Jaded. Tue Sep 28

The US market had a standard sort of pullback last night, giving back a quarter of the 2% gains from Friday night. The Australian market is in a pretty bullish frame of mind, perhaps taking the view that we've cleared the resistance and we can push on further. The Xjo chart doesn't rule out that possibility but I'm still feeling that the market is in dangerous territory in the short term. My reasoning is that we've have a good surge, a congestion and a pop up to new highs in a ranging market. I concede that the chart has a reverse head and shoulders look to it and I'm bullish in the medium term so there's a background supportive of continued strength. I can feel myself trading stubbornly at the moment so it's a very good thing that I'm off for a few days, I'm definitely jaded.

I suppose what concerns me is that there are no earnings upgrades and if anything, the favoured mining sector may have a few minor downgrades on the way with AUD strength and softening coal and iron ore prices, based on slowing steel production. The main change has been sentiment and I suppose that's usually the driving force in my time frame, but it's gone from extreme pessimism to optimism quite quickly.
I don't think the mild optimism is misplaced overall but it may need a reality check in the short term.

In the interim, I've got nothing left except a few Linc which I'm keeping and a very few Fmg which I'm closing out today. I should have closed out all of the Fmg yesterday and they've pushed up another 7 or 8 today. Having missed the best price on the open, it's just fine tuning now and I'm leaning to some weakness later on.

2.26 Out of Fmg at 519 as it's still well supported. The index is unchanged with Asian markets and US overnight futures also uneventful.
This is my last trading day of the quarter and despite the last couple of weeks being underwhelming, it's been another solid month in a productive quarter.

4.16 The Xjo 200 closed down nearly 6 points on a dull day.
That's it for me until next Tuesday. All the best.

Heads I win, tails you lose. Mon Sep 27

One theory explaining US market strength is that if the economy improves then the market rallies and if it doesn't then the Fed steps in with Quantitative Easing. It was a big move up overnight but on very little volume. It's been enough to push the Australian market up 60 points, peaking just below the recent Xjo 200 high of 4670 at 4668.
On Friday afternoon, I was getting in to some fine tuning on the Xjo 60 minute chart, anticipating a little more short term weakness but that theory proved to be bunk. Instead, my main scenario, based on the daily chart, was closer to the mark. That idea was that last week's resilience would be enough to help the index pop up to new highs - it's not there yet - and squeeze out any shorts. Obviously, it could happily keep charging upward too.
Pleasingly, I haven't come to any great harm profit wise as my short positions have rallied against me but nothing has gone ballistic. Unfortunately though, I haven't got much more time to see if I can turn a profit on these trades. I'm going away on Wednesday for a short holiday and with that in mind I'm just unwinding my positions as best I can.
It's 11.25 am and on the day I'm looking for the market to retrace slowly so I'm not buying it all back straight away. I have bought back a small balance of Tse at 364 and most of the Awe short at 160. I shorted Awe at 161, kind of hoping I could get short at more like 166. It fell as far as 157.5 but is really going nowhere.
I've also bought back a couple more Djs at 500 and on the long side, I got out of Paladin at 374. I never bought the extra stock there, I found the price action unconvincing.

11.37 The market is pushing back up for another go at the highs. I still anticipate a gap filling sell off but it would be easier if the index had pushed up above 4670 first. It's at 4668.

