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Trading Diary
January 2, 2004

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 .




USA
The Dow Industrial Average encountered resistance at 10500, closing down at 10409. 
The intermediate trend is up. Expect resistance at 10600, from the March 2002 peak.
The primary trend is up. A fall below support at 9000 will signal reversal.



The Nasdaq Composite broke through resistance at 2000, but has since failed to make further gains, closing at 2006. Consolidation above the new support level is still a bullish sign.
The intermediate trend is up. 
The primary trend is up. A fall below support at 1640 will signal reversal.


 


The S&P 500 closed the week at 1108, consolidating after a strong surge above 1100. 
The intermediate trend is up.
Short-term: Bullish if the S&P500 is above Monday's high of 1109. Bearish below 1106 (Tuesday's low).


The primary trend is up. A fall below 960 will signal reversal.
Intermediate: Bullish above 1109.
Long-term: Bullish above 960.

The Chartcraft NYSE Bullish % Indicator is at a 10-year high of 84.85% (January 2).


Manufacturing surge
The ISM manufacturing index posted a strong gain to 66.2, compared to 62.8 in November. (more)



Daily Trading Diary

 The Daily Trading Diary will resume on January 5th 2004.



Treasury yields
The yield on 10-year treasury notes closed higher at 4.37%.
The intermediate trend is uncertain, with price ranging between 4.0 and 4.5%.
The primary trend is up.



The yield differential (10-year T-notes compared to 13-week T-bills) is a healthy 3.4%.




Gold
New York (13.30): Spot gold closed at $415.30, testing support after making a 10-year high ( 416.25) on New Year's Eve.
The intermediate trend is up.
The primary trend is up. Expect support at 415 (the previous 10-year high).




 
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ASX Australia
The All Ordinaries rallied strongly over the last week, closing at 3309 despite low volumes. If the index is able to penetrate resistance at 3317, we may see a strong surge in January, historically a bullish month, as institutional buyers return from their holidays.



MACD (26,12,9) is above its signal line; Slow Stochastic (20,3,3) is above.
Short-term: Bullish above 3317.



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). Twiggs Money Flow (100) has leveled out but is still bearish after a large divergence.
Intermediate term: Bullish above 3317. 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 rising)
  • Industrials [XNJ] - stage 2 (RS is rising)
  • Consumer Discretionary [XDJ] - stage 2 (RS is falling)
  • Consumer Staples [XSJ] - stage 1 (RS is level)
  • Health Care [XHJ] - stage 1 (RS is falling)
  • Property Trusts [XPJ] - stage 3 (RS is rising).
  • Financial excl. Property [XXJ] - stage 4** (RS is level) 
  • Information Technology [XIJ] - stage 2 (RS is level)
  • Telecom Services [XTJ] - stage 2 (RS is falling)
  • Utilities [XUJ] - stage 3 (RS is level)

**  Financial-x-Property Trusts [XXJ] broke below the 3933 support level but has subsequently retreated back above. This is a weak signal. Relative Strength (xjo), however, is falling and I will treat the primary trend as downwards until there is clear evidence to the contrary. 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 up at 56 stocks (compared to 131 on April 11, 2003; and 8 on March 14, 2003). Prominent sectors are:
  • Oil & Gas Exploration & Production (6)
  • Diversified Metals & Mining (5)
  • Broadcasting & Cable TV (3)
  • Movies & Entertainment (3)
  • Construction Materials (3)
  • Banks (3)
  • Steel (2)
  • Aluminum (2)





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

Colin Twiggs


The fact is that purification and austerity are even more necessary
for the appreciation of life and laughter than for anything else.
To let no bird fly past unnoticed, to spell patiently the stones and weeds,
to have the mind a storehouse of sunsets,
requires a discipline in pleasure and an education in gratitude.

~ G.K. Chesterton: Twelve Types





We wish you peace, health and prosperity in the year ahead.



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