Full Member Version

We are making good progress
and will announce a start date shortly.
 


Trading Diary
February 27, 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 another inside day, closing up 1% at 7884 on above-average volume. The next support level is 7500.
The primary trend is down.

The Nasdaq Composite formed another inside day, up 1.5% at 1323. The next support level is at 1200.
The primary trend is up.

The S&P 500 gained 10 points to close at 837. The next support level is at 768.
The primary trend is down.

The Chartcraft NYSE Bullish % Indicator is at 40% (February 26).


Durable goods up
The US Commerce Department measured a 3.3% rise in durable goods orders for January. (more)

Iraq
The UN Security Council remains deadlocked over the resolution proposed by the United States, Britain and Spain, declaring that Iraq "has failed to take the final opportunity" to disarm. (more)




Gold
New York (17.00): Spot gold dropped sharply, losing 800 cents to $US 345.20.



ASX Australia
The All Ordinaries continues to signal trend strength with higher volume on declines [a] to [e]. The index closed below the 2779 support level, at 2775, and Friday should tell us whether this is a false break or whether the index is likely to trend lower.

Slow Stochastic (20,3,3) crossed back below its signal line; MACD (26,12,9) is below. Twiggs Money Flow still shows a small bullish divergence.





Materials
 The Materials Sector under GICS covers a vast array of industries. Traders should recognize that many of these industries have low correlation to each other and can be treated as separate sectors for trading purposes:
  • Chemicals
  • Containers & Packaging
  • Construction Materials
  • Metals & Mining
  • Gold & Precious Metals
  • Forestry & Paper Products
Onesteel
 Last covered on August 20, 2002.
Two of the three steel producers in the Materials sector are still showing strong performance (OST and BSL).





Onesteel has formed an upward trend channel after breaking out of its base in January 2002. The trend started strongly, with the secondary correction respecting the 1.10 support level by a healthy margin. Since then the up-trend has slowed, with OST testing the next support level at [4] and [5]. In February the stock broke below the support level from [3], signaling further slowing.

The question is: will OST stay within the trend channel, or will it break downwards to re-test support at 1.50?





Relative Strength (price ratio: xao) is still healthy, but Twiggs Money Flow and MACD both show bearish divergences.





With the state of the overall market, bearish divergences and strong volume on the correction in February, I will be cautious about trading the trend channel. 
If downward volume dries up, this will be an encouraging sign.


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


Twenty years from now you will be more disappointed by the things you didn't do
than by the ones you did.

- Samuel Clemmens







Back Issues
Click here to access the Trading Diary Archives.






Back Issues
Access the Trading Diary Archives.


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.