Headbanging. Thu Dec 3

A flat night in the US but the upward drift continues in Australia leaving us with a gain of 18 points at 11.34 am.
I've pinpointed what went wrong for me in a technical sense after holding my shorts for too long into the reversal. In an emotional sense I got excited about the possibility of a crash so that I had my signal to close out positions - a new low after a swing against me - in the case of Fxj, Ozl and Tse, but chose to hold on. In my enthusiasm for the bearish scenario I also added a very marginal short in Fortescue. Even though my stops were too wide, in retrospect, I would have been much better having taken off these positions (and not put on Fmg).
The point of my approach to trading is to be fluid - because I like that. So I might miss some big opportunities in extreme markets when I close out too soon but extreme markets are rare, as the word extreme suggests. I prefer to flow in and out with the swings in the market and get lots of regular wins.
I've stopped banging my head against the wall and closed out the last parts of my short positions. Awe at 276 (v 271), Bsl at 290 (v 276), Cey at 349 (v 335), Djs at 582 (v 577.5), Ipl at 303 (v 292.5), Ost at 312 (v 300) and Tse at 404 (v 412.5). They were all net about breakeven because I'd closed out portions for a profit but I watched that profit vanish over the last few days.

Another problem with getting too wrapped up in the bearish case was that I found it hard to take, and sometimes see, straightforward buy signals. The worst miss was in Arrow Energy which I planned to buy at 395 yesterday. I held off and congratulated myself when it eased yesterday to close at 390. It's as strong as an ox this morning at 412 and although I'm disappointed, I'm pleased that I identified it correctly. Now I've got my head straight and my ideas clearer, I can move on. Here's the Aoe chart. It made a minor new low on Tuesday which held above the November low and reversed yesterday. You had to be very quick to get on this morning if you wanted more confirmation and I missed the jump.

12.00 I've bought Ozl this morning. This was a marginal buy on Tuesday and a pretty good one yesterday. I closed out my short but didn't go long. I've bought a half position at 126.5 as I'm not too far away from the buy signal at 124.5. I mentioned yesterday that I was concerned about the lower high recently but the other case you can make is that this could mean that we've had a pennant correction and the next leg is under way. Regardless, the set up is strong and the long term trend is still intact. 12.10 I do still think that we're right at the top of the trend channel in US markets, with fading momentum and due a pullback but the point I was making earlier is that I need to keep that in mind but not become attached to it.

3.08 This little rough patch continues for me as I'm forced to stop out of my long in Mirvac Group. Although the rate rises here were expected, the credit problems from Dubai are affecting credit spreads worldwide and by extension Australian property companies. My stop was at 146.5 and I haven't cut yet with the stock lower again. It's possibly finding some intraday support so I might not experience too much slippage.

3.24 Out of Mirvac at 144.5 (v 153). This one surprised me, the immediate bounce back after it fell out of the range was a bullish sign. I expect it to hold above the early November low and there may be a better bounce then.

3.46 I shorted Csr at 175 on a reversal indicating a bearish resumption. Ideally I'll get a new low fairly promptly so I'm looking for a quick trade.

..and out of Fmg earlier at 431 (v 397), easily my worst trade of recent times.

4.12 The market rallied into the match out finishing up 12 points. I'm going to spend some time at the weekend going over my recent trades. Although I've had a few losing days I'm still well in front over the last few weeks and I can see some great opportunities that I missed. I want to see how I can make sure I get into these sorts of trades in future.