Bye bye Lihir. Tue Aug 31

Lihir Gold is now delisted as the takeover from Ncm was officially approved last week. It makes the gold sector interesting because there's a huge gap in market cap now between Ncm and the rest. Public statements have suggested that the sector is in play and with the gold price holding on to unexpected gains ahead of the jewellery buying season, it'll be interesting if the jostling for position starts sooner rather than later.
I've got a couple of positions in mid cap gold stocks St Barbara and Intrepid and I've just bought a few shares in Avoca Resources at 303. My stop is at around 290 and I'm looking for a continuation of the rally after a two week congestion.

The US market handed back Friday's gains with the indices losing around 1.5% but the Australian market is still in bullish mode as we hit the last day of what has been a good reporting season.

A 60 minute chart of the Xjo, below, shows that we're retracing yesterday's gains. At present we're off by 31 points at 11 am and there's probably room for more weakness as 4380 is now support. Nevertheless, yesterday's action looks like a 3rd wave move, this is probably a standard pullback, so I would expect another drive towards or through Monday's high. It might have to be tomorrow though.

In the meantime I'm no longer enthused by any short positions. I only had a few small ones and I'm buying them back.

12.15 Healthy current account numbers are going to add to GDP and retail sales and building approvals are firmer too so it looks like rates aren't going to fall any time soon.

I bought some One Steel yesterday and I'm trying to buy some more at 285 as it has eased back slightly today. This is an attempt to buy a bounce off the bottom of the range with a tight stop. Stop would be about 275 and since the top of the range is between 325 and 335, there's a reasonable risk/reward equation.

3.44 There's been a more significant retracement this afternoon although most of my positions are holding up, with the exception of Sbm which is down 2 at 32.5.

I tipped out a few of the Avo at 305 to take my average back a shade to 302. I also got a handful of Ost at 285 and I'm on the bid for a few more at 282 in case there's some late weakness.

Since I'm now quite bullish overall, I'm just waiting out today's correction and banking on the rally resuming in a day or two.

4.14 The index finished down 1.1% as the month comes to an end. Last year the Xjo was at 4479 at the close of trading on August 31st and one year later we've closed at 4404 so that's about 2% off for the year although dividends would have improved things by 2 or 3%.

Worst case avoided. Mon Aug 30

I'm pleasantly surprised by a better than expected performance from the Australian market this morning. The US had a 1.5% plus rebound on the back of GDP revisions that came in above the worst fears of the market but since we had already had a recovery on Thursday and Friday last week, I was wary of a market that might open firm and sell off promptly.
This hasn't been the script at all, and after opening with a gain of about 60 points, we've continued to rally and the market is just below the day's high, up 1.9% or 84 points. I bought back half of my Ipl short on the open at 332, along with the last of the Qan at 253 and the last few Ozl as well, at 122 and 124.
On the long side, Awc went at 172 and 173 along with a couple of other smaller positions than I don't think I wrote about.
I had my eye on Challenger last week. It ran hard on a good result and I've been hoping to buy a resumption of the rally after a pullback. I'm long at 375 with a stop around 358,360. I'm hoping for a quick move to a new high, so around 400.

11.57 It really has been a powerful performance from the Xjo index and changes my view on the next couple of weeks. There's now a strong possibility that the recent correction is over and that the market will retest recent highs around the 4600 mark. We may have done enough for today but on a weekly basis the index has already exceeded last week's high and has probably made a higher low.

2.14 The market's off the highs as Chinese markets are not quite as bullish as the Japanese today and US futures have lost some of their gains. Considering all that though, it's still very strong, up 69 points. I'm seeing potential buys across the board and the number of shorts I'm thinking about has diminished to one or two.

4.23 The market finished strongly and closed up 83 points.

I added another new long in Ost at 291, the purchase is not complete and I might write about it tomorrow if I get the chance to buy a few more on the back foot.

Toll was up up nearly 3% today at 615 so that's looking promising. I sold a couple at 611.

