Today is one of those days when we're ignoring the weakness in European and American markets last night and running our own race having rallied from a weak open to be down 6 points at 11.30am.
My positions are slightly against me and unfortunately I was stopped out in gmg at 31.5 when it's now 34 and unchanged. I still like the stock but I was pre-empting a move. The next stop after 31.5 was 25.5 which was too far away so I took the cautious approach. I was also stopped out of shl as another pre-emptive trade failed to go my way. I had only put on a small position here and cut at 1137 as the stock pushed through my entry signal of 1120 and headed towards the 1140s which was my original cut level. I decided to cut early because I was discussing the stock last night and it occurred to me that if the market was going to give back some of its recent gains then active traders might switch back into the safe havens. When I looked at the health care sector I could see that Cochlear (coh) had made a reversal low and was rallying while csl was also bouncing off lows.
That led me to buy some csl at 3300, prematurely I think. The break on the weekly chart is 3320 and I got carried away with the surprise rally in the market. My stop is at 3235 and I'm crossing my fingers that I don't have to pay for my impetuosity later today.
The daily chart shows the 3rd consecutive day in a tight range after a quick run up from 2994. Because this latest consolidation has overlapped a previous one from about 10-15 days ago I suspect that there is more of a rally to come; which doesn't mean we couldn't fall a dollar or so first.
Lgl and ncm are two other safe haven stocks that I shorted yesterday that have rallied against me this morning. Lgl is just up 1 to 324 but ncm is up 2% or 71 at 3302. Because I took these on a weekly signal I'm slightly more comfortable to hold with wider stops but I'm now doubtful about these trades. Fmg and tah have done pretty well. Fmg rallied after early weakness to be up 4 at 253. I've just reduced my position slightly but I'm still hopeful of new highs soon. Tah is up 9 at 654 after holding support at 640. Lnc also fell to support at 190 but is back now at 205.
I put on two new short positions this morning. One was in Brambles, bxb, a maker of pallets. This is pretty straightforward and I've put on a slightly bigger position than usual. Here's the weekly showing that the rally didn't overlap resistance at about 650.
The daily is very weak. There was a sharp fall 4 days back with virtually no retracement in the next 3 days and today is down 8% now.
The 30 minute is basically the same as the chart above. I sold most at 492 and some more at 484. The stock is having a small rally now to 480 from a low of 474. I think there's a pretty good chance we'll test the recent lows of 408. Although I base my trading on chart patterns I do follow market news and it's interesting that there is concern about Brambles' business model. They distribute wooden pallets and are starting to lose contracts to competitors working with plastic ones. So although valuations average around 600 there is a reason for the stock to be sold off heavily as those numbers would be based on assumptions of no threat to their model.
12.30 Bxb is now up to 486...and on to my other short. It is Incitec Pivot, ipl, who are in the business of fertilisers and industrial chemicals. It's not such a clear cut chart on the weekly and because of the scale and the size of chart I can fit on these pages I'll stick to the daily. On the weekly, it had a lacklustre 3 wave rally but it did slightly overlap a previous low at 220. I'm in two minds as to whether we'll see new lows but the daily break is clear and I think there's enough room to make money on a higher low. Here's the daily chart showing a new low today formed when the stock fell below 208. I shorted it at 206 and it's now 204 having been to 203.
12.45 One of the stocks I've been watching closely is Fairfax, fxj, who are a media group. The weekly chart shows a reversal low which has consolidated near the top of the range.
The daily shows how tight that consolidation has been. A trade above 108 would trigger a weekly buy signal. However, a closer look shows that in the last 5 days the stock has stopped at 103, 3 times. I'd buy on trades above 103 as I think the stock could quickly move to 108 and might continue through.
1pm I decided just to cut lgl and ncm as they look too good on the intraday charts and the dailies have reversed sharply. Lgl bought at 325 having shorted at 318 and ncm out at 3331 having sold at 3215.
2.45 It's been a bit of a mess for me today. The market is up now but my shorts have been going a bit better than my longs. I cut csl at 3280 - I figure I'll wait until I get a proper signal. Lgl has pushed on further to 328 but ncm has failed and reversed back down. I've been thinking about reinstating my short but have decided against it. I have bought some fxj at 103.5 on the break. My positions are long cnm, fmg, fxj, lnc and tah and short bxb and ipl. At least I'm comfortable with all my positions now after the transition of the last couple of days.
3.56 I went through the top 50 a little while back and there's nothing new. Axa broke down earlier but I don't want to chase it, I'm hoping for an opportunity on the daily through a rally then resumption of the fall. Also, being the end of the quarter the action today is not going to be totally reliable.
4.10 In the end the match out was fairly unremarkable. Ipl closed near its highs but bxb slipped back towards its lows for a 480 close.
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