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Trading Diary
October 28, 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 0.9% down at 8368 on higher volume. The market is moving sideways, signaling uncertainty. Contracting volume on up-days and expanding volume on down-days is a bearish sign. A primary trend reversal will be signaled if the index rises above 9130.

The Nasdaq Composite Index lost 16 points to close at 1315. The primary trend will reverse if there is a break above 1426.

The S&P 500 eased 7 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 36% (October 25).



US Dollar falls against Euro and Yen
Concerns that the US recovery is faltering may convince the Fed to lower interest rates. (more)



Gold
New York: Spot gold is up 220 cents at $US 315.30. The gold chart has been forming a bullish ascending triangle over the last 6 months.



ASX Australia
The All Ordinaries gained 23 points to close at 2990 on low volume. The index is still moving sideways, signaling uncertainty. A rise above 3150 will signal a primary trend reversal.
The Slow Stochastic (20,3,3) has crossed to below its signal line. MACD is above, while Twiggs money whipsaws around the zero line.





News Corporation [NCP]
 After a stage 4 down-trend NCP has formed 2 equal bottoms in the past 6 months. Relative strength (price ratio: xao) has signaled a trend change with a higher trough and break above the last peak.
NCP appears close to completing a double bottom reversal pattern, with price just below resistance at 11.00. Twiggs money flow has broken the downward trendline after a bullish divergence and now signals accumulation. MACD also shows a bullish divergence.





The equivolume chart shows strong volume on the rally before [3] and a bullish congestion pattern below the resistance line, at [3]. A break above 10.92, the high at [2], will be bullish, but a rise above 11.00 will be more convincing, especially if accompanied by increased volume. 





The targeted move for a breakout is 13.34 (10.92 + 10.92 - 8.50).



Market strategy

Short-term: Avoid new entries. The Slow Stochastic and MACD are above their respective signal lines.
Medium-term: Avoid new entries. 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:

 Action without thought is like shooting without aim

  - Old proverb.






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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.