Waiting for the drought. Fri Aug 27

We're well into the reporting season and the overriding impression is that balance sheets are healthy, companies are well capitalised and valuations are reasonable in the Australian market. Lots of repair work has been done since the GFC and with unemployment and inflation low, you would expect to be in boom time except that everyone is waiting. Not so much waiting for a storm from Europe or the US but from the effects of potentially years of austerity to come. No one knows whether China's domestic economy can take up the slack or whether Germany can perhaps lead Europe out of the doldrums earlier than expected so it seems as if we could have another couple of years of range trading.
The Xjo recovered back through 4200 in August of last year and we've had a year (barring 3 or 4 sessions) ranging between 4200 and 5000. (Click to enlarge, as usual).

The US market fell overnight but I'm mildly bullish, partly for the reasons outlined above, and I've done some buying this morning.
The featured trade is a long in Alumina at 162.5. This has been riding high recently on the back of a reassessment of the prospects for Aluminium and after a retracement this week, I figured that I could buy with support from the previous swing high in late July. There was slight overlap between this morning's low of 161 and that swing high of 161.5 but essentially I would use 160 as a stop and 154 as an emergency if I wanted to give it more of a chance.
Actually, I've just been distracted by a visitor and the stock has bounced up to 166.5 so the 160 seems adequate now. Here's the chart.

11.04 I'm about to leave the office for a couple of hours so I've closed out Fmg. It's down a couple of cents but of the 7 broker summaries I've read, 5 are upbeat and the 2 sceptical analysts have been forced to upgrade their targets. My jumpy trading in this indicates that I'm not clear on my chart view so the best bet is to get out, as there's the possibility of a short squeeze this afternoon.

1.28 Back in the office and generally things are firming from the weak start although we're still down 5 points. Out of a few of the Awc as they've climbed to 168 and bought back some more of the Ozl short at 120 as they too find support.

3.51 Back in the office once more after more admin. The market has strengthened all day, up 21 points now.

Awc is still strong and Ipl and Qan are flat. Tol has traded in a tight range all day. Overall, ok for my book.

4.26 I'm actually slightly long overall but I'm not convinced we'll get much more of a retracement. Here's a 60 minute chart of the Xjo. It'll be hard to hold above 4380 and then 4410 so maybe some Monday morning strength is the best I can expect.

Bell Tolls. Thu Aug 26

I've decided to add Toll holdings to my list of stocks after noticing that they'd reported quite positively this morning. I like the look of the chart but it's been tricky trying to buy because the stock raced out of the blocks with a 3% rise to 600 on the open and quickly took that gain to 7% with a run up to 624.
My plan was to buy on a pullback and that pullback has been quite sharp; so I've bought at 609, 603 and 599 for an average entry price of 605. My stop is below yesterday's low of 576.
The chart made a minor new low in early July since when it has been working it's way up. It was a decent breakout this morning, both on a minor scale relative to last weeks high and also as a range break of swing highs running back to mid June. Admittedly, the stock is right back in the range but the volume and reason for the break were quite significant and unless analysts take a look at the result and decide it's all smoke and mirrors, it shouldn't be long before it's pushing through the top of the range again.

Otherwise it's a reluctant rally for the market with a gain of 15 points at 11.12 am. My short positions are weaker by and large although Fortescue is up 7 at 441. I'd bought most of that back yesterday so I've reshorted a few more at 440 and would look to add more again in the high 440's.

I've also added a new short in Ipl at 332. I'm not thrilled with this one because I had it pencilled in as a short a few days back and I could have got set at better prices. It also looks as though it could still have a go at the highs because it only made a double top and there's a pennant shape. Notwithstanding, the stop isn't far away at around 350 and the downside potential is pretty good.

11.39 Woah! That was slack. I forgot to check my reporting calendar so when Fortescue was suspended for a better than expected report, I got quite worried. I closed out at 447 immediately which was a good thing in the short term because they're up to 452.

Transfield has gone the other other way today and I bought a couple back early on at 308 which was a drop of 10 cents. I've since bought another couple at 294 which is where they are now. Only short a few now.

1.05 Funnily enough, I've reinstated my short position in Fmg at 448. The stock went up to resistance at 454 and subsequently found little support. So far, it's failed to kick on after an expectation beating result so I've got away with being asleep at the wheel during reporting season.

