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Trading Diary
May 23, 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 market will be closed Monday for Memorial Day.
The Dow formed an inside day, closing up 0.1% at 8601 on low volume.
The intermediate upward trendline has been broken. A rise above 8766 will signal continuation; 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 2 points up at 933.
The intermediate upward trend is weak. A fall below 912 will signal reversal; a rise above 948[b], continuation.
The primary trend is down; a rise above 954[a] will signal an up-trend.





The Nasdaq Composite gained 0.2% to close at 1510.
The intermediate trend is weak. A fall below 1478 will signal a down-trend; a rise above 1552 will signal continuation.
The index is in a primary up-trend.

The Chartcraft NYSE Bullish % Indicator rose to 61.96% on May 22, following a Bull Correction buy signal on April 3. 

Market Strategy
Short-term: Long if the S&P 500 rises above 954[a]; short if the intermediate trend falls below 912.
Intermediate: Long if the primary trend reverses up (S&P rises above 954); short if the intermediate trend reverses down (falls below 912).
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.


Senate passes tax cut
The Senate passed the $US 350 billion tax cut by a slender 51-50. The bill will now be signed into law by President Bush. (more)




Gold
New York (15.30): Spot gold closed the week at $US 368.30.
On the five-year chart gold has respected the long-term upward trendline.



ASX Australia
The All Ordinaries rallied strongly to close at 2967, up 31 points on above-average volume.
The intermediate trend is down but on a weak signal. A rise above 2984[b] will signal reversal.
The primary trend is down. A rise above 3062[a] will signal an up-trend.

Slow Stochastic (20,3,3) has crossed to above its signal line; Twiggs Money Flow (21) shows a bullish signal, respecting the zero line at [+]; MACD (26,12,9) is below its signal line but threatens to complete a similar signal to TMF.





Market Strategy
Short-term: Long if the All Ords rises above 2984[b]; short if the XAO falls below 2908.
Intermediate: Long if the primary trend reverses up ( crosses above 3062[a] ); 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.


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 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 2 (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 rising)
  • Utilities [XUJ] - stage 2 (RS is rising)
Financial-x-Property may be forming an inverted head and shoulders reversal pattern on the weekly chart; with shoulders at [a] and [d] and the head at [b]. The pattern will be completed if XXJ rises above the high of [c].





Sectors: Relative Strength
A stock screen of the ASX 200 using % Price Move (1 month: +5%) rose to 79 stocks (compared to 131 on April 11, 2003; and 8 on March 14, 2003).
  • REITs (14)
  • Gold (5)





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

Colin Twiggs


When the only tool you own is a hammer,
every problem begins to resemble a nail.

- Abraham Maslow



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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.