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Trading Diary
April 17, 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 on lower volume, signaling uncertainty. The index closed up 1.0% at 8337 and is still within the bullish ascending triangle from the last 4 weeks.
The intermediate trend is down. A rise above 8552 will signal reversal to an up-trend; a fall below 8109 will signal continuation.
Monday 17th's follow through remains valid (as long as the index holds above 7763).
The primary trend is down.

The Nasdaq Composite surprised with a strong rally, rising 2.2% to close at 1425.
The intermediate trend is down. A rise above 1430 will signal a reversal; a fall below 1351 will signal continuation.
The primary trend is up.

The S&P 500 formed an inside day, signaling uncertainty, and closing up 14 points at 893.
The intermediate trend is down; a fall below 862 will signal continuation, a rise above 904 will signal reversal.
The primary trend is down.

The Chartcraft NYSE Bullish % Indicator is at 46% (April 16), after completing a Bull Correction buy signal. 

Market Strategy
Short-term: Long if the Dow rises above 8552; short if the Dow falls below 8109.
Intermediate: Long if the Dow/S&P primary trend reverses upwards; short if the Dow falls below 8109.
Long-term: There are already two bull signals: the March 17 follow through day and the NYSE Bullish % signal. Wait for confirmation from a Dow/S&P primary trend reversal.


What the weak dollar signals
A bearish divergence between the dollar and stock market indices over the past week raises some concerns.  (more)




Gold
New York (18.00): Spot gold closed at $US 327.00.



ASX Australia
The All Ordinaries failed to break above resistance at 2947 and retreated 27 points to close at 2917. The light volume may be due to the coming long weekend. The equal highs just below the downward primary trendline are a bearish signal. With hindsight, yesterday's short-term strategy should have been to go short if the index fell below 2944 (not 2888).
The intermediate up-trend continues. The trendline has been broken; so we should be alert for signs of a reversal. 
The primary trend is down.

Slow Stochastic (20,3,3) is above its signal line; MACD (26,12,9) is above its signal line; Twiggs Money Flow (21) signals accumulation.





Market Strategy
Short-term: Long if the index rises above 2947 (keep stops tight in case of a false break); go short if the index falls below 2888 (to late to get in at 2944).
Intermediate: Long if the primary trend reverses up (XAO above 3062); short if the intermediate trend reverses down (below 2888).
Long-term: There is already a bull signal: the March 18 follow through day. Wait for confirmation from the primary trend reversal.


Sector Analysis
Changes are highlighted in bold.
  • Energy [XEJ] - stage 4 (RS is level)
  • Materials [XMJ] - stage 1 (RS is rising)
  • Industrials [XNJ] - stage 4 (RS is falling)
  • Consumer Discretionary [XDJ] - stage 1 (RS is level)
  • Consumer Staples [XSJ] - stage 2 (RS is rising). This is a v-bottom and may revert to stage 1.
  • Health Care [XHJ] - stage 4 (RS is falling)
  • Property Trusts [XPJ] - stage 3 (RS is rising)
  • Financial excl. Property Trusts [XXJ] - stage 1 (RS is rising)
  • Information Technology [XIJ] - stage 4 (RS is falling)
  • Telecom Services [XTJ] - stage 4 (RS is falling)
  • Utilities [XUJ] - stage 2 (RS is rising)
Stocks in the Consumer Staples sector are showing signs of recovery: BPC, CML, FOA, WOW.





Sectors: Relative Strength
A stock screen of the ASX 200 using % Price Move (1 month: +5%) returned a more moderate 87 stocks (compared to 131 on April 11, 2003; and 8 on March 14, 2003). The Financial sector is most prominent:
  • Banks (5)
  • REITs (7)
  • Diversified Financial (6)





New! Understanding the Trading Diary has been expanded to offer further assistance to readers.
Colin Twiggs


Always drink upstream from the herd.

- Will Rogers.







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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.