3.17 Went too soon in Fmg and had to cut at 457. Annoying to have to get out so soon although I went long Mmx at 139 on a day trade and sold out at 143 so it paid for the loss at least.

Most other things have gone ok today though. I'm out of the last of the short in Aio at 163 and Tse at 298 while the gold stocks are hanging on to small gains and Lnc is up to 156.

The index ground its way to a gain of 35 points; it's up 26 now at 4346. It could be a touch oversold and with resistance now at 4380, maybe there's another day of retracement. I'm close to square now overall although the longs are skewed to gold stocks. Here's the Xjo chart, 60 minutes.

4.08 Today was a big day for companies reporting and I managed to get swept up in the madcap trading. Mostly it went my way but Fortescue was bipolar and not in a good way. I usually allow a couple of cents on my stops but I was pretty rapid to cut here at 457 only for the stock to fail again. I've gritted my teeth and reshorted at 450. In the end, it wasn't that expensive but unnecessarily intense.

4.11 We've matched out on the high for the day at 4356, up 36 points.

Bear with a sore head. Wed Aug 25

My cold is worse today and I can't really think straight. I'm still bearish and I was hoping for more joy this morning after a decent fall in European and American markets, along with a firmer gold price. Thanks to some decent company reports and the fact that we already fell yesterday, it has been a buy on open sort of day. It's 11.11 am and we're just down 0.5% after opening down close to 1%.
A couple of stocks that I'm short, Asciano and Oz Minerals, reported ahead of expectations. Fortunately, I bought back a third to a half of my positions into some early weakness, because they're both now up on the day. Not big rises though and I see this as gap filling rather than genuine strength so I'm happy to be short overall.
I have bought some Lnc at 150 as they opened in that range I was talking about in the last post. I was very hesitant because they looked pretty nasty, but they have actually turned around quite well. Here's a 30 minute chart.

11.48 The early bounce is losing momentum and we're just starting to slip lower.

Mmx has flattered to deceive and I've stopped out at 151.5 as it failed to hold yesterday's low.

1.36 The market is back around the lows, down 1%. Ozl has weakened again but Aio is holding onto gains. Otherwise, I've been nibbling at short positions, buying a few Fmg at 443 and Tse at 320.

Sbm has made a little buy signal with trades at 31.5. I'm still long this from a few weeks ago and trying to pick up more stock at 31.

4.21 The Xjo index closed down 61 points and at the lows.

Quite a good day for me with gold longs higher and the shorts all lower except Aio which held onto a 1 cent gain. I managed to get some more Sbm at 31 - they closed at 32 - and I bought more Fmg and Qan back at lower levels. Ozl closed down 3 at 120 and I bought half of my short earlier at an average a shade above 122.

Overall, I closed out about half of the short positions by dollar value today but there's still some momentum in the selling so I'm hopeful of better value buying tomorrow.

Follow my leader. Tue Aug 24

I've been net short for a couple of days now and have been fretting about whether the Xjo would make a higher low and squeeze back up, which would make life difficult. This is still in the balance as you can see from the chart of the Xjo, below.

However, I'm encouraged by the Dow Jones' chart which has failed to hold the first swing low. It broke support on Friday but bounced back to close above 10,200. Last night, by contrast, it was unable to hold the minor support level and finished on the lows.

With more than an hour of trading gone, the local market is down 28 points, and the election result is still unclear with no favourite emerging, although Labor probably has its nose in front.

My positions are a mixed bag, but broadly in my favour. I bought a few more Mmx at 158 but they have continued to weaken and are down at 155, not far from my stop. So far I'm glad to have been cautious with this one.

Aristocrat reported with a better than expected result and they're up 15. I jumped in early and got a few at 354 which I flicked out at 363 about 10 minutes later in the messy trading immediately following the result. They've settled back to 358 and I thought about buying, but since it's already the second leg in what might just be a retracement rally, I'm holding off for now. If the market weakens further today and this holds up, then I might reconsider. Here's the chart.

11.51 Interesting development in Mmx. As the market continued to fall, it was sold down a tick below support at 154. I was contemplating stopping out when a line of 26 million shares was crossed at 154. After a minute or two, the stock started to firm so I've bought some more at around 156. Judging by the market reaction, I'm assuming that Harbinger - formerly a large shareholder - might have completed their selling, and perhaps, Posco have taken the stock. Regardless, I'm long and hoping for a relief rally. Here's a 10 minute chart.

