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Trading Diary
February 6, 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 is at the lower end of the congestion pattern, down 0.7% at 7929 on average volume. 
This is likely to resolve as a continuation pattern and the index appears headed for a re-test of support at 7500.
The primary trend is down.

The Nasdaq Composite closed unchanged at 1301. The next major support level is at 1200.
The primary trend is up (the last low was 1108, the last high 1521).

The S&P 500 has broken below its congestion pattern, closing down 5 points at 838.
The index has formed a base between 768 and 964 but appears headed for a re-test of the support level.

The Chartcraft NYSE Bullish % Indicator is on a bull correction signal at 46% (February 5).
Compare what companies tell investors to what they tell the IRS
A divergence started in 1999 between the declared earnings of S&P 500 stocks and their taxable income. (more)



Gold
New York (18.30): Spot gold has stabilized at $US 368.80.



ASX Australia
The All Ordinaries closed down 30 points at 2868. The large volume spike [13] signals trend strength and increases the likelihood of a break below the 2850 support level.

Slow Stochastic (20,3,3) is below its signal line; MACD (26,12,9) is below; Twiggs Money Flow signals distribution.





Tap Oil [TAP]
TAP formed a stage 3 top in the shape of a descending triangle, [A] to [F], after a stage 2 up-trend. After one or two false breaks, the stock has breached its' long-term trendline and completed the triangle with a break below 1.30.

Twiggs Money Flow signals distribution and MACD has completed a strong bear signal with a peak below zero at [F].



The daily chart shows a small congestion pattern forming below the new resistance level at [G].

Relative Strength (price ratio: xao) is also declining.





The equivolume chart shows strong buying support at [F], [6] and [8]: the square bars at the troughs indicate that sellers met strong buying support.

Buying seems to have dried up and TAP has fallen below the base of the triangle at [G]. Volume is light and we now see congestion at [12], just below the 1.30 resistance level. A failure to break above resistance in the next few days will be a strong bear signal as will a break below the low of [12], especially if accompanied by strong volume.






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 dogmas of the quiet past, are inadequate to the stormy present.
 The occasion is piled high with difficulty, and we must rise - with the occasion.
As our case is new, so we must think anew, and act anew....

- Abraham Lincoln: Second Annual Message to Congress (1862)







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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.