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Trading Diary
July 22, 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 Dow fell almost 3% to close at 7784, below the key 8000 support level. The next major support level is 7379, from July 1998. We are now in the third phase of the bear market. Primary and secondary cycles trend downwards.

The Nasdaq Composite lost 2.7% to close at 1282, below the October 1998 support level. The next major support level is at 1194, from July 1997. The primary and secondary cycles are in a down-trend.

The S&P 500 dropped 28 points to close at 819. The next support level is 733, from April 1997.
Primary and secondary cycles trend downwards.

 
American Express
Second-quarter earnings of 51 cents per share tops analysts estimates (earnings were 13 cents a year earlier). (more)
 
Telecom
WorldCom files for bankruptcy and BellSouth reports a drop in second-quarter sales and earnings. (more)
 
 
ASX Australia
After plummeting more than 70 points, the All Ordinaries recovered to close down 23 points at 3035 on average volume.
The primary cycle and secondary cycle are in a bear trend.
The candlestick hammer shows support at current levels. Slow Stochastic (20,3,3) is above its signal line while MACD (26,12,9) is below. Exponentially-smoothed money flow signals distribution.


At times like this it pays to take a long-term view of the market.


Gold stocks
Gold stocks were able to avoid the general slide. (more)
Lihir Gold has formed a triangle and is threatening an upward breakout, with positive relative strength (price ratio: xao), improving MACD and exponentially-smoothed money flow signaling accumulation.

 


 
Newcrest Mining [NCM] looks weaker, with declining MACD and exponentially-smoothed money flow.
 

 
Woolworths [WOW]
CEO Roger Corbett says Woolworths can increase earnings by low double-digit percentage rates and achieve sales growth in the high single digits "for the foreseeable future". (more)
Relative Strength (price ratio: xao) is positive and exponentially-smoothed money flow holds above zero. MACD is negative.


 





Conclusion
 
Short-term: Avoid new entries. The Slow Stochastic is above, and MACD below, its signal line.
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
 
Thought for the Day:
Just because a stock has fallen doesn't mean that it's cheap. Be selective.
 
 




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