11.39 There we go....4670.2 vs 4670.1 on September 15th.

11.41 As promised on Friday, a discussion about Joe Ross's trading bible which has been revised and retitled as "Day Trading".
This is a terrific book and well worth the expensive cover price of US $150. Actually, I'll add a caveat here. I've lent the original version, "Trading by the Minute", to friends who were getting into trading and I could see that they were pretty unimpressed. I've got the book back a few weeks later and I'm confident that all they did was skim it, put off by the amateurish text and layout. I'm pretty sure it started out as a sort of self published/small publisher thing because it's not what you'd call smooth.
So, to be more precise, someone who has been trading for some time and is realising the need to be more disciplined and systematic in their approach will love this book and read it again and again.
Joe Ross must be past retirement age and he's a second or third generation trader. Perhaps that's why he's refreshingly free of theories, doesn't make heavy use of indicators and has a method which is just as applicable to long term trading as it is to very short term trading.
He uses a few entry signals, he's incredibly disciplined with his exits, he runs positions really well and he gives you a very clear understanding of how to follow his approach.
When you first start reading trading books, you follow the examples and everything happens in retrospect. So the author will say, obviously you would have got long here and this is the point where you would have got out (for a tidy profit). It's only when you try it for yourself that you realise the examples were unusually clean charts and you're not sure exactly where you should get in and out, and why this point x, say, rather than that point y.
Joe Ross is as precise as those jokers are vague. He also makes valiant attempts to deal with trading psychology - much better dealt with by Douglas or Van Tharp - and has lots of (outdated) info on dealing with brokers and the mechanics of dealing. Actually, I can see that the original needed revision and I imagine he's edited out the stuff dealing with market access, brokerage costs and dealing delays.
I found that I could go back to this book after a few years and see useful things that I hadn't taken in earlier.
I don't trade exactly like Joe Ross, I can't do the strict discipline and I tend to be more intuitive. It's still a fantastic learning resource for traders and you'd probably find that you would use and adapt some of his methods to suit your own trading style.

12.31 By the way, I wish I could do the strict discipline, I'm certainly a lot better than I was. My way of dealing with having to cut is to enter trades at points where a cut will be low cost. It means I've cut down greatly on the number of breakouts which I take. They're great trades but I struggle when they make quick reversal failures so I'm very careful with them now.
I have to go to the dentist now, which is grim, but I'm out of Awe at 160 average, I've bought some Ozl at 145 (bought some back at 141 on Friday) and have cut half the short in Ipl at 354. Ipl has gone through my stop but I'm still hoping for a better fill on an afternoon retracement. Bought a few Fmg at 512 too as I extricate myself from another failed short.
The market got to 4674 and it's still up at 4670.

2.57 Well, I've been back from the dentist for a little while now and the market is showing no signs of the pullback I was hoping for. The balance of my short positions is much reduced though so I'm fairly relaxed to wait overnight and I'm just winding everything up for my holiday.
Murchison has had a rollercoaster ride today and is still down 10%. The stock price had fallen from an overnight price of 181 to as low as 151. After being suspended from trading briefly, the stock has resumed trading with an announcement that rumours of their JV partner, Mitsubishi, watering down its involvement are unfounded.
I think the chart looks potentially bullish with the sell off touching support and the stock recovering. I don't really fancy buying to hold overnight though as it's one I'd want to monitor. It occurs to me that lots of rumour traders will be short so it's a big chance of taking off if the rally hits a critical mass. I'm long a few as an intraday punt.

3.41 Out of Mmx again, small loss. It could still rally into the close but it's also shaping up like a pennant before further weakness. That's on the 5 minute chart. I'm clearly having trouble disengaging ahead of my mini break and I'm just trying to make something happen, which is generally unwise.

4.16 The index finished up near the highs at 4675. I cleared the decks buying back Djs at 500, Ozl at 144 and the rest of the Ipl at 354 along with a couple more Fmg at 513. I'm just short a few Fmg and long a handful of Lnc.

I've been fighting the market for the last couple of weeks after a strong first half of the month, it's probably a good time for a holiday.

Early doors. Fri Sep 24

As they say in England, it's early doors. I'm blogging before market open because I'll be out of the office from 11 am for a couple of hours. I'm hoping that I won't have to worry about marginal new highs because the overnight lead was poor and the Spi is down 53 points.

