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Trading Diary
August 30, 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 demonstrated support at 8600, closing almost unchanged at 8663, on lower volume. This may indicate a lack of selling pressure, but trading may have tailed off ahead of the long weekend. The secondary rally is intact, while the primary cycle is in a down-trend.  

The Nasdaq Composite reversed yesterday's gain, closing down 1.6% at 1314. The inside day signals uncertainty. The secondary rally is intact, while the primary cycle is in a down-trend.

The S&P 500 closed 1 point down at 917. A second doji signals uncertainty.
The primary trend is down. 

The Chartcraft NYSE Bullish % Indicator  bull alert signal is at 46% (August 29).

The market will be closed Monday for Labor Day.


Greenspan defends Fed policy in the late 1990's
The Fed chairman citing past examples, suggested that only a sharp increase in short-term rates would have sufficient economic impact to check a stock market bubble...and could trigger a recession.



ASX Australia
After a mixed day the All Ordinaries fell in late trading to close 9 points down at 3074. The large volume and narrow trading range signal buying support. The primary trend is down.
The Stochastic (20,3,3) is below its signal line. Twiggs money flow signals distribution.





The Coppock Indicator has crossed to below zero for the first time since January 1995.







Gold stocks
Several gold stocks have formed triangle patterns after the recent down-trend. Possibly because spot gold has formed a higher August trough after a sharply lower trough in July.
Aurion Gold [AOR] has broken up from a symmetrical triangle, with bullish signals from MACD and Twiggs money flow.





Newcrest Mining [NCM] is forming an ascending triangle with bullish Twiggs money flow and MACD improving .





Croesus Mining [CRS] has also broken out of a symmetrical triangle, with rising MACD and Twiggs money flow.





Spotless Group [SPT]
SPT is forming a stage 1 base with the 150-day moving average leveling off and MACD signaling a strong bullish divergence.





But Twiggs money flow has failed to cross above zero, signaling distribution.





Sector Analysis
 Stage changes are highlighted in bold.
  • Energy [XEJ] - stage 1 (RS is rising)
  • Materials [XMJ] - stage 4
  • Industrials [XNJ] - stage 4
  • Consumer Discretionary [XDJ] - stage 4
  • Consumer Staples [XSJ] - stage 4 (RS is rising)
  • Health Care [XHJ] - stage 4
  • Property Trusts [XPJ] - stage 4
  • Financial excl. Property Trusts [XXJ] - stage 4
  • Information Technology [XIJ] - stage 4
  • Telecom Services [XTJ] - stage 1
  • Utilities [XUJ] - stage 2 (RS is rising)
Sectors: Relative Strength
 A stock screen of the ASX 200 using % Price Move (1 month: +5%) shows 77 stocks that have gained more than 5% in the last month. Notably:
  • Banks
  • Construction Materials
  • Real Estate Investment Trusts



Conclusion

Short-term: Avoid new entries. Slow Stochastic and MACD are on opposite sides of 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:

 The trouble with using experience as a guide is that the final exam comes before the first lesson.






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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.