August 2, 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 has failed to hold above Monday's
, falling 2.3% to close at 8313. The primary
cycle trends downwards.
The Chartcraft NYSE Bullish % Indicator has given a
bull alert signal, starting a new column with a reading of
30% (August 1).
The Nasdaq Composite, down 2.5% at 1247, closed the breakaway
gap from Monday's
follow-through. The primary cycle is in a down-trend.
The S&P 500 closed 20 points down at 864, holding just
follow-through day from Monday.
The primary cycle trends downwards.
Weak job growth scares the market
Net jobs created in July were only 6000, compared to 66000 in
Further rate cuts
Goldman Sachs predicts that the Fed will cut rates further before
the end of the year.
US bond yields fall
Money flowing out of equities and talk of further rate cuts drive
bond yields to new lows. (more)
The All Ordinaries closed down 21 points at 3003 on low volume.
The index is still above the 2940 support level. The primary
cycle trends down.
Slow Stochastic (20,3,3) crossed below its signal line.
Exponentially-smoothed money flow signals distribution.
Spot the typo (from yesterday's newsletter)
LHG is entering a stage 4 decline, with 20-day moving average
crossing below the 150-day moving average. Relative strength
(price ratio: xao) is declining and MACD is weak but
exponentially-smoothed money flow displays a bearish
Exponentially-smoothed money flow displays a bullish
United Energy [UEL]
UEL recently broke up from a large triangle. Relative strength
(price ratio: xao) is improving, MACD is positive and
exponentially-smoothed money flow signals accumulation.
TLS relative strength (price ratio: xao) has lately been
improving and MACD is strong but exponentially-smoothed money
flow has failed to hold in positive territory.
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 4 (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 the
ASX 200 using % Price Move (1 month: +5%) shows the strongest
- Electric Utilities
- Construction & Engineering
- Oil & Gas Exploration & Production
Short-term: Avoid new entries. Slow Stochastic and MACD are on
opposite sides of their respective 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
Thought for the Day:
The stock market is neither efficient nor random. It is not
efficient because there are too many poorly conceived opinions;
it is not random because strong investor emotions can create
- William J O'Neil.
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