10.12 The market has opened down below 4600, it's actually on support at 4589. I imagine there'll be some bargain hunting for an hour or so now.
I've been thinking about why charting works in relation to writing a couple of posts about books I've found interesting.
There's a point of view that charting doesn't necessarily work at all but instead it's the discipline of managing risk which is what makes money for technical traders. I don't agree with this but I take the point that risk management, which is a huge area, is probably more important than whatever method a trader might use to enter and exit a stock.
Getting back to the main point, why should historical price patterns be predictive? This is beyond belief to a certain type of mind because they see it as some kind of financial astrology. By contrast, I see the graph of price action in a stock as an unprejudiced distillation of the information available to all participants at the time in relation to the stock, the sector, the broad market, the economy etc but also, and more importantly, as a reflection of the emotional state of those market participants. Which is where the predictive element comes in.
Anyone who has thought about their own life will see individual patterns that continue to recur and of course, it's much easier to see those patterns in the lives of friends and family. I play social football with a bunch of friends and I know which player will make the right pass in a given situation, which one will panic, which one will misread the situation....again and again and again, for years. The same thing goes for the shape that the conversation will take after the game. It takes will and determination to change something you've identified as unsatisfactory.
When it gets to a public or even herd situation, such as when you're trading in a stock, it seems as if the most ancient part of the brain takes over. Despite years of experience, I've had to fight hard to lose the temptation or even compulsion to leap into a stock driven by euphoria or to panic with the crowd after a series of bad days or even to complete the simple act of buying at my chosen support level after a few days of retracement. I've held on to stocks long after they've breached my stop because I couldn't bear to crystallise the loss and finally capitulated at the worst moment. The list goes on.
I've just talked about the extreme situations because they're the easiest to identify with but there are lots of less emotional situations which constantly crop up. For example, there's the arm wrestle around support or resistance, the slow tussle and then the quick surge. There's the slowing of momentum in a trending stock, as if a thrown ball was reaching the top of its arc and then the typical sort of retracement as previously ironclad confidence is disturbed by whispers of doubt.
Until human nature changes dramatically, markets are going to behave in much the same way. Charting is an attempt to measure these behavioural patterns, to gauge the mood of a stock or market and predict the likely outcome based on past experience. There are any number of methods and which one you favour seems to be a matter of personal taste.  As far as I can see, every approach out there is pretty clumsy but still has the massive advantage of acknowledging that markets are not and have never been rational.

It's 11 am as I finish this section and the market is not managing to bounce much. Most of my stocks are performing well, with the exception of Fmg which is slightly firmer. Back later.

1.34 The market has bounced back and sits above support at 4609 which is lower by 24 points. Not a lot has changed since I've been out. Fmg is still firm but Awe, Djs, Ozl and another stock I shorted yesterday, Tse, are all lower.
I'm still long Paladin but only a few and I'm debating whether to complete my buying. I'm less confident now even though it's holding above support and provides a better entry. Here's the daily chart.

2.49 Most of the Asian markets have reopened and they're flat to slightly higher, failing to react to overnight weakness. It's likely that many of the market participants are away but despite all that, it's still having a steadying effect on the Australian market so that the Xjo index is down just 16 points now and still showing plenty of resilience.

Although I'm steeling myself for the possibility that the index resumes its rally, the 60 minute chart provides some ammunition for the bearish case. The opening drop this morning is not a completed sort of pattern - there's too much momentum - so the market probably needs to go lower for this correction to be complete. My point is that even if you're looking at the bullish scenario, there's short term weakness ahead while the bearish picture has this morning's move as the first serious crack before some genuine selling emerges.

3.05 By the way, I'll post something about interesting books next week. The one I'm thinking of writing about is "Trading by the minute" by Joe Ross.

3.08 I've just flicked over to the website and I see that this book has been revised and re-published as "Day Trading".

3.51 The intraday rally has faded and the index is down 29.

I've found another bearish position in Incitec Pivot. Short at 342 with a stop in the mid 350s. There was a sell signal today and the previous sell down from 365 to 338 also overlapped recent highs implying that a clean trend was over. I'm hoping for a second leg down to around 320.

4.07 A scrappy day for me, in and out of the office, and now I've got to bolt to yoga which I've missed for the last two weeks. Meanwhile, the match is approaching and the Spi is getting hammered ahead of it. Even Fmg has eased back and might close at about 504 after hitting 510 in mid afternoon.

It's been a choppy week too and I'm happy to have scraped a few dollars out of it.