2.37 The Xjo index broke below last week's low earlier on, although there's been a small recovery since midday. I sold out a few Mmx on a blip up to 162 so my average entry price is reduced now.

Lnc is down 5% today and the next support level could be around 147, which was a swing high in the middle of July. I plan to buy some with a tight stop if the stock gets to the 148-152 range.

4.10 I'm coming down with a cold so I'm happy to get home to bed as soon as possible.

The Xjo finished down at 4381, close to the day's lows and just below the intraday bottom last week. 

Fmg was down 14 at 450, so hopefully that's not going to have another go at the 470s and I might get a quick move down to support around 430.

 

Independents day. Mon Aug 23

Independent MPs hold the balance of power in Australia while votes are still being counted in some electorates. The market is up by 8 points after an hour and resource stocks are the outperformers as the chances of a mining tax are lower now.
My positions have gone against me but at this point I'm unconvinced that the rally is sustainable.
Challenger is easily the best of the stocks on my watchlist, up strongly after reporting much improved results. I wasn't quick enough to get on board though, as I was cautious about the response to the election result. Nice chart though.

12.54 The market is as undecided as the electorate and we're hovering close to unchanged, holding on to a 3 point gain.

My positions are moving back slightly in my favour and, as they're mostly shorts, I'm looking at a long position to provide some balance. This is in Murchison Metals which has been the underperformer among the iron ore stocks. I've chopped in and out of this a couple of times recently but with a drop, a congestion and a marginal new low followed by a rebound, I've now got a reversal pattern that I'm comfortable with.

It's in a joint venture with Mitsubishi Corp to build and operate rail and port infrastructure and has signed up foundation customers. Allied to the technical signal, I'm hoping that this will be enough to spark a turnaround.

So far, I've bought a handful at 162. I'm buying cautiously because it has been under a lot of pressure lately.

1.20 I've been following the combinations and permutations of possible coalitions and my initial assumptions were that the conservative independents would ally with the LNP after some horse trading. A bit more reading has suggested that the rift between these independents and their former party is quite severe and there is a real possibility that they could get into bed with Labor.

Greg Peel gave his usual, well thought out exposition in FnArena this morning showing how finely balanced the situation is.

It's just occurred to me that the market may be just realising this and we could have a sell off this afternoon if the enthusiasm for a Liberal/National victory has been overdone.

4.12 That was wishful thinking. No sell off, just indecisive trading and we finished with a loss of 2 points on the Xjo index.

Is this it? Fri Aug 20

I was hanging on for more of a rally in the US but last night was pretty weak. It was still on light holiday volume but the motivation - further weakness in the US economy - was sound enough.
I've sold out of long positions ahead of my stops because I'm concerned that we're starting another leg down after 5 days of retracement. Here's the Xjo daily chart.

Awe was sold for close to even at 166 and I took a loss on Wsa with a sale at 495 after I'd repeated an old mistake of chasing a stock.

The market has held quite well with the futures down 41 which is better than the overnight close of down 67. The index has rallied off early lows in tandem and the loss on the Xjo has been pared to 38 points. I don't think that's significant though and I've taken the opportunity to put on a short position in Fortescue. It reports next Thursday, so I'll need to pay attention to that.

The stock has been grinding up, continuing to squeeze shorters I suppose, because while the chart is not strong (no clean trend, just choppy overlapping waves) it keeps making marginal new highs. I'm short at 459 with a stop around 480.

2.10 The relative strength faded and the Xjo is down 65 points.

I went short a couple of other stocks today. Aio which has dropped further and Qan which is hanging in where I sold it. Ozl and Tse are lower and Fmg has edged back to 456. My only long position is in Sbm which is a tick lower. The larger gold stocks like Newcrest and Lihir are up today but the rest of the sector is a mixed bag.

