Nickel and Zinc. Wed Apr 15

It's late morning and the Aussie market is now up 7 points, running its own race despite a fall of close to 2% in US indices last night. Nickel and zinc are continuing to bounce off very depressed levels and I've been looking at the small resource sector as that's where there are some great charts. Not just in nickel and zinc stocks either, coal miners have been very strong lately.

First of all though, I sold out of lgl at 299 as I was looking for a breakout against the trend. It still hasn't happened and there are opportunities elsewhere. Silly trade really, in at 301 out at 299. I've also sold out half of my lnc at 218.5 vs entry at 210 because it pushed on earlier and made a minor new high but has failed to follow through. Otherwise, lei has fallen 52 cents to 2131, still a fair way from my stop around 2050. Iag and wpl are steady, csl is up 1% or so, ozl is up 2 to 60.5 and looks good, I've bought more at this level. My only short is tol, down a few cents to 630.

My two new positions are longs in Kagara Zinc, kzl, and Minara Resources, mre, which is a nickel producer. Analysts value them below their current prices so they're trading now as an option on the underlying commodity, given that they're heavily leveraged to the commodities.

Here's the daily chart for kzl. Breakout this morning was over 65 and I hesitated but eventually bought at 69 as the stock rallied quickly to 73.5 before drifting back to be 69.5 now.This stock was trading at just under 600 less than a year ago and there's quite a lot of scope for rallies which in the bigger picture would just be retracements. There was a peak a tick below 80 in early January which would be my short term target.

Mre is another one where it's a little difficult to get across the scale as the stock has fallen so far. For example, it was trading at 400 in early 2008. Anyway, here's the daily chart.I probably could have got on this a couple of days ago but I'm looking for acceleration through the recent highs, a bit like kzl, so I was prepared to chase and buy at 65. One reason I like these charts is that the scale is changing; the moves are bigger and the momentum is on the increase.

12.52 There are a couple of potential shorts around in the top 50 and I've put on a small position in Sonic Health, shl. Like most of the stocks with weaker charts, shl outperformed the index during the bear market. In February, it cracked through support and after a retracement the weakness is back.

The daily chart, below, shows a breakdown today through the 1100 level. Because it has gapped through I've been a bit tentative and just put on part of a position, shorting at 1074. I half expect a rally back towards 1100 before more weakness so I'm keeping a bit up my sleeve. 3 pm The market is now down 10 points and has been threatening to fall sharply for a couple of hours without actually doing much. Asian markets are down 1 to 2% and the overnight US futures markets are down another 1/2% on top of the overnight falls. I'm net long and a bit concerned but most of my positions are static so I'm waiting.

4pm Ozl has performed quite well today. It's been as high as 62.5 today, matching a recent high just over a week ago. A break through 62.5 might trigger a fast move. Maybe tomorrow.

4.11 The top 200, xjo, closed down 5 points. A big outperformance. Not a lot of change in my positions.