A strong yet strangely unconvincing overnight rally has squelched my idea of yesterday's action being a gap filling rally, at least on the micro picture I was looking at. However, at the daily level, it has been lacklustre so far, with the market building to an early peak with a rise of 47 points but rapidly retreating from it so that at 11.15 am the market is up 25 points.
This leaves us with a situation where the Dow Jones Industrial Average has made another new high while all the other major world indices are still sitting below recent peaks.
It's a puzzling situation and my trading signals are equally unclear. So much so, that I've sold out of Telstra for square at 333 because I thought it wasn't a strong enough signal while I've not yet acted on a buy signal in Onesteel - fortunately - because of a lack of clarity.
My overall position, which is net short, is moderately against me but I had feared that I would need to stop out of Asciano and Alumina. Awc is actually down on the day and although I'm not out of the woods in Aio, it's only up a tick.
12.28 The sell off gathered steam, we're now down 6 points on the day and I'm feeling more comfortable although my positions are still slightly against me. A few more potential sells are taking shape now.
Bluescope Steel has been making minor new lows and I've been tending to trade this on the upside while at the same time feeling that the weekly chart (below) is quite bearish.
The weekly chart shows that we're on major support so a break of 280 could be quite bearish. Here's the daily.
Onesteel has a similar weekly pattern to its competitor Bluescope and I've been equally puzzled because when a stock is holding support with only marginal range breaks it is often quite likely to squeeze out the shorts with sharp little rallies. I was leaning towards a buy in Ost earlier because it looked like it might have completed a retracement from the early November surge. However, it's now looking more likely to give me a sell signal with a tight 1-2-3 breakdown starting to set up which would be triggered by sales at 300.
This would still be quite risky because there's key support at 293 but given the weekly charts for both steel stocks and recent reports of a Chinese steel glut, I'm tending to the bearish side.
OZ Minerals is another metals stock that is looking as if it might have made a lower high. There's a small sell signal in the offing if it goes below 126.
1.27 Short Ozl now - half at 126 and the rest at 125.5.
3 pm Having fallen for most of the day, the Xjo index is making the first attempt to rally but is still down 17 points. The rest of the markets in this time zone are similarly unimpressed with the Northern Hemisphere rises last night. Most of them are down further than the Xjo.
Qantas is looking shaky having opened strongly today. I went long this last week at 278 when I really had no good reason to do so. However, there was a nice reversal buy signal yesterday and the strength continued in to this morning. Now it's testing recent support at 266 and I'm not sure whether to put my stop level at 265 or leave it at 259. I think I'll use 265 because while I was initially expecting a second leg up, time is now running out and today's action is discouraging. The other thing is that there's now a sell signal setting up at 265.
3.58 The sell signals are coming along thick and fast. Short Aoe now (at 403), as it breaks below the pivot at 402, while a few others are close.
4.16 The final scorecard shows a loss of 32 points. Awc was my best performer as it fell 7 to 162.5 and confirmed my tentative sell signal by breaking last Friday's low.
A solid day for me and my book is skewed to the short side now so I'd like to see some follow through.
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