The window shuts. Thu Apr 30

The window of opportunity for a fall slammed shut last night as US and European markets rallied despite a larger than expected fall in US GDP because consumer spending was holding up and the fall was mostly driven by a rapid shrinking in inventories, implying that a recovery in demand could quickly drive greater production and employment....and more than likely most traders have been short and squeezed.

I'm in that category but I've been using puts because there's not clear confirmation of a top. Unlike the US market which made a new high on all the major indices - and also the major European indices - our market is still well short of recent highs.

I haven't come to too much harm this morning but I've taken off my short positions (except for qbe which is too far gone) as the rationale for them is no longer valid. For example, here's a daily chart of bhp.

Today's action has pushed bhp back above Tuesday's high. I'd often take a buy signal on something like this. I haven't because the correction doesn't look right, it looks incomplete, and I don't want to buy on a gap. Sold the last of my puts for 85 (v 127) although with the other sales my average selling price was 114.

I sold out of the last cba puts for 167 (v 115). It's a bit weaker than the overall market but setting up bullishly intraday. Mqg made a new high and I sold out the next strike down as they were a better price at 220 compared to 240 for the 3150 puts (255 entry price) and traded some stock for a small gain to cover the difference. I'm left with a small put spread - long may 3150s and short may 3100s.

Wpl is up 1.7% and I've also cut this. It's charting in a similar fashion to bhp. I sold the puts at 95 (v 128) and I've actually gone long stock on the basis of short term charts. I've been slightly uneasy with my short here because the crude oil charts look bullish. Here's a line chart of the daily action in crude.......and the 30 minute chart of wpl.

The other short was in amp. Sold the puts at 36 (v 39) as the stock pulled back after the opening gap up. On its high again and looking strong in the short term.

On the positive side, csl and tcl are both up a little more than the market and I sold a few calls in csl at 238 (v 192).

I also bought ozl at 74.5. I sold out of this impatiently in the low 60's and I had to grit my teeth to buy again but it's looking like it could accelerate, everyone's upgrading, and there's more takeover talk with suggestions that bhp might like to acquire the stock. Here's the weekly.

The daily, above, reminds me of kzl a couple of weeks ago just before it jumped hard.

Tug of war. Wed Apr 29

Just over 2 hours into the trading day and the market is down 17 points, led lower by a weak result in Anz. The overnight lead was less bad than expected and the market could have had quite a strong up day. It's still threatening to find a base here and rally as the bulls and bears fight it out. I'm watching very closely but haven't done much.
I sold a few bhp puts on some opening weakness and I've bought more qbe puts as the stock has gapped back up 70+ cents to 2080. Amp confirmed the break trading as low as 502 but is now up slightly at 510. Cba is down but outperforming the rest of the banks by quite a bit.

12.26 I'm not looking at any new trades as I've already got 2 longs and 6 shorts and I want to manage them. For the moment, I'm reasonably confident with my positions over the longer term but I'm a bit concerned that the market could take off with a big rally today so I'm on alert to see whether I should look to close out any positions and try again another day.

1.38 The market has rallied around 30 points and I've haven't been able to do much. I did buy and sell some mqg stock for a small profit as I want to stay long the puts I have there. That pretty much sums up my feelings about today. I've seen opportunities to get out of positions but haven't taken them as I haven't changed my mind and I can't see a lot of opportunity in a counter trend position. Here's bhp as an example.

The weak opening meant that bhp broke its 5 day pattern of making higher lows on each swing down. Now it's rallying but I don't expect it to push past yesterday's high. I sold a few puts early but want to keep the rest of the position. Hindsight tells me I should have got out of all the puts and looked to reinstate the position later, or else just bought and sold stock and kept the option position intact. Anyway, I didn't, and now I don't see that there's too much further to go - if I'm to be right on this, at least.
The daily chart seems quite significant. It's looking likely that yesterday's high might be a second lower high and the sharp swing down I'm looking for may happen in the next day or so. I suppose the reason I only took off a few puts this morning is that I'm looking for a larger scale move.

