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Trading Diary
December 06, 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 slightly up at 8645 on average volume. If the next rally fails to take out the high from last Monday, we may face a re-test of the 7500 and 7200 support levels; equal highs (August 22 and December 2) in a down-trend are a bearish signal.
The primary trend is still down. It will reverse up if the average rises above 9130.

The Nasdaq Composite formed a closing price reversal, gaining 0.8% to close at 1422. 
The primary trend is up (the index is above 1426).

The S&P 500 closed up 6 points at 912.
The primary trend will complete a double bottom reversal if it rises above 965.

The Chartcraft NYSE Bullish % Indicator signals a bull alert at 50% (December 04).
Unemployment rises
The jobless rate reached 6% in November after a slight decline to 5.7% in October. (more)



Gold
New York: Spot gold continues to rise, up 150 cents at $US 325.90.



ASX Australia
The All Ordinaries lost 13 points to close at 2991 with reassuringly lower volume. The creeping up-trend continues.
The primary trend will reverse (up) if the index rises above 3150.
The Slow Stochastic (20,3,3) is below its signal line; MACD (26,12,9) is above; Twiggs money flow signals accumulation.





Foodland [FOA]
 Last covered on October 11.
FOA has formed a stage 3 top after a strong stage 2 up-trend. Price has formed two equal highs in June and September and is now testing support at the July low of 17.00
Relative strength (price ratio: xao) is falling, MACD shows a bearish divergence and Twiggs money flow signals distribution.





FOA respected the support line at [6] but the rally to [7] showed weak volume. The sharp drop at [8] was accompanied by strong volume but the long shadow on day [8] signaled buying support. However, volume is drying up on the latest rally, increasing the likelihood of a successful penetration of the 17.00 support level.





Sector Analysis
Changes are highlighted in bold.
  • Energy [XEJ] - stage 4 (RS is falling)
  • Materials [XMJ] - stage 2 (RS is rising)
  • Industrials [XNJ] - stage 4 (RS is falling)
  • Consumer Discretionary [XDJ] - stage 2 (RS is rising)
  • Consumer Staples [XSJ] - stage 4 (RS is falling)
  • Health Care [XHJ] - stage 1 (RS is level)
  • Property Trusts [XPJ] - stage 3 (RS is level)
  • Financial excl. Property Trusts [XXJ] - stage 4 (RS is falling)
  • Information Technology [XIJ] - stage 4 (RS is falling)
  • Telecom Services [XTJ] - stage 4 (RS is falling)
  • Utilities [XUJ] - stage 2 (RS is level)

Sectors: Relative Strength
A stock screen of the ASX 200 using % Price Move (1 month: +5%) returned 24 stocks (compared to 99, August 23rd and 10 on October 4th). Notable sectors are:
  • Pharmaceuticals



Market strategy
For further guidance see Understanding the Trading Diary.

Short-term: Avoid new entries. The Slow Stochastic and MACD are on opposite sides of their respective signal lines.
Medium-term: Avoid new entries.
Long-term: Wait for confirmation of the bottom reversal signal.

Colin Twiggs


Always bear in mind that your own resolution to succeed
 is more important than any other one thing.

- Abraham Lincoln






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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.