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Trading Diary
October 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 formed an inside day on strong volume, closing 2.6% down at 8036. The Dow Theory measure of primary trend direction will only turn up if the index rises above 9130.

The Nasdaq Composite Index gapped down to close at 1232, a loss of almost 4%. The primary trend will reverse if there is a break above 1426.

The S&P 500 lost 21 points to close at 860, forming an inside day. 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 15).



Wall Street takes a breather
IBM reports third-quarter earnings of 99 cents per share, beating forecasts by 3 cents and up 2 cents on last year. (IBM)
Coke warns that full-year earnings may miss forecasts. (Coke)



Gold
New York: Spot gold last traded at $US 314.30, up 80 cents on yesterday.



ASX Australia
The All Ordinaries closed up slightly at 2949 on strong volume, completing a gravestone candlestick reversal [g]. The long upper shadow signals rejection of higher prices. The index is now likely to test support at 2910 and possibly the recent low of 2843.
A break above 3150 will signal a primary trend reversal.
MACD (26,12,9) and Slow Stochastic (20,3,3) are above their signal lines. Twiggs money flow has dipped back below zero, after a bullish divergence.





BHP Billiton [BHP]
Apologies for the gremlin in yesterday's diary: A break above 9.55 will be a bull signal.
News Corporation [NCP]
Last covered on September 13.
NCP has formed two fairly equal lows about 10 weeks apart, after a long stage 4 down-trend. Relative strength (price ratio: xao) has broken its downward trendline, warning of a possible reversal.





MACD and Twiggs money flow show bullish divergences and TMF has crossed to above zero, signaling accumulation.





NCP could not break through resistance at 10.00 - the long shadow at [5] signals rejection of higher prices. A bullish double bottom pattern will be completed if price rises above 11.00.





A break above 11.00 will be a strong bull signal. A fall below 8.50 will be bearish.


Market strategy

Short-term: Long. The Slow Stochastic and MACD are above their respective signal lines.
Medium-term: Long. Use stop losses to protect yourself against a sudden reversal.
Long-term: Wait for confirmation of the bottom reversal signal.

Colin Twiggs


Thought for the Day:

 .....where Fortune is concerned: she shows her force where there is no organized strength to resist her;
and she directs her impact there where she knows that no dikes and embankments are constructed to hold her.

 - Niccolo Machiavelli, The Prince (1532)







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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.