3pm The intraday rally seems to have run its course and cba which was outperforming its peers has finally broken support. The 60 minute chart shows that the stock held 3485 on Monday and Tuesday and then looked like it could form a slightly higher base at 3500 earlier.

Here's the daily chart. I'm hoping there's some acceleration now. The daily break was on Monday at 3550 but the stock tried to hold that level until now. There could be some support just above 3400 but if that fails the next level would be 3140 support from February.
3.30 Qbe has been as high as 2107, surprising me with its strength, but the 60 minute chart shows it's just bouncing aroung in a range. Perhaps, there's some switching out of the banks into this.

4.01 Sonic Health, shl, is firming up with the rest of the sector. There's a buying opportunity with the stock having decisively rallied through last week's high but it's a little extended and I'll try to wait for a better opportunity.
4.14 The match out had the xjo finishing down 13 points on the day. It was hard to tell which way it would go with the opposing forces of weak banks and mildly bullish US and Asian influences. Not a lot of change to my positions. I added to my short in qbe on the rally and reduced the short, taking a little profit, in bhp and wpl. Shl is on the watch list for tomorrow. A slightly negative day for me to end a run of good results but cba was satisfying.

Zombie market. Tue Apr 28

The market won't roll over and die and today we've fought back from an early sell off on the back of the NAB profit announcement and sympathetic weakness in the other banks. Cba has recently hit 3614 after opening nearer to 3500 and trading as low as 3485 - it's 11.46 am now, so that's in less than 2 hours. The rest of the market has followed suit so my predominantly short set of positions is down a bit. I did sell some more puts early in cba at 196 (v 115) but I've bought a few more may 3200 puts in bhp at 105, may 3150 puts in mqg at 270 and may 3700 puts in wpl at 111 as I'm taking the view that the rally will fail. Mind you, I'm a bit less confident than I was earlier on. Here's a 60 minute chart of the xjo. It's starting to look as if the index might trade above yesterday's high around 3780. If that's the case then it'll be an unusual pattern with a new low made y'day versus last Friday but then a new high today. It can be a corrective pattern ie an expanding top or it could just mean there's a lot more strength than I expected.

11.56 I've been bullish on csl for a week or two now and bought some april 3250 calls which expired last Thursday hoping for a quick run up. There's a line of resistance at 3300 and a break of that could trigger some acceleration. I'm happy to pre-empt a break with some may or june calls but I hesitated at 3250 and now the stock has run up to 3283. Here's the daily.I think I'll wait now for a proper break as there's not much to gain buying just below 3300.

1.20 The market is like Melbourne weather at the moment. If you don't like it, wait a couple of hours and it'll change. The xjo index just failed to break yesterday's high (so far) as did the broader xao (all ords) and the spi likewise. The futures contract has made a short term sell signal, we're already 27 points off the day's high and US futures are now down nearly 1% so although it seems unlikely that lightning will strike twice I guess it's possible that we could get slammed again.
All this is idle conjecture, I haven't done anything else since my early session put trades and I'm awaiting developments.
1.25 Actually that's wrong - I bought more mqg may 3150 puts at 240 to average 255.

2.30 I bought more wpl may 3700 puts at 98 to average 106 for the day. Now the market has fallen again to be down 5 points. I sold out the extra bhp puts at 120 (v 105) and a couple of the mqg puts at 275 (255).

2.35 Out of a few of the amp may 550 puts at 41 (v 39). I think the stock is going to fail but it's bounced off 514/516 a couple of times so I'm just taking out a bit of insurance.

2.46 Bought Csl June 3300 calls at 192 as the stock broke through 3300. It's already up nearly 4% on the day but the daily chart (which is further up the page) looks to me as if it's moving into a larger trading range. Citigroup has also put out a note suggesting that Csl could benefit from a gov't flu response and of course, it's a safe haven which after the rally is no longer at much of a premium to the broad market.

3.20 Decided to short QBE, the largest Australian insurer as the US overnight futures are down about 1.5% on worries about the banks and I'm guessing that other financials could suffer too. Here's the daily.Once again, I'm trying to get in ahead of a break which would be a sale below the recent low of 1978. It's trading at 2027 right now and I went short by buying may 2000 puts at 76.

