Monday, February 16, 2009

Ongoing strength?

The market has steadied after a weak start and the strong stocks like fmg and wpl have rallied, especially fmg.
11.30 Fmg is petering out though and I've got a potential short at 292 and bhp which was looking like it might have made a higher low seems like it could be running out of steam.
So no trades yet.

Wow is once again consolidating, in the same tight range of 2760 - 2775 as last Thursday but this time looks more likely to break down.

11.45 Short fmg at 291 as it dropped quickly and ncm at 3434 as it slipped below a morning rally which finished with a doji.

11.58 Still a very indecisive market. Bhp shaping up as a short at 3222, ie this is the third inside bar of a retracement and is closing on its low. A similar pattern for rio.

12.05 Short bhp at 3222 and wow at 2756. Close in rio.

12.35 No more trades and the market is chopping first down, then back up with no conviction. Bhp has edged back to 3229 and would be cut and reverse to go long at 3236. I could cut here as 3227 is a simple trailing stop but I'm prepared to give the trade a jot more room.

My bearishness is still predominant, our market has shown strong relative strength especially compared to the US indices and the spi tried hard to push back through 3500 but seems to have failed for the moment. I've seen how my overall opinions can negatively effect my trading though, so I'm being careful.
I've ignored my stops a bit when getting out of good positions as well so that's another reason for being patient.

12.46 Both rio and bhp are shaping up as potential buys or sells depending on which way they break and the spi is continuing to tilt at 3500.

1.06 Rio popped up through 5030 but I didn't buy as there seems to be little momentum. So far it's paying off.

1.15 The spi is dropping now. Sold lgl at 339 on the premise that it has made a lower high. Still short bhp, fmg, ncm and wow. All going my way except bhp which is 3224.

1.37 Bought rio at 5038. It's rallying in a choppy fashion and I don't want to second guess the signal any more.

1.41 Bought back fmg for a small profit. the stock spiked down as I hoped and then found pretty good support. It may have another leg down but overall the rally looks incomplete.

1.48 Nervous about bhp as it has sat in a tiny range for 3 bars.
1.53 Closed at bhp at 3226. If anything it's shaping up for a rally and the overnight adr close was at 3270. Small loss.

2.13 Sold out rio long at 5037 and shorted at 5025 as rally was thin and seems to have failed. Bhp holding up relatively well at 3220.

2.19 Shorted fmg on ross hook at 283. I'll probably look for 5 or 6 cents and get out as the comments above still pertain.

2.28 Sto raced through a buy signal at 1521. It's now 1525 - not sure whether to take it as the chart is a bit extended. I'm starting to feel like I'm on the wrong foot, too many positions so I'll leave it alone and fix up what I've got.
Out of fmg, a scratch trade and only short a little wow now.
Rio problematic as it's still very choppy and is back at 5050.

2.39 Bhp could provide a really good trade this afternoon but I've been tempted to pre-empt about twice in each direction so far so I'll try to be patient.
Out of the balance of wow. It could be an interest buying opportunity much like wpl on Friday except that the stock has been in a tight range for 12 days now whereas wpl was consolidating for just a few days after a decent fall.

2.47 Out of rio at 5055. A hasty trade that I thought best to leave. Closed out ncm also as it was the third bar in a row where the stock was rallying off its low. Only position is the balance of the short in lgl, now at 335.

Wpl is setting up bullishly and I'd buy stock above 3320. Bhp and rio are still chopping about and time is running out for a decent signal.

2.54 Once again, too hasty. Fmg is now at 276, slightly below where I was planning to take the short off. The message is, take the signal and don't second guess it! (now 272, 5 minutes later)

3.03 Short a little sto at 1519. Made a small new high, looked like a 5th wave and then started to reverse.

3.26 Bought some bhp at 3231. The stock is still shaping for a late rally but keeps hitting a wall here. I'll keep a tight stop on this.

3.36 Closed out sto at 1527.

3.40 Out of lgl at 334. Still looks weak, if I was holding positions o'night I'd keep this but would rather get out near the close.
Just got a small long in bhp which I couldn't help pre-empting.

3.49 Out of bhp at 3221. Kicking myself for not resisting the temptation.

Net result is a small profit on a difficult day where stocks chopped on light volume because the US market is closed tonight.

10 trades, 4 losers, 5 winners, 1 scratch.
Two of the losers were dumb trades, none of the winners were dumb trades where I got lucky.
Regret is that I second guessed the short trade in fmg at 283 which would have been the best of the day. Even if I'd held, I was planning to take it off for 4 or 5 cents (whereas it fell as far as 18 cents once the sell signal was received) as I wrongly assumed that the uptrend was too strong for a big fall.

I did well in wow and cut at a good time.
I did reasonably well in ncm and lgl although not patient enough with my cuts.

I recognised most of the opportunities that were available and made something out of them.

This sort of trading is a little limited because there's no chance to hold on to good positions overnight. However, in a time of unprecedented volatility it's worthwhile accepting the limitations.
I've added the chart of fmg below. I took the difficult initial short trade at 292 but chopped out of the relatively easy short trade at 283 where the stock had established a downtrend.
If I used a trailing stop I would have been in until the close, in which case I could have taken the price just before the match of 269 or risked waiting and closed out my short at 266.
I'm not trying to beat myself up over this, it's a bad habit I've had for a long time. The idea is to change my habits for the better.

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