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Trading Diary
January 9, 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 retreated 1.3% to close at 10458 on lower volume, after testing resistance at 10600. 
The fast intermediate up-trend is likely to either consolidate below resistance at 10600 (from the March 2002 peak) or correct back to the primary supporting trendline. Twiggs Money Flow (100) continues to signal strong accumulation.
The primary trend is up. A fall below support at 9600 will signal reversal.



The Nasdaq Composite closed 14 points lower at 2086. Strong volume and a weak close ( tall shadow) signal selling pressure.
The intermediate trend is up. Support is at 2000 and resistance at 2100. A break above 2100 will be a strong bull signal.
Twiggs Money Flow (100) continues to signal strong accumulation.
The primary trend is up. A fall below support at 1640 will signal reversal.


 


The S&P 500 closed 11 points lower at 1121. Strong volume signals selling pressure.
The intermediate up-trend is accelerating. A fourth, steeper trendline is likely to signal a blow-off. Resistance at 1175 may, however, intervene.
Short-term: Bullish if the S&P500 is above Thursday's high of 1132.


The primary trend is up. A fall below 1000 will signal reversal.
Intermediate: Bullish above 1070 (from December 1).
Long-term: Bullish above 1000.

The Chartcraft NYSE Bullish % Indicator is at a 10-year high of 85.88% (January 9). This means that almost 86% of stocks on the NYSE are in an up-trend, which is a 10-year high. The next highest level was 76% in August - October 1997, which was followed by a sharp correction to the 10-year low of 16%, in August 1998.



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Treasury yields
The yield on 10-year treasury notes plummeted to 4.086%.
The intermediate trend is down.
The primary trend is up. Price has been ranging between 4.0 and 4.5% and a fall below the September low of 3.93% will signal reversal.



The yield differential (10-year T-notes compared to 13-week T-bills) is still a healthy 3.25%.




Gold
New York (13.30): Spot gold rallied to $426.20.
The intermediate trend is up.
The primary trend is up. Support is at 415 (the previous 10-year high).




 
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ASX Australia
The All Ordinaries retreated to 3307 after testing resistance at 3320. The long shadow and higher volume signal selling pressure. A fall below Monday's low of 3293 will be bearish. January is historically a bullish month, however, as institutional buyers return from their holidays, and we may see further tests of the resistance level.



MACD (26,12,9) is above its signal line; Slow Stochastic (20,3,3) is below.
Short-term: Bullish above 3320. Bearish below 3293.



On the 3-year chart we can see that the All Ords has consolidated between 3160 and 3320, after a fast up-trend. A break through resistance will signal a re-test of the previous highs at 3425 to 3440. The primary trend is up but will reverse if there is a fall below support at 3160 (the October 1 low). Twiggs Money Flow (100) has leveled out but is still bearish after a large divergence. A fall below the recent TMF support level would be a strong bear signal.
Intermediate term: Bullish above 3320. 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 3 (RS is falling)
  • Consumer Staples [XSJ] - stage 2 (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 level)
  • 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 the primary trend will be treated as downwards until there is clear evidence to the contrary. The index appears headed for a re-test of resistance at 4127 to 4136. A close above 4127 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%) increased to 62 stocks (compared to 131 on April 11, 2003; and 8 on March 14, 2003). Prominent sectors are:
  • Oil & Gas Exploration & Production (7)
  • Broadcasting & Cable TV (5)
  • Banks (4)
  • Diversified Metals & Mining (3)
  • Diversified Commercial (3)
  • Data Processing (3)
  • Aluminum (2)






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

Colin Twiggs


Humility leads to strength and not to weakness.
It is the highest form of self-respect
to admit mistakes and to make amends for them.

~ John (Jay) McCloy.




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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.