Our market is only down 10 points but the Nikkei and the Hang Seng are both down well over 1% after having started firmer.

4.10 The market closed down 23 points as the futures tailed away. Csl was pleasing, holding the break of 3300 with a close at 3315. Amp closed at 509 and looks ready for a sharp fall.The recent low, 5 days back, was at 508. The rest of my shorts were also weak with qbe closing at 2003. During the day I traded out of my puts bought in the late morning for some day trading profits in bhp, mqg and wpl. I added a new long in csl and a new short in qbe and reduced the size of my short positions in amp and cba, taking a little profit.

I'm hoping that this is finally the start of a new trend but the xjo hasn't failed yet so it's quite possible we could have another day in the range tomorrow.

Poker face. Mon Apr 27

The market is still vacillating and it's tricky to guess which way it's going to go. For example, we have been up as much as 70 points this morning on a good overseas lead but at the same time there's a serious flu warning causing great concern in the US and with the story just having broken the overnight US futures are quite weak so it's entirely possible that we'll sell off again as the day goes on. The market is up 44 points now at 12.37.
I've sold out of my gold stocks this morning for a good profit, lgl at 301 -304 and ncm at around 3100 equivalent. I went too early in ncm which is now 3164. I'm anxious at the moment to take profits and move on but I was a little too anxious. A trailing stop on a 30 minute chart would still not have been triggered.
On reflection, I regretted not winding up my positions on Friday - at least on the short side - because I'd had a good day but since Fridays are often reversal days and the market had fallen, I wasn't convinced that they would continue to fall before a rally on Monday. I wasn't criticising myself after seeing the rise in the Dow, this occurred to me late on Friday and perhaps encouraged me to be a bit hasty in ncm this morning.
Having said all that, I'm happy enough now as it seems like we might have had the rally I was worried about. Of my other positions for example, cba has been up 60 but is now up 15 while wpl was up 85 now higher by 5. Amp is the only one holding firm as the extra little rally I was wondering about seems to be unfolding. I'm hopeful that today's high of 536 will complete things and a fall will follow.
I bought some wpl stock earlier as crude oil is strong but cut again for a small loss as the stock failed. Did the same in Arrow Energy, aoe.

2.38 Just back from catching up with a friend and the market which was still up 30 points around 1pm, is now down 16 points and actually off its lows by a further 16 points. Most of my positions are going well. I'd sold out of my 2 longs in lgl and ncm and was still short amp, cba and wpl. Now amp is square on the day, while cba is down 86 having been even lower as it has announced that it is planning a capital raising and wpl is also down 41 cents on the day. Earlier on I put on 3 new positions, all via options. The long position was in Transurban, a toll road operator and a defensive stock. I bought june 450 calls at 21 and 22 cents. Here's the weekly.

I've been waiting for an opportunity here and today the stock started to accelerate. Fortunately, I stuck to some reasonably priced June 450 calls because the stock has sold off 10 cents or so as the market has fallen. Here's the daily.The next position was a short in bhp. This broke down about 3 days back and has been retracing. I'm hoping for a failed rally and once I got the sniff that today would be a reversal day I decided to buy the May 3200 puts. I paid 127 for them. The last 2 sell offs have been about 250 and 270 c respectively. If the stock does something similar then it could fall to around 3000 in two or three days.

2.53 The other position was also a short in mqg. It's still been making higher highs but on rapidly fading momentum. As it's such a volatile stock I decided to buy some May 3150 puts at 265.

I used the 60 minute chart to time my entry. The stock rallied on option expiry day last Thursday in a 3rd wave type fashion using Elliot wave jargon. It pulled back and made a new high. I hoped it could be a 5th wave high and thought that along with the daily pattern it was a reasonable bet. Here's the 60 minute chart.

3.42 The market has found some support and most stocks are rallying. However, it looks like a retracement before another fall so I'm happy with my short positions. I did sell small numbers of puts in cba at 190 (v 115), bhp at 140 (v 127) and mqg at 312 (v 265).

