Friday, March 6, 2009

Another false dawn. Fri Mar 6

AIG, the money pit, and no detail on the Chinese stimulus package helped the US markets to slump again overnight. One of the few bright spots was gold as it rebounded $30 but obviously at the expense of everything else.
I'm not planning to do too much today as I'm bit overtired, too much pre-season training for my upcoming over 35's football season. So the signals will have to be good...
Bhp - rallied off the opening but still down 2%.
Fmg - also rallied and almost back to square.
Ncm - up a dollar, jumped on the open and held near the highs very well. May be due a little pullback before resuming.
Rio - slightly up on the day despite a weak overnight lead. Back in y'day's tight range.
Sto - now I'm trading the spi, I've decided to drop this as I'm already covering wpl in the oil sector. I'd like to add in a financial or two. Once I feel like there's some reasonable longer term buying opportunities I'm planning to put on some buy and writes as passive positions and use the long stock for my day trading.
Wow - made an early low, slightly below last week's levels and has bounced. Could set up for a run later.
Wpl - almost square after opening weaker. Nothing setting up right now.
Spi - obviously doing what everything else is, ie rallied off the open. Pulling back a bit now but following our usual Mr Sensible pattern of ignoring the wild volatility of overseas markets we'll probably be only slightly down by the end of the day. I might look for a long later.
Another thing I've been thinking about is focussing on pre-empting most of my trades. Since a stock will often go into a congestion once it makes a new high or low or a ross hook and I've got tight stops then I'd rather take my chances with pre-empting a trade.

12.01 Short a little wpl at 3397 as I'm assuming that the early rally was a retracement of y'day's and the open's sharp drop and now a fall to new lows is possible. The rally that played out from Tue to Thu also looked like a textbook retracement. Initial stop is a simple trailing one just above the high of the last bar at 3422.

Obviously this is pre-emptive and clearly if this turns out to be part of a tight looking correction then the chart is going to look pretty bullish.

12.35 Had some computer troubles and was out for a little while. Wpl has been non-commital and my stop is now 3411.

12.42 Short the spi at 3130 on a similar set up to wpl. It's a battle royale in the spi with plenty of volume at these levels. I've got a tight stop of 3136. Wow has made a potential sell at 2584 but I'm not taking it as I'm worried about the early support at 2566 proving key.

12.55 Stopped out of the spi at 3136. It's setting up bullishly now. I'd tried to get out of the position for square once I could see from shorter term charts that it was bouncing but missed. It's nearing the end of another 30 minute period and as wpl is still going nowhere I'm going to get out, hopefully for close to square.

12.58 Out of wpl at 3403.

1.03 My sense is that the market is looking to rally so I'm going to try to take pre-emptive bullish trades where there's a tight stop. Bhp is particularly promising as it has ground back from over 2900 to 2750 now after having gapped up from 2730ish.

1.08 Part filled on a buy order in wpl at 3411 (see the post at 12.01)....and eventually paid 3412 to complete.

1.34 The market is still consolidating but I'm bullish and decided to take a pre-emptive buy on the 10 minute chart in the spi at 3130. I've decided to do something similar in bhp at 2752 as it's very close to a 30 minute break.

1.43 Sold a few wpl at 3430 to cover costs. Bhp hasn't quite turned around...

1.59 Sold half of spi on profit objective at 3138. Bhp has confirmed break but not convincingly yet while ncm and rio could plausibly run and wow too.

2.15 Sold spi balance at 3134 as the rally stalled and bought wow at 2585 on a breakout.

2.27 Back in the spi at 3135 -10 minute resumption at 3137.

2.35 Out of wpl at 3466 as it stalls following a good run. I'm planning to be more agressive with my cuts now so that if there's a black candle or a doji in a bullish position I'll probably get out. Wpl still looks good mind.

2.55 Spi had been going nowhere so sold half at 3136 but now it's close to breaking up through 3141.

2.59 Sold some bhp at 2759 to cover costs.

3.03 Out of spi at 3135 - still ranging. Wpl is up at new daily highs of 3491 but my cut still worked ok as I would have been stopped at 3450, there just wasn't much of a retracement so no room to get back on.

3.10 Long spi again at 3142. Still in the range but a breakout within that which should go close to 3150 and could go further.

3.20 Out of bhp at 2752. The spi immediately retraced and I'm nervously long. My other position is in wow and that's holding up well at 2590.

3.31 Stopped out of the spi at 3132. The trading range should have kept me away.

3.50 Sold half of wow at 2592 as the end of the day nears will do the rest on the match.

4.01 The spi ran back up (within the range) after I cut my long and made a slightly higher level at 3145. Just sold small at 3139 as it reversed on the 10 minute chart.

4.10 No quick reversal so out at 3139. Sold last of wow at 2599.

4.18 Just realised I forgot to put on an order for wow!

Quite happy with today, 4 stock trades, 3 winners, 0 losers, 1 scratch and 5 spi trades for 1 winner, 2 losers, 2 scratch and overall up on the day. The spi was in a narrow range and after the first couple of trades it wasn't really offering any opportunities. The stock trading was interesting. I noticed ncm as a potential short but thought that the overall pattern was unclear so I missed something there but wpl was a terrific mover. It finished really well and I'm a bit disappointed I didn't get back on. I'm a bit reluctant to take ross hook trades but given how much I like the stock at the moment it would have been worth going down to the 10 minute level to get a re-entry on the long side. Better than forcing a trade in a different stock that's going nowhere.


The 10 minute chart of wpl is just above and there is a pre-emptive entry signal here at 3463. Maybe it's stretching a point but by this time in the day it was the only thing I trade that was moving cleanly.

I'm a bit concerned about the spi, it's a bit too easy to overtrade because costs are low and it's pretty liquid. I started spending way too much time looking at the 5 and 10 minute charts. I think I'll stick to the 30 minute like everything else and only use the shorter time frames for fine tuning in a nicely trending situation as in the wpl example.

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