Circuit breaker. Mon May 10

The overnight markets were weak again but the US market, with broadly positive jobs numbers, was able to stabilise. All that has been superceded though with early news today that the EU has caved in and will go ahead with quantitative easing. Initial response is very positive with US overnight futures up more than 2%. The Japanese market is a little more muted but still up 1% or so as the Euro recovers against the Yen. The local Xjo index is up over 2% at 12.17 pm and I'm just grateful as I've been buying a few stocks as they come right down to support and was anticipating another tricky day.
My assessment is that it's an oversold bounce and I want to avoid getting carried away with my long positions. Here's the Xjo chart.

It looks like an expanding top, a volatile pattern with higher highs and lower lows which should settle into a downtrend once this leg is complete and we've had a proper retracement rally. If you look back to late October and early February, you can see that in both cases there was an oversold rally towards the end of the drop but it was still too early to buy for anything other than a quick turn. It may be that we've hit the lows last Friday but the situation in Europe is so fluid that I can see the optimism evaporating quickly.

12.50 Apropos of my concern about this being a fleeting rally, I've sold out a couple of things which I punted on the open and I've lightened the load with partial sales at 256 in Bsl, 106 in Ozl and 260 in Qan.

I'm also working my way into a short position in Awc. This was one where I got prematurely long but managed to get out for a minor gain. It fell further than I anticipated so that with some more strength today it's edging towards a reasonable retracement level. I've shorted a small amount at 164 but my stop is in the low 170s and I'd like to get the rest away a couple of cents higher.

3.13 I got my wish in Awc and sold more at 165 and 166 to get an average of 165. It's at 166.5 now and the market has kicked back up as despite caution in this time zone, the US futures are red hot. I've stepped back into a couple of short term resource longs so I'm banking on there being a little more bullish follow through tomorrow. I suspect that if Northern Hemisphere markets are able to rally strongly, it will still probably be a sell on open market tomorrow.

4.20 A strong finish took us up to a 4600 close which is a rise of 2.7%. I'm hoping for some follow through in the morning.