4.13 The market rallied a bit further to close up 19 points. It was a wild day, rallying to up 70 points, plummeting to down 30 and finishing in the middle. Lots of uncertainty about the extent of the problem with swine flu and the effect it would have on world markets and in the end a result suggesting the local market is sitting on the fence. I'm mostly short and glad I took a little profit earlier.

Is this it? Fri Apr 24

I mean, is this the end of the rally? Actually, I think there might be another day or so in the US where the market tries to reach a new high. In the short term though, it's working out for me with gold up overnight and European banks weak so that my positions in lgl and ncm are going well with short cba (down nearly 2%) also paying off.

Just off topic, I'd like to say thank you to the people who follow the blog. I know one of them, Danny, who's asked me to explain some of my shorthand a bit more; so I'm trying to explain things a bit more fully. I'm happy to think someone might be getting something out of this other than me. I'm also trying to write about most of my trades including the silly ones. Some are not worth it - for example, quick day trades, but I'll write about the ones with a strategy.

I intend to write a bit more broadly about trading issues because as you can see from the blog a lot of what I do is repetitive, where I'm looking for much the same sort of patterns, and by far the biggest challenge is to manage myself psychologically. The patterns which are hardest to respond to are the behavioural ones which I'm trying to change or accept and work with.

I've added one more trade this morning which is a short in AMP, an Australian wealth manager and life insurer. Conceptually, it's another trade based on my opinion that the market is topping out. Amp has rallied 50% in a month, perhaps because as a wealth manager it holds large stock portfolios so that along with its core business, it's doubly exposed to the market. Here's the daily.I've bought May 550 puts at 39, which means I'm short the stock at 550 less 39, or 511. The stock is trading at 524 so I'm short at worse than the market; however I only risk the 39c cost of the put which is why I have to pay a premium.

I'm trying to put trades on before I get complete confirmation of a trend change and in the short term I'm a bit concerned that I may have jumped in too early here. I'm wondering whether amp might push up towards 540 before it starts to turn down and whether I should hedge the position until then. Here's the 30 minute chart.

2.52 The index has had a sell off this afternoon and is just off its lows, now down 45 points. My positions have kept moving in my favour and I've taken some profits in lgl, ncm and cba. Amp has also had a leg down and is now down 9 at 516.

3.09 I've put on another short position, this time in wpl. It broke support at 3800 and has rallied slowly over 3 days without much oomph. Here's the daily.

I've bought the May 3700 puts at 128.
Bhp has a really similar chart and I thought about putting on much the same trade there but since bhp is already trading at a 2% discount to the US closing price I've held off from that one.
The other banks are starting to follow cba's lead and I'm tempted to short mqg but I don't have such a firm view and option prices are high there so I'll wait for a better opportunity.

4.05 I've got to dash out of the office. The market is closing near its lows although amp, cba and wpl are bouncing a bit. More on Monday.

Not dead yet. Thu Apr 23

Expiry day for stock options and it's a mixed bag for me. Csl, which was the smallest investment, will expire worthless as will wpl which I wrote off over the last few days. My mqg Apr 30 puts are also worthless but fortunately I bought stock against them, effectively going long and look to have come out slightly ahead on the deal. Wes is up strongly today so that position is going well, as the options are essentially stock at this point because they're well in the money and I'll exercise them. I'm selling stock gradually against this effective stock position rather than losing small amounts selling the options because wes is not a terribly liquid option stock.

The US market fell about 1% last night but we've rallied to be up 35 points: perhaps the overnight fall was not as bad as we feared or maybe we were indeed oversold. Anyway, my positions are a little ahead although tol has surprised me and headed back down - below the previous low of 600. I haven't cut yet as it feels like a bit of an engineered trade to force longs out of the stock. Nevertheless, I probably will sell out; I just think that a lot of people will have stopped out now and perhaps there's a chance I can get a better price as overall the market is strong.

