Trading Diary
June 25, 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 slide continues, with the Dow falling 1.7% to close at 9126 on above-average volume.
This is a bear market, with primary and secondary cycles trending down.

The Nasdaq Composite dropped 2.5% to close at 1423, testing September 2001 support levels.
The primary and secondary cycles trend downwards.

The S&P 500 lost 16 points to close at 976, approaching support at 960.
Primary and secondary cycles continue downwards.

 
General Electric
After market hours, GE announced that second quarter earnings will match forecasts. (more)
 
Procter & Gamble leads decline
Market favorite P&G lost 5%, making the biggest contribution to the Dow's fall. (more)
 
ASX Australia
The All Ordinaries dropped 9 points to close at 3177 on strong volume.
The primary and secondary cycles are in a bear trend.
MACD (26,12,9) and Slow Stochastic (20,3,3) are below their signal lines. 
Chaikin Money Flow signals distribution.


 
Macquarie Bank [MBL]
MBL will collect $50 million in fees from the successful $5.6 billion bid for Sydney Airport. (more)
Relative Strength (price ratio: xao) is rising, while MACD and Chaikin Money Flow show bullish divergences.


Looksmart boardroom turmoil [LOK]
 Evan Thornley steps down as CEO but remains as Chairman, while 3 other directors quit. (more)
MACD and Relative Strength (price ratio: xao) are weak, while Chaikin Money Flow is positive.


Mayne Group [MAY]
Mayne seeks to expand its healthcare division through the acquisition of Queensland Medical Laboratory. (more)
MACD and Relative Strength (price ratio: xao) appear weak, while Chaikin Money Flow has returned to positive territory.


Chaikin Money Flow has one major flaw to watch out for: Note the sharp fall [1] on April 24th, when price gapped downward. 21 days later at [2], when the downward gap is dropped from the indicator window, Chaikin MF rises steeply. Indicators calculated with a simple moving average have this propensity to "bark twice" - first when the data "arrives" and later when it "leaves".

I have been working on an improvement to eliminate this flaw.

 




Conclusion
 
Short-term: Short in selected sectors - MACD and slow Stochastic are below their 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 (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.