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Trading Diary
May 1, 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 tested support at the lower border of the bullish ascending triangle before rallying to close 0.3% down at 8454 on lower volume.
The intermediate trend is down. A rise above 8587 will signal the start of an up-trend; a fall below 8109 will signal continuation.
March 17th's follow through remains valid (as long as the index holds above 7763).
The primary trend is down; a rise above 9076 will signal a reversal.

The S&P 500 also fell in early trading but recovered to close unchanged at 916.
The intermediate up-trend continues.
The primary trend is down; a rise above 954 will signal a reversal.

The Nasdaq Composite gained 8 points to close at 1472.
The intermediate trend is up; overhead resistance is at 1521.
The primary trend is up.

The Chartcraft NYSE Bullish % Indicator is rising after a Bull Correction buy signal; up more than 1% at 52.93% (April 30). 

Market Strategy
Short-term: Long if the S&P 500 is above 920; short if the intermediate trend reverses down (or falls below 862).
Intermediate: Long only when the Dow/S&P primary trend reverses upwards; short if the intermediate trend (S&P) reverses down.
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.


Jobless claims
High unemployment levels continue to cast a shadow over the market. (more)




Gold
New York (19.45): Spot gold continues to climb, reaching $US 341.50.



ASX Australia
The All Ordinaries failed to complete the doji star reversal, holding above 2948 and leaving a longish shadow. The index closed down 5 points at 2966 on average volume.
The intermediate up-trend continues.
The primary trend is down, although the trendline has been broken; a rise above 3062 will signal a reversal.

MACD (26,12,9) is above its signal line; Slow Stochastic (20,3,3) has crossed to above; Twiggs Money Flow (21) has crossed below its upward trendline but continues to signal accumulation.





Market Strategy
Short-term: Long if the index is above 2972; short if the intermediate trend reverses down (or XAO falls below 2910).
Intermediate: Long if the primary trend reverses up (XAO above 3062); short if the intermediate trend reverses down.
Long-term: There is already a bull signal: the March 18 follow through. Wait for confirmation from a primary trend reversal.


Caltex Australia [CTX]
Last covered on April 3, 2003.
Caltex is in a primary up-trend as shown by the trendline [A] to [E]. The stock makes fast intermediate rallies off the primary trendline:
  • [A] to [B];
  • [C] to [D]; and 
  • [E] to [F];
before correcting back, either with a sharp downward correction or a sideways consolidation.
Volume surges in the second half of the rally but fades at the peaks, at [B], [D] and [F].

Twiggs Money Flow (100-day) signals strong accumulation. 





Traders who trade the intermediate trend will use a momentum oscillator to time entry and exit points. This may be prone to false signals, as shown by the MACD below.

MACD and Twiggs Money Flow (21) are bullish.
Relative Strength (price ratio: xao) is rising.





Alternatively, stops can be moved up to below the most recent short-term low: at [5] and [8]. This may also give false signals and traders determined to avoid being shaken out before the up-trend is over, may use the intermediate trendline or delay moving their stops up to [8] until price moves above the high of [7].





When price moves above the upper trend channel, increasing the risk of a reversal, it may be advisable to set tighter stops.





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

Colin Twiggs


The most solid advice for a writer is this, I think:
 Try to learn to breathe deeply, really to taste food when you eat,
 and when you sleep really to sleep.
 Try as much as possible to be wholly alive, with all your might,
 and when you laugh, laugh like hell
 and when you get angry, get good and angry.

- William Saroyan.







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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.