3 pm Having moved to a solidly short stance on the market (and I doubt if I'm alone here), I've now got that uncertain period ahead of me where the market has the potential to make a higher low and trace out a more elaborate correction. Here's a 60 minute chart of the Xjo. While I'm pretty confident, there's still an obvious possibility that the index finds support above 4380 and repeats the process even if further weakness is still in the offing.

4.12 There was a last hour rally and the losses were reduced to 48 points in the Xjo index. My shorts firmed a tad except in the case of Fmg which squeezed up to 464. I'm beginning to think there could be another minor new high in this and I plan to be watchful but not trigger happy with my stop if it opens higher next week.

Summer holidays. Thu Aug 19

It's an unseasonably lovely day in Sydney and I feel like a holiday too. The US is pretty much closed for business while the bigwigs swan around in the Hamptons and the knock on effect is that the Aussie market is drifting around in a small range like a hedge fund manager's neglected yacht. An hour and a half gone and the Xjo index is down 10 points. Of the top 20 stocks, 4 have reported today and it's a Victorian terrace of a performance with two up, two down.
I've put on another short position, this time in Transfield services. This had a slow choppy rally from late June to early August, followed by a quick plunge and a bungee jump bounce. It's just short of the early August highs and I'm punting that it fails to get through. Just short a few at 338 so far and hoping to sell more at 341.

1.28 We're the lagging market in the region, having fallen by 17 points on what is a mildly positive day elsewhere. No further trades, except to sell a few more Tse at 338 as they failed to bounce back into the 340s. Spot gold is still edging up and the gold stocks are mostly firmer although my last gold long in Sbm is becalmed.

Otherwise, Bhp is still bearing the brunt of making a large, hostile bid for Canada's Potash.

3.25 The Xjo index has fought its way back to square. I think we're just correcting last week's tumble and the medium term prognosis is for further weakness, but in the next day or two I'm leaning towards further strength. Here's a 60 minute chart of the Xjo index which shows a choppy rally.

The reason I'm slight bullish in the very short term is that the second wave of this correction seems to have traced out four waves with a fifth to come, perhaps peaking tomorrow.

4.13 The Xjo squeezed up to finish with a gain of 4 points.

I shorted a few more Ozl on the match at 125.

Full up. Wed Aug 18

The market is still digesting yesterday's sneaky rally and we're down a couple of points at 11.18 am. There was an early rise on the back of US strength but Bhp's bid for US firm Potash has knocked it down 3.5% creating a headwind.
I sold out a few things early: Avo at 507, Lnc at 175 and Qan at 254, although I have rotated to some extent with a new long position in Wsa at 504.
I missed an opportunity to get long this last week when it snapped back dramatically after a few days of weakness. There have been two more days in a fairly narrow range and then a break of short term resistance at 502. My stop is just below short term support of 485 and the increasing momentum in the stock suggests to me that it can rally fairly quickly, perhaps to about 550.

2.50 Nothing much has happened but it's an unsatisfying day, with a few positions moving against me. It seems like random noise but disappointing nonetheless.
I think Ozl is worth shorting; it's having a reversal day after squeaking up to a new high. I'm not sure whether to put on the short now or hope that we rally into the close - the market looks mildly bullish intraday - and maybe I'll do a bit of both. Here's the daily. Stop would be a little above today's high.

4.18 The Xjo closed down 2 points. I did short some Ozl, on a minor bounce, at 124.5 and also sold out of Pna at 59.5

Sneaky rally. Tue Aug 17

We're having a sneaky rally today, with the market having crept up by 10 points after an hour and a half despite some early nerves and no lead whatsoever overnight. The Japanese market seems to be perpetually in the doldrums and since that's the first major market to open in our trading period, it often puts a dampener on sentiment at the start of the day.
Gold continues to firm, up another USD 10 last night, and since there doesn't seem to be the bullishness around that was apparent a couple of months ago, the stocks are also firming. I understand that a lot of funds are quite heavily weighted to gold already so this could be just a retracement rally and the chart of Spot Gold doesn't rule out the possibility. It was a longer, more complex pullback than you would expect if you were looking for a new high so maybe this will fail below USD 1265.

Despite that, I think there are some opportunities because the stocks have lagged the gold price in some instances. I featured Sbm a little over a week ago, but it's one of the laggards. I'm still long and I bought more yesterday at 29.5 and a few more on the open today at 30.

