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Trading Diary
January 30, 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 has consolidated over the last 2 days, closing at 10488. Low volume with a "hammer" close signals an absence of selling pressure. 
A fall below Thursday's low of 10417 would signal a re-test of support at 10000.



Despite the down-turn, Twiggs Money Flow (100) continues to signal accumulation. 
The primary trend is up. A fall below support at 9600 would signal reversal.



The Nasdaq Composite consolidated after the recent down-thrust, closing at 2066. Thursday's weak close and big volume signaled buying pressure, but Friday's inside day on lower volume increases the chances of a continuation. 
The intermediate trend is uncertain. Initial support is at 2000, resistance at 2300.
The primary trend is up. A fall below support at 1640 will signal reversal.


 


The S&P 500 consolidated with an inside day after a 2-day correction, closing at 1131. Strong volume and a narrow range signal pressure from both buyers and sellers.
The intermediate trend is up, with resistance overhead at 1175.
Short-term: Bullish if the S&P500 is above 1155.




The primary trend is up. A fall below 960 would signal reversal.
Twiggs Money Flow (100) may have turned down but continues to signal accumulation.
Intermediate: Bullish above 1155.
Long-term: Bullish above 1000.



The Chartcraft NYSE Bullish % Indicator retreated to 84.59%. More than 80% of NYSE stocks are in an up-trend, the highest level in 10 years.


Consumer confidence up
The University of Michigan index of consumer sentiment rose to 103.8, from 92.6 in December.
(more)


Treasury yields
The yield on 10-year treasury notes retraced to 4.138%.
The intermediate trend is up and likely to re-test resistance levels at 4.4% to 4.5%.
The primary trend is up. A close below the September low of 3.93% would signal reversal.



The yield differential (10-year T-notes compared to 13-week T-bills) is a healthy 3.25%.




Gold
New York (13.00): Spot gold tested support at 400 before recovering to $402.00.
The intermediate trend is down.
The primary trend is up.





 

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ASX Australia
The All Ordinaries attempted a rally after the fast 3-day down-trend, but selling pressure forced a weak close at 3283 on strong volume. The intermediate trend is now uncertain.
Short-term: Bullish above 3350. Bearish below 3293 (Jan.12 low).



On the 3-year chart, the false break above 3320, followed by a fast down-trend, is a bearish sign. We are likely to witness a re-test of support at 3160. 
Twiggs Money Flow (100) is headed for a test of its 3-month support level.
The primary trend is up. A fall below 3160 (the October 1 low) would signal reversal.
Intermediate term: Bullish above 3350. 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 level)
  • Industrials [XNJ] - stage 2 (RS is rising)
  • Consumer Discretionary [XDJ] - stage 3 (RS is falling)
  • Consumer Staples [XSJ] - stage 3 (RS is level)
  • Health Care [XHJ] - stage 1 (RS is level)
  • Property Trusts [XPJ] - stage 3 (RS is level).
  • Financial excl. Property [XXJ] - stage 3* (RS is rising) 
  • Information Technology [XIJ] - stage 2 (RS is level)
  • Telecom Services [XTJ] - stage 2 (RS is level)
  • Utilities [XUJ] - stage 2 (RS is rising)


Financial-x-Property Trusts [XXJ]* has made two false breaks through resistance at the top of the consolidation pattern. Narrow consolidation just below resistance, however, is still a bullish pattern. Relative Strength (price ratio: xjo) is edging upward. If there is a further breakout, it would be prudent to wait for a pull-back that respects the new support level.




Sectors: Relative Strength
A stock screen of the ASX 200 using % Price Move (1 month: +5%) fell to 25 stocks, from 50 a week earlier. The highest reading was 131 on April 11, 2003 and the lowest, 8 on March 14, 2003. Prominent sectors are:
  • Oil & Gas Exploration & Production (4)



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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


With things - some go forward, others follow;
Some are hot, others cold;
Some are firm and strong, others submissive and weak.
Some rise up while others fall down.
Therefore the Sage:
Rejects the extreme, the excessive, and the extravagant
.

~ Lao Tse: Te-Tao Ching





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