Taking away the punchbowl. Fri Feb 19

I was quite hopeful when I got to work this morning about a couple of long positions given that overnight markets were strong again but after the US market close the Fed raised the discount rate by 25 basis points. This is seen as a prelude to a rise in the Fed funds rate so overnight futures are down and any early rises quickly evaporated.
I decided to cut my long positions although they are still above yesterday's lows which might usually be a fairly conservative stop. However, since I didn't feel that my entries were all that great and the trades were retracement type momentum plays, I'm happy to clear the decks and see if something better might turn up. Both the stocks are more trading range situations than reversal rallies but still not great bullish charts. Anyway, out of 40,000 Asciano at 177.5 for a 200 dollar loss with another 46 in costs. Out of the last 33k of Fairfax for 177 which is a further 1320 profit to make 1760 overall less 49 costs.

12.22 I've just shorted 15,000 David Jones at 486.5 average price. The stock had a retracement rally where it made higher lows over 8 successive days. There was the opportunity to take this short position on Wednesday when it finally broke the previous day's low. This is the third successive new low but I'm still able to get short at very close to the signal level of 487. The stock is in a downtrend so this is a resumption trade but even if it actually makes a higher low in an a-b-c retracement rally, there's still a reasonable opportunity to make some money because a higher low will often be only marginally above the previous one in retracements. The danger is if the retracement is not complete and my stop is just above the recent high at 500.
Click to enlarge

2.22 The market held for most of the morning but since midday it has dropped so that the Xjo index is now down close to 1%. The Kospi and the Hang Seng are harder hit again with globex overnight S&P futures down over 1% as well. I'm interested to see what happens with the Xjo index. Usually when you have a big up day as we did on Wednesday, there's some follow through and at present this is looking like a correction of that move on the intraday 60 minute chart below. Holding 4600 will be key as a break of Tuesday's high will probably negate the chance of significant further rallies.

4.11 The market rallied from 2pm to close down 20 points which is a strong result relative to other markets in this time zone and overnight action in the US futures.

So far, so good for Djs which closed at 480.