B wave. Tue Oct 6

US and European indices rallied back last night although it looks to me like a standard retracement rally which could fall short.

The Dow Jones daily chart, above, tells the story. This pullback has been deeper than the previous two in mid August and early September so I think the probability is of a lower high.

The chart for the Xjo differs slightly because we've had just the one wave of selling from the highs. Again, I think it's unlikely that we'll go straight back to new highs.

The upshot is that it's a time for short term trades until the situation resolves. Overnight I had only Lynas and I'm looking to sell them out today. Subsequently this morning I've gone long Lihir Gold and Linc Energy.

Lgl might be running its own race regardless of the index situation as gold has rallied back to just under recent highs and looks like it could push further. I was looking at Lihir yesterday afternoon as a promising set up and have bought stock at 295 and 299 this morning. I'd like to see it close strongly though.

Linc is having another go at resuming after a pullback. I tried to buy it last time and I'm having another go having bought at 168.5. 12.55 The market is now up just 24 points from earlier highs of up 67. Trade figures were disappointing and now it's the wait for a decision on interest rates with a possibility of a 25 basis point rise to 3.25%. Out of Lyc at 68.5 (v 61.5 adj). Lnc has peeled back to unchanged at 164 but Lgl is solid at 298.

2.51 We've had the rate rise to 3.25% and there's been a mini period of volatility. It look now as if the sell off occurred before the announcement but we're not out of the woods yet. I've bought some St Barbara, another gold stock, at 29. I'm on the bid for more at 29.5.

3.31 The market has continued to drift off and is now on its lows at 4583, up 10 points. It isn't being helped by a subdued day in Tokyo and Hong Kong.

I bought more Sbm at 30 for an average of 29.5. I might have to cut Lnc - my plan is to try to wait till later in the day to see sustained strength and although I bought less than half of my full amount I still could have waited longer.

3.58 Stopped out of Lnc at 161 and that was just an undisciplined (and unlucky) trade. Fortunately, it was relatively low volume.

4.15 Market closed up 18 points. Long Lgl and Sbm which finished well.