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Trading Diary
July 24, 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 .

After an initial rally, the Dow encountered selling pressure, closing 0.9% lower at 9112 on higher volume.
The intermediate trend is up. A fall below 8968 will signal a reversal.
The primary trend is up.

The S&P 500 closed 8 points lower at 981 on higher volume.
The intermediate trend has turned down. MACD shows a bearish divergence but Twiggs Money Flow (21) completed a bullish trough above zero.
The primary trend is up.

The Nasdaq Composite made a similar retreat, closing 1.0% lower at 1701 on higher volume.
The intermediate trend is up. A fall below 1675 will signal a reversal. 
The primary trend is up.

The Chartcraft NYSE Bullish % Indicator rallied to 75.01% (July 23).

Market Strategy
Short-term: Long if the S&P500 is above 1000. Short if below 975.
Intermediate: Long if S&P 500 is above 1015. Short if below 962.
Long-term: Long.

Job market strengthening
New unemployment claims fell to 386,000 last week, below the benchmark 400,000 level.

Treasury yields
The yield on 10-year notes [TNX] edged higher to 4.17%.
The intermediate trend is up; the primary trend is down.

New York (17.02): Spot gold has leveled off at $361.30.
The primary trend is up.

ASX Australia
The All Ordinaries appears headed for a re-test of resistance at 3080. The index closed 5 points higher at 3073 on increased volume. An upward breakout from the ascending triangle would have a target of 3150.
The intermediate trend is up. A fall below support at 2979 would signal a reversal.
The primary trend is up (marginally).

Slow Stochastic (20,3,3) has crossed to above its signal line; MACD (26,12,9) is above; Twiggs Money Flow signals accumulation.

Market Strategy
Short-term: Long if the All Ords is above 3083; short if below 3041.
Intermediate: Long if the index is above 3083; short if below 2979.
Long-term: Long if above 2979.

Down-trending stocks
AMP Limited [AMP] experienced a severe shakeout at [a] on huge volume. Shakeouts often precede a stage 1 base and, although well below the 150-day moving average, the stock appears to be no exception. I suspect that it will be quite some time before we witness a breakout to stage 2 but the months ahead may present several intermediate rallies for shorter-term traders. The immediate target would be 6.00, with some rallies possibly reaching 9.00. Stops should be kept tight to protect against further downside.

Woolworths [WOW] is correcting back to test support at 10.70. The stock is in an intermediate down-trend with higher volume on downward bars at [1], [2] and [3]. The larger pattern could be a stage 3 top or a mid-point consolidation. Relative Strength (price ratio: xao) is weakening. Long term signals will come from a break below 10.70 or above 13.00.

HPAL Limited [HPX] has trended downwards since 2001. Trend momentum has eased to a fairly slow down-trend over the last year. There has been no cathartic shakeout towards the bottom and the stock now displays further weakness with a sharp fall in the last 4 days. The support level at 1.25 is in danger of being penetrated. 

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

Colin Twiggs

Laws Absolute # 1

Never "double up"; that is, never completely and at once reverse a position.
Being "long", for instance, do not "sell out" and go as much "short".
This may occasionally succeed but is very hazardous, for should the market begin again to advance,
the mind reverts to its original opinion and the speculator "covers up" and "goes long" again.
Should this last change be wrong, complete demoralization ensues.
The change in the original position should have been made moderately, cautiously,
thus keeping the judgment clear and preserving the balance of mind.

~ S.A. Nelson: The ABC of Stock Speculation (1903).

Stock Screens: Trending Stocks

Another method of identifying trending stocks uses the Bollinger Bands filter:
(1) Select ASX 200 under Indices and Watchlists
     and 200 as Maximum Return;
(2) Select Bollinger Bands;
(3) For up-trends, enter 200 as the 50-day Minimum; or
     For down-trends, enter -200 as the 50-day Maximum.

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