Still confused by iron ore. Fri Jul 16

Fortescue was hit hard yesterday after a good quarterly production report by volume but with average cost a concern for some. They sold down to 407 early on today, confirming that they're not making clean bullish patterns at the moment. I've been double bluffing myself with the iron ore stocks. The spot price is sinking fast, but the companies themselves are still raking it in after massive earlier price rises, so it's tricky to gauge what sentiment might be. In retrospect, this was pretty straightforward. An abc rally to 464 followed by a failed new high which could have given a nice shorting opportunity. I did actually spot it yesterday but then lost connectivity after getting permission to short Fmg and Mmx and missed the opportunity. However, if I'd been sharper I could have been short a few days before.

Mmx is a similar story except that it's more obviously weak and, after suggesting I might short it on a rebound on Wednesday, I didn't bite the bullet there either.
I suppose my overriding concern is that the V type rally we're having tends to grind up for longer than you'd expect and squeeze shorts pretty hard so I don't want to get into that mindset too early.
With that in mind, I've gone long Awc. This ran up into the Alcoa result and slipped back again. I've got a stop close by and a good deal of support in the 140s. It's possible that this can rally up to the high 160s. Long at 151.5.

1.23 At lunch yesterday I caught up with friends who are more in touch with market gossip than me. They're complaining about light volume and it certainly seems pretty flat to me. A few of them are worried about broker layoffs but then again, they're notoriously short term. It's the school holidays, the start of the financial year and there's still a lot of indecision about where the world economy might be going so plenty of reason for investors to be cautious until the air clears.

The market is easing back. Lnc is down to 127, I sold out a third of my position at 137 on Wednesday and Thursday and it's obviously going to slip until something is announced. If no deal is done, it might drift back to 110ish but unless they're completely misleading the market, it's hard to believe that there's not substance to the reports of an imminent deal.

If I'd missed the breakout the other day, I'd be looking to start buying a few on the backfoot. The takeover bid for Centennial coal was incredibly well telegraphed in retrospect and I'm using it as a guide. Once the buyers bought the second large tranche, it was clear it was no longer a blocking stake and it only took a couple of weeks before the bid came through. The acquirers, Banpu, even sent a letter on June 18th confirming that it was not a passive stake. Despite that, very few people (including myself) did the obvious and bought stock in expectation of the bid which came along on July 5th at 620.

4.06 It's been another quiet day for me and all I've done is sell out the balance of Wsa at 435. I'm continuing my less-is-more approach and not trying to force any trades. I'd like to have put on a short in Fmg or Mmx but the chance was yesterday and there wasn't any sort of rally today that I could fade.

Awc was hit with the rest of the market and looks like closing at 148, so not a good start there, but it's been a typical profit taking Friday and I can afford to give it more time.

Market is down about 0.5% just ahead of the closing match.