Mixed business. Thu Sep 23

The S&P 500 and the FTSE 100 both fell around half of one percent and the local futures opened sharply lower but nobody was going to knock the market down through key support on such a flimsy pretext so at 12.30 pm, the Xjo 200 index is just down 4 points which is where it has been for the last 2 hours.
Base metals were bid up last night as obvious beneficiaries of quantitative easing and there has been an attempt to rally here and there but no massive enthusiasm. For example, Alcoa traded up 4% in the US but Alumina is up 2 cents or 1%. The iron ore stocks are ok, Fmg is still pushing up a little while Murchison (damn!) is the best of them as they are up to 187 after announcing a resource upgrade.
Meanwhile the gold stocks have stopped following the gold price (in US dollar terms) up and are mixed.
My featured trade is another short position in Oz minerals. I'm short a few at 147 and hoping to sell a couple more at 149. I'm looking for a lower high or perhaps a marginal new high here, but basically I think that momentum has stalled and it should pull back. My stop would be in the low 150s and I'm looking for a move to the mid 130's.

1.08 I knew there were holidays this week but hadn't realised the extent of them. The Japanese, Chinese and Korean markets are closed today which perhaps explains the lacklustre session that we're having as the index climbs gently into the black for the day.

I'm mainly short but have somehow made a couple of dollars thanks to Djs being sold down another 9 to 501. I also traded a few Lynas from the long side earlier on until their rally faded.

2.34 The market isn't really going anywhere, except for Fmg which is still pushing higher. I'm trying to pick a top here, as I am in Ozl, so it's tricky. My feeling is that it's very thin trading and it's possibly an attempt to squeeze some shorts out of their positions. Here's the chart.

4.15 The market closed up 8 and I didn't do too much. Fortescue eased to 499, I bought a couple of Djs back at 500 on the match. That's about it.

The market has now had 6 sessions in a tight range since hitting 4670 last week. The fact that we haven't had much of a retracement yet is making it more probable that we pop up higher before we can fall. This happened in early August, although the congestion was only 3 days then. I like my short positions and I'm inclined to hold them but I might have to widen the stops to cater for a marginal new high.

Fashionably late. Wed Sep 21

David Jones has reported a few weeks after the season closed. I noticed the possibility of a sell signal in the stock before the market opened and the profit announcement took me by surprise. I've shorted a few so far at 512 average although the stock has bounced back to 515. I would have liked to sell closer to the opening price of 523 but I wanted to gauge the reaction to the result. It's a worse fill but at least I was trading on better information, in that the sell signal was confirmed.
Assuming that it doesn't reverse back up once the analysts have gone through the entrails, then I'll try to sell a few more. Here's the daily.

The overnight session in the US brought news from the Fed that they are still considering quantitative easing despite better (less bad) economic news recently. The index jumped on the announcement then reversed to close flat. Meanwhile, the Aussie market has been indecisive for most of the first hour but has started to lean to the bullish side with a gain of 12 points.
I was tempted to nibble at some of the gold stocks which were sharply lower yesterday, but although a couple of them have bounced, there's very little enthusiasm to bid them up. The game may be over for the time being.
With this lack of interest in the punters' favourites, I decided to tip out the Murchison long from yesterday at 179, for a small loss. It wasn't a deep enough pullback to give me a lot of security so when it failed to run after yesterday's opening strength the case for being in this was much reduced. I didn't feel the need to wait for a stop to be hit.

The market is showing signs of increasing intraday strength and I may have pulled the wrong rein here. Nevertheless, my strategy is to be cautious and I'm not convinced about this one.

12.30 The market has drifted back to be up 7 points with Asian markets narrowly mixed and US overnight futures up about a third of a percent.
Retailer David Jones is weakening again and I completed my selling at 512 with the stock now at 510.
Fmg has chopped back up to 491 and Awe to 160.

2.20 The index is on the highs for the day, up 0.5% but the rally hasn't really caught fire. Just as well, I'm short now, although I'm starting to look at a long position in uranium miner Paladin. This has been bottoming slowly over the course of this calendar year. It made a marginal new low in July relative to February. A decent rebound back above 400 was encouraging and now it's showing signs of having completed the retracement of that move. If my scenario is correct then the rally in late August/early September was wave 1 of the next move. That would imply we've had wave 2, forming a higher low, and we're in the early stages of an acceleration up.
I'm not necessarily super convinced about this one but I can use the recent lows at 368 and 365 as the basis for a stop and an acceleration could easily push the stock to around 400. I'm trying to get set at 377.

