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Trading Diary
July 17, 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 retreated a further 0.5% to close at 9050. Lower volume improves the chance of the index respecting support at 9000, despite the recent bear signal of two equal highs below the previous high.
The intermediate trend is up. A decline below 8978 will signal a down-turn.
The primary trend is up.

The S&P 500 closed weaker: 13 points down at 981.
The fall below the recent low of July 10 signals that the intermediate up-trend is weakening. A decline below 962 will signal a down-turn.
The primary trend is up.

 


The Nasdaq Composite gapped down at the opening, closing 2.8% lower at 1698.
The fall below the previous low of 1707 signals that the intermediate up-trend is weakening.
The primary trend is up.

The Chartcraft NYSE Bullish % Indicator retreated 0.26% to 76.22% (July 16).

Market Strategy
Short-term: Long if the S&P 500 is above 1015. Short if the index is below 983.
Intermediate: Long if the S&P is above 1015. Short if the index falls below 962.
Long-term: Long.


Microsoft
The software giant reported earnings for the quarter of 18 cents a share, after a charge of 5 cents for legal settlements, compared to 24cents a year ago. Sales were up strongly at 11%. (more)




Gold
New York (17.29): Spot gold is slightly higher at $US 344.40.
On the five-year chart gold is above the long-term upward trendline.



ASX Australia
The All Ordinaries formed an inside day, closing 7 points lower at 3068. The lower volume is reassuring.
The intermediate trend is up.
The primary trend is up.

MACD (26,12,9) is above its signal line, having completed two bullish troughs above zero; Slow Stochastic (20,3,3) is above; Twiggs Money Flow (21) signals accumulation, also displaying bullish troughs above the zero line.



Market Strategy
Short-term: Long if the All Ords is above 3075. Short if below 2978.
Intermediate: The primary trend is up; Long if the All Ords is above 3075.
Long-term: Long.


Challenger [CFG]
CLI last covered on March 10, 2003.
CLI and CPH are in the process of being merged to trade as CFG. Further information is available on the ASX site.
 
Looking at the new entity, CFG formed a broad stage 1 base before a breakout at [e]. The stock then rallied strongly before forming an ascending triangle, from [f]. Note the earlier dry up of volume when price made a marginal break below support at [c].
 
Ascending triangles are normally bullish, but Twiggs Money Flow (100-day) has declined below zero and MACD is also bearish.



Relative Strength (price ratio: xao) made new 3-month highs after the breakout, but subsequently leveled out when CFG started to form a triangle. 



There have been surges of volume on some rallies within the triangle but Twiggs Money Flow has declined to signal distribution, with a bearish peak below zero at [-].


A break below 0.52 would be bearish, while a close below 0.50 would be a strong bear signal.
A rise above resistance at 0.57 would be bullish. Prudent traders would wait for a pull-back, after the breakout, that respects the new support level.





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

Colin Twiggs


When people are born, they are supple and soft;
When they die, they are rigid........

If a soldier is rigid, he will not win; 
If a tree is rigid, it will not survive.
Rigidity and power occupy the inferior position;
Suppleness and softness occupy the superior position.

~ Lao Tse.


 
Stock Screens: Ranging Stocks

Directional Movement provides a useful filter for identifying ranging stocks:

(1) Select ASX 200 from Indices and Watchlists and 200 as the Maximum Return;
(2) Select the Directional Movement System: ADX Value Filter; 
(3) Enter 15 as the ADX (14) Maximum;
(4) Submit and sort the Return by clicking on the ADX(14) header.

Stocks returned are generally stocks that are consolidating in a narrow range.




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