Don't stop me now. Fri Jul 9

It was the first 3 day rally in the US since April with a 1% plus rise overnight but the Aussie market is reluctant to join in the fun. I'd like to see the rally continue but it's definitely in the balance in the short term. The 60 minute chart for the Xjo index has traced out a sharp 5 wave rally but it hasn't definitely completed.

I got out of Ozl at 106.5 and some Tse at 328. The Ozl because I've not been completely comfortable with this trade, my entry at 102 just seemed too late in the piece for a retracement rally. With Tse, 330ish is my target - it did trade up to 331 briefly but has slipped back to 323. I probably should have sold the lot and might just tip them out if it edges back to 326, say.

1 pm So far, yesterday's pattern of relative strength in banks and industrials is continuing. Despite that I've put on a long position in iron ore stock, Murchison, at 198. I'm looking for either a run up to the highs around 235 or just a little retracement rally to 210. Stop is at 185.

I normally wouldn't favour this trade because it looks like the rally has already happened in late May and June, but the chart of Fmg - another iron ore miner - implies that the rally could be tradeable. It seems to be a few days ahead of Mmx but pretty similar overall. A bit stronger, perhaps, as the June rally went relatively harder.

3.43 pm The market tried to sell off early but the tide has turned and we're now up 39 points. Any strength in resources is still patchy and tentative but I've placed my bets with longs in Mmx and Wsa. I'm out of Bsl at 218 and still sticking with Ipl which has disappointed slightly by only rising 1% when US potash stocks (not an exact proxy, but a good guide) were up 4%.

If the market continues this rally early next week then I expect resource stocks to catch up. The rally will only be sustainable if there's a view that the world economy is stronger than the recent fears and in that case, cyclicals would be bought.

4.10 We're closing up near the market highs. I'm heading off to yoga and will be thinking positive thoughts for a Spain win over Holland in the World Cup final.