2.37 Ok, there's some kind of bug with getting the Paladin chart up. I'll insert it later.
It would be nice to have a new theme for my trading stocks and I can that the market might begin to look elsewhere if the recent favourites lose momentum.

2.39 I was looking over at Australian Uranium investing (there's a link) and he's got some great widgets. I'm going to have to find some good ones for this blog.

2.51 Finally...and long a handful at 377.

4.17 Most of those gains ebbed away and the index finished up 8 points. In no man's land; above support but having lost the recent momentum.
My positions didn't treat me particularly well with Awe and Fmg both squeezing up about 2%. Djs stayed weak though, while Pdn slipped lower to 375.

Gun shy. Tue Sep 21

The US and European indices rallied hard last night for no very obvious reasons. FNArena's morning report spells it out quite well - and no, I don't get commission from them! The Australian market has responded in cautious fashion with an initial 30 plus points bounce but that gain has been halved, an hour and a half into the trading day.
My plan is to initiate some short positions here and there but I've found myself reluctant to pull the trigger. My quandary is that the index made a little base just above support at 4600 and since there's no overlap between swing highs and lows and the market is in an uptrend then there has to be a good chance that it grinds up higher. Here's a 60 minute chart of the Xjo to illustrate.

Maybe I'm not so much gun shy as cautious about jumping the gun. I've watched Fortescue come back from an early high of 500 to 494 but if the market recovers then Fmg will make an attempt to go back up with it. If it then fails to get through 500, I can be much more confident that the stock is under pressure and is probably not going to get through last week's high.

Apart from this theorising, I've sold out half of my Bsl for square at 244 as the bounce in this stock is pretty lacklustre. I did get a dividend of 5 c per share here as well. There was more housekeeping in Lnc, selling a third out at 191, a few Ost at 309 and yesterday's extra Qan balance at 271.
I've also got back into Murchison at 181. This has consolidated for 5 sessions after it's big run and if I use the pullback low of 174 as the basis for a stop then there's a reasonable chance of a quick push up to around 200. The risk with this trade is that it might turn into more of a long winded, 3 wave pullback but recent momentum is good.

12.51 The picture is evolving quite rapidly as the Xjo 200 is now down 2 points and the chances that a lower high has been made are increased.

I'm selling out of the longs that I'm least committed to, which are Bsl and Ost. Both of these fell below a swing high yesterday before recovering with the market which means I'm less confident of another push up. I'm out of the Ost at 308 and I'm offering the last of the BlueScope at 242. Here's the One Steel chart.

I've also bit the bullet on a couple of shorts, selling some more Awe at 161 and some Fmg at 491 and 490.

Qantas has surprised with a big reversal after early gains. In the short term, it looks like a tight 5 wave pattern has played out so I've sold at 267 with the idea of getting back in at around 260 on a pullback.

1.22 The tone is really changing with recent favourites like the gold stocks and Lynas getting hammered today. I'm out of Bsl at 241 and thought I might have sold Fmg at the low of the day as the stock and the market has been trying to get off the canvas. The attempt isn't gaining traction yet and the Xjo chart is overlapping yesterday afternoon's swing high. This doesn't negate a recovery but makes it less likely to be a strong one.

In recent days I've been able to get away from the screen but today is one of those sessions where things are on a knife edge.

3.22 This is the second attempt to find a low today and the market is down 7 from down 13. It still above the 4600 support but not looking that great. Here's the daily.

If it breaks support in the next day or so then you've got a sell signal after a move up which is arguably a 5 wave structure. It would also be just above the top of recent resistance in an environment of analyst downgrades on valuation grounds. Having said all that...it might only be a relatively quick 50% retracement of the recent move and the big picture looks ok.

4.15 I'm relatively happy with today. I'm out of the marginal long positions and have a couple of short positions on board. It's an interesting time when a trend could be turning - index closed down 14 points, on the low - because until you're confident it's really about damage limitation. It was relatively easy to make money over the last few weeks of solid rally and now I want to hold on to that profit.

