Trading Diary
January 2, 2002
These extracts from my daily stock
trading diary are intended to illustrate the techniques used in
short-term share trading and should not be interpreted as
investment advice. Full terms and conditions can be found
at
Terms of Use .
USA
The Dow rallied late in the day to close at 10073 on normal
volume. It may well test resistance formed at 10200, the level
of the previous high. The bearish MACD
divergence continues.
The Nasdaq rallied 2% to close at 1610, but is still in
a down-trend
, only reversed if the index rises above 1640.
K-mart falls 18%
K-mart stocks fell on reports of disappointing December sales.
(more)
Instinet, retail industry analysts, project stronger retail industry sales but "further damage to already weakened margins" due to mark-downs and special promotions.
Instinet, retail industry analysts, project stronger retail industry sales but "further damage to already weakened margins" due to mark-downs and special promotions.
Australia - ASX
The All Ords continued to climb, closing at 3384 but
on very weak volume*. This is best illustrated on an Equivolume
chart where the thickness of the bars represents volume*. Since
the break above 3320, on December 24th, volumes have been
exceedingly weak, indicating that a correction is likely.
* When we refer to "volume" in relation to an index, we
actually measure the total value traded. This is a more
accurate reflection of market activity.
The bearish divergence on the MACD
has been broken, with MACD rising above the last peak. But
MACD does not take volume into account and MACD divergences
are powerful signals, seldom wrong. So I am still
anticipating a downward correction.
Conclusion
This is beginning to sound like my daily mantra. Just
remember that you don't make money by buying stocks when they
have a 50/50 chance of going up or down. We have to wait until
the odds are more like 70/30 in our favor.
Short-term: The Dow still shows weakness and the
Nasdaq is in a down-trend. Tighten up on stop
losses and avoid new entries.
Long-term trades: Wait for a correction on the
secondary cycle.
Colin Twiggs
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Author: Colin Twiggs is a former investment banker with almost 40 years of experience in financial markets. He co-founded Incredible Charts and writes the popular Trading Diary and Patient Investor newsletters.
Using a top-down approach, Colin identifies key macro trends in the global economy before evaluating selected opportunities using a combination of fundamental and technical analysis.
Focusing on interest rates and financial market liquidity as primary drivers of the economic cycle, he warned of the 2008/2009 and 2020 bear markets well ahead of actual events.
He founded PVT Capital (AFSL No. 546090) in May 2023, which offers investment strategy and advice to wholesale clients.