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We will keep you informed of progress.
Trading Diary
January 16, 2003
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 inside day, down 0.3% at 8697.
The short-term trend is weak.
The average is ranging between 8161 and 9076, at the top end of the base that has been forming since July 2002; a bullish sign.
The primary trend is down and will only reverse up if the average rises above 9076 (the high from December 02).
The Nasdaq Composite lost 1.0% to close at 1423.
The primary trend is up.
The S&P 500 lost 4 points to close at 914. The short-term trend shows weakness.
The index ranges between 965 and 768, establishing a base. It has recently held above 867; a bullish sign.
The Chartcraft NYSE Bullish % Indicator increased to 52% (January 15).
The average is ranging between 8161 and 9076, at the top end of the base that has been forming since July 2002; a bullish sign.
The primary trend is down and will only reverse up if the average rises above 9076 (the high from December 02).
The Nasdaq Composite lost 1.0% to close at 1423.
The primary trend is up.
The S&P 500 lost 4 points to close at 914. The short-term trend shows weakness.
The index ranges between 965 and 768, establishing a base. It has recently held above 867; a bullish sign.
The Chartcraft NYSE Bullish % Indicator increased to 52% (January 15).
Iraq tension drives gold
The likelihood of another gulf war draws closer as UN weapons inspectors find empty chemical warheads.
Gold
New York: Spot gold reached a 5-year high, up 690 cents at $US 357.50
The likelihood of another gulf war draws closer as UN weapons inspectors find empty chemical warheads.
Gold
New York: Spot gold reached a 5-year high, up 690 cents at $US 357.50
ASX Australia
The All Ordinaries retreated to close at 3030, after failing to
hold above the 3050 resistance level, a bearish sign.
The index ranges between 2915 and 3050, forming a base.
Slow Stochastic (20,3,3) has crossed to below its signal line; MACD (26,12,9) is above; Twiggs money flow is falling.
The index ranges between 2915 and 3050, forming a base.
Slow Stochastic (20,3,3) has crossed to below its signal line; MACD (26,12,9) is above; Twiggs money flow is falling.
Harvey Norman [HVN]
Last covered on
August 14, 2002.
HVN formed a triple top at [A], [D] and [F] before entering a stage 4 down-trend. Note the false break at [D]; a strong bear signal.
The stock then appeared to form a base at [K] to [L], followed by a break above resistance at [M]. This proved to be a bull trap, with a break below the trendline at [N]; a very reliable bear signal if traders are able to reverse their mind-set quickly enough to catch it. We are now presented with another potential bottom: a low at [0] followed by a false break at [1] and an ascending triangle to [7].
Relative strength (price ratio: xao) is starting to rise; MACD has completed a bullish divergence but has not yet broken above the long-term trendline; Twiggs money flow signals accumulation, having completed a bullish divergence [+].
HVN formed a triple top at [A], [D] and [F] before entering a stage 4 down-trend. Note the false break at [D]; a strong bear signal.
The stock then appeared to form a base at [K] to [L], followed by a break above resistance at [M]. This proved to be a bull trap, with a break below the trendline at [N]; a very reliable bear signal if traders are able to reverse their mind-set quickly enough to catch it. We are now presented with another potential bottom: a low at [0] followed by a false break at [1] and an ascending triangle to [7].
Relative strength (price ratio: xao) is starting to rise; MACD has completed a bullish divergence but has not yet broken above the long-term trendline; Twiggs money flow signals accumulation, having completed a bullish divergence [+].
The daily chart shows a low at [0] followed by a false break at
[1], with no increase in volume until the break back above
2.40. This formed the start of an ascending triangle, completed
by a breakout at [7]. Short term traders may have entered at
[6], spurred by the low volume and short duration of the
counter-trend. The bullish triangle had some degree of volume
confirmation with volume rising on each of the rallies.
HVN is now forming a congestion pattern just above the new support line. A break above the congestion pattern, especially if accompanied by strong volume, will be a bullish signal.
HVN is now forming a congestion pattern just above the new support line. A break above the congestion pattern, especially if accompanied by strong volume, will be a bullish signal.
Stops should be kept tight as recoveries from a narrow base are
prone to failure.
Conservative traders may wait until the stock has broken above the long-term trendline, on the weekly chart or on the MACD indicator.
Conservative traders may wait until the stock has broken above the long-term trendline, on the weekly chart or on the MACD indicator.
Market strategy
For further guidance see Understanding the Trading Diary.
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
To eliminate fear we must embrace it.
- Another paradox. To conquer our fear we must not fight it but accept it.
- Another paradox. To conquer our fear we must not fight it but accept it.
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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.