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.
 
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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