Forcing it. Fri Jul 31

Overnight European indices were up by 2% and so was the US until the last hour or so when it gave back half of those gains. Oil and resources rebounded and the Australian market is up close to 1% at 12.30 pm.

I've been trying to force the pace this morning, overwhelmed by too many stocks breaking out so that I've bought and then stopped out of 3 or 4 stocks. I was just trying to ride some short term momentum, but not really waiting until I was certain where the strength was. Anyway, you have mornings like that. The damage was minor.

Otherwise, most of my existing positions have performed reasonably well. Mah is up 2.5 at 44 and I've sold a smattering there (v 39.5), Map is up 3.4% at 245 and, again, I sold a couple (at 244 v 233.5), Mgr and Sgp have recovered from early weakness to be square to up while Lgl is steady to down.

I've bought back into Asciano at 160 after it rallied on very strong buying into the close last night and continued with that strength this morning. Although it's at 159 now it's showing signs of accelerating as it pulls away from the breakout.

Boart Longyear is the other stock I've gone long. Like Mah, Bly is a company servicing the mining industry and could well have a capital raising soon but right now that's not holding the stock back. I've been looking at it for a few days, I almost bought yesterday but wanted to wait for the move through 27. There is a pennant formation which looks complete and could go to new highs in this move. Long at 27.5 and thinking about buying a few more later on if it holds the break.

2.04 Just got long Ost at 305 as they resume their up trend after a pause and lag behind a surging Bsl - which is too extended for me to get on. I'm over my limit now so I'm going to sell out of Sgp. The daily still looks ok but it's consolidating and I'm already long Mgr which has a similar profile.

Out of Lgl puts at 14.5 (v 20) as the stock is holding and out of Sgp at 324 for square.

2.18 Just added another long....Mmx at 190. Resumption.

3.43 Closed out Mirvac at 125 and 125.5 (v 123) as I want to reduce my portfolio size, also sold out a few more Map at 248 (v 233.5). Ost has reversed on me and is now 298 - I'll probably hold on but may sell a few late. At the moment, I'm long Aio, Bly, Mah, Map, Mmx and Ost with no short positions.

4.10 The market closed just below the highs, up 54 points. Sold out a few Ost at 299 (v 305). The others all closed very close to their highs.

Shorting Lihir. Thu Jul 30

After the 4.10 pm match out I decided to short Lihir yesterday so I bought some August 283 puts, managing to bend two of my rules in the one trade. However, the puts are fairly liquid with nearly 7000 open positions in that strike price and the stock looks very weak. It's 9.38 am, so there's almost half an hour until Lihir trades but they've just released their 2nd quarter production report which looks quite good, so I'm a little uneasy now. Anyway, here's the chart.

Other than that, the US markets were down, but not much and our overnight futures were steady, albeit having dropped sharply between the equity market close at 4.10 and the futures close at 4.30 pm. Precious metals, base metals, oil, the Australian dollar and the big miners were all weaker overnight.

I don't particularly want to harp on Asciano but there was an article in today's Sydney Morning Herald talking about the large volume going through and the open share registry in a recapitalised company with good quality assets.

10.34 I bought a few more Asciano on the open at 154.5 and the stock is just a little higher now at 156. Lgl has rallied to 275 but so far it looks like a dead cat bounce. A couple of new trades popped up and I've gone long Macmahon holdings and Macquarie Airports.

Macmahon is an engineering contractor. I bought and stopped out last week, but this time the break looks clean and I'm long at 39, thinking of buying a few more at 40.

Map is not confirmed yet but I'm going early on good volume and a nice deep pullback which held above support after a strong move. Long at an average of 233.5. I'd like to see continued strength and a push through 240 today.

11.15 Sigma is not really going anywhere and I've sold out about half my balance this morning for 131.5 (v 132) as I've bought elsewhere. Also sold out the extra Aio at 155 (v 154.5) as nothing is happening right now. Map has pushed as high as 239.

Generally, it could be the time for property trusts and some of the neglected industrials to run.

I've bought some Stockland Group, a property developer and investment manager. Long at a tad above 323.

Mirvac group, a stock in the same sector, is also trading strongly but is still in a fairly tight trading range.

12.03 Asciano started to fail so got out at 152 (v 144). I'm obviously bullish in the bigger picture but I don't want to confuse my aims. This is short term trading not investment. I also bought some Mgr at 122.5, just a small amount. There's some good momentum in the stock and the sector; if it keeps running I can buy more and achieve a good average while if it stalls below the breakout then I'll cut and hopefully the buying strength will limit any losses there.

