May 8, 2002
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 .
It is not very often that you witness a 3% jump
on the Dow. The average rose strongly throughout the day to close
at 10141. The secondary cycle up-trend is intact.
The Nasdaq Composite soared almost 8% on the back of strong
results from Cisco. "One sparrow does not make a summer" - the
secondary cycle is still in a down-trend.
The S&P 500 climbed 3.75% to 1088. We will
have to wait and see whether the index again tests the 1070
Cisco Systems rose 24% since it topped analysts
quarterly estimates, restoring investors faith in chip and
hardware stocks. (more)
Rally needs to break above resistance
The short-term rally needs to
break above resistance levels if it is to sustain itself.
The All Ords recovered to 3287 on reasonable
volume. The target for the correction is 3230 to 3240.
While Slow Stochastic and MACD are negative,
Chaikin Money Flow is showing a bullish divergence.
Amcor Limited becomes the
world's largest plastic bottle maker after its $2.875 billion
German acquisition. (more)
Chaikin Money Flow and MACD have both been
signaling weakness since early this year.
The ACCC approves the sale of
Westpac's AGC consumer finance division to GE Capital. Westpac
will use part of the proceeds to fund a share buy-back.
Chaikin Money Flow shows accumulation in April
but MACD is still weak.
Perpetual declares special dividend [PPT]
Perpetual Trustees Australia
has shown its confidence in the company's outlook, declaring a
special dividend of 50 cents and promising another next
year. (more) Both Chaikin MF
and MACD have recently been showing weakness after a long period
Short-term: Avoid long.
Medium-term: Wait for the All Ords to form a
Long-term: Wait for the Nasdaq or S&P 500 to
form a base.
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