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S&P 500 [SPX] data history

The S&P 500 data history has been extended to 24 years 
- from January 1980.




Trading Diary
June 12, 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 rally appears healthy, with short retracements on low volume. However, declining overall volume raises doubt about buyers ability to break through resistance at 10570. Failure to do so would signal a re-test of support at 10000/9900.




A rise above 10570 would signal resumption of the primary up-trend.
But Twiggs Money Flow continues to signal distribution.




The Nasdaq Composite broke through resistance at 2000 but has since retreated below this level. 
Declining volume signals a lack of commitment from buyers.
Twiggs Money Flow continues to show distribution.




The S&P 500 has also experienced low volumes on the latest rally. Failure to break above resistance at 1150 will signal another test of support at 1090/1080.




A bear trap pattern is evident at [4] on the P&F chart below.
A clear break above resistance at 1150 would signal resumption of the primary up-trend; though it may be advisable to wait for confirmation, as at [3] on the last breakout. 
Twiggs Money Flow
continues to signal distribution.





Treasury yields

The yield on 10-year treasury notes is at 4.791%. The short retracement [2] after the breakout [1] above resistance indicates a healthy primary up-trend.

The yield differential (10-year T-notes minus 13-week T-bills) at 3.5% reflects imminent rates increases.






Gold

New York: Spot gold closed down at $384.90, below resistance at 390. Expect a bearish consolidation or slow down-trend.
The next (intermediate) support level is at the May low of 375.




 
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ASX Australia

The All Ordinaries rallied to a new high but quickly reversed on increased volume. Buyers then intervened, overcoming sellers on strong volume at [4], but the action seems to have exhausted demand: volume dropped significantly on Friday.




While Twiggs Money Flow shows signs of increasing accumulation, we have not yet seen confirmation of the breakout, in the form of a pull-back that respects the new support level. 








Point & Figure - Bull and Bear Traps

One of the most reliable patterns. Bull traps occur when an upward breakout retreats back below a resistance level. Bear traps occur when a downward breakout retreats back above a support level.

Bull Traps
  • Bull traps should be traded in a down-trend. 
  • They may also signal reversal after an extended up-trend.
  • Go short when price falls back below the resistance level.




Bear Traps
  • Bear traps should be traded in an up-trend.
  • They may also signal reversal after an extended down-trend.
  • Go long when price rises above the support level.



Wide Bull and Bear traps

Bull and bear traps (and false breaks) often occur in longer time frames as well.
Ford Motor Co. displays a bull trap that took more than a year to complete.




  1. Price spikes up to a new high, in early 1998, but quickly retraces.
  2. Resistance forms just below the previous high. The strong following correction is a bearish sign.
  3. The Bull trap: Price rallies to a marginal new high but then retreats below the resistance level.
  4. A short retracement confirms the trend change.
  5. An equal lower high confirms resistance has formed at 32.00: the low before [3]. A strong bear signal.
  6. Another attempted rally peters out.
  7. Equal highs in a down-trend are a strong bear signal; and are followed by a long downward spike.
Ford is currently in an up-trend after a wide bear trap at [10] below. Note the triangular consolidation at [11].
More on triangle patterns next week....




Basic point and figure chart patterns are explained at the Trading Guide: P&F Chart Patterns.


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Colin Twiggs


The usual bull market successfully weathers a number of testsuntil it is considered invulnerable,
whereupon it is ripe for a bust.

~ George Soros



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