I bought a few more Mah at 41 to take my average to 39.5.

3.05 Been busy with accounts but the market has held really well today. I've sold out of the last of my Sip at 130.5 (v 132) as nothing much is happening there. Lgl has rallied again, up to 276, and I'm in a quandary but it still doesn't look very strong to me. The new longs in Mah, Map, Mgr and Sgp are all fairly strong. I bought a few more Sgp earlier and took my average price up to 324. Just sold a few at 327 to cover costs. Mgr is now 125 and showing signs of breaking out, I'm thinking of adding to the long.

3.50 Just bought a few more Mgr at 124 to move my average to 123.

4.10 I'm lightening the load after a surprisingly strong day. Sold a few more Map at 239, sold the extra Mah at 41.5 (v 39.5), changed my mind on the additional Mgr so sold out at 124.5 and let go a couple more Sgp on the match at 325. Xjo up 48 points today.

Something afoot in Asciano? Wed Jul 29

I hope there's something going on in Asciano as it would be nice to get a windfall. At the very least there's a good breakout across the daily and weekly charts and the stock has worked its way up 10c or 7% to 157.5. I added a few shares to my existing position, paying 153.Overall, the Xjo is up 2 points after opening down nearly 30, so the recent resilience is still there.

I sold out of Srl at 214.5 (v 213) as there isn't the buying strength of yesterday and the stock hasn't broken out yet. I sold the last of my Axa shares, a little early, at 417 (v 398) as I thought momentum had stalled.

I've had another try at buying Suncorp, paying 725, as it has consolidated above the breakout from 2 days ago and looks ready to run.

I've paid close to the short term high and the stock is now back at 721 but I've been influenced by the 60 minute chart which also looks supportive. 1.26 It's today that we're getting the pause I expected yesterday. I sold out the extra Aio at 155 (v 153) as it pulled back. Also sold out a handful of Cey at 298 (v 290).

I've just read a great financial article in Rolling Stone magazine of all places. Here's the link.... http://www.rollingstone.com/politics/story/29127316/the_great_american_bubble_machine/1 and please note there's some raw language.

2.04 The market is getting weaker and the fall is gathering momentum. I'm stopping out of Pla at 95 (v 97). I still like the chart but the stock is down 6c or 6% on good volume so I don't want to hang around while the retracement is going on. I'm also stopping out of Cey which is retracing after peaking at 299 an hour or so ago. Out at 289 (v 290) though I made a small profit overall with the earlier sale.

2.12 Had to tick the Pla balance down to finish my selling so the average sale price was 94.5 (v 97). Just long Aio and Sun now, with both looking a little shaky now. Actually, out of Sun at 715 (v 725) as it looks like a straight reversal.

2.23 I'm just long Aio now, which is trading at 151. I'm happy to be out of most of my positions so I can take stock after a good few days since I recommenced trading last Thursday.

2.36 I just noticed one of the stocks on my watch list had broken out. It's Sigma Pharmaceutical and it isn't too extended so I've bought some at 132. It's an odd pattern with the big retracement in early July. It looks like a larger pattern is building so there's the chance of some acceleration here.

Just had a look at the FNarena research database for Sigma and found 5 holds and 4 underperforms amid a stream of fairly recent downgrades. Valuations are grouped between 100 and 110 so I'm curious at to why the stock is charting so well.
Also bought a few more Asciano at 152 as they're holding and the market is steadying again.

4.11 The market has just closed down 27 points and looking vulnerable to a sharp short term pullback if we fall again tomorrow. Sold out the extra Aio at 153.5 (v 152) and a few of the Sip at 129 (v 132) as they closed back in the 125-130 range although they're well bid.

Time out. Tue July 28

It's 1 pm and the Xjo index is up 9 points having rallied from early softness and then stalled. I took the opportunity to lighten the load by selling out some Aio at 148 (v 144), some Axa at 407 (v 398), the balance of Gbg at 90.5 (v 85), the last of the Telstra at 360 (v 346) and the Tol at 667 (v 647).

I've added two new long positions in Centennial coal and Platinum Australia.

Cey, long at 289.5, is a simple resumption of trend after a consolidation.

Off the top of my head, it could either stall here at a minor new high forcing me to stop out or power on. The weekly implies that the stock will be strong but in the short term there is the familiar pattern of a surge followed by a minor new high which can mean that the short term move is over - so it's not plain sailing yet.