I'm fiddling around with the font today because I'm using the Firefox browser today and the other font looks strange. Bear with me.

2.35 I've experimented with Firefox and Chrome and I can't get the fonts to look right. Pretty strange that Chrome doesn't work well since I'm using a google blogging product. Anyway, back to internet explorer.
The market is up 33 points now and I'm still not ready to put on short positions.
I've just looked at the 60 minute chart of the Dow Jones which looks pretty bullish for tonight so I'm comfortable to wait. Here's the chart.

2.53 I've added a new long given that I now think the US indices will give us a little boost in the morning. It's in Awe and although it's quite possible that this is a stock in a slow turnaround which has already had it's a-b-c rally, I've still bought at 166.5 because I'm happy to have a tight stop around 160 and I think there's more chance that it's ready to extend the rally with an acceleration up. The reason I think that is because the recent bounces have been impulsive while the pullbacks - even in last week's soft market - are fairly mild.

4.11 A late sell off has pared the gains, up 39 points. The advances were across the board but financials did best.

Too cautious. Mon Aug 16

I think the market is too cautious. After the hoped for rally in the US failed to appear we've quickly unwound most of Friday's gains helped by Cba going ex-dividend. We fell pretty hard last week and it's worth remembering that our economy is a long way from the basket case that is the US, our valuations are cheaper and we're in the swing of a pretty good earnings season with Bsl, Llc and Ncm all reporting positively today, for example.
I still think we've probably seen a high recently but in the light of the points above, there's little scope for further serious weakness barring overseas shocks.
Since the Xjo fell back to its lows in early July, the chart has developed much more of a trading range look about it.

1.22 My stocks, all long, are mixed today. I've added one more long too. This is in Qantas and I'm buying a pullback in a reasonable uptrend. The last swing ran from 225 to 269 and after briefly touching 242 this morning the stock has steadied. I'm long at 247.

Overall, my dollar exposure to the market is still low and I'm essentially waiting to put on a few short positions. On the day the Xjo index has bounced back somewhat as the Shanghai market is up on good profit reports and Hong Kong is only marginally down.

3.24 Just read a story on FnArena saying that, 30% of the way through, the reporting season is slightly disappointing. My take is that expectations were even lower and most companies are talking down future prospects but reporting reasonably well. They're hosing down expectations in a textbook way.

The market is down just 12 points now.

4.11 Down 0.5% by the close but the real story is Chinese markets which are kicking on again. Here's the Shanghai index chart. It looks like a short term push to a new high is on the cards after a minor a-b-c retracement.

It's a more bullish chart than that of the Xjo, with less overlap, but encouraging on the long side because we generally track it quite closely.

Same again, shinier. Fri Aug 13

It's the same story for the trading day again as I'm looking for a bounce off oversold levels and trying to keep my powder dry in order to short after a couple of days of rally. There's a bit more traction to the rally today with the market rising from a flat to soft opening to be up 14 points after 40 minutes with some nice rebounds in the oversold stocks.
I bought a few more Lnc on the open and sold them again a bit higher plus I've sold a few of yesterday's at 175.
The shinier aspect of the day is the overnight rise in gold and though I'm not sure what to make of the gold chart overall, I think the rally has taken people by surprise.
I bought some Avoca resources at 281 on the open but they've already got away, up to 288. However, Pna is still buyable. I got long fairly luckily at 55 on the opening auction in this copper/gold stock and they're up to 56 now but were at 61 very recently and could get there again soon. It's not a clean chart - there's too much overlap - but there's decent short term momentum and there's a lot of love for copper stocks at the moment.

2 pm The rally has gathered some steam leaving the Xjo with a gain of 30 points. There have been some strong performances among the smaller caps in the top 200 index. One of them is Incitec Pivot, which is on my list of potential shorts. It's had a very impressive bounce today and I had a handful of these overnight as an oversold long position. Now, however, the stock is getting quite close to the recent high and I think there's a good chance it won't get past that level. There's probably no rush to short this, the Dow Jones could bounce overnight and even if we've pre-empted it, there might be some follow through on Monday. Anyway, I'm happy to see this recover and I'll look to short it if it stalls.

