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Trading Diary
October 22, 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, closing down 1% at
8450 on lower volume. A primary trend reversal will be signaled
if the index rises above 9130.
The Nasdaq Composite Index retreated 1.3% to 1292, forming an inside day. The primary trend will reverse if there is a break above 1426.
The S&P 500 formed an inside day, losing 9 points to close at 890. The primary trend is down. The index will complete a double bottom reversal if it rises above 965.
The Chartcraft NYSE Bullish % Indicator has swung to a bull alert signal at 32% (October 21).
The Nasdaq Composite Index retreated 1.3% to 1292, forming an inside day. The primary trend will reverse if there is a break above 1426.
The S&P 500 formed an inside day, losing 9 points to close at 890. The primary trend is down. The index will complete a double bottom reversal if it rises above 965.
The Chartcraft NYSE Bullish % Indicator has swung to a bull alert signal at 32% (October 21).
AT&T
AT&T reports falling revenues in the third-quarter but manages earnings of 6 cents a share, compared to a loss of 69 cents a year earlier. (more)
Gold
New York: Spot gold was up 180 cents at $US 312.40.
AT&T reports falling revenues in the third-quarter but manages earnings of 6 cents a share, compared to a loss of 69 cents a year earlier. (more)
Gold
New York: Spot gold was up 180 cents at $US 312.40.
ASX Australia
The All Ordinaries rallied sharply in the
morning but then eased during the day to close 13 points up at
2961 on average volume. 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. MACD shows a bullish divergence while Twiggs money whipsaws around the zero line after a bullish divergence.
MACD (26,12,9) and Slow Stochastic (20,3,3) are above their signal lines. MACD shows a bullish divergence while Twiggs money whipsaws around the zero line after a bullish divergence.
Novogen [NRT]
A loss-making biotech stock, NRT displays 2 troughs over the last year, the latest trough being visibly higher than the first. The stock has now completed an ascending triangle with relative strength (price ratio: xao) rising steeply.
A loss-making biotech stock, NRT displays 2 troughs over the last year, the latest trough being visibly higher than the first. The stock has now completed an ascending triangle with relative strength (price ratio: xao) rising steeply.
MACD has respected the zero line, a bullish
signal. Twiggs money flow is rising.
The equivolume chart shows strong support at
2.00 to 2.05. Notice how price did not close above the 2.00 round
number until the breakout at [6]. The first opportunity to
accumulate was at [5] when price rallies after a weak correction
on low volume and of limited duration. The breakout day [6]
reveals buyers interest, with substantial volume required to
break through resistance. [7] signals the likelihood of another
correction, with a weak close. By [8] the correction shows
reassuring signs, with much thinner volume. A second opportunity
to accumulate will present itself if price rallies in the next
few days, without breaking the 2.00 support level.
The stop-loss after the first entry should be positioned below the low at [5]. After day [7] consider adjusting the stop-loss up to just below 2.00. The reasons for this are twofold: (1) 2.00 is at the bottom of the 2.00 to 2.05 support band; and (2) 2.00 represents a 2/3 retracement of the last up-swing (from [5] to [7] ) - anything more than 2/3 retracement would signal weakness.
The stop-loss after the first entry should be positioned below the low at [5]. After day [7] consider adjusting the stop-loss up to just below 2.00. The reasons for this are twofold: (1) 2.00 is at the bottom of the 2.00 to 2.05 support band; and (2) 2.00 represents a 2/3 retracement of the last up-swing (from [5] to [7] ) - anything more than 2/3 retracement would signal weakness.
A break below 2.00 would be bearish.
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:
Recognizing when the market has hit a top or bottomed out is 50% of the whole complicated ball game.
It is also the key investing skill that all too many professional and amateur investors seem to lack.
- William J O'Neil, How to Make Money in Stocks.
Recognizing when the market has hit a top or bottomed out is 50% of the whole complicated ball game.
It is also the key investing skill that all too many professional and amateur investors seem to lack.
- William J O'Neil, How to Make Money in Stocks.
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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.