Chinalco/Rio tie up off. Fri June 5

The big news is that Rio has cancelled the asset sales to Chinalco, a deal struck at the bottom of the market that looked increasingly poor for Rio as the weeks rolled by. In its place is a US$15 bn rights issue. Rio is now trading up 680 or 10% so it seems as though everyone is keen to get their hands on some of the new shares. Bhp has followed suit to be up 8% as it has agreed to pay Rio US$5.8 bn to create a joint iron ore venture in the Pilbara region of West Australia.
Of my positions Fmg has been the best performer, jumping on the back of this news. I took the opportunity to sell out at 317 and 340 (v 279). It's back to 318 now so that worked well.
Gmg is up again and I took the opportunity to close out the other half of my position at 37.5 (v 28.5). It's a big move in a couple of days and I'm happy to take it, especially being Friday when you could expect some profit taking.
US markets reversed back up as did oil, gold and base metals although the Rio issue weighed on the Aussie dollar. Ozl has bounced 3 to 90 and I've reinstated my Mre position buying at 92.5 as it resumes its rally and has traded above yesterday's high. Wpl is bewildering, oil was up 4% last night and it opened strongly but is now down 35 at 4285. I can only assume that traders are switching out of this large resource play to get exposure to Bhp and Rio. Technically I could cut my long June 4400 call position but I'm not convinced by the move so I'll have to think about it for a while.I was expecting the stock to hold at the high made 7 bars back but I think I'll use the 4200 support level now because the move doesn't feel right.
Mqg is up 108 or 3% at 3728 as my theory has proved false. I was thinking about this while having a swim yesterday afternoon and I realised that my logic was faulty. Many retail investors who already owned Mqg would have already sold out their old shares at the higher levels to lock in a certain profit knowing that they would be able to replace them. I would have been better to wait for my signal - it's one of the classic trading errors, dealing because you're worried about missing out rather than waiting for proof. Mind you, I'm not too fussed as I do think that the stock is topping out, it's just that I could be able to deal at a better price when it does make a signal and I'm down on yesterday's trade.

12.50 A quick cut in Mre for 92 (v 92.5) as it reverses after making a new high. The market was up as much as 85 points earlier but is now up 48. It's got the whiff of a Friday afternoon reversal about it. The ASX 200 made a new high relative to Wednesday also so there's the possibility of a completed top.

2.10 Not much has happened over lunch although I've just jumped back into Fmg at 327 as it's resuming after the sell off. Just a day trade really. I've also bought a few Cba June 3700 puts at 88 as it's hit the top of the trading range and traded below yesterday's low. 3.04 Out of Fmg for square as I don't want to get sucked into daytrading and it's lost all momentum.

4.03 The market has held quite well since midday, slipping a touch, to now be up 36 with the match out to come. I'm long Wpl which has kept sliding to be 4255 and Ozl which has held and is still up 2 or 3. I'm short Cba which has had an engulfing reversal day, where a stock makes a new high then reverses to close on its low below the previous bar's low. I'm also short Mqg which is still up about 50 on the day having been up 140 early on. I'm leaving the office soon so arrivederci till Monday.