Turn around day? Wed Nov 4

I've got a few potential buys today but most uptrends are broken while downtrends are not necessarily established. It's probably a situation where there'll be rallies which just make or just fail to make it to the old highs in some stocks while others will confirm lower highs and start to trend down.

Overnight the Australian futures contract was up 12 and at 11.09 am that's about where we are, with the Xjo up 9 points.

Gold was the highlight overnight as India bought a large part of the IMF overhang at 1045 which sent the gold price up nearly 3% to 1085. The Dow managed a small loss after the pre-market indicators and European markets were weak.

I've added two positions, a long and a short.

Asciano has had 3 choppy swings to form an a-b-c retracement since the early September peak or at least, I hope so. I've taken the buy signal at 157 but I'm kind of sceptical. I think it's quite likely to be part of a larger scale retracement where the best I can hope for is a choppy rally back towards 170. I don't know that though so it's smarter to just take the signal.

Stockland Group is my short position. After chopping around to minor new highs for a month they've hit the skids. There was a 3 day rally and I've sold a break of yesterday's low to get short at 377. So far, so good, as it has hit 372.

My existing positions are generally steady with the exception of Lgl which is up 13 at 330 on the back of the gold price surge.

2.42 I got long Kar about a week ago as I began experimenting with reversal trades. They obviously succeed or fail but there are two general types of winners. Quite often they will chop around a bit and end up making a typical 1-2-3 buy (or sell) signal anyway and you could have got in a few days later at much the same level while at other times they'll shoot up and that's when you're grateful that you got in quickly. With my Karoon position, I bought at 771 and sold some out that day at 793. Subsequently it held support twice and I was slightly hopeful that it would generate a standard buy signal. Unfortunately it has failed to hold 740 so I'm out at 737 for my balance. Still, it was an interesting exercise and I'm glad that I gave the trade time to resolve one way or another. I'd realised that I hadn't been allowing my trades enough time to play out my way so this is part of it; dealing with the slow evolution of a situation.

Fortescue is really similar but I hope it has a different outcome. The reversal hasn't exploded up but nor has it broken the pivot low at 364. I've wanted to stop out of this trade a few times because I feel pretty sure that it will make a minor new low and then find support again. But the best thing is to wait and see and if that happens I might get another chance to buy.

3.01 It's possibly not the wisest juncture at which to be experimenting with bullish reversal trades because they work best early to midway through uptrends or towards the end of drawn out sell offs. It's pretty obvious that's not the case now and I have managed to put on a more rational bearish reversal trade in Sgp today. With that caveat, I've put on part of just such a bullish trade in Fairfax today as the stock has bounced hard off an early low of 152 to be up at 159. It reversed off 152 a month ago and ran to 175 in two days. It's possible that this could happen but, again, I suspect a moderate rally so I think I'll keep a tight stop on this because there's a good chance it's a countertrend rally. Long a half position so far at 160. 3.12 Overall, the market is down 4 points having hit a low earlier at 4518, 1 point above yesterday's low. The Nikkei is similarly subdued but the Hang Seng is bouncing back strongly and US overnight futures are slightly firmer so I think we might have reached an interim peak of pessimism.

4.16 Fxj finished close to the day's highs so I bought the rest of my position at 159.5 on the match out to average a tad under 160. There was a late market rally of modest proportions to leave the index up almost 9 points.