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Trading Diary
October 14, 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 closed up slightly at 7877 on low volume. Buying pressure appears to be waning - the true test this week will be whether the index can carry above the 8000 resistance level. The primary trend is down.

The Nasdaq Composite Index gained 10 points to close at 1220. The primary trend is down.

The S&P 500 gained 6 points to close at 841. Immediate resistance is at 855 and the index will complete a double bottom if it rises above 965. The primary trend is down.

The Chartcraft NYSE Bullish % Indicator reflects a bear confirmed signal at 26% (October 11).



A quiet day on Wall Street
The absence of a sell-off, after two strong up days. Some see this as a good sign for the next few weeks. (more)



Gold
New York: Spot gold last traded at $US 317.40, up 130 cents.



ASX Australia
The All Ordinaries broke through initial resistance at 2909, closing up 33 points on light volume. The primary trend is still down.
Slow Stochastic (20,3,3) is above its signal line; MACD (26,12,9) is below. Twiggs money flow signals a bullish divergence [+].





Sons of Gwalia [SGW]
A lot has happened since September 2 when SGW was last covered.
The stock has formed a bullish falling wedge while in a stage 4 down-trend. Relative strength (price ratio: xao) has been falling for the last 16 months but may be showing early signs of a reversal, forming a higher low.





MACD shows a bullish divergence. Twiggs money flow shows a bullish divergence [+] followed by strong accumulation [$] with TMF holding above zero.





On the equivolume chart SGW appears to be forming an ascending triangle with resistance at 5.00 after equal highs at [2] and [3]. Volume on the latest rally [4] is a bit thin and some heavier volume, as in the previous rally [1], would be reassuring.





A break above 5.00 on strong volume will be a bull signal, while a break below 4.35 will be a bearish continuation signal.


Market strategy

Short-term: Avoid new entries. The 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:

 Ordinary mortals know what's happening now,
the gods know what the future holds
because they are totally enlightened.
Wise men are aware of future things
just about to happen.

 - C.P. Cavafy, a poem based on lines by Philostratos






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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.