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Trading Diary
February 13, 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 rallied in the afternoon to erase the morning's losses, closing almost unchanged at 7749 on higher volume. The index is likely to test the 7500 support level.
The primary trend is down.

The Nasdaq Composite lost 1 point to close at 1277. 
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 lost 1 point to close at 817.
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 at 44% (February 12).
Retail sales fall
January retail sales fell 0.9%, according to the US Commerce Department, after a 2% rise in December. (more)



Gold
New York (16.30): Spot gold had gained 350 cents to $US 356.10.



ASX Australia
The All Ordinaries brushed aside the 2850 support level to close down 46 points at 2821 on strong volume.
The short-term "bounce" failed to materialize and we will see over the next few days if the lower end of the 2850 to 2779 support band is able to hold.

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





A long-term perspective shows that the All Ords has broken a key support level at [C], completing a double top from [A] and [B]. There are two possible outcomes: (a) the index respects the 2850 resistance level over the next few weeks and plunges sharply lower (the calculated target for the double top is +/- 2300); or (b) the index retreats back above the support level.





McGuigan Simeon Wines [MGW]
Last covered on October 9, 2002.
MGW has maintained a stage 2 up-trend for the past 7 years. In 1998 at [A] the slow up-trend accelerated into a fast trend, until the correction from [B] to [C]. At [C] MGW reversed into another fast up-trend, culminating in a top at [D]. The top from [D] to [H] has formed a bullish ascending triangle below the resistance level at 5.00.

Relative Strength (price ratio:xao) is still rising, while MACD is neutral, whipsawing around the zero line.



The daily chart shows the ascending triangle in more detail. MGW initially oscillated between 5.00 and 4.00 but this has now narrowed to above the 4.60/4.70 support level.

Twiggs Money Flow signals strong accumulation.





The equivolume chart reflects the narrow congestion pattern between 5.00 and 4.60/4.70.

A breakout above 5.00 will be a strong bull signal, while a break below 4.70 would be bearish. There are a number of false breaks below 4.70, at [6], [8], [10] and [12], and one above 5.00, at [H]. It would be prudent to wait for price to respect the new support level (after an upward breakout) or the new resistance level (after a bearish breakout) before entering.






Market strategy
For further guidance see Understanding the Trading Diary.

Short-term: Short. 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


It is unwise to be too sure of one's own wisdom. 
It is healthy to be reminded that the strongest might weaken
and the wisest might err.

- Mahatma Gandhi







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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.