July 26, 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 made further gains, closing up 0.95% at
8264. The 8000 level is again acting as support. Primary and
secondary cycles trend downwards.
The Chartcraft NYSE Bullish % Indicator has a
reading of 24% (July 25). See
Bullish % Index for more details.
The Nasdaq Composite formed a second inside day, rising 1.8% to
close at 1262. Primary and secondary cycles are in a
The S&P 500 closed up 14 points at 852.
Primary and secondary cycles trend downwards.
The final University of Michigan figure for July came in at
88.1, a lot higher than 86.5 from the preliminary survey.
Following accounting concerns, Chairman Denis Nayden is ousted by
parent General Electric Co. and GE Capital is split into four
Gold fell through the key $US 310 support level with spot gold at
$US 303.5 and August futures at $US 303.3. (more)
Bear market - no end in sight
Analyst Paul F Desmond says that "panic selling" has not been
followed by sufficient "panic buying" for this to be the end of
the bear market. (more)
The All Ordinaries fell 50 points to close at 2941 on strong
The primary cycle and secondary cycles trend down. The next
support level is 2828, from September 2001
Slow Stochastic (20,3,3) and MACD (26,12,9) are below their
signal lines. Exponentially-smoothed money flow signals
is likely to finish the month below zero,
for the first time since 1995.
Cochlear ache [COH]
Cochlear shares tumble after the US Food and Drug
Administration warns of 25 cases where patients with an
inner-ear implant contracted meningitis, including 9 deaths.
Relative strength (price ratio: xao) and MACD are declining
while, surprisingly, exponentially-smoothed money flow signals
a bullish divergence.
Bad debt concerns weaken bank stocks [ANZ]
Bank stocks have declined since ANZ disclosed its exposure to
troubled UK Marconi group. (more)
ANZ is approaching the target of 16.80 from a completed head
and shoulders pattern. Relative strength (price ratio: xao),
MACD and exponentially-smoothed money flow are all declining.
Commonwealth Bank [CBA] is also declining, with falling
relative strength (price ratio: xao), MACD and
exponentially-smoothed money flow.
Stage changes are highlighted in
- Energy [XEJ] - stage 4 (RS is rising)
- Materials [XMJ] - stage 4
- Industrials [XNJ] - stage 4 (RS is rising)
- Consumer Discretionary [XDJ] - stage 4
- Consumer Staples [XSJ] - stage 4 (RS is rising)
- Health Care [XHJ] - stage 4
- Property Trusts [XPJ] - stage 3 (RS is rising)
- Financial excl. Property Trusts [XXJ] - stage 4
- Information Technology [XIJ] - stage 4
- Telecom Services [XTJ] - stage 1 (RS is rising)
- Utilities [XUJ] - stage 1 (RS is rising)
Sectors: Relative Strength
A stock screen of
equities using % Price Move (1 month: +10%) is dominated by:
- Application Software
- Diversified Financial Services
- Diversified Metals & Mining
- Internet Software & Services
- Oil & Gas Exploration & Production
- Real Estate Management & Development
Short-term: Enter short in selected areas. The Slow
Stochastic and MACD are below their respective signal lines.
Keep stops tight.
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:
I think it would be a good idea.
- Mahatma Ghandi, when asked what he thought of Western
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