term: Bullish above 1000.

 


The Chartcraft NYSE Bullish % Indicator rose to 85.54% (January 20).




Treasury yields
The yield on 10-year treasury notes rallied to 4.057%.
The intermediate trend is down.
The primary trend is up. A close below 3.93% will signal reversal.





Gold
New York (19.05): Spot gold rallied to $412.50 after a low near 405.
The intermediate trend is up.
The primary trend is up.




ASX Australia
The All Ordinaries again tested resistance at 3320, closing marginally above at 3320.8. Lower volume and a narrower trading range signal lack of commitment from buyers. A follow-through tomorrow, above 3320, will be a bull signal. A break back below support at 3293 would be bearish, signaling a likely re-test of support at 3160.
Short-term: Bullish above 3320. Bearish below 3293.



The same applies to the long-term cycle: a break above 3320 will signal a likely re-test of the previous highs at 3425 and 3440. 
The primary trend is up but will reverse if there is a fall below 3160. 
Twiggs Money Flow (100) has leveled out but is still bearish after a large divergence.
Intermediate term: Bullish above 3320. Bearish below 3160.
Long-term: Bearish below 3160.


Commonwealth Bank [CBA]
Last covered January 12, 2004.
Commonwealth has pulled back to test support after breaking through resistance at 30.50. Rising Twiggs Money flow (100) signals accumulation.



CBA tends to move in increments of 50 cents or a dollar, depending on the speed of the trend. 
Relative Strength (price ratio: xao) is rising, signaling continuation of the up-trend.



Equivolume shows the break through resistance at 30.50, with an over-square bar on January 9th. The rally continued through to 31.00 before selling pressure forced a pull-back to 30.50 on strong volume. Buying support is evident at the support level, with an over-square bar and weak close in the upper half of the bar.
An early up-turn, while above the previous peak at [a], will signal continuation of the fast up-trend.
A correction lasting into next week will signal a loss of upward momentum.



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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.



About the Trading Diary has been expanded to offer further assistance to readers, including directions on how to search the archives.
Colin Twiggs


It did not really matter what we expected from life, but rather what life expected from us.
We needed to stop asking about the meaning of life, and instead to think of ourselves
as those who were being questioned by life - daily and hourly.
Our answer must consist, not in talk and meditation, but in right action and in right conduct.
Life ultimately means taking the responsibility to find the right answer to its problems
and to fulfill the tasks which it constantly sets for each individual.

~ Viktor Frankl: Man's Search For Meaning (1963
)





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