I've gone long ncm as it's made a marginal new low 4 days back and is now shaping up slightly bullishly. I cut the short I had here a couple of days ago because I was wondering whether the sell off was complete. The fall from mid March had traced out a 5 wave pattern and I think that could be the second leg of the sell off complete allowing a rally to unfold. Especially if the overall market falls and gold resumes its safe haven status. Here's the daily.

Here's the 30 minute chart. The stock has consolidated today after gapping up and looks ready to run again. I've bought May 2912 calls as there's a fair bit of guesswork going on here.

12.38 Also stopped out of my short in bsl at 261 (vs 267) earlier. Prematurely, as it's now back to 256.

12.53 Stopped out of tol at 597 (vs 627). Bought some wpl at 3732 as they're tracing out a similar pattern to ncm. This is a short term trade as wpl looks weak on larger scales. Here's the 30 minute.I've been in and out of rio today for a small profit as there are a few day trading opportunities on this retracement day. I've closed out the mqg stock at 3146 average vs a buy price of 3056 for a small profit.
1.09 Out of tls at 327 (v 325) as there's no momentum and I've got enough on my plate for now.
2.38 Out of wpl at 3757 (v 3732) for a quick trade.
3.27 Bought lgl at 290 as it's much the same scenario as my other gold stock, ncm.

Also, went short Commonwealth bank, cba, by buying May 3600 puts at 120. The stock has been making marginal new highs as momentum fades but it looks like it may have stalled here. I'm pre-empting a signal of course. Here's the daily.

I'm keen to get out of most positions I've got and leave myself long the two gold stocks and short cba. I'll sell out the balance of wes today and the only other position is a small long in lnc which is quite strong right now. The reason for this is that after the fall earlier in the week I'm looking for the index to make a lower high. There could be another day or two of rally but not easily tradeable as I expect to see a day which opens strong and fades.

3.46 Actually sold out of lnc at 228 v 210 as I just want a clean book and I'm trying to be a bit more instinctive - rather than impulsive.

3.57 Out of wes, average sale price was 2185 (v 2119 via options).

4.10 The market surged in the last hour or so and my short term timing was off in cba. It pushed up about 40 c after I bought puts. I bought a few more at 105. Just a few positions now; long lgl and ncm, short cba. The market up 2% for the day.

A moment of indecision. Wed Apr 22

There's been a little bit of "yes, no, wait" style indecision in financial markets over the last couple of days and the US rallied back 2% last night with gold down again and oil up a bit but base metals were mixed. The chart of the Dow Jones Index reflects that.Up until two days ago there was a pattern of higher lows and higher highs but with fading momentum so that the new highs were marginal and the lows were getting closer together. Then the 4% down move formed a lower low for the first time since early March. I suspect that the rally last night won't push on to new highs and we could have a short term change in trend forming.

The Australian market is behaving in a very similar manner although we haven't had a new low yet. The rally today is muted and at 11.24 am we're now only up by 2 points. It's made for choppy trading and false breaks but if the market does start to move down there should be some good shorting opportunities. Because option premiums are cheaper now it will be a lot easier to play the short side than it was between October and March.

I've cut mgx, at 61.5 (vs 73.5) which was a poor trade from the word go. Should have cut immediately as I realised my mistake after about 20 minutes. I've bought some Toll Holdings - a transport company. I paid 627 for tol as yesterday's strength continues. I'm assuming that the correction is over having failed to go below the recent low at 600. Here's the daily.12.30 Just bought some tls at 325 as I'm taking the view that it has found support just below this level having potentially made a lower low and could swing up towards recent highs.

The 60 minute chart shows that tls is starting to make higher lows and trades in the high 320's would confirm the short term bullishness. There was a similar sort of set up a few days back which failed to develop further. Nevertheless, the subsequent fall was minor and I'm willing to give this a go. One thing I'm trying to do at the moment is get into positions earlier and to that end I'm willing to accept less certainty especially if there's a level nearby where I can stop out if I'm wrong.

2.47 Not a lot happening. I've decided to neutralise mqg by buying some stock against my puts as I think it's having a retracement rally which has probably got another leg up to come. Here's the 30 minute chart.

