Gap filling. Mon Nov 23

US and European indices had only modest falls on Friday night so our fall in Australia was a little overdone. My working model is that the Xjo has peaked and although I'm not completely convinced, it seems like, say, a 65-70% chance. I'm more confident in the short term where I think we're filling the gap to about 4730. We're up 30 at 4716 at the moment, 11.25 am.
Of course, the nice thing about short term charts is that I'll know pretty soon if I'm wrong.

So far this morning I've bought Telstra and gone short in Fairfax.Telstra, above, is not the most exciting stock for my time frame but it's pulling away from the low in September and I've bought on the pivot created by Friday's pullback. The last two slow grinding upswings have created a base and the fact that the last swing didn't show any acceleration implies that it could be a larger pattern with a 3rd wave move to come. My main concern here is that the last swing had a deeper pullback and I don't want a repeat of that. Long at 333. Looking at the macro picture, if the market top is in place then this quintessential defensive stock could certainly go for a run.

Fairfax is one that I've decided to chase because of the change in tone of the market, typified by the rapid reversal in Aristrocrat. It ground up to a lower high on the daily chart, but with no obvious wave pattern within that upswing I was reluctant to take a reversal trade. However, the signal was at 171 and I was able to get short at 166. While this is a significant miss, I also think it's a high probability trade with a very good chance that a fall might extend below this month's low of 152. So far it's going my way, having bucked the trend to be down 3 now at 163.

Other than this, my existing positions are mixed with no significant changes so far. Qantas is showing promise. This is a stock where I went long after the first pivot only to see it push down further. I was confident that there should be another attempt to rally and I prefer to use the swing low as my stop but I was beginning to worry that this wouldn't hold.

11.58 I've taken my short position in Transfield back to a full position with a sale at 409 having previously bought back some stock at 420. I'm much more confident now that this has had enough time to rally and hasn't found any significant buying support. I'd love to see it break below 403 because it has now been in a trading range for 18 days and a break of a range often signifies a decent move.
1.58 The index is hovering around below resistance. It's up 33 at 4718, down from a high of 4725. Gold is the story of the day, up 16 at 1164 and finally starting to kick on in local terms as the AUD slips against the USD to 0.92 having peaked last week above 0.94. Because I'm usually looking for early stages of moves, it does mean that I'll be out of trends that keep driving on. Sadly then, I'm on the sidelines as Lihir Gold is up 11 to 369 today. No trading method is going to get you on every trade although it's some consolation that if I was adopting the same approach using weekly charts then this is a trade I would be long.

4.21 We've closed with a gain of 31 points and I'm still going with my working proposition that this is a gap filling rally. My two new trades finished at my entry price while the balance was slightly against me as a couple of the shorts that I was late into are having a leisurely bounce.