Trading Diary
June 25, 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 .
USA
The slide continues, with the Dow falling 1.7%
to close at 9126 on above-average volume.
This is a
bear market, with primary and secondary
cycles trending down.
The Nasdaq Composite dropped 2.5% to close at
1423, testing September 2001 support levels.
The primary and secondary cycles trend downwards.
The S&P 500 lost 16 points to close at
976, approaching support at 960.
Primary and secondary cycles continue downwards.
General Electric
After market hours, GE announced that second
quarter earnings will match forecasts. (more)
Procter & Gamble leads decline
Market favorite P&G lost
5%, making the biggest contribution to the Dow's fall.
(more)
ASX Australia
The All Ordinaries dropped 9 points to close at
3177 on strong volume.
The primary and secondary cycles are in a bear
trend.
MACD (26,12,9) and Slow Stochastic (20,3,3) are
below their signal lines.
Chaikin Money Flow signals distribution.
Macquarie Bank [MBL]
MBL will collect $50 million in fees from
the successful $5.6 billion bid for Sydney Airport.
(more)
Relative Strength (price ratio: xao) is
rising, while MACD and Chaikin Money Flow show bullish
divergences.
Looksmart boardroom turmoil
[LOK]
Evan Thornley steps down as CEO but remains
as Chairman, while 3 other directors quit.
(more)
MACD and Relative Strength (price ratio:
xao) are weak, while Chaikin Money Flow is positive.
Mayne Group [MAY]
Mayne seeks to expand its healthcare
division through the acquisition of Queensland Medical
Laboratory. (more)
MACD and Relative Strength (price ratio:
xao) appear weak, while Chaikin Money
Flow has returned to positive territory.
Chaikin Money Flow has one major flaw
to watch out for: Note the sharp fall [1] on April 24th,
when price gapped downward. 21 days later at [2], when
the downward gap is dropped from the indicator window,
Chaikin MF rises steeply. Indicators calculated with a
simple moving average have this propensity to "bark
twice" - first when the data "arrives" and later when
it "leaves".
I have been working on an improvement
to eliminate this flaw.
Conclusion
Short-term: Short in selected sectors -
MACD and slow Stochastic are below their signal lines.
Medium-term: Wait for the All Ords to signal a reversal.
Long-term: Wait for a bull-trend on the Nasdaq or S&P 500
(primary cycle).
Colin Twiggs
Please forward this to your friends and
colleagues.
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