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Trading Diary
January 28, 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, closing up 1.2% at 8089 on above-average volume. The index appears headed for a re-test of the 7500 support level.
The primary trend is down.

The Nasdaq Composite also formed an inside day, closing at 1342. The next major support level is at 1200.
The primary trend is up.

The S&P 500 closed up 11 points at 858; another inside day. The index appears headed for a re-test of support at 768.

The Chartcraft NYSE Bullish % Indicator has switched to a bull correction signal at 48% (January 27).
Consumer confidence falls
The Conference Board consumer confidence index falls to 79, the lowest level in 9 years. (more)



Gold
New York (15:30): Spot gold is holding at $US 369.30.



ASX Australia
Increasing war rhetoric drove the All Ordinaries down more than 50 points to close at 2941 on average volume.
Over the last 3 months the index has been forming a base between 2915 and 3050. The support level is likely to be severely tested over the next few days.
Slow Stochastic (20,3,3) and MACD (26,12,9) are below their signal lines; Twiggs Money Flow signals distribution.





Novogen [NRT]
Last covered on October 22, 2002.
After a stage 4 down-trend to [A] NRT formed a higher low at [D] before completing a double bottom at [H] with a break above the high of [C]. The double bottom is normally a strong bullish signal but price has reversed back below the support level after spiking up to 4.00 at [H].

Note that spikes at [B] and [H] were both unsustainable and pulled back about 25% from their highs. 

 Relative Strength (price ratio: xao) and MACD are both bearish, while Twiggs Money Flow signals distribution after breaking below its trendline.




The daily chart shows a pennant forming at [H]. Normally this is a bullish continuation pattern but here we have a break below the pattern at [19]. Many traders will have already been stopped out and the outcome may be a bull trap.





The breakout at [19] is on low volume. It would be prudent to wait until NRT has respected the lower trend line, to ensure that this is not another false break, before taking any short positions.



Market strategy
For further guidance see Understanding the Trading Diary.

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

Colin Twiggs


The greater the laws and enactments, the more thieves and robbers there will be.

- Lao Tse (c. 600 B.C. - 530 B.C.)


A state is better governed which has but few laws, and those laws strictly observed.

- Rene Descartes (1596-1650)






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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.