Pla is a clearer looking chart. It looks like we're moving in to the 3rd wave of a rally which usually sees the stock accelerating. The last 7 bars have been in a particularly tight range but still with a discernible pattern of a bullish pennant style correction of the earlier rally.2.05 The market is having another run at the day's highs. I bought a few more Pla as it continues to strengthen. Long at an average price of 97.

The coal stocks are running today. I've already bought Cey and have added some Straits Resources at 213. Here's the daily.

It's not as clear as some of the stocks I'm in but I'm impressed by the 7% bounce on good volume after making a higher low. In the context of the whole sector running I'm comfortable with the trade.

2.30 Stopped out of Suncorp at 713 as it stalls.

4.05 Ahead of the closing price auction at 4.10 pm, the top 200 index is up 30 points. I'm long Aio, Axa, Cey, Pla and Srl. They're mostly looking strong into the close although Srl has just reversed in the last 20 minutes. I had sold some stock at 215 (v 213) to cover costs.
Tol is the one that got away today as it has continued to rally having reached 690 earlier.
Axa has been the best performer, up about 4%.

A plethora?

In the words of El Guapo from the film 'The Three Amigos', "would you say I have a plethora?". The market is continuing to grind up and there are buying opportunities aplenty. We're up 51 points approach midday and I've added to my longs with new positions in Asciano, Axa and Toll holdings.

First to the existing positions: Gbg is up 4 at 87.5 and I've sold out a bit over a third of my position there (v 85); Ipl is up 11 at 278 and with US fertiliser stocks firm but subdued overnight I sold some early at lower levels - about two thirds of my position at 273.5 (v 260); Lynas is steady and I've done nothing; and in Telstra I've sold half my position at 352.5 (v 346).

Asciano is once again pushing up to the top of the range and is up 5% today on good volume. It's making higher lows and looks awesome on the weekly. I may be unlikely to hold any position for very long but there's always the hope that you're long when an announcement comes through that there's a takeover bid come in.

Here's the daily chart.

Axa is pushing out of an 8 bar congestion and while there are some earlier highs just above 400 I'm hoping that the rule of thumb where the range of the congestion will match the size of the breakout holds true here. That would give me a target of close to 420. Long at 398.

Toll is another simple breakout of a trading range in what looks like the early stages of a bull trend. It has also been upgraded by two brokers today so there is some good buying interest and it's up 3% now at 651. Long at 646.
12.40 I'm long a bit too much and since I don't have much Ipl left I've sold out the last at 276 (v 260). Not a bad result especially after the stock gapped through the breakout and I had to chase my entry. Mind you, nothing much wrong with the chart.

2.57 I haven't done much in the last couple of hours except for cost covering trades. Sold a little Tol at 660 and 671 (v 646) as the stock has taken off. Sold a handful of Aio at 146 (v 144) and sold out half of the Lynas at 46.5 (v 47) as there is still no momentum. In the case of Lyc I'm happy to turn around and buy again at 48 or 49 if it pushes on as that would confirm the strength.

3.35 I've had Suncorp, a regional bank/insurer, on my radar but have been hesitant to buy it as I want to concentrate on lower dollar, higher percentage breakouts. However, it's a pretty nice one so I'm waiting for a little opportunity to buy here on a slight pullback.

4.13 The market softened a little in the last half hour to close up 50 points. I sold out the rest of Lyc at 45.5 (v 47) and took more profit in Aio at 145.5, Axa at 401, Gbg at 89.5, Tls at 357 and Tol at 662. I bought Sun at 718 thinking it wasn't going to pull back only for it to retreat to close at 711. A pretty good day overall, I'm still long Aio, Axa, Gbg, Sun, Tls and Tol although not terribly much of each.

Onwards and upwards. Fri July 24

The US market pushed conclusively through the June highs with a nice gain of 2% plus on the major indices. The UK and German markets did the same and we've followed suit this morning as the synchronised recovery continues. Late trading in the US is a bit weaker following some disappointing revenue figures from American Express among others, but it doesn't seem to be putting much of a dampener on things.

I sold out of all my longs early. Aoe because it was very strong yesterday and showed no strength early. Out for 395 (v 374) and it's now 389. Got out of Mgx at 116.5 as it showed a little momentum on a gap opening but no follow through and it has also slipped a tad to 111 now (11.56am). The other position was a small one in Aqa and I was happy to take the gap move as it opened up 20 cents or so. Sold at 612 (v 586) although it did spike to 630 but on very low volume.