My puts expire tomorrow but if the stock runs up they'll probably go out worthless. However, my hedge would cover most of that and if it goes according to plan I'll try to buy some May puts, with 1 month options often being at their cheapest on expiry day.

4.25 Bought wes April 2081 calls at 38 as the stock rallied through 2100. They expire tomorrow and I'll be in front if the stock is above 2119 with my downside being the 38c paid. Here's the daily showing a stock that's strong and ignoring the pullback yesterday.

I decided to go long this when the stock rallied above 2100, knowing that with expiry tomorrow I could buy April options for not much more than parity. Here's the 30 minute chart.

Wesfarmers seems to be regaining some credibility in the market after having been out of favour over a boom time Coles acquisition.

Broadly the market traded in a tight range for much of the day as Asian markets were unimpressed by the US bounce and US futures were lower. I'm leaning to the bearish side but I think the market is oversold in the short term with a better than even chance of a rally tomorrow which is why I've bought some cautious longs.

The cracks are widening. Tue Apr 21

Two weeks ago I thought the rally could be over but markets picked themselves up and continued to new highs. This time the pullback is that little bit more severe. The top 200 index, xjo, has now traded below last week's low. This is reasonably significant as a sign of weakness. Obviously, if there was a trend change, that is, a fall then a rally to another high followed by a further fall, then I'd be more bearish but for the moment it's a yellow light rather than a red one.

Apart from the weakness in US markets, with the S&P 500 down over 4%, the other factor has been a sharp reversal in recent trends so that gold rallied while oil and base metals fell. This has caused havoc with my positions as I'm essentially long base metals and short gold. I've sold out of the last of my lyc at 28.5 vs a buy price of 25. I've also sold the last of a batch of csl bought at 3212 for 3203 and bought back tol at 617 - sold at 602, as I've lost patience with this trade. I'm also close to stopping out of a few more trades. Days like this are hard, but they have to be looked at in perspective, which is that if you've done the right thing through the 6 week rally then it's a fairly small price to pay. Unfortunately, I've really just started trading well over the last few weeks after a dry period.

Just sold out of iag at 334 vs 345 as the market is down 101 points (at 11.44 am) near its lows for the day.

1.30 The day is not getting much better. Stopped out of lei at 2032 (vs 2182) but fortunately I had sold 80% of my position at about 2182 and was looking to build back in if the stock were to rally back through that level. Stop was at 2056. I also stopped out of ozl at 61 (vs 59) which was a judgement call. I don't mind the stock but after what seemed like a significant break on the daily amid quite a few upgrades, the stock has failed to really go anywhere and needs to get to 68 to confirm a weekly break.

Another judgement call has been to close out lgl and ncm. I keep changing my mind on the gold stocks and since the damage is small and the short term charts are bullish I decided to cut again. Here's ncm on a 30 minute chart. I've actually gone long at 2897 as a short term trade.

2.41 Stopped out of shl at 1105 (1071 av.) as the day's pattern continued of a return to the safe havens of healthcare, retail, gold and telecommunications. While the market is rallying off its lows, the main beneficiaries are these stocks.

2.54 Sold out the ncm from earlier at 2927 (2897 buy price) for an intraday trade that covered most of the loss on the options.

3.25 Stopped out of gpt at 50 (vs 55) and fmg at 253 (vs 256,261) as they both wanly attempt to rally only to fall over again. I'm particularly wary of gpt because it has been a real momentum stock lately.

Notice how the sell off in March was extreme while the fall earlier in April was also pretty sharp.

3.54 Stopped out of fxj at 112 (114.5).

Here's a chart of Macquarie Group, mqg.

The stock made a new high and traded around that level over 5 days and now has gapped through the bottom of the range at 3050. There was an attempt early in the day to rally which has now failed. I've bought some April 3000 puts which expire on Thursday as I think there's a chance of an acceleration down. It's a tricky one because I expect the market to have an up day tomorrow, to retrace some of today's fall.

4.01 I've also bought some short dated calls in csl. April 3250 calls for 22.5. The stock looks like holding 3200 which was a recent break out level although it dipped below intraday. It's the sort of defensive stock that traders may switch back into and it's a beneficiary of a weaker Aussie dollar.

