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Trading Diary
February 6, 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 rallied to close at 10593, just below resistance. The strong close and low volume give conflicting signals. A rise above 10600 would be bullish. A fall below last Thursday's low of 10417 would signal a re-test of support at 10000.



Twiggs Money Flow (100) continues to signal accumulation. 
The primary trend is up. Resistance is at 10600 and 11300 to 11350. A fall below support at 9600 would signal reversal.



The Nasdaq Composite rallied strongly to 2064, closing the gap from earlier in the week. 
The intermediate trend is down. Initial support is at 2000, resistance at 2100, 2150 and 2300 (May 2001).
The primary trend is up. A fall below support at 1640 would signal reversal.


 


The S&P 500 rallied to test resistance, closing at 1142. The strong close and lower volume give conflicting signals.
The intermediate trend is uncertain, with resistance overhead at 1155 and 1175.
Short-term: Bullish if the S&P500 is above 1155. Bearish below 1122, last Thursday's low.




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 rallied to 84.48%.
More than 80% of NYSE stocks are in an up-trend, the highest level in 10 years.


Unemployment lower
Non-farm payrolls grew by 112,000 in January, while unemployment fell to 5.6%, the lowest level in 2 years. (more)


Treasury yields
The yield on 10-year treasury notes retreated to 4.089%, signaling weakness in the intermediate up- trend.
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 3.2%.




Gold
New York (13.00): Spot gold rallied to $403.20, after testing support at 400.
The intermediate trend is down.
The primary trend is up. A fall below $370 would signal reversal.





 
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ASX Australia
The All Ordinaries rallied to 3285. The index is still within the consolidation pattern and lower volume signals a lack of commitment from buyers. The intermediate trend is uncertain. A follow-through above 3300 would be bullish. A fall below 3266 would signal commencement of a down-trend.
Short-term: Bullish above 3350. Bearish below 3266.



On the 3-year chart, the false break above resistance is a bearish sign, increasing the likelihood of a test of support at 3160. 
Twiggs Money Flow (100) has broken below its 3-month support level, another bearish sign.
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 falling)
  • 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 rising)
  • Property Trusts [XPJ] - stage 3 (RS is level).
  • Financial excl. Property [XXJ] - stage 3 (RS is level
  • Information Technology [XIJ] - stage 2 (RS is falling)
  • Telecom Services [XTJ] - stage 2 (RS is level)
  • Utilities [XUJ] - stage 2 (RS is level)


Materials [XMJ] has made a false (marginal) break above the previous high before retreating below the 30-week MA. Relative Strength (price ratio: xjo) has fallen below the previous trough. These may be the first signs of a stage 3 top.




Sectors: Relative Strength
A stock screen of the ASX 200 using % Price Move (1 month: +5%) fell to 21 stocks, from 50 two weeks ago. The highest reading was 131 on April 11, 2003 and the lowest, 8 on March 14, 2003. Prominent sectors are:
  • Casinos & Gaming (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


We're so busy watching out for what's just ahead of us,
that we don't take the time to enjoy where we are.
Days go by and we hardly notice them. Life becomes a blur.
Often, it takes some calamity to make us live in the present.
Then suddenly we wake up and see all the mistakes we've made.
But it's too late to change anything.

~ Calvin & Hobbes.




 

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