I mentioned Ipl yesterday, I was hoping for a strong close so I could go long overnight. It didn't eventuate, instead it gapped open following the lead of the two large US fertiliser stocks Mosaic and Potash which surged 6 and 7% last night on strong reports. Ipl will often pull back after a gap opening and after trading at 255 it ground back to 252. Unfortunately, it then reversed rapidly before I could buy and I finally grit my teeth and paid 260. It's now 263 and churning around in a tight range. The fact that it hasn't retraced significantly after an 8% gap makes me think it could go again this afternoon. Here's the daily chart.

I've also bought some Lynas Corporation at 47. It's breaking out of a little range but I was hoping for more of a surge.

12.18 There's one that got away this morning. At least, I think so. Gindalbie, another smaller iron ore producer/explorer, has been setting up nicely and I've been looking for a surge through 80. It got to 79.5 this morning and has been suspended from trading pending an announcement. In the current climate it's probably good news so I may have very little chance to buy when it resumes trading. Here's the chart. Quite a few of the real estate trusts are looking promising. I'm hesitant about trading in them because they don't generally move too far, but Mirvac Group is one that I'm watching anyway.

Actually, I've just gone long some Goodman Fielder at 138, a baker, so a little bit similar to real estate trusts in that the volatility is generally fairly low. Here's the daily. 2.20 I was out of the office and missed Gbg returning from suspension. It's jumped up as high as 86. I've bought a few at 85 but I'm hoping for a small pullback to buy a few more at lower prices.

3.11 The market has been grinding down after a strong gap opening and most of my positions are going nowhere or edging against me. I've sold out of Gff for 137 (v 138) as momentum died and on reflection I feel that it has less upside than my other positions. Ipl is still near the top of the range so I'm hoping that if the futures stop falling the stock can kick again in this last hour.

4.02 The spi contract is just starting to rally after falling all day. Ipl, at least, has pushed up slightly. I sold a handful at 266 (v 260) and have a few more on the offer at 268 for the 4.10pm match.

I almost forgot, also bought some Telstra at lunchtime at 346. They've struggled for most of the afternoon but look as though they could close near the highs. Here's the daily.

I'm showing a few more bars on the chart so you can see that it's quite a significant level having previously peaked around 345 three times since April.

4.11 Telstra closed at 347 which is very promising because the previous peaks tended to be intraday highs. The highest actual close was a recent one at 343. The Xjo closed up 26 points and I'm long Gbg, Ipl, Lyc and Tls.

Feeling fresh. Thu July 23

The US markets paused for breath last night and we're doing much the same with a small 11 point drop at 12.30 pm.
Post my holiday, I'm concentrating on trying to buy stocks with strong momentum but without discarding my usual disciplines. On the basis of this morning's experience I've got some thinking to do about how long I hold positions but overall it's looking promising. I want to be fairly quickly in and out of positions; perhaps averaging a holding time of one to two days but I can see that the temptation might be to drift into more of an intraday mode. I don't want to pre-judge this possibility but I've generally found that it's better to hold good positions overnight as most of the gains are made on the opening gap.

I suppose I had been thinking about more than just the momentum idea while I was away, but the other ideas I've had seem more like obvious strategic or procedural things which haven't involved too much consideration. These points are:

1. concentrate on buys rather than sells because of the time delays in getting confirmation when I want to short sell.

2. stick with smaller dollar stocks and lean towards the resource and energy sectors because these have the largest percentage moves.

3. avoid options as my holding time is too short to cover the spread in the long term.

4. these are only guidelines, be especially cautious of wearing bullish blinkers.

The first position is in Arrow Energy. This has been running for a week or two but had just pushed to a new high yesterday. I bought early at 374 as there was solid buying at the new highs and the stock has pushed on to 381 now.

The next one is my old favourite Fortescue. Like most of the resource stocks around, it's running and I paid 434 after it had shrugged off a weak opening and pushed past yesterday's (consolidation day) high.

On to Mount Gibson, an iron ore stock which has been slightly lagging the others and has just popped through yesterday's high having released it's 08/09 result and a quarterly activities report. Long at 99 and sold a third at 101.5 to cover costs.

The last postion is in One Steel which I bought at 290 when it broke out of a 4 day consolidation. I sold a few at 292 to cover costs and it has traded as high as 295 having edged past the June high.

