As you were. Thu Nov 26

It's more groundhog day than Thanksgiving week with the market unchanged after an hour and a half having sold off from a bright start on the back of steady overnight rises in Northern hemisphere indices and in gold, oil and base metals.

I'm glad I bought back my Arrow Energy short yesterday because it was marginal at best. 17% shareholder, New Hope Coal, who are in turn controlled by Soul Pattinson, have announced that their stake is for sale and it has had the perverse effect of rallying the stock. I imagine that rather than having a large holder drip feeding stock into the market there is now the opportunity for one of the big coal seam gas and LNG players to take a stake. I'm long now at 410 on a bullish reversal.

My other new position is also a long in Telstra. I stopped out a few days ago at 333 because I was worried about a second leg down despite being bullish overall. I felt justified initially as it edged down to 328 yesterday morning. That was as low as it went and having made a double bottom it reversed giving a second buy signal just before the close of trade at 336. I didn't take it thinking that I'd wait for a breach of the recent high at 338. That was obviously going to happen on the open and yesterday's bullish reversal was a good sign, so I bought at 340 on the open. It has now pushed on to 343 as it looks like the parliamentary debate about the carve up of Telstra will not now take place in this period. This also raises the possibility of a relief rally as the government was playing hardball and talking down the valuations that they would be prepared to put on Telstra fixed line assets.

11.56 The sell off is gaining momentum. Down 11 points after a 40 point turnaround. I've put on three new short positions but I'm hesitant about all of them. I'm willing to put them on because I think momentum favours them but I might take them off again later.

Perhaps this will help me clarify my thoughts. Ok, first up is Awe, which gave me a sell signal that I didn't take yesterday. I'm short a partial position at 280 which is better than yesterday's level. I'm still working on the potential for this to have made a lower high with a small sell signal generated yesterday. The trouble is, it looks a bit like a pennant formation and is still, just, holding a trend channel. I suppose a second dip below 275 would be much more convincing but with today's sell off gaining momentum I thought it might be worth dipping my toes in the water and maybe getting a better price.

Cey is the next one and again, it's just a tentative position so far. It also gave a little sell signal yesterday but it's another one where I could see this having a last run up to a new high. The recent run up fell just short of the August high. It seems to me that this rally has formed a small 1 and 2 wave followed by an extended 3rd wave which itself has a 5 wave pattern. If that scenario is correct then this is a choppy correction which should hold above the 1st wave peak of 325. Despite this analysis, I'm not a big fan of expecting wave patterns to unfold in a textbook manner but it's nagging at me with this trade. I've included a larger range of days to show the big picture followed by the usual closer look.

12.27 The market is bouncing in it's tight range, now back up 3 points and my speculative shorts are edging up. The last one is Ipl. On Tuesday this reversed from 301, the same level that had held it in early October. Today it made a tentative double top with early sales at 301 before a sell off. I've gone short at 292.5 but I can see that I've jumped the gun. Ie, I haven't waited for a reversal short signal, which itself is a very early entry, and would be triggered tomorrow by a break of today's lows. 2.56 We're back around the lows now with the Xjo index down 16 points.

3.48 Still in two minds on Awe so bought back at 278 (v 280).

4.11 With the US closed tonight for Thanksgiving, I've left the debatable shorts on in Cey and Ipl. A flat day for me although I got sucked in by the early strength in Aoe which retraced to close at 398. I'm sticking with it for a little longer, it strikes me as a stock which is turning around as it makes higher lows and more attempts to rally.
Market closed down 14 points, Hong Kong and Shanghai are both weak and down by a little over 1%.