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Trading Diary
April 24, 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 intermediate trend is uncertain, with a lower trough followed by a higher high. Volume increased on the rally after (the false break at) [1], but Friday's weak close signals increased selling pressure. Resistance at 10570 is significant: failure to penetrate this level in the next few weeks, or a fall below 10250, would be a strong bear signal.




The primary trend is up. Resistance is at 10700 to 10750; and support at 10000.
Twiggs Money Flow has crossed above its signal line but still appears weak. A fall below the March 24 low would be a strong bear signal.




The Nasdaq Composite has surged strongly after a false break [1] below support at 1980. Expect a re-test of resistance at 2080. A double top pattern below the January high would be a strong bear signal.

The primary trend is up. Resistance is at 2150; support at 1900. 
Twiggs Money Flow is rising. Reversal below the March 24 low (0.05) would be a strong bear signal.


 



The S&P 500 surged strongly on heavy volume after a false break [1] below support at 1120. Friday's inside day signals consolidation before a likely re-test of resistance at 1150.




Last week's statement is incorrect: a fall below 1087 will not yet signal a primary trend reversal - primary support is still at 960. Resistance is at 1160.
Twiggs Money Flow is weak but rising.





Treasury yields

The yield on 10-year treasury notes has rallied to 4.452%.
A successful break above 4.50% would signal a primary up-trend, while a rise above 4.67% would add further confirmation.

The yield differential (10-year T-notes minus 13-week T-bills) is a healthy 3.5%; indicating that long-term investors are demanding a healthy premium for tying up their capital.






Gold

New York: Spot gold closed at $395.00 after testing support at 390.
The intermediate trend is down.
Equal lows in an up-trend are not a bear signal, but a fall below $390 would signal reversal of the primary up-trend.




 
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ASX Australia
The All Ordinaries has shown encouraging signs over the last few days, holding above support at 3425 to 3420. Heavy volume and a fairly weak close signal increased resistance at 3472. A break above this level would be a bullish sign. 
The intermediate trend is up.




The primary trend is up. A fall below last week's low of 3416, while not strictly a horn reversal, would be a significant bear signal. Thomas Bulkowski (Encyclopedia of Chart Patterns) found that narrow double tops, resembling two horns, are more reliable than broader double tops.
Twiggs Money Flow may be forming a bearish divergence, which would signal long-term weakness.






Creating a Volume Moving Average

Volume Moving Averages help to identify unusual volume activity, like the volume spikes prior to the last two Microsoft reversals:




The indicator is not listed on the Indicator Panel. To create a Volume Moving Average:
  • open the Indicator Panel 

  • select Volume in the left column (or the right column if you want to edit the existing selection)
  • in the center panel, select Daily at the top
  • under Optional Indicator Smoothing, select an MA type (Exponential, Simple or Weighted) and enter a time period (e.g. 50)


  • save the new settings [>] and close the Indicator Panel [x].


Indicator Help

The Indicator Panel 

 offers 3 separate help links (indicated by blue pointers):



  • A selected indicator ( e.g. Volume) is linked to a Trading Guide which explains how the indicator is constructed, suggests suitable trading strategies, and offers practical examples.
  • [?] links to the Indicator Help page which shows how to add Indicators
  • Optional Indicator Smoothing explains how to add a moving average/signal line to an indicator.


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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


Markets are constantly in a state of uncertainty and flux
and money is made by discounting the obvious
and betting on the unexpected.

~ George Soros
.



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