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Trading Diary
May 9, 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 gained 1.3% to close at 8604 on higher volume.
The intermediate trend is edging upwards.
The primary trend is down; a rise above 9076 will signal a reversal.

The S&P 500 rallied 13 points to close at 933, testing resistance at 935.
The slow intermediate up-trend continues.
The primary trend is down; a rise above 954 will signal a reversal.

The Nasdaq Composite gained 2% to close at 1520, testing resistance at 1521.
The intermediate trend is up.
The primary trend is up.

The Chartcraft NYSE Bullish % Indicator closed almost unchanged at 57.00% on May 8, following a Bull Correction buy signal on April 3. 

Market Strategy
Short-term: Long if the S&P 500 is above 929; short if the S&P intermediate trend reverses down (or falls below 897).
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 April 3 NYSE Bullish % signal. Wait for confirmation from a Dow/S&P primary trend reversal.


Is the US headed for a liquidity trap?
Debt reduction by uncertain consumers may lead to a liquidity trap similar to Japan. (more)




Gold
New York (16.44): Spot gold closed at $US 348.30.
On the five-year chart gold has respected the long-term upward trendline.



ASX Australia
The All Ordinaries has penetrated the long-term trendline on the weekly chart but has since corrected downwards. The fall in weekly volume over the past month is not as significant as it appears on the chart - because of the recent holidays.





On the daily chart XAO has formed a hammer reversal, opening and closing above the support level, at 2928 on lower volume. Expect the index to rally after the gains in US markets.
The intermediate up-trend is weakening; a close below Monday's low of 2926 will signal a reversal.
The primary trend is down. A rise above 3062 will signal reversal to an up-trend.

MACD (26,12,9) and Slow Stochastic (20,3,3) are below their signal lines and the Stochastic has fallen below 80%, a further bear signal; Twiggs Money Flow (21) is below its trendline but still signals accumulation.





Market Strategy
Short-term: Long if the XAO rises above 2928; short if the XAO falls below 2919.
Intermediate: Long if the primary trend reverses up (XAO above 3062); short if the XAO falls below 2926.
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 1 (RS is level)
  • Materials [XMJ] - stage 3 (RS is falling)
  • Industrials [XNJ] - stage 4 (RS is rising)
  • 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 falling)
  • Information Technology [XIJ] - stage 4 (RS is falling)
  • Telecom Services [XTJ] - stage 4 (RS is falling)
  • Utilities [XUJ] - stage 2 (RS is rising)


Sectors: Relative Strength
A stock screen of the ASX 200 using % Price Move (1 month: +5%) returned a lower 61 stocks (compared to 131 on April 11, 2003; and 8 on March 14, 2003).
  • Diversified Financial (4)
  • Health Care Facilities (4)
  • Diversified Commercial (3)
  • Data Processing (3)
  • Diversified Metals& Mining (3)





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

Colin Twiggs


The wise man bridges the gap by laying out the path
 by means of which he can get from where he is
 to where he wants to go.

- J.P.Morgan.



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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.