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Trading Diary
October 08, 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 .

The Dow gained 1% to close at 7501 on strong volume.
The primary trend is down.

The Nasdaq Composite Index rallied 10 points to close at 1129.
The primary trend is down.

The S&P 500 formed an outside day, closing up 11 points at 796.
The primary trend is down.

The Chartcraft NYSE Bullish % Indicator reflects a bear confirmed signal at 28% (October 7).

Bush intervenes in West Coast labor dispute
The markets were bouyed by the news that President Bush is seeking a court injunction to re-open West Coast ports. (more)

New York: The spot gold price declined 400 cents to $US 318.10.

ASX Australia
The All Ordinaries rose 5 points to close at 2901 on low volume. The next band of support is at 2867 to 2828, from September 2001. The primary trend is down.
Slow Stochastic (20,3,3) and MACD (26,12,9) are below their signal lines. Twiggs money flow is rising.

The long-term Coppock indicator slopes downward.

Adelaide Bank [ADB]
Thanks to Rocky who drew my attention to ADB on the chart forum and provided some of the following analysis.
ADB is in a stage 2 up-trend with relative strength (price ratio: xao) rising.

The daily chart shows a bullish ascending triangle/pennant formed in early August after a 12-week secondary correction. MACD gave a bullish confirmation. Twiggs money flow shows a bullish confirmation towards the end of August.

The equivolume chart clearly shows support and resistance levels, with the width of the bar depicting volume. Shaded areas on the bars depict closing prices: the lighter shade is above the close in an up-trend, and below the close in a down-trend.

The chart for July-August shows the ascending triangle formed after 2 equal highs at [1] and [2]. The 2-day correction after [2] is on weak volume, followed by a buy signal at [3] when stock rallies above the resistance level. The ideal entry point would be a buy-stop just above resistance at 7.10 with a stop-loss a few ticks below (a stop at the bottom edge of the triangle would be too wide).

The next correction ends above the 7.10 resistance level, confirming a strong trend. Accumulation is shown by the wider bar at [4]; increase your position when price rallies above the high.

The next correction shows very strong accumulation/support at [5]. Time for further buying when price clears the high of the lowest bar. Move your stop up to a few ticks below the low, to protect profits.

Distribution takes place at [6], near the new high. Take profits when price breaks below the low of [6], at [7]. Exit your remaining position when ADB gaps downward at [8]. 

A further pennant has formed in October, with resistance at [9] and [11]. The pennant is normally a continuation pattern, but strong support at [10] and [12] makes me cautious. A rally above 7.48 could see resistance tested at 7.88, while a fall below 7.30 may test support at 7.10 and 6.65.

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:

Everyone has his own specific vocation or mission in life to carry out a concrete assignment which demands fulfillment. Therein he cannot be replaced, nor can his life be repeated. Thus, everyone's task is as unique as is his specific opportunity to implement it.

Victor Frankl - Man's Search for Meaning

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