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Trading Diary
December 12, 2003

These extracts from my daily trading diary are for educational purposes and should not be interpreted as investment advice. Full terms and conditions can be found at Terms of Use .

The Dow Industrial Average has broken through the key 10000 resistance level, closing up at 10042. 
The intermediate trend is up.
The primary trend is up. A fall below support at 9000 will signal reversal.

Declining volume on the daily chart raises doubt over the index's ability to hold above the new 10000 support level.

The Nasdaq Composite failed to make any significant gains on Friday, closing at 1949 on lower volume.
The intermediate trend is uncertain. A fall below 1880 will complete a double top reversal with a target of 1760: 1880-(2000-1880).
The primary trend is up. A fall below support at 1640 will signal reversal.


The S&P 500 gained 3 points to close at 1074. 
The intermediate trend is up. The index has broken above the recent consolidation, a bearish sign, but low volume places doubt over the strength of the rally.
Short-term: Bullish if the S&P500 is above resistance at 1070. Bearish below 1053 (Wednesday's low).

The primary trend is up. A fall below 960 will signal reversal.
Intermediate: Bullish above 1070.
Long-term: Bullish above 960.

The Chartcraft NYSE Bullish % Indicator recovered to 81.90% (December 12).

Consumer confidence falls
Preliminary December readings of the University of Michigan consumer sentiment index fell to 89.6, from 93.7 in November, while economists were expecting a rise to 96. (more)

US Stocks

NYSE, Nasdaq (including OTC BB) and Amex stocks are now available on Incredible Charts.
Stock screens will be added next week.

Adjusted end-of-day charts are accessible from the Securities menu.
The charts are also accessible from the free version until early 2004.

Treasury yields
The yield on 10-year treasury notes appears to be consolidating between 4.0% and 4.5%, closing at 4.24% on Friday.
The intermediate down-trend is weak.
The primary trend is up.

The yield differential is a healthy 3.3% (10-year T-notes compared to 13-week T-bills).

New York (13.30): Spot gold closed the week up at $409.20.
The intermediate trend is up.
The primary trend is up. Expect support at 400, resistance at 415.

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ASX Australia
The All Ordinaries rallied 26 points to close at 3216. Lower volume signals a lack of commitment from buyers.

MACD (26,12,9) is above its signal line; Slow Stochastic (20,3,3) is below.
Short-term: Bullish above 3213, Thursday's high. Bearish below 3173 (the December 1 low).

The All Ords is below its long-term trendline, signaling weakness. The primary trend is up but will reverse if there is a fall below 3160 (the October 1 low). A fall below 3160 would also complete a head and shoulders reversal with a target of 3010: 3160-(3310-3160)
Twiggs Money Flow (100) is below its signal line, indicating distribution, after a bearish triple divergence.
Intermediate term: Bullish above 3213. Bearish below 3160.
Long-term: Bearish below 3160.

Sector Analysis
The 11 sectors (10 + Property) are in various market stages. Relative Strength (xjo) measures the performance of each sector relative to the overall index.
  • Energy [XEJ] - stage 2 (RS is rising)
  • Materials [XMJ] - stage 2 (RS is falling)
  • Industrials [XNJ] - stage 2 (RS is rising)
  • Consumer Discretionary [XDJ] - stage 3 (RS is falling)
  • Consumer Staples [XSJ] - stage 1 (RS is rising)
  • Health Care [XHJ] - stage 1 (RS is level)
  • Property Trusts [XPJ] - stage 3 (RS is rising).
  • Financial excl. Property [XXJ] - stage 4** (RS is falling) 
  • Information Technology [XIJ] - stage 2 (RS is rising)
  • Telecom Services [XTJ] - stage 2 (RS is falling)
  • Utilities [XUJ] - stage 3 (RS is level)

**  Financial-x-Property Trusts [XXJ] formed a narrow line (or trading range) over the past 5 months. The index broke below the 3933 support level at [7], signaling a primary trend reversal, but has subsequently retreated back within the pattern. This is a weak signal. However, Relative Strength (xjo) is falling and I will treat the primary trend as downwards until there is clear evidence to the contrary.

Apologies for the eye-strain. It is the only way that I can fit the above daily pattern into a single image. 
The intermediate trend will reverse up if the index rises above the recent high of 4026. 
A rise above 4136 will signal that the primary trend has turned upwards.

Sectors: Relative Strength
A stock screen of the ASX 200 using % Price Move (1 month: +5%) is at a low 19 stocks (compared to 131 on April 11, 2003; and 8 on March 14, 2003). Prominent sectors are:
  • Real Estate Investment Trusts (6)
  • Biotechnology
    Peptech [PTD] and Novogen [NRT] head the overall list with gains of 24% and 21% over the last month.

Daily Trading Diary
Stocks analyzed during the week were:
  • Alinta - ALN
  • CSL Limited - CSL
  • Lion Nathan - LNN
  • Caltex - CTX
  • Novogen - NRT
  • Wattyl - WYL
  • Cochlear - COH

Understanding the Trading Diary has been expanded to offer further assistance to readers, including directions on how to search the archives.

Colin Twiggs

......whether or not it is clear to you,
no doubt the universe is unfolding as it should.

Therefore be at peace with God,
whatever you conceive Him to be,
and whatever your labors and aspirations,
in the noisy confusion of life keep peace with your soul.

~ Max Ehrmann: Desiderata (1927)

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How are the adjustments calculated?
Details are at the above link.

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