In the 'do what I say, not what I do' category is Asciano. I paid 139 but this has a different tone to the other charts and I'm trading on potential rather than fact here. It is very strong, having driven up all morning on good volume and holding steady over lunch.I think I'll sell by the close unless it runs through to new highs by then. It's one to watch certainly.

Another one to watch is Ipl, which is setting up really well. If it can close in the high 240's I'd buy some.

2.38 Sold a few more Mgx at 106 (v 99) and Ost at 298 (v 290).

2.55 The market is showing a great deal of resilience and is now square on the day despite the bank sector being muted thanks to the Nab issue yesterday. I've just bought some Minara at 91.5. I could have paid 90 as it sat there for a long time but given that nickel was strong again overnight it just gapped up early and sat at 90. It's finally soaked up the stock and is pushing on.

Sold out of Aio at 139.5 for a slight gain as I'm now long Aoe, Fmg, Mgx, Mre, and Ost which is quite a bit for my first day back. I might even sell out of one or two if I'm feeling a bit iffy about them.
3.36 Long Aquila resources at 586 (after having bought earlier today at 570 and inexplicably cut). I guess my concern is that the stock is not very liquid. It's traded about 800,000 shares today so it's not the worst and the chart is very good. A nice bullish correction and a pennant break out.

3.42 I'm scratching around, looking for a reason to cut something. I've just sold out the balance of Ost at 298 as it's stalling here on high volume. The stock looks fine but something's got to go.

4.13 I also cut Fmg at 442 (v 434) and Mre at 90.5 (v 91.5) along with a small amount of Aoe at 397 (v 374) and some more Mgx at 112.5 (v 99). It was quite a good day for the high momentum stocks but I'm equally happy to be going home with modest overnight positions. Overall the top 200 index fell 4 points.

The best laid plans...Wed July 22

Just back from a 10 day holiday which was very refreshing but my hopes of the market continuing in correction mode were sadly misplaced. The market has rocketed right back to the top of the range sitting below 4100.
It always looks like trading would have been easy with the benefit of hindsight but being tired and jaded, maybe I wouldn't have done that well. I didn't think too much about my trading while I was away except to ponder/reconsider one idea that had been nagging away at me before my break.
I've been working on getting into moves early by assessing on limited evidence whether a stock has made a higher high/low. I'm pretty sure that this has quite a good success rate because when combined with a tight stop I rarely take a bath on a position while sometimes the market breaks out beautifully. What's nagging at me, though, is that I'm often just catching a small move which fails to break out and takes a week or so before it confirms this. In the end, by not getting confirmation of strong momentum am I focussing on a high win/loss ratio at the expense of the risk/reward ratio and overall profitability?
Obviously, I think I am and I'm going to look more closely at the really explosive patterns and see if I can get on board more of them at the lift off point and not during the many hours to count down.

Is it just me? Fri July 10

Is it just me, or is this an incredibly boring week? I think the answer is yes; I've had a quick look at the Xjo chart for the week and although Monday was a solid trending down day, Tuesday to Friday have been in a narrow range. There was an intraday rally on Wednesday but the action has been sloppy and illiquid.
I'm glad I'm off on holiday because our market is waiting for our August reporting season and school holidays are upon us so the malaise may continue for a while yet.
The US was flat, again, overnight and while the little rally I was looking for yesterday afternoon came along this morning, the gain is now only 5 points from a high of up 28.
There was quite a good article about the head and shoulders pattern in the S&P 500 index on the fnarena site yesterday. It's locked for subscribers but worth a look, perhaps on a trial subscription. The gist of it is that although the daily chart looks bearish, if you pan out to the weekly then you can see that a fall over the next few weeks would set the market up for a good rally in the latter part of the year. This is because the bigger picture shows a reverse head and shoulders pattern. In my terms (actually Elliott wave terms), when the rally off the March lows overlapped previous lows it indicated that the impulsive down wave was over. It would be quite normal for markets to retrace some of the recent gains and then rally hard again.
4.08 Off now for a week or so. The market has strengthened again, all very thin, but up 26 points or so.

Winding down. Thu July 9

Tomorrow is my last trading day before a break and given how dull the market is I'm mostly unwinding stuff. The US market was flat overnight, Europeans a bit down, gold, oil and base metals weak but after the US close Alcoa reported a slightly better than expected result so US futures have rallied. The Aussie market is cautious, down 9 after outperforming yesterday. It's also a bit unpredictable with Ncm - up 1.6% after gold fell $20 - an example. The AUD was weak so that explains part of the outperformance.

