Trading Diary
June 11, 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 had dropped 1.3% by the close, at 9517, on strong volume.
The average is again testing support at 9500. A break below this level will signal a primary bear-trend.
Chartcraft's NYSE Bullish % Indicator has given a bull correction signal, warning investors to adopt defensive strategies. 

The Nasdaq Composite fell sharply to close at 1497.
The primary and secondary cycles trend downwards.

The S&P 500 fell 17 points to close at 1013.
Primary and secondary cycles trend downwards.

 
Drug-makers lead the retreat
Abbott Laboratories cut their 2002 profit forecast. (more)
Merck delay the introduction of a new painkiller. (more)
 
ASX Australia
The All Ordinaries fell 18 points to 3278 on above-average volume.
The primary trend is up, secondary trend - down.
MACD (26,12,9) and Slow Stochastic (20,3,3) are below their signal lines, while Chaikin Money Flow still signals accumulation.


 
Foodland on the expansion trail [FOA]
The Perth-based grocery retailer is today expected to announce the acquisition of Woolworths New Zealand. (more)
FOA  shows strong Relative Strength (price ratio: xao), Chaikin Money Flow shows accumulation, while MACD signals a bearish divergence.


 

Gold
Gold stocks undergo a correction as bullion prices slide to $US 319.50 per ounce. (more)
Relative Strength (price ratio: xao) and MACD are strong while Chaikin Money Flow signals a bearish divergence. 
Wait for Detrended Price Oscillator and Chaikin MF signals before entering short trades. 


Sectors
 Analysis of ASX sectors reveals the following stages:

Growth Sectors

  • Stage 1 possible recoveries - Media (XME), Telecom (XTE) and Technology (XMI)

  • Stage 2 bull trends - Banks & Finance (XBF) [advanced]

  • Stage 3 possible reversals - Retail (XRE) and Transport (XTP)

  • Stage 4 bear trends - Developers (XDC), Insurance (XIN), Alcohol & Tobacco (XAT), Health & Biotech (XBH) and Diversified Resources (XDR).

Cyclicals

  • Stage 2 bull trends - Gold (XGO), Paper & Packaging (XPP) and Chemicals (XCE) [advanced]; Tourism & Leisure (XTU) [early]

  • Stage 3 possible reversals - Building Materials (XBM) and Energy (XEY)

  • Stage 4 bear trends - Engineering (XEG) and Diversified Industrial (XDI).

At the end of June the ASX will cease to provide detailed sector indices. We will endeavor to find other sources.

 




Conclusion
 
Short-term: Avoid long. Maintain tight stop-losses.
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 (primary cycle).
 

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.