Trading Diary
July 18, 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 lost a further 1.5% to close at 8409 on above-average volume. The next key support level is 8000. This is a bear market, with primary and secondary cycles trending down.

The Nasdaq Composite lost 2.9% to close at 1356. The index is at the October 1998 support level.
The primary and secondary cycles are in a down-trend.

The S&P 500 dropped 25 points to close at 881, below the October 1998 support level.
Primary and secondary cycles trend downwards.

 
Microsoft
Microsoft report fourth-quarter earnings of 43 cents per share, the same as a year ago. (more)
 
AMD
 Advanced Micro Devices reported a second-quarter loss of 54 cents per share, compared to 5 cents for the same period last year. (more)
 
ASX Australia
The All Ordinaries closed up 27 points at 3100 on average volume.
The primary cycle and secondary cycle are in a bear trend.
Slow Stochastic (20,3,3) has crossed to above its signal line.
Exponentially-smoothed Money Flow signals distribution.


Aussie dollar
The US dollar weakens along with the equity market. (more)
 
Leighton [LEI]
Australia's biggest contractor reports a record $ 8.4 billion of work in hand. (more)
The triangle (symmetrical) can either be a continuation or reversal signal, depending on the breakout. Relative Strength (price ratio: xao) is positive, while MACD and exponentially-smoothed Money Flow are neutral.


Qantas [QAN]
Qantas extols the benefits of a partnership with Air New Zealand, fuelling speculation that QAN will acquire a substantial stake in the carrier. (more)  
Another triangle: Relative Strength (price ratio: xao) is positive but MACD and exponentially-smoothed Money Flow are weak.


 

Telecom
Not many investors favorite sector at the moment, but worth watching.
Telstra [TLS] is approaching the target of 4.98 from the short double-bottom pattern. The rising wedge is a bearish signal. The 150-day moving average is declining and relative strength (price ratio: xao) is still weak but MACD and exponentially-smoothed Money Flow are improving.


Singapore Telecom [STT] shows a bullish, ascending triangle. A break above 1.55 would have a target of 1.86 (1.55 + (1.55 - 1.24)). The 150-day moving average is declining and relative strength (price ratio: xao) is still weak but MACD and exponentially-smoothed Money Flow are improving.


 




Conclusion
 
Short-term: Avoid new entries. The Slow Stochastic is above, and MACD below, its signal line.
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
 
Thought for the Day:
Small investors tend to be pessimistic and optimistic at precisely the wrong times, so it's self-defeating to try to invest in good markets and get out of bad ones. - Peter Lynch
 
 




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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.