I cut my short in Qan for 187 (v 185) and my long in Tls for 336 (v 334) as nothing much happens. I'm still long Qbe which is rallying fractionally in a choppy fashion. I've also done a trade in Fmg, buying at 353, driven by boredom and the desire to have an interest. Here's the 30 minute chart. It looks ok, but it would have been smarter to wait for a break of yesterday's closing high of 355. As it is, I'm now hoping that this morning's chop is a completed correction and we're ready to rally.

12.39 Out of Qbe at 1965 (v 1962) as nothing much is happening. Only Fmg is left now.

3.17 The market is very cautiously working its way back to breakeven. Still down 4 points but I get the impression that it's building the base for a late run.

Looking at the Xjo chart, the reversal day yesterday looks similar to one about 11 bars back - the market may be in a downtrend but is trying for a retracement rally.

4.10 My hopes for a late run have proved to be overoptimistic as the market closed down 5 points. Sold out of Fmg as it pushed up to 356 but couldn't continue on. Looks too much like a failed rally to want to hold this overnight, out at 347 (v 353).

Head and shoulders. Wed July 8

The US chartists were talking about the possibility of a head and shoulders pattern signalling a top in their market when I was watching Cnbc last night, before the US opening. Looking at the chart, I think they already had confirmation but the 2% fall with the S&P 500 closing on its lows would have convinced most of the technicians. Here's the daily. The Elliot wave approach doesn't use terms like 'head and shoulders' but the response is much the same. My guess is that we've had the first wave down, a completed correction and we're now in the third wave down. This should have more momentum but it's still unclear whether in the bigger picture it's just going to prove to be a correction of the move up from early March or if new lows are in prospect. Personally, I think we'll make comfortably higher lows relative to March and rally again from there.
Regarding my positions, there's only a couple of days until I go on holidays so the plan is to look to unwind but not put on anything new. Most things have gone my way today, Tls is up and the three resource shorts are down with Qbe the only negative, down 21 or 1.1%, which is the same as the Xjo.
The only thing I've done is to buy back a third of the Mgx short at 80.5 (v 85.5).

12.09 Just tempted by another short position, this time in Qantas. The stock made a new low this morning as it slips away from support around 190. Short at 185.

2.12 This is a bit quiet again as I'm winding down before the trip. Just bought a couple of Osh at 517 (v 529). The market is only 36 points lower which is outperforming overnight leads and the other markets in our time zone. We had some extraordinarily strong consumer sentiment readings this morning so that might be helping.

2.58 The rally has gained some momentum with Mgx now up on the day. I've cut the Gbg short at 71 (v 72). I've also cut the rest of the Oil Search at 520.

3.12 Now out of my long in Qbe at 1956 (v 1962) for a small loss as it has battled all day to be even with last night's closing price. Not the sort of performance I was hoping for after yesterday's strength and with the intraday rally starting to stall I'd rather be out. Sold a few Tls at 336 (v 334) to cover costs. Still not out of Mgx; I didn't react quickly enough when it turned and now I'm rather forlornly hoping for a couple of cents pullback.

3.18 Damn. Just realised Qbe could be about to surge and quickly bought back at 1962.Here's the 60 minute chart.

3.38 Stuffed up in Mgx, just paid 90 after hesitating for 30 minutes. Short was at 85.5.

4.13 The rally kept chugging on until the close and the market closed up 1 point. I've got very few positions and they're all small...long Qbe and Tls and short Qan.

No conviction. Tue July 7

The US indices were pretty flat last night but the theme was for weakness in oil, gold and base metals and strength elsewhere. Hence, although we dropped yesterday on the back of expected overnight falls which didn't eventuate, we're still down by 16 points. The market is illiquid and indecisive. I cut my short in Ccl at 857 (v 855) although overall I was breakeven on the trade because of a small purchase at 850. In essence, I figured that I shouldn't be in this trade as the trading range is too tight. I also sold out of Wow for square at 2628 as there seems to be little buying interest in the stock - not much selling interest either.

I've bought some Tcl at 406 and 401 (av 403.5) as it seems to be making a higher low. It's also in a range but a much broader one as a percentage of the stock price. I've been slightly disappointed with the lack of buying here today, maybe just a touch of impatience, so I may cut this later in the day.

