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Trading Diary
December 18, 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 is trending down, closing 1% lower at 8447 on average volume. The down-trend may still re-test the 7500 and 7200 support levels.
The primary trend is down and will only reverse up if the average rises above 9130.

The Nasdaq Composite gapped down at the opening, falling 2.2% to 1361.
The primary trend is up.

The S&P 500 lost 11 points to close at 891.
The primary trend is down.

The Chartcraft NYSE Bullish % Indicator appears stuck at 50% (December 16).
Iraq fears fuel gold price
President Bush expresses concerns about omissions in the Iraqi arms declaration.



Gold
New York: Spot gold is up more than 700 cents at $US 344.10.



ASX Australia
The All Ordinaries formed a doji star reversal signal, confirmed if tomorrow's close is below 2940. The index closed unchanged at 2957 on higher volume. The market is ranging between 2915 and 3050, building a broad base in the process, but now appears intent on re-testing the 2915 support level.
The Slow Stochastic (20,3,3) has crossed to above its signal line; MACD (26,12,9) is below. Twiggs money flow is just above zero.





Commonwealth Bank [CBA]
Last covered on November 8.
After a new high at [A] and a false break a year later at [B], CBA started to trend downwards, breaking through support at 32.00, 30.00 and 28.00. A symmetrical triangle has now formed at [C], below resistance at 28.00.

Relative strength (price ratio: xao) and MACD are bearish. Twiggs Money Flow continues to signal distribution.





A tight congestion pattern such as a small triangle (or large pennant) is normally a continuation signal in a trend. A further bearish sign is that price has respected resistance at 28.00, the low from [1]. Volume is drying up; signaling that a breakout is imminent.





A break below 26.86, the low at [6], will be a strong bear signal, while a break above resistance at 28.00 would signal trend weakness.

The next major support level is at 25.00.



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


Fill your bowl to the brim
and it will spill.
Keep sharpening your knife
and it will blunt.
Chase after money and security
and your heart will never unclench.
Seek people's approval
and you will be their prisoner.

Do your work, then step back.
The only path to serenity.

- Lao Tse






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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.