A quick rundown.
Bhp - down nearly 4% at 2775 and well below the US closing low (it's traded in ADR form) of 2857. I'd often expect a rally when the market seems to have overreacted like this but the charts look pretty tragic. Bhp is still driving down with no obvious opportunity for me.
Fmg - just shorted this at 252 as it makes new lows after having rallied slightly from the open. I've traded this poorly lately but it's a valid enough signal, though it would be better if it cracked through the low of 242 from last Thursday.
Ncm - very strong, up over 5% on safe haven buying even though gold has only bounced slightly. It's consolidating but without pulling back much so it could be a buy a bit later.
Rio - looks dreadfully weak, no opportunity yet.
Sto - also hit hard but trying to find a base and forming the sort of reversal that I might take with a tight stop.
Wow - up 7 cents today as it consolidates after being hammered on Friday. Probably setting up for a short term rally.
Wpl - also very weak but like sto is rallying a little off its lows.
12.05 Sto carried on with the reversal but as there seems to be no real momentum and I'm not sure that the fall is extended enough, I'm not taking the trade. I've noticed that there's often a first attempt at a reversal and then a new low close to the old one so I might take a second attempt. Nevertheless, if it holds here for half an hour so and volume starts to improve it might be worth a quick trade.
12.21 The market has been trying to make a base here for about 45 minutes but can't convincingly climb off the canvas. My only position is short fmg which I was reluctant to take after having stuffed it up late last week. It has a rallied a little against me but nothing too serious as yet.
12.41 Had to cut fmg at 255 as it pushed back up but at least it's a small loss. I expect it to go lower today but as it's not clearly trending I'm sticking to my simple 1 bar trailing stop. Here's wow, I'm willing to take a break of the 2nd last bar as I expect a 3 wave rally and there's a tight stop if it fails.
12.47 Wow blipped up but I did buy some at 2629 and also bought ncm at 3275 on a traders' trick entry. I generally would have waited for ncm to make a new high because the difference between buying now and then is small but the degree of certainty is much higher. However, the market is unusually thin at the moment and it can be very difficult to get set at my level.
12.55 There have been bullish reversal set ups in bhp, rio, sto, and wpl. In the first 3 there would have been only a marginal gain in taking them while in wpl the trade would have paid off. I chose to take none of them but I'm still long ncm which has made new highs now and wow which is going nowhere. Fmg hasn't really participated in the rally and I'm itching to reinstate a short position there as the chart looks awful to me.
1.07 Decided to take the signals in bhp at 2792 and rio at 4451 as I hadn't missed the entry level by much and the spi was still quite solid along with these stocks. Very tight stops on both positions though with a cut and reverse probably.
1.14 Almost picked the exact peak in the spi and the tight stops kicked in so out of bhp and rio for minor losses. Short again at 251 in fmg.
1.20 Definitely looks like the rally is running out of steam and I might get the opportunity to short some wpl. Wow is close to stopping me out as there was a rally but a very minor one.... out of wow at 2616.
1.49 After a period of indecision stocks are falling now and I'm short some bhp at 2782 and wpl at 3480 as there is enough room for a trade even if the stocks don't breach this morning's lows. Rio and sto are setting up in a similar fashion and ncm is flirting with my cut levels. I'm having doubts about that pre-emptive trade in wow that I had to cut for a loss. It reminds me of last Thursday's fmg chart which subsequently failed. In fact, some work I did a while back persuaded me that you would often get a 3 wave pullback from the little surge and then the chance of a proper bullish breakout so best to be patient - I'd forgotten about it.
2.10 Out of ncm as it breaches my entry point, now my stop, of 3275. My sale price is a bit higher as I took a few off earlier. Indecision still reigns although I guess I must favour the downside being short bhp, fmg and wpl.
2.17 Short sto at 1481 on a TTE, kind of marginal as the ross hook entry is at 1470 but it tried to rally for a long time and has broken the low of the last 4 bars.
2.27 Ncm just spiked up to a new high of 3305 but I didn't take the breakout trade as it seemed so flighty. It has now dropped 20 cents back into the range just as quickly. I could have cut a couple of my shorts but as the market is still so whippy it seems a bit foolish.
3.03 Still going nowhere. Ncm back up at 3306 after having spiked to 3315 but given that it's also traded at 3261 in the last half hour or so I'm still leaving it alone.
3.16 A bit of a tricky little period. The spi ran up to just break the top of the range and took me past the stop out point in a couple of trades. It's been so thin today and given that I'd taken a little off at the bottom of the range, I've decided to hang on a bit longer and things are starting to reverse.
3.23 Stopped out of last of bhp at 2792 for small net loss.
3.31 Ncm was a shame, it's running easily now at 3345 but I could easily have been badly chopped around while the stock consolidated earlier. Wow is now having a better rally but not wholly convincing and only after having consolidated for quite a while after the first break and with a false start in between. Fmg and wpl are falling now while my other short sto is at 1484, compared to my entry point of 1481.
3.38 Bhp is making a small buy signal but it's a bit too near the end of the day, and the market is too directionless for me to want to take it.
3.52 Bought a little fmg and wpl as I'm squaring into the close. Been playing a dangerous game in sto as it's back up at the top of the range at 1497 and I failed to buy any after having missed the cut the first time and had a second chance. I'm going to wait till the last minute as the spi is driving down now.
4.15 Closed out my balances on the close. Fmg at 245, sto, the worst at 1500 and wpl at 3427.
The day was just down with trades breakeven and costs the deciding factor. 9 trades, 3 winners, 5 losers and 1 scratch. It was a very difficult day so not the worst result. From the time I started trading, about 11.45, until the end of the trading day the market was in a very tight range. The reversal rallies were not strong enough to make anything out of on the upside and hence there was not much room for them to slip back again. The exception was wpl which had a decent reversal which I missed, but I did manage to do well out of the resumption of the downtrend.
I stuffed up a bit in sto but given the nature of the day which was characterised by whippy moves on light volume, I had saved myself quite a bit by being a tiny bit looser with my stocks. The one that got away was ncm. It was so volatile around the break at 3300 that I missed the second time through break which ran strongly.
One thing I've noticed regarding reversal trades is that I often don't want to take them and then I jump in a bit late when I feel more confident about them. There were 4 potentially bullish reversals today in bhp, rio, sto and wpl. All of them had fallen from 4 to 6% so there could be room for a 1 or 2% bounce and all of them were bouncing off their lows with a signal being a break of the high of the previous bar. There was no way of knowing which ones would work and only wpl succeeded. Yet if I had promptly taken all of them with the stop fairly quickly moved to b'even then the other 3 would have been fine as in practice they all initially went well and I usually sell a small amount to cover costs. Jumping in too late changes the economics of the trade drastically as counter trend trades are about snatching a few dollars out of a stock fairly quickly. Their real value lies in keeping yourself from entering too early in the direction of the trend, before the correction is complete.
I also broke my rule in bhp and sto about using a TTE to go short when the reversal rally had been small. In both cases the stock elaborated to make a choppy 3 wave rally, a nightmare for intraday trading and I could easily have kept out of them.
Fmg is a different kettle of fish. I'd been thinking of dropping it because the smaller resource stocks tend to move sharply over an hour or so then spend the rest of the day chopping back. I might need a 4 or 5 cent move to get a trade entry and yet that's already close to 2%. I'm sticking with it for now because when it runs, it really runs. The thing to do is to wait for good breaks and to keep wider stops. A little 3 or 4 cent retracement is quite common and yet the trend will normally reassert itself quickly so a 1 bar trailing stop is probably too tight. I'll experiment a bit.
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