That's a yes, then. Mon Nov 9

I've been asking myself the question whether it's a good idea to trade reversals because, a, you have to be pretty careful and b, I'm getting so many buy signals with the market itself reversing sharply after a steep drop. I got my answer this morning with Axa up 30% after a takeover bid from Amp.I sold out half at 550 (v 419).

Otherwise, the market has shrugged off a neutral lead and surged 1.6% by midday as we're undoing our recent weak performance. I've stopped out of Djs at 564 (v 528). I gave myself a wider stop here and obviously that didn't work in this instance. In addition, I've cut Fmg at 385 (v 386) as I've had this for a while and it still can't seem to rally despite a big bounce in the index. I'd be happy enough to try to buy this again, especially if it can get through 392, 393 which is, respectively, the low before the last swing down and the high 8 days back.

Encouraged by Axa, I've added 4 more bullish reversal trades in All, Aoe, Bsl and Qan and missed another 2 in Bld and Ost. I've also bought back into Cey as some more serious buying confirms the tentative 1-2-3 breakout that I was sceptical about on Friday.

Here's Aristocrat Leisure. They've been downgraded by all and sundry and are not helped by a strong AUD but it's a decent reversal and it looks like there's a 5 wave shape to the sell off.

Arrow Energy has been trending up on the weekly chart and it looks like the choppy correction could have completed on a daily basis. Long at 405. I'm expecting a 3 wave type rally, perhaps to 435, 440. If it was to spike to 425-430 in the next day or so I think I'd take that.
Bsl is perhaps the most encouraging of the latest reversals. It has bottomed out with a minor new low after a couple of tentative attempts to reverse. This at a level where it found support in September and October. I bought at 299 and it has edged up to 300.
I wrote about the Qan chart last thing on Friday and although it closed towards the middle of the range then, it has rallied above the highs of the last 3 bars now and is up at 271. Long at 268.

The other position is in Cey, where I've re-entered at 328. Goldman Sachs JB Were has upgraded thermal coal prices in their modelling and that's helped the stock to rally more convincingly.

2.13 Well, long yet another reversal with Awc at 163.5.
Ozl has produced a nice 1-2-3 buy signal and I'm unsure what to do about it because I'm long a lot of stocks now and pushing the budget too. I will be closing out Lgl later today because it's pushed on again after a pullback and I'm using that as a compromise solution for taking profits but I'll still have quite a bit of exposure.

I've got 23 stocks on my watchlist and I'm long 13 of them. I've also missed buy signals in Bld and Ost. One observation is that my list is too big so I think I'll cut Bld out as I lean towards the lower dollar stocks. A further point is that although there are a lot of signals now, it's an unusual turn of events that suits the approach I'm taking and if I delete too many stocks from my watch list then I could miss opportunities in future. I don't want to get into the habit of overriding signals when I don't have a good reason to so I think what I'll do is take the signal in Ozl with reduced size and cut back the size of my other long positions by about a quarter across the board.

Mirvac Group gave a reversal buy on Friday but there seemed to be very little momentum so I left it alone. It has crept up again so I've put on a half position at 143.
I also bought into Ozl - half size again - at 120.5.

4.10 Market closed up 81 points. I eased out of bits and pieces over the afternoon. A third of the Aio at 159 and 159.5 (v 157), about 15 or 20% of the dollar value for the following stocks; All at 445 (v 430.3), Aoe at 409 (v 405), Awc at 164 (v 163.5), Awe at 267 (v 267), Bsl at 304 (v 299), Cey at 336 (v 328), Fxj at 165 (v 160), Ipl at 273 (v 262), Qan at 272 (v 268) and Tls at 323 (v 324). These trades were taken because I have more trades than I anticipated and I don't want to pick and choose which ones I take.

I also closed out Lgl at 341 (v 313) as my general plan is to wear one swing against my trade and then sell at the close of the day when a new high is made for this type of trade. What I mean is that I've bought at a third wave breakout, had the surge, watched the pullback and then am selling out on a fifth wave - which could of course go higher. What I've noticed as a rule of thumb is that the stock will either kick a lot higher or that will be pretty much it for the run and it will often reverse. This seems to be a compromise which reduces my holding time, allows me to sell into strength and on balance delivers a profit outcome as good as holding on for the occasional big winner.

Fortescue closed well at 390 and I'm regretting selling out. My conservative entry point is in the mid 390s so I might have to watch out and buy early tomorrow.

A good day today, I'm pleased to have followed my signals with very little interference or second guessing and Axa was the cherry on top. Still long some as it closed up at 570.