July 29, 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 rallied strongly, closing up 5.4% at
8711, completing a
follow-through day if volume confirms the move. The primary
cycle trends downwards while the secondary cycle has commenced a
The Chartcraft NYSE Bullish % Indicator has a
reading of 24% (July 26). See
Bullish % Index for more details.
Leading companies - General Motors has commenced a secondary
rally while Fedex (which has stronger relative strength) still
The Nasdaq Composite jumped 5.8% to close at 1335, another
potential follow-through. Primary and secondary cycles are
still in a down-trend.
The S&P 500 climbed 46 points to close at 898.
Primary cycle trends downwards but the secondary cycle has
started a rally.
The Denver-based telecom company is to restate financial
results for 1999 to 2001 due to improper accounting.
Pension funds showed renewed confidence, selling bonds and buying
The All Ordinaries climbed 43 points to close at 2984 on average
The primary cycle and secondary cycles trend down. The next
support level is 2828, from September 2001
Slow Stochastic (20,3,3) has crossed to above its signal line.
Exponentially-smoothed money flow signals distribution.
Falling exports, rising imports a worry
The monthly trade deficit widened to $1.1 billion as exports to
weakened trading partners fall and the strong local economy
continues to drive imports. (more)
Telstra plans to spend $1 billion to attract broadband
Relative strength (price ratio: xao) and MACD
are rising but exponentially-smoothed money flow looks
The NSW totalisator and wagering business is forming a
long-term triangle on the monthly chart, with improving
relative strength (price ratio: xao). The rally during May 2002
was supported by a share buy-back of 9.8% of share capital so
we will need to analyze subsequent performance.
The weekly chart shows a breakout above another symmetrical
triangle, supported by a rise in exponentially-smoothed money
The daily chart shows a further triangle with a break
downwards during last week's bear market decline. This has
been followed by a rally to match the recent high. A break
above this level, supported by strong volume, would have a
target of 3.44, but MACD will need to reverse.
Short-term: Avoid new entries. The Slow Stochastic and MACD
are on opposite sides of their respective signal lines. Keep
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:
In a narrow market, when prices are not getting anywhere
to speak of but move in a narrow range, there is no sense in
trying to anticipate what the next big movement is going to
be - up or down.
- Edwin Lefevre.
Access the Trading Diary Archives.