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Trading Diary
May 30, 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 1.6% to close at 8850 on above-average volume.
The intermediate trend is up.
The primary trend is down; a close above 9076 will signal a reversal.

The S&P 500 rallied strongly, closing 14 points higher at 963; and breaking above the 954 resistance level from [a].
The intermediate trend is up.
The primary trend closed above 954 [a], signaling the start of an up-trend.




The Nasdaq Composite gained 1.33% to close at 1595.
The intermediate trend is up.
The index is in a primary up-trend.

The Chartcraft NYSE Bullish % Indicator is rising steeply, reaching 65.00% on May 29; following a Bull Correction buy signal (April 3).

The yield differential between 10-year treasury notes and 13-week t-bills is a healthy 2.0% plus; a bullish sign for the economy. A negative yield differential is a strong bear signal; as can be seen from the S&P 500 plotted on the chart below.





Market Strategy
Short-term: Long if the S&P 500 is above 954.
Intermediate: Long - the primary trend has reversed up (S&P above 954).
Long-term: There are already two bull signals: the March 17 follow through day and the April 3 NYSE Bullish % signal. Long - the S&P 500 primary trend has turned upwards.

Manufacturing increase
The National Association of Purchasing Management says that its Chicago-region manufacturing index for May has jumped to 52.2 from 47.6, well above expectations. (more)




Gold
New York (15.30): Spot gold closed down at $US 364.10.
On the five-year chart gold is above the long-term upward trendline.



ASX Australia
The monthly Coppock indicator has turned up below zero, signaling the start of a bull market, while the XAO has broken above the downward trendline.





The All Ordinaries closed down at 2980, failing to break above the 2984 resistance level - on strong volume.
The intermediate trend is up.
The primary trend is down. A close above 3050 will signal an up-trend.

MACD (26,12,9) is above its signal line; Slow Stochastic (20,3,3) is above; and Twiggs Money Flow (21) shows accumulation.





Market Strategy
Short-term: Long if the All Ords rises above [b] at 2984; short if the XAO falls below 2908.
Intermediate: Long if the primary trend reverses up ( closes above 3050 ); 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 level)
  • 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 level)
  • Utilities [XUJ] - stage 2 (RS is rising)


Sectors: Relative Strength
A stock screen of the ASX 200 using % Price Move (1 month: +5%) eased to 57 stocks (compared to 131 on April 11, 2003; and 8 on March 14, 2003).
  • REITs (5)
  • Diversified Financial (4)
  • Gold (3)
  • Banks (3)
  • Broadcasting & Cable TV





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

Colin Twiggs


Life is like the Olympic games;
a few men strain their muscles to carry off a prize,
others sell trinkets to the crowd for a profit;
some just come to see how everything is done.

- Pythagoras (569 - 475 B.C.)



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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.