Trading Diary
May 21, 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 a further 1.2% to 10105 on normal volume, showing a lack of buying support.
The primary trend is down, secondary - up and short trend - up.

Software and chip stocks led the Nasdaq Composite down 2.2% to close at 1664.
The primary cycle is forming a base (or stage 1), secondary trend - down, while the short trend is up.
 
The S&P 500 fell 12 points to 1079. The target of 960 from the double top pattern may still be attainable.
Primary cycle - the base still shows weakness, secondary trend - down and short cycle - up.
 
Home Depot
First-quarter sales increased 17%, boosting profit by 35%, but AG Edwards analyst downgraded the stock because of a murky outlook. (more)
 
Merrill Lynch
Merrill Lynch reached a settlement with the NY state Attorney General, agreeing to pay $100 million in fines and to repair the "Chinese wall" between its securities analysts and investment banking divisions. (more)
 
ASX Australia
The All Ords closed down at 3329 on normal volume. The next support level is 3250.
Chaikin Money Flow crossed to below zero, signaling distribution.
Slow Stochastic (20,3,3) crossed below its signal line.


Fairfax [FXJ]
The newspaper and online publisher is expected to announce a major restructuring, as early as next week. (more)
 FXJ shows a bullish divergence on Chaikin Money Flow, while Price Ratio still looks weak. 



CSR [CSR]
CSR announces "solid" results and plans to spin-off its sugar division in the new year. (more)
Chaikin Money Flow shows strong distribution over the last 6 months.


Price Ratio and the 30-week weighted moving average show a stage 3 top - and the possible start of a stage 4 decline.


 




Conclusion
 
Short-term: Avoid new entries. Maintain tight stop-losses.
Medium-term: The All Ords has not yet formed a base.
Long-term: Wait for the Nasdaq or S&P 500 to break out from their bases (trading ranges).

Colin Twiggs



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Colin Twiggs

Author: Colin Twiggs is a former investment banker with almost 40 years of experience in financial markets. He co-founded Incredible Charts and writes the popular Trading Diary and Patient Investor newsletters.

Using a top-down approach, Colin identifies key macro trends in the global economy before evaluating selected opportunities using a combination of fundamental and technical analysis.

Focusing on interest rates and financial market liquidity as primary drivers of the economic cycle, he warned of the 2008/2009 and 2020 bear markets well ahead of actual events.

He founded PVT Capital (AFSL No. 546090) in May 2023, which offers investment strategy and advice to wholesale clients.