12.21 Short Gindalbie, an iron ore producer, at 72. The chart made a lower high about a month ago and is now starting to slip through support. 12.36 Also shorted a small amount of Mount Gibson, another emerging iron ore producer as it made a sell signal at 88 a couple of days ago and subsequently has attempted to hold, but is now slipping. Short at 85.5.

2.22 Now short Oil Search as well at 529 as it opened stronger today but then traded through yesterday's low of 528. I've also gone long Telstra at 334. It's not completely bullish but seems to be working it's way towards a range break after a small 3 wave retracement.
2.57 This is a bit perfunctory today because I've got some sort of virus and I'm struggling with low energy and a high temperature. I hope it goes away by Sunday when I'm off on holiday.

Bought back Ost at 236 (v 247) as it's finding support.

3.58 Tcl wasn't showing any strength so I cut for 401 (v 403.5) and replaced with Qbe which pushed through 1954 to make a buy signal. I'm long at 1963 where it's trading now.

4.15 The market closed towards the bottom of the day's range but it's definitely lacking conviction. Long 2 defensives, Qbe and Tls and short resources, Gbg, Mgx and Osh.

Gloomy Mondays. Mon July 6

Despite the US market having been closed on Friday night and the European markets flat, the Australian market has continued to fall and we're now down 54 points at 12.32 pm. The Hang Seng and the Topix are both down over 1% and US futures are weak so we're not on our own.
I sold out of the last of my Rio early at 4890 (v 5225) for a disappointing trade where I had the chance and valid reasons to cut for a small loss on two separate days but chose to stay in. I also sold out of Ozl Aug 90 calls at 6.5 (v 18.5) as I've realised that my option trading is hurt by an unwillingness to quickly turn over my positions. I did make some of this back on hedging. My general thought is that I'm going to restrict any option trading I do. Ideally, I'd like to have a separate pool of money in order to pursue buy/write strategies but I'll leave that for a later date.
My remaining position is a short in One Steel which is down 9 at 238 as I write.

1.16 Ost is finding some support so bought half back at 239 (v 247).

1.45 Just unwound my hedged position in Brambles. The stock was looking weak but extended so not the sort of position I want to take overnight. I took off half of my stock hedge at 563 and the rest at 556 then sold the July 625 puts at 70 with the stock at 556. This is a premium of only 1 cent over intrinsic value because the puts are deeper in the money and time is running out. Because of the early sale at 563 I was able to claw back most of the lost premium.
My book is the smallest it has been for a long time, there's a small short in Ost and a hedged July put position in Gpt. I'd like to unwind this but I doubt I'll get the opportunity and can only hope for some moves in a stock that has been glued to 50 for 2 weeks.
I'm off on holiday at the end of this week so having very few positions is good.

3.10 Just put on a couple of fresh trades in Ccl and Wow.

The Ccl chart is actually in a range but is reversing after a 2 week upswing that made a lower high. I'm short at 855 looking for a test of 840.

Woolworth's is one of the defensives that's charting well, it's building a base and has some momentum. Trading through 2840 might provide the energy for a move to the top of the range. Long at 2628.
4.22 Distracted by a visit. Bought back a couple of Ccl at 850 (v 855) to cover costs.
Market closed down 45 points.