Having said all that, Ipl is essentially performing well, I'm merely looking for a decent pull back. Something like Fortescue is probably a better short still. It really has struggled to rally over the last month, limping to a slight new high which it couldn't hold. Another one to short in a retracement.

3.42 The market is up 48 points now but my positions haven't kept pace. I'm disappointed that I didn't follow through with my plan in Wsa. I was a bit spooked when it fell right to support at 440 but today it has rebounded dramatically. There was no need to pre-empt this trade, it opened fairly modestly today and I was bullish the market from the open. The one that got away.

4.09 I've got to dash off but it looks as if we're going to finish off near the highs, up about 50 points.

I've bought a few more Linc, laggards, and the 60 minutes looks ok.

Out of breath. Thu Aug 12

The US indices had a nasty night and fell over 2.5% so despite leading the way yesterday we fell another 60 plus points on the open. It's probably too much now and I've bought a couple of things for a short term trade. I'm keen to put on more short positions but I want to wait until they come to me and in the meantime Linc is a minor long position. I've bought at 170.5 with a stop at 156, a recent swing low.

12.30 Not a lot of change. The market has just about held above the early lows and is chopping back up with very little conviction. I sold out of half of the Lnc at 174. I also bought back half of the Fxj earlier at 143 but should have bought the lot. Fxj is the sort of stock that outperforms on a day like today and it's now up a half cent at 146.5. It's a tiny position though and I'll look to short more if it can get to 148.

Today is the sort of day where you can possibly make money intraday, ie the third consecutive big day down with an opening gap. You have to watch closely though and at the moment, this could be a pennant style correction on the intraday chart which fails as the market closes at new lows or it could evolve into a decent rebound. It's too hard to pick at this stage but the rebound is the one that offers the more profitable opportunities because the market is already heavily sold down so will probably only grind lower if it fails.

Further to this, the 10 minute Xjo chart above doesn't give me the impression that the fall is over, I'd want to see more congestion and a minor new low; my point is that the tentative rally we're having since the opening low has plenty of room to move without negating the downtrend.

It's quite possible that we firm up this afternoon and make another new low tomorrow morning on more overnight weakness.

1.56 It turned out to be a pennant with the Xjo making an intraday low a few minutes ago. It's only a minor one though and Asian markets are starting to recover so I'm holding on to what's left of a couple of short term positions.  

4.14 The low mentioned just above was a minor turning point and we rallied slightly to close down 55 points. I made a few bucks out of the intraday longs but with no significant bounce it was all quite inconsequential.

I kept half of the Linc long. The 156 stop mentioned early was an emergency stop if I held it overnight but really, most of the positions today were very short term. Hence my willingness to tip out half of the Lnc for just a few cents profit at 174.

QE 1 and a half. Wed Aug 11

A limited reinstatement of quantitative easing - thanks Daily Telegraph journo - failed to excite the US market very much and though it only fell about 0.5%, the chart looks nasty. A marginal new high, a drop and then a rally back which falters below that high. It's all very short term, of course, but I can see why we've fallen pretty hard from the open.

Allied to the weakness in base metals (Chinese GDP figures yesterday, not enough imports) we fell from the start and at 11.24 am we're still down 51 points. It's about 10 off the low at this level and I'm disappointed that the Xjo chart didn't have a shape more like that of the Dow, above, because I was hoping that we might have over egged the pudding yesterday.

I've just got a few Challenger left and a small long position in St Barbara - but I was hoping for an opportunity to put on a couple of short positions.

A few that I've been thinking about have got too far away from me, although Fairfax is still possible.

The rally took it up to previous swing highs from late May and June and now there's a lower high (potentially) at 150.

12.31 Chinese markets have bucked the trend and are stronger, with another raft of Chinese data out. It's helped our market to get out of the sick bed for a little while although we're still down 1%.

Fxj has moved away from me so no action there yet.

2.15 Early gains in China have receded and our rally faded. We're down 71, on our lows. Fxj rallied to 146 and I've shorted some there. If it gets back to 147 or 148 then I'll do some more.