4.10 The day is over with a fall of 2.4% or 92 points on the xjo. The bare facts don't do the day justice; most of the strong stocks fell by much more than that while the weak ones rallied, strongly in some cases. It was the day I was worried about because bear market rallies can reverse suddenly so that stocks gap straight through stops en masse. For example, gpt was a great buy signal - a strong break of a range with good volume - but it's looking quite possible now that it was a false break. Oh well, that's a couple of weeks' profit wiped out but I've almost cleared the decks. The last two weeks have been tricky as the market has been stalling and a change in trend would give some fresh opportunities.

The F Effect. Mon Apr 20

The US market managed a flat night and Europe was firm on Friday which is probably a better result than our Friday action was anticipating. That is, we gave up early gains of 2% to close pretty much unchanged. Given the relative strength overseas the Spi futures contract rallied quite well in the night session on Friday. However, the wave of selling from Friday resumed and we are now down 1% just bouncing off our lows. It's 12.34 pm.

I'm not convinced that there'll be much more selling today - it still seems like a market that's rotating. I've done a bit of housekeeping; selling out of mcr for 103.5 (entry was 102 and 103.5) as it opened strong and reversed. I've also sold some lyc at 32 as they opened strong and have held to still be up 3 at 31. I sold out a few of my lgl puts to cover costs as, despite continue weakness in the gold price, there isn't a lot of enthusiasm to sell lgl or ncm at the moment. My positions are pretty mixed, a few winners and a few losers, with no cuts on the horizon.

I've put on two new long positions in stocks beginning with F; fmg and fxj. Actually, in fmg I've added to an existing long. Here's the 60 minute chart for fmg.

I noticed that 260 was clear short term resistance, the stock had opened strongly and not pulled back like much of the market. I was waiting to buy at 261 and had to pay 262. The daily chart below is not so crash hot but nevertheless there's reasonable momentum off a higher low about 6 bars back and a break through 280 could cause a run to develop.

In the case of Fairfax, fxj, the stock had stalled after hitting 114 about 2 weeks back. I bought at 114.5, there was a quick surge to 117, and now the stock is sitting around 114. The breakout looks hopeful but I do want to see some acceleration as the weekly chart is grinding up in a tight range.

Here's a 60 minute chart of the same thing.

1.20 Just buying some General Property Trust at 55. Gpt raced up to 54 in late March and spent the last 3 weeks consolidating just below 54.

The daily is below. I'm hoping that it runs up to about 80 which would be the bottom of the previous trading range which failed in January. 3pm Gpt has gone very well and is now 58.5. Two other property stocks were also charting well, gmg and sgp, and they've both continued to run but rather than buy all three I decided to put on a larger position in gpt which I thought had the best chart. I guess, if you buy the group you're reducing the overall risk but I'd rather have fewer positions to manage. Talking of fewer positions, I'm having the most success in low priced stocks at the moment and I'm tempted to get out of csl, iag, and lei because they're churning and perhaps I'm a bit bored with the positions. I'll resist the temptation though because they're all holding above support and I still like the charts. I also think that even if the market has found a short term top, there's probably a retracement rally coming to test out Friday's early high.

3.36 Sold a little gpt at 58.5 and some fmg at 271 (vs 262), also bought a few of short tol at 615 (sold at 602) as it falls back towards where I shorted it - this is as insurance in case it makes a higher low and rallies again because the chart is not clear at the moment. Here's the weekly.

I sold this about 2 weeks ago with pretty bad short term timing and watched the stock rally up to 648. Fortunately, it failed to make new highs so I wasn't stopped out but with hindsight the trade was poorly thought out as a 50 c stop was too much given that I wasn't particularly bearish overall.

4.10 Sold a few fxj to cover costs at 117 on the match as it finished near its highs for the day. Fmg had a strong afternon and closed at 275; 280 would confirm a break.

All aboard. Fri Apr 17

Another solid night in the US and Europe and although base metals eased back our base metals sector is very strong, this time broadly amongst large and small cap stocks. A second look at Chinese GDP growth reassured people that the Chinese economy could be over the worst.

