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Trading Diary
May 21, 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 made a weak opening but then rallied to
test resistance at 8523, forming an inside day on strong volume.
The index closed up 0.3% at 8516.
The intermediate upward trendline has been broken. A fall below 8394 will signal a reversal.
The primary trend is down; a rise above 9076 will signal a reversal.
The intermediate upward trendline has been broken. A fall below 8394 will signal a reversal.
The primary trend is down; a rise above 9076 will signal a reversal.
The S&P 500 also formed an inside day,
closing 4 points higher at 923.
The intermediate upward trend is weakening. A fall below 912 will signal reversal.
The primary trend is down; a rise above 954 will signal an up-trend.
The intermediate upward trend is weakening. A fall below 912 will signal reversal.
The primary trend is down; a rise above 954 will signal an up-trend.
The Nasdaq Composite closed 2 points down at
1489.
The intermediate trend is weakening. A fall below 1478 will signal a down-trend.
The index is in a primary up-trend.
The intermediate trend is weakening. A fall below 1478 will signal a down-trend.
The index is in a primary up-trend.
The Chartcraft NYSE
Bullish % Indicator retreated slightly to 61.17% on May 20,
following a Bull
Correction buy signal on April 3.
Market Strategy
Short-term: Short if the S&P intermediate
trend falls below 912.
Intermediate: Long if the Dow/S&P primary
trend turns upwards; go 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.
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.
Alan Greenspan
The Fed chairman says that production and employment are weak but stronger financial markets and productivity gains point the way to recovery. (more)
The Fed chairman says that production and employment are weak but stronger financial markets and productivity gains point the way to recovery. (more)
Gold
New York (18.57): Spot gold has reached $US 371.10.
On the five-year chart gold has respected the long-term upward trendline.
New York (18.57): Spot gold has reached $US 371.10.
On the five-year chart gold has respected the long-term upward trendline.
ASX Australia
The All Ordinaries again tested support, reaching 2908 at the
opening before rallying to close at 2915.
The intermediate trend has reversed downwards but on a weak signal. A false break is often followed by a rally; so traders need to stay alert.
The primary trend is down. A rise above 3062 will signal an up-trend.
MACD (26,12,9) is below its signal line; Slow Stochastic (20,3,3) is below; Twiggs Money Flow (21) is rising.
The intermediate trend has reversed downwards but on a weak signal. A false break is often followed by a rally; so traders need to stay alert.
The primary trend is down. A rise above 3062 will signal an up-trend.
MACD (26,12,9) is below its signal line; Slow Stochastic (20,3,3) is below; Twiggs Money Flow (21) is rising.
Market Strategy
Short-term: Long if the All Ords rises above 2918; short if the
XAO falls below 2908.
Intermediate: Long if the primary trend reverses up (XAO above 3062); short if the XAO is below 2908.
Long-term: There is already a bull signal: the March 18 follow through. Wait for confirmation from a primary trend reversal.
Intermediate: Long if the primary trend reverses up (XAO above 3062); short if the XAO is below 2908.
Long-term: There is already a bull signal: the March 18 follow through. Wait for confirmation from a primary trend reversal.
SIMS Metal [SMS]
I projected a long-term target of 9.75 on January 2, 2003 on the Chart Forum .
The stock has made healthy gains since then, but now shows signs of weakness. Price made a High at [a] after several weeks of strong volume; and the subsequent correction was accompanied by a dry-up of volume. The next rally to [b] was on lower volume and failed to match the previous High. Another high at [c], on even lower volume, formed a small double top.
A lower double top (after a new high) in an up-trend is a bear signal.
I projected a long-term target of 9.75 on January 2, 2003 on the Chart Forum .
The stock has made healthy gains since then, but now shows signs of weakness. Price made a High at [a] after several weeks of strong volume; and the subsequent correction was accompanied by a dry-up of volume. The next rally to [b] was on lower volume and failed to match the previous High. Another high at [c], on even lower volume, formed a small double top.
A lower double top (after a new high) in an up-trend is a bear signal.
Relative Strength (price ratio: xao) appears to be turning
downwards and MACD is bearish but Twiggs Money Flow (21-day)
still signals accumulation.
On the daily chart you can see the lower double top completed by a break below the intervening trough at [d].
On the daily chart you can see the lower double top completed by a break below the intervening trough at [d].
SMS is likely to re-test support at 8.00 and possibly return to
the long-term trendline.
Intermediate traders should not trade against the primary trend, but look to take profits after rallies off the primary trend line (primary trend movements) and re-enter after corrections. Short-term traders are able to place tight stops, above the most recent high at 8.65, and trade the secondary correction back to the long-term trendline.
A break above the high of [c] would be a bull signal.
Intermediate traders should not trade against the primary trend, but look to take profits after rallies off the primary trend line (primary trend movements) and re-enter after corrections. Short-term traders are able to place tight stops, above the most recent high at 8.65, and trade the secondary correction back to the long-term trendline.
A break above the high of [c] would be a bull signal.
New! Understanding
the Trading Diary has been expanded to offer further
assistance to readers.
Colin Twiggs
Absorb what is useful,
reject what is useless,
and add what is specifically your own.
- Bruce Lee
(not exactly intended for traders, but useful advice
nonetheless)
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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.