When in doubt...Fri July 3

On the last trading day before the July 4th long weekend the US markets took a bath falling more than 2.5% as jobless claims rose unexpectedly, dampening hopes of recovery. I was watching the US market early on in their session and the win/loss ratio was appalling. European markets were already weak before the jobless claims numbers and fell pretty heavily also.
I'm annoyed with myself because I felt very uneasy yesterday and should have sold out of Bhp despite the 60 minute chart looking less bearish, just because I already had too many positions and the daily was very undecided. I had also toyed with dumping Qbe but held on as it traded briefly through 2000.
Anyway, it highlighted for me a flaw in my trading which I've been unwilling to address. I'm increasingly comfortable with the type of trades I like - generally involving going as early as I can on a breakout and having a tight stop - but my problem is rationing the trades when I have too many signals. You would think this would be a core issue for any trader: that you have a finite amount of capital, you want your position size to be consistent along with your risk/reward profile and therefore you have to weigh up which trades to take when you have many signals.
For some reason, I've been unwilling to tie myself down to a maximum dollar amount and quantity of trades. This is a shame because the advantage of this method is that it encourages me to unwind a trade having made, say, a quick 4 or 5% and then to replace it with something else that is looking better. All too often I hang on to the first trade for another couple of days and it doesn't really get any better. This is not a style that will suit everyone but my aim is to get into a stock which is on the point of acceleration and to get out as soon as it stalls. It's also to get out if nothing has happened for a day or two even if I haven't been stopped out.
You might think that this is stating the obvious, that everyone would want to trade like this, but I'm not sure that the time frame is to everybody's taste and a lot of traders either don't want to trade for short term moves or don't believe they can pick them. It also takes a fair bit of psychological flexibility which is not for everyone either. I find that I can get in a zone with this type of trading and do very well for a long time but then inflexibility can creep in and suddenly I'm swimming against the tide.
That inflexibility is usually driven by incompatible aims. For example, I might have got excited about the prospects for a stock, thinking that perhaps it can run 10 or 15% in a particular week, but instead it runs a healthy 3% and stalls. Normally, it would be a good bread and butter trade but in this case I might feel that I've missed out on 7 to 12% and stubbornly hang on only for the stock to retrace, perhaps even making a loss on the trade. Another incompatible situation is where I don't take a tight stop because the market has gapped through on thin volume. That's fine, it's ok to give it an hour or two until the dust settles but you still need to take the stop unless there's an amazing reversal. So the intention is to keep that core goal in mind always and not be distracted by other time frames.
Since I've been writing this blog I've found that I've been able to identify the types of trades I like much more specifically and interestingly my trading preferences are a bit unorthodox in that I prefer to pre-empt signals. Previously, I would often take these trades but be guilty about them and also take the orthodox signals. I'd then have way too many positions - a lot of them pretty good - and I'd have very confused ideas about my stops. I think reasonably good trade selection covered a multitude of sins in relation to stops and portfolio size but my profit and loss swung around too much for comfort.
All this is a roundabout way of saying that I'm making a New (financial) Year's resolution. I'm now happy with my trade selection, my profit taking and my stops so the next step is to be disciplined about the number of positions I'm willing to hold, the dollar value of my book and to trust my intuition as to when time is up and I need to get out of a position on which I've neither been stopped out nor made a profit.
On to the day's action. It's 12.15 and the market is down only 1.4% as we might have had some of our fall yesterday. Things also look a bit different in this part of the world as we face towards China and an economy that only exports 7% of GDP to the US and 8% to Europe (according to Tim Price at thepriceofeverything.typepad.com) and could surprise on the upside with economic growth.
I've sold out of Bhp at 3365 (v 3435), Ncm at 3050 (v 3065) and Qbe at 1963 (v 1992). None of it too disastrous. I was tempted to hold Ncm but the difference between the trailing stop and the next stop was too far. I would have sold out of Rio but it is suspended from trading as the company has a book build to cover a small shortfall in the rights issue.
I've kept my position in Wdc, it briefly went through yesterday's low of 1103 but the next stop is very close at 1095 and as the stock is still well bid I'm happy to keep this position with the proviso that 1095 holds. I'm wondering whether I'm contradicting myself immediately with my stretching of the stop but there are tight stops and there's cutting off your nose to spite your face.

2.10 I've answered my own question in Westfield. After showing signs of strength and rallying back to 1114, the stock has slipped below 1103 for a second time and I've stopped out for 1101 (v 1115.5). I sold a third yesterday at 1124.5 so the loss is not large.
The only position I have now is an option position in Ozl which is 2 cents lower. I'm holding on to this is they are August calls and I can't lose much on them. I've been doing some homework on my option trades and find that when I trade in illiquid options, or where the option spread is very wide (as in Ozl), I tend to hold the options too long and lose on time decay. In future, my aim is to use options in the bigger dollar stocks (where the spreads are smaller) and get out of them within a few days.

2.35 I've been going through my charts and since I've still got one position in Rio, I've got room for one largish or two smallish positions. I don't want to force a trade but going through the top 50 it seems that most of the signals I thought were bullish over the last few days turned out to be 3 wave retracement rallies that have failed. There are some slightly bullish charts in some defensives; telecoms, property trusts and retail but I'm more interested in putting on a short position. I thought Amp, Cwn, Mqg, Osh and Ost were all plausibly bearish but I'm leaning towards Oil Search and One Steel.

The chart of Osh shows a weak sort of 3 wave rally after a pretty sharp fall.

Ost is similar. The 60 minute chart is also looking weak...

4.14 Rio unexpectedly resumed trading and fell as low as 4905. I sold some of my position at 4960 (v 5225) but given that there'll be no US trading before next Monday I thought it ok to try to get a better exit when we re-open. Also shorted some Ost at 247 on the close. Market down 49 points.