My caution in getting out of Kzl was definitely unnecessary as it went vertical this morning. The daily chart is below and explains the point I was making on Wednesday about a change in scale.

Overall, my trades are looking pretty good this morning. Mre is back up to 71 - I sold a small amount at 70.5 vs entry at 65 - and I'm hoping for a similar move to kzl. I've bought in lyc at 25 and mcr at 103 as they're small resources stocks making similar sorts of bullish patterns. It seems that this is the place to be at the moment as the top 50 seems rather staid by comparison.

I like the chart in Lynas Corp'n, lyc, as it shows a flat 3 wave correction. This is where the 3rd leg of the consolidation failed to go below the first pullback. It implies a lot of strength and if the rally resumes there can be strong momentum.Another stock that's gone vertical like kzl, has been Murchison Metals, mmx, in the iron ore sector. It's too late to buy this but I'm interested in another iron ore stock, Mount Gibson, mgx, which is behaving bullishly and has had a tight little correction after making a new high. If it runs above these recent highs, rather than gapping straight above them perhaps, I'd look to buy some.

11.58 I've gone short lgl and ncm again this morning. I've been bearish these two on the basis of weekly charts but I haven't had great entries on the dailies so I've tended to go short then cut for a loss, because despite the logic of weekly trading, which I'll talk about another day, I think my natural time frame tends to be shorter. Therefore, I've decided to use May expiry put options to go short. There's long enough to go until expiry on May 28th for time decay to be manageable and knowing what my exposure is - I can only lose the premium I've paid for the puts - makes it easier to be patient. Once again these two have gapped down, they're both down over 3%, but I think they can fall a fair bit more in the next few weeks. I'm targetting about 250 for lgl, 285 now, and 2500 for ncm which is at 2873.

Ozl has finally pushed through 62.5 and is now at 64.5. It should be plain sailing for a day or two here.The rest of my longs are up as you might expect on a strong day. The large caps are roughly up in line with the market although iag is doing a little better having risen 2.4% or 8c to 347, finally back above my buy price of 345. Of my older short positions, I'm comfortable with bsl and shl but I'm a bit concerned about tol which is up less than the market but is starting to chart quite well in the short term. There was a higher low yesterday around 629 and we're near the top of the short term range here. A bit more strength and the stock could have a surge. So, I'm on the lookout in case I need to stop out here.

1.25 Decided to sell out of mre at 69.5 average as it stalled again at 73.5 and could well drop back to 65. I'm still bullish but I'd be happy to get on again when the run resumes. In the meantime, I've replaced the position with some mgx at 73.5 which look more likely to move today.

1.40 Damn, the mgx went against me rather quickly. I jumped in before it had pushed through the highs on some short term strength and hit some selling. It's chopped straight back to 71.5. Still, lyc has surged, up to 28.5 now.

2.49 The market has slipped rapidly back including mgx unfortunately. I realised I'd misread it and thought about cutting it quickly. I didn't and now it's pulled back to 67 which could be support so I'll wait and see.

3.46 Getting towards the close of trading and the index is on its lows for the day. Not surprising really and I had sold bits and pieces of csl, iag, lei, lyc, mcr and ozl at intervals during the day. I'm still irritated about my timing in mgx but I do like the stock still on the daily chart. Wpl has surprised me with its weakness over the last few days and is heading down towards last week's lows of 3780. It's 3806 now and the stock will have to jump rapidly by next Thursday when my April 4000 calls expire. Still, most things have gone well today; tol failed to push and is now down at 629, shl is still up but it looks like consolidation ahead of the next fall and bsl is falling again after a retracement rally lasting a day or so. Lgl and ncm have slipped further, while on the long side iag, lyc, csl and ozl are holding most of their gains. Lei looks good; sitting just below resistance at 2175 with the chance of a decent rally next week. Chart shows higher lows with a flat top on a 60 minute scale.

4.16 The market closed up 1 point from a high of up 75 earlier. I'd given myself a reminder message on outlook y'day evening to "sell early" but in the end most things held. More on Monday.