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Trading Diary
April 3, 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
After 3 days consolidation below resistance at 10400 the Dow Industrial Average has broken through, to close at 10470. Increased volume signals commitment from buyers. Expect a test of resistance at 10750.




Penetration of resistance at 10750 would signal resumption of the primary up-trend and is likely to result in a test of the 11400 level. Initial support is at 10400, followed by major support at 10000.
Twiggs Money Flow has rallied off the recent low but is still bearish..




The Nasdaq Composite penetrated resistance at 2000, followed by a gap up on strong volume; a bullish sign. 
The intermediate trend is up. The gap may exhaust short-term momentum but should herald a re-test of resistance at 2100. A rise above resistance at 2150 would signal resumption of the primary up-trend. Support is at 2000 and 1900 (major). Twiggs Money Flow is still bearish.


 



The S&P 500 broke through resistance at 1125 on strong volume. If the pull-back respects the new support level, we should see a re-test of resistance at 1160.




A rise above 1160 would signal resumption of the primary up-trend. However, Twiggs Money Flow is still bearish.


Daylight Saving

New York: Daylight saving commences at 2:00 a.m. on April 4. 
Times will shift to EDT (GMT-4) from EST (GMT-5).

For further details, see Coping with different Time Zones.


Treasury yields

The yield on 10-year treasury notes rallied sharply to close at 4.14%.
The intermediate trend is uncertain. A rise above 4.25 would signal commencement of an up-trend.
The primary trend is down.




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




Gold

New York: Spot gold eased to $421.40 after testing resistance at $427.
The intermediate trend is up.
The primary trend is up. A fall below $390 would signal reversal.




 
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ASX Australia
The All Ordinaries formed a compressed spring (a narrow range with strong volume) demonstrating strong buying support. The compressed spring is normally followed by a strong trend movement, in either direction, so entries are often taken with a buy-stop above the High, or a sell-stop below the Low.




There may still be further resistance overhead at 3450, while support is at 3160.
The intermediate and primary trends are up.
Twiggs Money Flow signals accumulation (intermediate time frame).





 
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Stock Screening - Directional Movement: Trend Starts

Welles Wilder's Directional Movement system consists of three lines:
  • Positive Direction Indicator (+DI) indicates upward trend movement;
  • Negative Direction Indicator (-DI) summarizes downward trend movement;
  • ADX indicates the overall level of directional movement. High readings signal strong trends, while low readings indicate ranging stocks.
Long signals are taken when +DI crosses to above -DI while ADX turns up (from a low reading). 
Short signals, when -DI crosses to above +DI while ADX (also) turns up.
There are many different ways of trading with Directional Movement. See the Trading Guide for Alexander Elder's approach.

To identify potential long trades:
  1. Open the Stock Screen module from the toolbar

  2. Select Directional Movement System
  3. Under DI+, DI- (14) Crossovers:
    • select Bull Signal and
    • within the last 5 trading days




  1. Scroll down to ADX Crossovers:
    • select ADX (14) Crossover of 20
    • Crosses Above and
    • within the last 5 trading days



  1. Submit
This will return stocks where DI+ has crossed to above DI- and ADX has crossed above 20.

As an alternative to the second filter you can use the ADX Reversals filter:
  • ADX (14) Reversal by 4 Points
  • ADX turns up
  • Within the last 5 trading days
This may identify earlier turning points but will give more incorrect signals.





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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 will be the business of reason to rule with wisdom and forethought on behalf of the entire soul;
while the spirited element ought to act as its subordinate and ally.
The two will be brought into accord, by that combination of mental and bodily training
which will tune up one string of the instrument and relax the other,
 nourishing the reasoning part on the study of noble literature
and allaying the other's wildness by harmony and rhythm.

~ Plato.



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