Trading Diary
August 16, 2002

These extracts from my daily trading diary are intended to illustrate the techniques used in short-term trading and should not be interpreted as investment advice. Full terms and conditions can be found at Terms of Use .





 
USA
The Dow eased slightly to 8778 on lower volume. The secondary rally has to break through the 8800 resistance level.
Primary cycle is in a down-trend.

The Chartcraft NYSE Bullish % Indicator has given a bull alert signal, with a reading of 32% (August 14).

The Nasdaq Composite gained 1.2%, to close at 1361, above resistance at 1355, signaling the start of a secondary rally.
The primary cycle is in a down-trend.

The S&P 500 eased 2 points to close at 928. The primary cycle is in a down-trend.

 
Chip support
A better-than-expected outlook from Dell sparked purchases of chip stocks. (more)
 
Are we headed for a double dip?
President Bush and Alan Greenspan are putting the best possible face on weak economic data. (more)
 
 
 
 
ASX Australia
The All Ordinaries rose steeply after the opening but then eased later to close 7 points up at 3084 on good volume. The primary cycle trends down.
The Stochastic (20,3,3) and MACD (26,12,9) are above their signal lines. Twiggs money flow is positive.
 

 
 
Mayne in poor health [MAY]
Mayne group stock fall 8% after warning of deteriorating earnings. (more)
MAY has been in a stage 4 decline for the past 6 months but appears to be holding above support at 3.60. Relative strength (price ratio: xao) and MACD are weak but Twiggs money flow signals a bullish divergence.
 

 
 
Newscorp [NCP]
 NCP has been in the news after the stock rallied more than 15% over the last 2 weeks, shortly after posting an Australian record loss. After completing a double top/symmetrical triangle at [M] the stock has been in a stage 4 decline, completing a descending triangle at [D] before falling to a new support level [S] at 8.40. 

Interesting: the descending triangle is a bearish pattern with a calculated target of 4.42 .... only for the brave. 

 

 
Relative strength (price ratio: xao) is weak while MACD completed a bullish divergence. Twiggs money flow has also completed a bullish divergence, followed by a double bottom, completed at [W], with a target of $10.84.
 

 
 
Sector Analysis
 Stage changes are highlighted in bold.
  • Energy [XEJ] - stage 1 (RS is rising)
  • Materials [XMJ] - stage 4
  • Industrials [XNJ] - stage 4 (RS is rising)
  • Consumer Discretionary [XDJ] - stage 4
  • Consumer Staples [XSJ] - stage 4 (RS is rising)
  • Health Care [XHJ] - stage 4
  • Property Trusts [XPJ] - stage 4 (RS is rising)
  • Financial excl. Property Trusts [XXJ] - stage 4 (RS is rising)
  • Information Technology [XIJ] - stage 4
  • Telecom Services [XTJ] - stage 1 (RS is rising)
  • Utilities [XUJ] - stage 2 (RS is rising)
Sectors: Relative Strength
 A stock screen of the ASX 200 using % Price Move (1 month: +5%) shows the strongest sectors as:
  • Electric Utilities
  • Construction Materials
  • Diversified Commercial Services
 




Conclusion
 
Short-term: Long. Slow Stochastic and MACD are above their respective signal lines.
Medium-term: Wait for the All Ords to signal a reversal.
Long-term: Wait for a bull-trend on the Nasdaq or S&P 500 (primary cycle).
 
Colin Twiggs
 
Thought for the Day:

 ...thou art no thy-lane, (alone)
In proving foresight may be vain:
The best laid schemes o' Mice an' Men,
Gang aft agley, (often go wrong)
An' lea'e us nought but grief an' pain,
For promis'd joy!

- Robert Burns, to an investment analyst.
 
 




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Colin Twiggs

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.