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.