Stock Screens: Directional Movement

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Trading Diary
September 6, 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 reversed it's losses from the previous day, rising 1.7% to close at 8427. The primary cycle trends down.

The Nasdaq Composite Index gapped upwards to close 3.5% higher at 1295. The primary trend is down.

The S&P 500 regained 14 points to close at 893. The primary cycle is in a down-trend.

The Chartcraft NYSE Bullish % Indicator  bull alert signal is at 46% (September 5).


Stronger jobs report
Unemployment fell to 5.7% in August, from 5.9% in July. (more)

Intel offers tech stocks some relief
Intel stayed within the range of previous revenue and margin forecasts, bringing relief to investors who had expected worse. (more)



ASX Australia
The All Ordinaries broke through the 3047 support level, to close at 3042 on strong volume. The primary trend is down.
The MACD (26,12,9) and Slow Stochastic (20,3,3) are below their respective signal lines. Twiggs money flow signals distribution, having respected the zero line from below [-].





Computershare [CPU]
CPU has been in a stage 4 down-trend for the past 18 months, falling to 35% of its former high. As can be expected, relative strength (price ratio: xao) is weak while the 150-day moving average appears to be leveling. MACD signals a strong bullish divergence.





Twiggs money flow has completed a bullish divergence but still signals 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 (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%) has fallen to 65 stocks that have gained more than 5% in the last month. Notable sectors:
  • Agricultural Products
  • Construction Materials




Conclusion

Short-term: Short. The Slow Stochastic and MACD are below 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:

 Every cycle with a positive feedback leads sooner or later to catastrophe.

 - Naturalist Konrad Lorenz







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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.