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 .
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
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.
Second-quarter earnings of 51 cents per share
tops analysts estimates (earnings were 13 cents a year
WorldCom files for bankruptcy and BellSouth reports a drop in
second-quarter sales and earnings. (more)
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
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.
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.
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
Thought for the Day:
Just because a stock has fallen doesn't mean that it's cheap.
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