4.12 It's all doom and gloom here with the market down 1.9% on the day. The Xjo index has already failed to hold above the peak of the first rally leg (4466 on Jul 15) so the next level is around 4350 which is more than 100 points away. It looks like a sell on rally set up now and I sold a few more Fxj at 146.

I've got a few more potential shorts; Aio, Ipl and Ozl for example. A choppy rally would be handy.

Doves v Hawks. Tue Aug 10

I read a newspaper article (taken from the UK Daily Telegraph) this morning suggesting that the US senate has held up the appointment to the Fed board of three dovish new members. There's still a consensus that we'll get QE2 but maybe it won't be very comprehensive. The US indices rallied in quiet trading last night and we've retraced a third of yesterday's rise as 11 am approaches.
The DJIA chart looks unconvincing to me and my aim today is to sell out more stock. Here's a 60 minute chart which is pretty similar in recent days to the Xjo chart.

It could be that we're climbing a wall of worry and I'm still not seeing opportunities on the short side, but I'd rather be safe than sorry.

12.05 Sold out the last of my Awe at 171.5 and Lnc at 193. The market has now retraced yesterday's gains.

Challenger has failed to kick on and is back at 364, although I'm willing to hold that for a little longer. Mmx is below my stop but is jumping around on light volume so I might get a change to exit at better levels later on today.

12.47 With regards to Linc, I was hopeful yesterday that it could kick through 200 but it opened just shy and sold off. Once this double top/failure came through I should have sold out straight away but I held in hope for an hour or two. It's not all over, it's possible that the mid 180s holds and it has another go at 200 but in the short term, I'm less confident now.

2.32 The hawks are winning today. The Xjo index is down 48 points at 4547, just above support at 4540. I think it's unlikely that support will break in any significant way today. My scenario is that we've probably topped but we might bounce off support for a day or so before another leg down.

If we get a rebound tomorrow it could be time to put on a short position or two.

4.13 Xjo closed at 4541, down 54 and on support. I think we might have topped with the minor new high yesterday and my inclination is to sell out any balances of long positions if we get a small bounce in the morning. We've built in a bad night in the US and while I think that's plausible, it hasn't happened yet.

QE? Mon Aug 9

The Aussie market thinks Quantitative Easing (in the USA) is on its way because after a nervous opening flutter, led by the Spi, which took the market right down to the 4540 support level, the Xjo has bounced 25 points to be unchanged by 10.52 am. The moves are fairly even across sectors although you might expect resource stocks to be the best placed because QE should bring USD weakness and commodity strength. That was the case on Friday anyway, with base metals holding up well into early selling and gold jumping 1% or so.
With gold in mind, I've gone long St Barbara which is a small producer under new management. They've pulled back from 39.5 about a month ago and I've gone long at 29.5 with the stock having held around support formed by the highs of March and April this year. The fall since June looks corrective at this stage, with the c wave down having broken up into 5. I'm punting that this is enough of a fall and a rally up through the lows of the a wave at 31.5 would be a good indicator that the tide has turned. My stop is at around 26.

12.16 The turnaround has continued with the market now up 15 points at 4581 and just short of last week's high. Linc is hovering just under 200 which I thought might be a reasonable target. Looking at a shorter term chart, 30 minutes in this case, it's shaping up more bullishly than that. There are series of little surges and minimal corrections over the last few trading days, a good sign that buyers are having to pay up still.

2.14 The index briefly broke through the trading band and made a marginal new high at 4586. I'm itching to sell a few things because I was just looking for a new high but my long positions don't look particularly toppy. Maybe the 3 or 4 day congestion has given stocks enough of a pause so that they can do more than just pop up to the top of the range.

I haven't got many One Steel left so I'm offering the last of those at 319 and a couple of Cgf at 366.

Just to finish up with the 10 minute Xjo chart that I was posting from time to time last week, here it is below.

3.45 We're now clearly out of the range, up 29 at 4595, with the trading day drawing to a close.

Sold a couple more Cgf at 370. Mmx isn't out of the woods but is reluctantly tracking the better performing iron ore stocks and has firmed a few cents to 183.

4.18 The market held through to the close. Challenger had a good day, rising 3% after opening down 2.5%. The chart looks promising now, it could have a couple of acceleration days up.