Positive divergence. Thu Feb 26

While the fall in the US indices look incomplete the Australian market could be close to a low and possibly find support around the November 2008 lows of 3200 rather than fall to the next support levels at 2800.
Early on the xjo and spi look bullish with potential higher lows versus y'day afternoon and again from the 24th.
Bhp - a better bullish reversal is shaping up with matching black then white candles and an attempt to push through the highs of those candles.
Fmg - back on board after a big placement to a Chinese group of new shares and a large holding from presumably weak US hands. A positive dev't and the stock is shaping up well. Strong rally after knee jerk sell off and pullback to higher low which still needs confirmation.
Ncm - gold continues to sell off after a strong run and while ncm has had a rally off opening lows there looks to be little enthusiasm for a bounce.
Rio - once more similar to bhp and the index/spi but perhaps a little weaker.
Sto - just broken through with a buy at 1477 and now 1483, will try to get some close to here.
Wow - failed to run on a new high yesterday and looks undecided today.
Wpl - buy signal just after 11am at 3495 and another one is looming at 3509 above y'day's high. Oil strong o'night also helping sto.

11.43 Getting set in sto at 1482. Will have to be patient as it's a bit far from the break but the set up is supportive for a sustained run with a breach of highs covering 5 or 6 days action and a series of higher lows. An obvious target would be 1525. Chart follows.

11.52 Long wpl at 3510 and bhp at 2908. Wpl is a strong signal, bhp more of a reversal but a good enough pattern.

12.14 Was hasty into bhp. Buying one stock straight after another is a bit of a risk as you can get caught up in the excitement of putting on a good trade and take a marginal one. Best to at least look for 5 or 10 minutes. The spi paused for 20 minutes or so but is now up near its highs. Wpl has been strong, now at 3542 and sto is holding well after it's early spurt. If the overall market stays firm then fmg and possibly ncm could be buys.

12.44 Bhp has been drifting down and I've been thinking about cutting but as the spi is chopping about I thought better of it. Long some fmg now at 268, looks a fairly straightforward trade. Here's the chart.1.10 We're still clumping around in a range but most of the stocks I look at are setting up bullishly.

1.20 So much for that idea. It looks like we've failed to press on and the market is drifting down although without a huge amount of commitment. I've shorted some ncm at 3030 on a sell signal that's within a range so I'll be more comfortable if it can trade below the bottom of the range which is 3015.

1.26 Stopped out of bhp at 2889. Could go either way now.

1.31 Stopped out of wpl for a profit at 3534 and sto at 1489. They both look good but are pulling back with the market. Ncm, now through the day's lows.

1.44 The pulback may be over. It shook me out of a few positions although I held on to fmg. I got out of ncm at about 3010 as it was thin and the market rallying. No official stop. This may have been an irritating period but having got rid of weak longs including some of mine, there's scope for a run.

1.54 Fiddling round a bit too much but I sold ncm back out at 3012 after it pushed back through the break then started to slip again. Also sold out of fmg for a loss at 263, a reasonable trade but just didn't go my way. The Hong Kong market is down and other markets in our time zone are slipping back after being firm early. I'm break even for the day now with only one slightly poor trade in bhp costing me.

2.15 I bought back into wpl at 3560 as it breached its old highs. I was sceptical but there was quite a bit of volume trading so felt I ought to do the trade. Short in ncm is going nowhere and while the spi is drifting my stocks are in no man's land. If anything, fmg will be a sell at 259. A couple of brokers are negative because in addition to the Chinese placement there was going to be a bookbuild but it was abandoned due to lack of support at 250.

2.22 Decided to short rio at 4615 as this is the 6th bar that it's been drifting down and it had held 4620 for an hour. There's a more definitive break at 4587 but it had also made a lower high after rallying from an opening sell off. Also out of wpl at 3550 as my scepticism got the better of me. I'm always nervous of a marginal new high with no follow through and the spi is continuing to weaken slowly. One thing in the trade's favour is that there still appears to be reasonable buying.

2.39 Damn and blast. Wpl went up again as the spi rallied and I've bought back in at 3572 - ouch. Have shorted fmg at 257 and bought sto on a resumption at 1493. Also bought back half of rio at 4615. At the moment I'm long sto and wpl which have been the two trending stocks in my bunch and short fmg, ncm and rio on a punt.

2.44 Bhp made a sell signal at 2883 so short a small position - again, would like to see it go through the day's lows to be convinced.

2.50 Out of rio for square as the spi rallies sharply again and it still hasn't made a proper sell signal and out of ncm for a small profit as the bar looks like closing on it's highs making a bullish reversal set up.

2.56 I'm really jumping at shadows today and apart from the iffy trade in bhp early on, that's what has cost me a good day so far. Sto and wpl have been the trending stocks and I was sorely tempted to keep a stop back to the breakout with them both. With hindsight that would have sealed the day. It's approaching 3pm and the spi has reversed now and is gathering steam.

3.23 Bought a little wow at 2812 on a bullish reversal earlier and now also some rio at 4629 for the same reason. On a scatty day for me I realised that my plan is only to take reversals in extended patterns not in trading ranges like these two so I'll try to get out of them without too much damage.

3.33 Got out of rio for square but cost myself 6c in wow.

3.38 Now stopped out of fmg at 263. Really disappointed with this as it dropped sharply from 262 and I thought 262 would act as strong resistance on any retracement.

3.48 Stubbornly tried again to short fmg at 258 as 263 seemed to act as strong resistance and I feel like I was suckered in to stopping out.

3.55 Closed bhp for scratch at 2882 as there's only minutes to go....sigh, fmg at 258 after missing 255. Still long sto and wpl, small size, for the match.

4.23 Sold out of the balance of sto at 1501 and wpl at 3598 in the match, bhp slipped to 2860 so it's a shame I didn't leave some short for the 4.10 close out. Ok, the washup. A tiny loss, and like every other day there have been enough opportunities to make solid money. A bit like yesterday I was slightly flustered and messed up some good positions plus I had a spot of bad luck in fmg where I did 2 reasonable trades and had to stop out at the worst point. I feel like I should have done much better with sto and wpl and possibly should have dealt in bigger size there. There were 15 trades all up, 6 winners, 5 losers, 4 break even. 7 trades were either slightly or very silly. All stops were good although I wonder whether I should use a qualitative filter for the high class trades so as to stay in longer. The two breakout charts are below.

On reflection, the stop and re-entry points probably aren't too costly. The issue might be confidence, ie to go harder at a stock with a clear breakout. I'm dealing in smaller size than usual and I'm not planning to increase volume until I feel like I've mastered the approach I'm trying to take. The last 2 days are a bit disappointing as they've been a step backwards from Monday and
Tuesday. I haven't thrown in a shocker like one day last week and I'm getting better and better at cutting. The problem is trade selection; I'm quite cavalier about taking on marginal trades. From now on, I'll work on being more discerning. This will allow me to build the size on the good trades and keep my composure.