Trading Diary
January 14, 2006
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 S&P 500 failed to make further gains, but remains positive provided that it holds above the new 1270 support level.
The S&P 500 failed to make further gains, but remains positive provided that it holds above the new 1270 support level.
The breakout above the upper border of the long-term bearish
rising wedge pattern signals a stronger primary up-trend. The
signal would be confirmed if a retracement respects the new
support level of 1270.
Twiggs Money Flow (21-day) remains positive after a higher
trough at [L1].
The Dow Industrial Average briefly rose above 11000 on
Monday before retreating Thursday with a strong red candle. The
index will remain bullish if it holds above the new support level
at 10950, while a close below the low of [5] would signal
weakness.
Twiggs Money Flow (21-day) rose above zero, but remains weak.
The Dow Jones Transportation Average continues to show a
strong primary up-trend, while Fedex and UPS show signs of
weakness. Overall, still a positive sign for the economy and
equity markets.
The Nasdaq Composite's successful breakout from the
bearish
rising wedge pattern is a bullish sign for equity markets.
Twiggs Money Flow (21-day) signals accumulation after the
last trough at the zero line.
Treasury yields
Short-term yields continue to climb, sending the yield differential (10-year T-notes minus 13-week T-bills) close to the key zero level. This should have a negative impact on banking sector margins and is an excellent long-term predictor of economic down-turns. The Fed may be forced to slow short-term interest rate hikes in an attempt to prevent further weakness. Not a good position to be in if inflation starts to rise.
Short-term yields continue to climb, sending the yield differential (10-year T-notes minus 13-week T-bills) close to the key zero level. This should have a negative impact on banking sector margins and is an excellent long-term predictor of economic down-turns. The Fed may be forced to slow short-term interest rate hikes in an attempt to prevent further weakness. Not a good position to be in if inflation starts to rise.
Gold
New York: Spot gold broke through initial resistance (at $540), closing at $556.50 on Friday. The breakout above $540 confirms the strong primary up-trend and gives a target of $580: 540 + (540 - 500).
New York: Spot gold broke through initial resistance (at $540), closing at $556.50 on Friday. The breakout above $540 confirms the strong primary up-trend and gives a target of $580: 540 + (540 - 500).
United Kingdom
The FTSE 100 consolidated after a strong rally in the past two weeks. Twiggs Money Flow (21-day) signals strong accumulation: holding above zero since [Dec 1]. The target for the breakout is close to 6000: 5500 + (5500 - 5140) = 5860.
The FTSE 100 consolidated after a strong rally in the past two weeks. Twiggs Money Flow (21-day) signals strong accumulation: holding above zero since [Dec 1]. The target for the breakout is close to 6000: 5500 + (5500 - 5140) = 5860.
Japan
There appears to be some profit-taking, with the Nikkei 225 pausing at its long-term target of 16400: 12000 + ( 12000 - 7600 [April 2003]). This bull-trend appears far from spent: Twiggs Money Flow (21-day) has held above the zero line since July 2005, signaling strong accumulation.
There appears to be some profit-taking, with the Nikkei 225 pausing at its long-term target of 16400: 12000 + ( 12000 - 7600 [April 2003]). This bull-trend appears far from spent: Twiggs Money Flow (21-day) has held above the zero line since July 2005, signaling strong accumulation.
ASX Australia
Last week's short-lived retracement, followed by a strong blue candle at [1] indicates that the All Ordinaries is in a strong up-trend. However, a turbulent week for major US indices caused uncertainty in the local market, evidenced by the subsequent consolidation. We may see another retracement in the week ahead, but as long as this holds above support at 4620 the market is in positive territory.
Last week's short-lived retracement, followed by a strong blue candle at [1] indicates that the All Ordinaries is in a strong up-trend. However, a turbulent week for major US indices caused uncertainty in the local market, evidenced by the subsequent consolidation. We may see another retracement in the week ahead, but as long as this holds above support at 4620 the market is in positive territory.
Twiggs Money Flow (21-day) has so far held above the zero
line. A low above [L1] would be a positive sign. The index is in
a strong primary up-trend with a target close to 5000: 4620 +
(4620 - 4300) = 4940.
Wishing you a healthy and prosperous New Year.
Colin Twiggs
A misty morning does not signify a cloudy
day.
~ Ancient Proverb
~ Ancient Proverb
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.