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Trading Diary
January 23, 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 rejected higher prices, closing below support, at 10568, on higher volume. The false break above 10600 resembles a shooting star candlestick pattern; a bearish sign. 
A fall below the (Jan 13) low of 10367 will signal a correction to re-test support at 10000.
Twiggs Money Flow (100) continues to signal strong accumulation. 
The primary trend is up. A fall below support at 9600 would signal reversal.



The Nasdaq Composite held above support at 2100, forming a doji with a close at 2124 on strong volume. 
The intermediate trend is up. Expect further tests of the support level. Resistance is at 2300.
Twiggs Money Flow (100) continues to signal strong accumulation.
The primary trend is up. A fall below support at 1640 will signal reversal.


 


The S&P 500 tested resistance at 1150 before retreating to close at 1141. Strong volume is a bearish sign.
The intermediate trend is up, with resistance overhead at 1175.
Short-term: Bullish if the S&P500 is above 1150.




The primary trend is up. A fall below 960 will signal reversal.
Intermediate: Bullish above 1115 (from January 13).
Long-term: Bullish above 1000.



The Chartcraft NYSE Bullish % Indicator has formed a new 10-year high, with 86.29% of NYSE stocks in an up-trend. The next highest level was 76% in August to October 1997, preceding a sharp correction to the 10-year low of 16%, in August 1998.


Treasury yields
The yield on 10-year treasury notes reversed sharply off support to close at 4.066%.
A follow-through on Monday would complete a double bottom reversal, likely to re-test resistance levels at 4.4% to 4.5%.
The primary trend is up. Price has been ranging between 4.0 and 4.5% and a close below the September low of 3.93% will signal reversal.



The yield differential (10-year T-notes compared to 13-week T-bills) is a healthy 3.2%.




Gold
New York (13.00): Spot gold pulled back to $407.60.
The intermediate trend will reverse downwards if price below 405, with a likely test of support at 400.
The primary trend is up.





 

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ASX Australia
The All Ordinaries successfully tested support at 3320 before rallying to a new high at 3346; a bullish sign. Low volume may result from the Australia Day long weekend.
Short-term: Bullish above 3320. Bearish below 3293.



On the 3-year chart, the break above 3320 signals a re-test of the previous highs at 3425 and 3440. 
Twiggs Money Flow (100) has started to trend upwards, signaling accumulation, with a higher low followed by a break above the previous high.
The primary trend is up. A fall below 3160 (the October 1 low) would signal reversal.
Intermediate term: Bullish above 3320. Bearish below 3160.
Long-term: Bearish below 3160.



Sector Analysis
The 11 sectors (10 + Property) are in various market stages. Relative Strength (xjo) measures the performance of each sector relative to the overall index.
  • Energy [XEJ] - stage 2 (RS is rising)
  • Materials [XMJ] - stage 2 (RS is rising)
  • Industrials [XNJ] - stage 2 (RS is rising)
  • Consumer Discretionary [XDJ] - stage 3 (RS is level)
  • Consumer Staples [XSJ] - stage 2 (RS is level)
  • Health Care [XHJ] - stage 1 (RS is level)
  • Property Trusts [XPJ] - stage 3* (RS is level).
  • Financial excl. Property [XXJ] - stage 2** (RS is level) 
  • Information Technology [XIJ] - stage 2 (RS is level)
  • Telecom Services [XTJ] - stage 2 (RS is level)
  • Utilities [XUJ] - stage 2 (RS is rising)

Property Trusts [XPJ]* has rallied strongly off support at 1400 but has yet to signal a clear resumption of the up-trend. Tops can be far more volatile than bases and this could still resolve into a head and shoulders reversal pattern. The trough of the next secondary correction should provide a strong clue. Relative Strength (price ratio: xjo) has yet to make a significant upward move.




Financial-x-Property Trusts [XXJ]** broke through resistance at the top of the consolidation pattern, signaling a return to Stage 2. Relative Strength (price ratio: xjo) has yet to make a significant upward move, encouraging prudence.




Sectors: Relative Strength
A stock screen of the ASX 200 using % Price Move (1 month: +5%) increased to 50 stocks (compared to 131 on April 11, 2003; and 8 on March 14, 2003). Prominent sectors are:
  • Oil & Gas Exploration & Production (4)
  • Banks (4)
  • Health Care Facilities (3)



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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


Experience is not what happens to a man;
it is what a man does with what happens to him.

~ Aldous Huxley
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