In the too hard basket. Thu Mar 26

For a change the Australian market is not trying to pick the overnight move and is simply up 16 points (at 11.10am) with most stocks moving independently, eg of the 4 major banks, 2 are little changed, one is up, one is down.

I've had one mess to clean up which is ilu, it closed on its lows - which could have been a clue for me to get out last night - and gapped 5% lower soon after the open. I sold at 401 versus an entry price of 449. I took a long time to decide to buy this stock and examining the trade in retrospect I realise that the chart was very much like fgl, my other recent dud trade.

In both cases (fgl last week and ilu this week) the signal was negated quickly and only appears as the thin range at the top of the candle. Common to both charts is that they are in trading ranges making lower swing highs after peaking in the last few months, which means that bullish breaks must be very convincing to be worth taking and/or right at the bottom of the range.

I ran through the top 50 earlier and decided to take a trade in fmg at 237. There is no weekly break yet, I would have to see 250 for that, but there is an excellent set up on the 30 or 60 minute chart and the other time frames are quite supportive.

The daily chart shows a slow retracement to 218 after a February run that went from 165.5 to 334. If the daily can get to 244 it will be the first bullish pivot since then.

I've had to expand the weekly chart to get the scale legible but the 2 recent run ups have found higher lows - potentially, at least. The simple nature of the swings, one wave and similar size, is usually a sign that there's more to come. In elliot wave terms, it's possible that the first swing is a wave 1 and the second swing is a wave (1) of 3, ie part of a bigger bullish pattern.Until I get a good confirmation this is simply theorising and my stop will be around 223 based on the 60 minute chart.

Running through my existing positions: aoe is running well now, up 11 to 291; cfx is down 4 to 170 but this seems like a pullback to the trend line and I'm still bullish; cnm is unchanged at 19; ctx is down 21 to 987 after a very strong few days and still looks fine; gpt is up 1 to 36.5 and may still run up; lnc has ground up to 190 and looks ok technically but there is a lot of volume on the offer for a small stock; mgr has bounced back to 89 but needs to accelerate soon otherwise I'm out and I've sold a few more at 89.5; lastly tls which has been toying with a correction is holding well at 314.

3.09 Just got back from a late lunch with some old friends. The big change has been lnc which went ballistic between 2.35 and 2.40 pm going from 193 to 206. It's now 213 and is clearly through resistance. I'd like to buy some more but will only do so if there's an opportunity on a pullback. Given that there was stock on the offer at every price point from 189 upwards I had assumed I would easily be able to get set in the high 190's on a confirmed breakout. Otherwise, fmg has been as high as 247, confirming the break on a daily basis and it's now 243. Tls is back up at recent highs of 318 and the pre-emptive trades in the property trusts, gpt and mgr are looking pretty good at 39.5 and 92 respectively.

3.56 Had a run through the top 50 before the market closes for the day. No new signals although some marginal buys like rio continue to push ahead. The market is up 1.1% today but with the exception of ilu which I cut early on, most of my stocks have outperformed. I bought a few more lnc at 214 as the short term chart kept powering and they're now 221.

4.10 I decided to sell out of cfx, for the reasons I mentioned yesterday, at 170. I sold a few fmg at 247 as I'd bought more earlier at 239, averaging 238, and I just wanted to cover costs. I did the same with a few lnc at 217 on the match. Otherwise, mgr slipped back to 86 and I thought about cutting this but as gpt and gmg rallied today I thought it might just be noise. The market closed up 1% which is a pretty strong day although US overnight futures are firm and we could have gone even further.