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Trading Diary
December 02, 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 outside day, closing down 0.3% at 8862 on higher volume.

The Nasdaq Composite index also formed an outside day, closing up 0.4% at 1484.

The S&P 500 formed an outside day, closing almost unchanged at 934.

The Chartcraft NYSE Bullish % Indicator signals a bull alert at 50% (November 29).


Manufacturing Activity Slow
The Institute for Supply Management index of business activity came in at 49.2 for November. A rise above 50 would signify manufacturing growth.



Gold
New York: Spot gold declined 120 cents to $US 317.50.



ASX Australia
The All Ordinaries continues to rally, closing up 23 points at 3048. Volume is disturbingly weak and the rally will not carry much further without a fresh influx of buyers.
The primary trend will reverse if the index rises above 3150.
The Slow Stochastic (20,3,3) is above its signal line; MACD (26,12,9) is above; Twiggs money flow signals accumulation.





Woolworths [WOW]: Explanation
Last covered on November 29.
I did not make myself very clear: If price reverses downwards after [4], below the previous low at 11.70, this will be a strong bear signal.




CSL Limited [CSL]
CSL has been in a stage 4 down-trend for the last 9 months before breaking the trendline at [2] and rallying sharply to above the last high [1] in the down-trend. Relative strength (price ratio: xao) is rising. 

The rally to [3] appears to be a sharp "V" reversal. These are unreliable patterns, often resolving as counter-trends which fade to re-test the previous lows, and are unreliable to trade (in medium/long-term).





In the short time frame the equivolume chart shows gaps before [3] and [4], both days experiencing heavy volume. Price then forms an upward flag from [4] to [7] before breaking out at [8]. 

The breakout from the flag at [8] has a target of 24.50 (21.75 + 21.00 - 18.25). Entry has to be taken close to the breakout point in order to keep the stop-loss (below [7]) within reasonable limits.






Market strategy
For further guidance see Understanding the Trading Diary.

Short-term: Long. The Slow Stochastic and MACD are above their respective signal lines.
Medium-term: Long.
Long-term: Wait for confirmation of the bottom reversal signal.

Colin Twiggs


Good people are good
because they come to wisdom through failure.


- William Saroyan.






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