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Trading Diary
May 2, 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 to test resistance at the upper border of the bullish ascending triangle, closing up 1.5% at 8582 on higher 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.
The primary trend is down; a rise above 9076 will signal a reversal.

The S&P 500 gained 14 points to close at 930.
The intermediate up-trend continues.
The primary trend is down; a rise above 954 will signal a reversal.

The Nasdaq Composite rallied more than 2% to close at 1502.
The intermediate trend is up; overhead resistance is at 1521.
The primary trend is up.

The Chartcraft NYSE Bullish % Indicator continues to climb after a Bull Correction buy signal, reaching 53.32% (May 1). 

Market Strategy
Short-term: Long if the S&P 500 remains above 924; short if the intermediate trend reverses down (or falls below 862).
Intermediate: Long if 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.


Unemployment reaches 6%
Rising unemployment and a drop in average working hours reflect slowing business activity. The market shrugged this off, believing in a post-Iraq rebound in consumer spending. (more)




Gold
New York (15.30): Spot gold ended the week up 2.3% at $US 340.70.



ASX Australia
The All Ordinaries broke below the intermediate trendline, down 25 points at 2941. Lower volume signals a lack of commitment by sellers.
The intermediate up-trend continues; a break below 2931 will be bearish.
The primary trend is down, although the trendline has been broken; a rise above 3062 will signal a reversal.

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





Market Strategy
Short-term: Long if the index rises above 2966; short if the intermediate trend reverses down (or XAO falls below 2931).
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.


Sector Analysis
Changes are highlighted in bold.
  • Energy [XEJ] - stage 4 (RS is level)
  • Materials [XMJ] - stage 3 (RS is falling)
  • Industrials [XNJ] - stage 4 (RS is falling)
  • Consumer Discretionary [XDJ] - stage 1 (RS is level)
  • Consumer Staples [XSJ] - stage 1 (RS is rising)
  • 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)
On the 6-month Sector Comparison Chart:


Utilities is the only sector trending upwards;

Property Trusts are level;

Materials is weakening;

Energy,

Financials (excl. Property),

Consumer Staples and

Consumer Discretionary show signs of recovery;

Industrials,

Health Care and

Telecom are bottoming; 
while

IT remains weak.





Sectors: Relative Strength
A stock screen of the ASX 200 using % Price Move (1 month: +5%) returned a lower 80 stocks (compared to 131 on April 11, 2003; and 8 on March 14, 2003).
  • Gold (4)
  • Diversified Financial (4)
  • REITs (5)





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

Colin Twiggs


If you're ridin' ahead of the herd, take a look back every now and then to make sure it's still there.

- 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.