The glass is half full. Wed May 27

Of the scenarios I was considering for last night, the one I thought least likely eventuated. The US indices ran around 2.5% on better than expected consumer confidence while ignoring worse than expected housing data. The Australian xjo index has followed suit early to be up 34 points. However, we're 15 points off our highs so I can see us drifting lower after yesterday's short squeeze and a little bit of scepticism in Asian markets about the US with the rallies being only around 1% like ours.
My positions have gone pretty well considering. Ipl is up 7% at 252. I sold some at 248 (v 236) but I also have been picking up ipl Sep 264 calls at 16 (a couple of days ago) and at 21.5 this morning. My plan is to hedge them with stock once I feel the rally is over. Mig is also up 4 at 152 and I sold a few at 153.5 (v 142.5) while lgl is only down 1c despite an overnight fall in gold.
There has been yet another large equity issue with ANZ bank looking to place $2.5 bn of shares at a discount but this hasn't hurt cba which is up another 13 cents although well off its highs. I did sell a couple of yesterday afternoon's extra puts on some early weakness at 124 (v 112).
Mqg has gone according to plan. I bought a synthetic May 3200 call yesterday - which means I bought stock and May 3200 puts. I sold out the stock early at 3190 (v 3094) and so far have sold out half of the puts at 110 (v 135). In this case the 25c loss on the puts is outweighed by a 96 c gain on the stock. The stock is now down 28 on the day at 3122. Qbe is also failing to rally and is testing support again at 2000.

12.14 I've been sceptical about the ability of the market to rally much further but I'm trying not to let that colour my views about individual stocks. A few of the smaller resource stocks in the top 200 index are shaping up bullishly. One of them is Minare, mre, a nickel stock.

There was a high at 69 five days back and we're getting close to that level again. If there was some buying strength through that level I'd go long. It's an odd chart with the one day in April where the stock spiked up then sold down and it may be that the high in early May formed a double top. On the other hand if the stock can push through to new highs then the length of the consolidation would suggest there's a solid base for some good gains. The weekly, above, speaks for itself.

Kagara Zinc, kzl, is doing something similar. It made a minor buy signal early as it traded at 118 although the high from 6 days back at 125 is a bit more significant.

12.34 Sold out a few more of my Qbe May 2050 puts at 51 (v 24). Only one day to go until expiry of May options and with the stock hanging in around the support at 2000 I don't want to see these puts expire worthless tomorrow on the basis of another little bounce off support.

1.12 Spotted a nice set up in Leighton holdings, lei, which had a leasurely 5 wave pullback from a strong run into early May. Long at 2300.

The set up is easier to see on the 60 minute chart.

1.16 Decided to hedge the last of the qbe May 2050 puts as the stock is finding support right at the bottom of the range. Since the puts are only worth their intrinsic value with a day to go I bought the same amount of stock at 1985, the equivalent of selling the puts out for 65 (v24). It's more liquid to buy stock and if support fails I can always sell out for a small loss thereby reinstating the short position. Also sold out a few more Lihir gold June 300 calls at 26 (v 22) as it's holding support but has gone nowhere for 3 days.

3pm Sold out the last of my ipl stock at 253 (v 236) but I'm still long via September calls.
Qbe continued to fall but I didn't manage to get out of my stock hedge. I'm still long June 2100 puts so the weakness is welcome.

4.15 The market closed with a much reduced gain of 13 points. Cba, which has been stubbornly up all day, fell in the last half hour or so to close down 32. A pretty good day for me. I've taken some profit in ipl, lgl, mig, mqg and qbe. I'm still long ipl, lei, lgl and mig and short cba, mqg and qbe. Lei is the new position today. My assistant took the kzl trade which did well to close at 121.