Rebalance or retracement? Mon Sep 14

It's 11.45 and the Xjo index is down 46 points or 1% after opening unchanged with a neutral overnight lead but then selling off steadily. Today is the start of the window for some international funds to reweight out of Australia (and Japan) into Korea. This seems to have affected the Nikkei more than the Aussie market with the Japanese index down 2.5% and curiously the Korean Kospi is also down 1%.

This morning I've stopped out of Asciano at 164.5 (v 168.5), Infigen at 135.5 (v 139.5) and the second tranche of Gbg at 98.5 (v 95.5). I've still got the first set of Gindalbie but I suspect I should also sell them out. These sales were all based on trailing stops and Gbg has well and truly breached Friday's low, but I think the stock has a fair way to run so I was hesitating regarding the stock I bought at 86. 95 is a key level here and the stock has now traded down to 94.5 - admittedly on very light volume - so it's looking quite precarious for Gbg.

I bought some Lgl this morning at 311 as the stock resumed its rally on the back of the gold price closing above USD 1000 in New York. The buy signal was at 306, although not much was traded there, but I hesitated at 308 then chased it up to 311. The stock is back to 309 now. I'm obviously running the risk that Lgl makes a lower high here but Sbm and Ncm - two other gold stocks - did push on to new highs and, muddying the picture further, Sbm has failed to hold the new level.Just stopped out of the last of the Gbg at 94 (v 86).

12.52 The market has edged lower to be down 1.1% and although I don't necessarily think that we're seeing a top here, I am starting to notice some opportunities on the short side. Right now, I'm looking at Ipl, Map and Ost.

1.06 I've gone short 2 of the 3. The first is Incitec Pivot, a fertiliser and explosives company. Ipl had a great run from 214 to 342 between early July and mid August. It had one pullback and then a weak rally which I tried to trade on the long side without any success. That seems to have petered out now and another leg down might take it to 270ish. Short at 301.

The other short is in One Steel at 325. This one just made a double top (potentially) last Friday. The stock reversed rapidly after hitting 345 and closed just above its low at 332. The big if is that it hasn't necessarily peaked. Trading below the previous pivot point at 322 would be a good sign.

2.30 After a brief rally the market is again at its lows, down 57 points. I'm long Due and Iof which are unchanged and Lgl which unfortunately has continued to slide and is now down to 304. Gold is slightly weaker but still above 1000 so I'm tempted to hold on. Realistically though, I should acknowledge my mistake in not waiting for the stock to confirm the strength especially as the market was already looking weak. It looks very much like an early peak for a lower high.

3 Out of Lgl at 303 (v 311). Not a great trade but at least I haven't compounded the error by hanging on in hope. Regardless of what happens later, my primary aim with my trades is to get into strong moves and this clearly isn't one (any more).

3.59 I decided to take the other short in Map at 241. I've been hesitating because I'm not sure if it's just correcting the little surge in late August. In the end, I think that it's not often that you get a clear pivot like this without a tradeable move so I've put on a small position.

4.16 The Xjo index closed down 65 points, about 12 points above the day's low. The rest of the region was also weak and the US futures are down close to 1%. The uptrend is still intact though and I've been trying to avoid picking a top in the market. However, over the last week or two there have been fewer upside opportunities so I've put on a few short positions today. They still look like pullbacks though not downtrends.