Gold to run? Thu May 7

The US market rallied again and took most commodities with it along with the Australian dollar, a commodity related currency. Gold started to move, in a much more modest fashion, but the spot gold charts are starting to look promising and I've put on a position in Lihir Gold, buying at 300. The context for this is that lgl ran from 152 in late October to 364 by late February. The correction, to my eye, looks like it completed with a choppy 3 wave move down to the low in mid April. Since then there's been a move up breaking the previous swing high just above 300 and a small pullback. If the stock can push through 302 then I see it accelerating towards 340 quite rapidly. I'd add to my position on a trade of 303 but since this can gap overnight I'd prefer to buy some now as I don't see a lot of downside.

12.22 I sold out about half of my sun position at 630, 638 and 640 (v 602) as it got close to recent highs. I've got about a third of my position left. Qbe has rallied 3% which is better than the market. I noticed that when I wrote about this yesterday I didn't feel super confident but once again I'm moving it back to the bottom drawer as a minor "work out" position rather than sell out as the options are June expiry and will only lose slowly if nothing happens. My feeling is that the markets are due a sharp retracement and that even though concern about the stress tests has faded the actual announcement might be a "sell on fact" trigger; qbe is my insurance policy as otherwise I'll just be long.

Another new position is Incitec Pivot, ipl, who are in the fertiliser business and report next Monday. They've had a capital raising, reduced their dividend forecasts and had the CEO resign recently but now that the dust has settled I notice that there is a growing perception that the worst has happened. At least according to the broker analyst's summaries I've read on http://www.fnarena.com/ (a very good local research site). I'm interested in the brokers' opinions but my reason for buying is the daily chart.

Although the stock is still in a trading range, it just had a surge to the top. Unlike the last surge in March, the third day is not a continuation of the sell off, the stock is up a solid 6%. A breakout could be explosive after such a long range and the results would be a reasonable catalyst. Long at 231.

Also sold out of llc at 750 (v 731) fairly soon after the opening as the stock is too illiquid at present and limits position size.

2.41 Out of the last of the Suncorp at 636 (v 602). Still like this, will keep watch for another opportunity.

I've started to build into a position in Link energy, lnc, as it has pushed up today after 5 days grinding down from a strong rally.

4.15 The market finished in good shape, up 72 points. Essentially, I have 3 long positions in ipl, lgl and lnc with a few out of the money puts. Sold a few ipl on the close at 239.