A little bit left. Tue Mar 24

Following on from the massive overnight rally in the US which was largely pre-empted in our time zone yesterday, we are continuing to rally with the XJO index up 1.5% at noon, slipping back from a high of 2.7% early on. The large cap stocks have again led the way with the only weak spots being the former safe havens such as csl, coh, wow and also the golds. Speaking of gold, I'm glad I sold out of my lgl position yesterday although I'm still in ncm. Ncm has recovered from sharp falls earlier but as it overlapped what I thought would be support levels, I'm planning to sell it out once the rally loses steam.

My other underperformers are org and tls. At the moment the pullbacks in these two are minor and there are no signs of lower highs forming on the 30 minute charts as yet. So I don't see any reason to stop out of either but I can imagine them falling a bit further because it's shaping up as one of those days where the market might sell off slowly all day. On March 18 and 19 the spi gapped open and sold off all day. Given the much larger gap it's more than possible that it could happen again. Of my existing positions, ctx is the most satisfying as it's really starting to take off today and I'm pretty confident that it will get to the February high of 1050 quite soon.

I ran through the top 100 stocks this morning and found quite a few potential trades, too many in fact. I'm considering cutting back to looking only at the top 50 as a way to ration the positions I put on, although I've often got a few favourites which I'll make exceptions for. The most interesting theme was property. As the latest US initiative encourages traders to speculate that credit might ease, the Australian property sector, which was overgeared and heavily sold ahead of expected equity issues, is looking quite interesting.

I've put on 3 positions in the sector this morning. One is a straightforward buy signal while the others are more questionable but the upside potential makes them worthwhile for me. The first is in cfx, a retail property trust.

The daily shows the stock breaking out this morning, and I bought some at 166.5 and more at 168.5 to average 167.5.

The other two positions are in gpt and mgr, 2 former powerhouses of the sector that overextended themselves in the boom. The charts are almost identical (as is gmg, another one in the sector) so I'll just show Mirvac Group, mgr.

I'm working on the assumption that the tightening consolidation between late October and mid January was a 4th wave correction which then failed as the stock fell to a 5th wave low a couple of bars ago. If that's the case and the stock is now correcting with a reversal low at 60 you might expect a rally to around 120, near the middle of the 4th wave consolidation. A confirmation would be if the stock pushed through 99.

The daily chart shows a nice run up from the lows with a roughly 61.8% fibonacci retracement and then strength today. It's a bullish continuation pattern setting up so I've taken it, for a few days at least, hoping that it can convert into a weekly position. I bought mgr at 85.5 and it's trading slightly above that at 86. I chased gpt early and paid too much, 39.5, as it's now 38. As I wrote earlier, its chart is very similar to that of mgr. The recent difference is that yesterday formed a white candlestick and I was desperate to buy towards the end of the day. I decided that if I was going to pre-empt a weekly move I should at least have some daily confirmation so I thought I'd wait till I saw a break above yesterday's high. The stock gapped open and I fell into the traders' trap of worrying about missing out. Don't! There's always another trade.

1pm Just sold ncm at 3312, which was still a profit having bought on the 19th at 3255 and sold some the following day at 3396. I suspect that this could be a stock I'll be shorting next week along with lgl. I also sold out of my penny dreadful, fms, at 6.7 versus an entry price of 6.3. No problems with the chart but it's a small position and I don't want to become overwhelmed with too many trades.
Having said that.....I then put on a position in another one, Carnegie Corporation, cnm. I saw the breakout at 18 last week but it was on news and sold off quickly from a brief high of 20. Presumably, a fair number of holders were waiting to sell into the news but a couple more days have passed and the stock is still looking firm so I jumped in at 19.


My excuse is that they're involved in wave power and I'm a fan of alternative energy technologies. The chart set up is quite promising. The dramatic change of scale between the first rally in December and the rally from February on, implies that the move from 12 to 21 was the first part of a larger scale move that should see 30+ faily soon. My only concern is if the correction has further to go.

2.58 Since my first post around noon today, the spi continued to slip away but only slowly and it's very stable now at 3602, hinting at a rally. Org and tls have been weak as feared and even made lower highs but as they don't seem close to complete I've stayed long and they're recovering somewhat.
I'm about to run through my stocks again. Of the positions I could have taken but didn't, I like Aristocrat, all, and Iluka, ilu. Iluka actually made a signal yesterday which I failed to spot and has continued today but with a pullback which may give me an entry.

3.47 After prevaricating all day I've bought some ilu at 449 as unlike a couple of my other trades today it has actually made the set up I'm looking for. Here's the weekly chart.

The daily chart shows the breakout through 440 yesterday. Iluka hit 456 earlier today so I'm not unhappy with getting in on a pullback at 449.

As ilu is the only one out of the possibles that has a clear signal I've left it at that.

4.10 The spi didn't manage to rally much at 3pm and kept slipping to 3582. After 4, and now after the match, it's rallying. Not in time to save me from some slightly negative markings. I put on 5 new positions today and 4 of them have closed a little against me. From the start of the day, I stopped out of ncm and sold out of fms. Tls is down 1, org down 12, aoe up 5 and ctx up 19.