Understanding the Trading Diary

A short guide is available under the Trading Diary section.




Trading Diary
November 13, 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 another inside day, with sellers struggling to move the market. The average closed at 8398 on higher volume. The primary trend will reverse (up) if the index rises above 9130.

The Nasdaq Composite Index gained 0.9%% to close at 1361. The primary trend will reverse (up) if the index breaks above 1426.

The S&P 500 closed unchanged at 882. The primary trend will complete a double bottom reversal if it rises above 965.

The Chartcraft NYSE Bullish % Indicator signals a bull alert at 40% (November 12).


Iraq concedes
Iraq agrees to the return of UN weapons inspectors but the US and Britain are skeptical. (more)

Gold
New York: Spot gold dropped sharply on the news from the UN and is down 510 cents at $US 318.80.



ASX Australia
The All Ordinaries eased to close 11 points down at 2943 on lower volume. Sellers are in control. The primary trend will reverse if the index rises above 3150.
The MACD (26,12,9) and Slow Stochastic (20,3,3) are below their signal lines, while Twiggs money flow has given a bearish signal [-], reversing below zero.







Gold
Last covered on September 11.
Several gold stocks have formed bearish patterns on the weekly charts.

AOR has formed a descending triangle. The upward break in the last two weeks appears to be a false break: Twiggs money flow signals distribution and displays a bearish peak below the zero line. Relative strength (price ratio: xao) is falling and MACD is bearish.




After a bearish MACD divergence, Lihir Gold Limited [LHG] completed a false break at [fb] followed by a double top reversal at [t-]. The stock has since formed equal lows in July and October - not a strong signal in a down-trend. Relative strength (price ratio: xao) is falling and Twiggs money flow shows a bearish divergence. A fall below 1.06 will confirm the continuation of the down-trend, while a rise above 1.37 would be bullish.





Newcrest Mining [NCM] has also formed a descending triangle. Relative strength (price ratio:xao) is falling and MACD is bearish.





Twiggs money flow signals a bearish divergence at [d-]. In the short-term, equal highs have formed at [1] and [2] followed by a breakout at [3] completing a small ascending triangle. The target is 6.82 (6.26 + 6.26 - 5.70), below the upper border of the larger descending triangle. This sort of trade should only be attempted by the most intrepid short-term traders as the long-term pattern is bearish.

A fall below 5.50 will be a strong bear signal.






Market strategy

Short-term: Short if there is a break below support at 2909: The Slow Stochastic and MACD are below 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


I know millions of things that won't work.
I've certainly learned a lot.

- Thomas A. Edison
 






Back Issues
Click here to access the Trading Diary Archives.






Back Issues
Access the Trading Diary Archives.


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.