I play football or soccer and you expand in attack and contract in defence. It's pretty much the same in most footy codes and batting at cricket fits the bill too. Anyway, it occurs to me that it's much the same when you're trading defensively; you just want to be error free and wait for good opportunities to present themselves.

The sceptical shopper. Mon Sep 20

More market participants are turning bearish and while the US was flat overnight, the Australian market settled down around 0.7% or about 32 points. I can see that momentum is disappearing and I'm in the bearish camp but I don't see a top yet so the sell off looked overdone, at least as long as the Xjo 200 holds above the 4590-4600 range.

Which is how I found myself doing some buying earlier on. I added to my Qantas position at 265 and sold out half of the extras at 268 and Linc looked ready to resume after a congestion period and I jumped the gun slightly, buying at 180. This has worked out with the stock running up to 187.

1.05 The index is flirting with further falls but is just hanging on.
My two steel longs, Bsl and Ost, are square after adjusting for a 5 cent dividend and down 2 respectively. They're both trades which are predicated on the index chopping higher as the market peaks. If we've already seen the peak and the market is about to break support then I'll need to be quick to chop these.
Linc is a different story, the rest of the coal assets are up for auction and today's action suggests that an announcement may be close. And Qantas is a stock which has the ability to rally in a falling market given the strength of the AUD and the employment situation in Australia which is strong with gradually increasing consumer confidence. Obviously my long position in Qan is chart based but, like everyone else, I like to have a story to hang on the trade.

3.06 Support held and the index has recovered to be at 4618, down 20.
I've added Awe to my list of stocks that I want to short on a (minor 2 or 3 percent) rally, along with Fxj and Fmg.
It's the weakest of the three.

4.17 The final figure for the Xjo 200 was 4631, a drop of just 7 points.

Awe recovered a little and I shorted about a third of what I'm aiming for, at 161.

Nuanced. Fri Sep 17

My apocalyptic fears about the market were premature and on reflection, the market situation is more nuanced than I thought. I'm still looking for a short term top soon, although I now think it will be next week. Quite a few of the stocks I follow look like they are completing patterns but often with the prospect of a minor new high. That could be reflected in a similar outcome for the Xjo 200 index.
Here's an example, Fortescue. This might have made the minor new high but I don't want to short it towards the bottom of a congestion pattern. I'm looking for something around 495 to 500.

By contrast, BlueScope steel has pulled back to just above the previous swing high of 239. I'm long at 244 and looking for a quick move to a new high around 256-260 but not necessarily expecting too much more.

The 60 minute chart is more enlightening. It shows a little acceleration up to a double top at 255 and a pullback to 241. A standard 5th wave should make a new high and even a failure might get up to 252, say.

1.53 The market is pretty solid, up 31 points. There was an attempted sell off after the initial rebound but it looks pretty bullish in the short term. I'm monitoring three stocks to short; Awc, Fmg and Tse and they're holding up pretty well so I may be able to get short at the levels I want, early next week, I suppose.

4.10 A good day for the market as it rebounded 34 points although a lot of closing volume - a portfolio maybe - took the edge off the gains.

Earlier, I put on a long position at 304 in Ost; it's had a pullback within a trend like Bsl but is not as advanced.

Spi rollover. Thu Sep 16

The September Xjo 200 futures contract expired today so that December is now the front month. There were the usual huge volumes on the opening but subsequently it's turned into a dreary morning session with some minor weakness - down 10 at 11.14 am.
I ended up buying some Qantas at 264 yesterday which was a half position with the hope of getting the rest at around 260. It's a minor bright light this morning, defying the soft market to be up 7 at 271. Otherwise I'm paying for my haste in Kagara Zinc as it drifts back towards the last swing low.
I'm still long a small amount of Lnc left over from a purchase at 154 a couple of weeks ago. The stock has congested in a very tight band. I may be able to buy more on a break through the high as the lower level of this tight congestion would provide a good stop. Trades at 182 and 183 would be encouraging and trigger a buy signal while a level around 172 would be a comfortable stop.

12.47 It's looking like a market rollover too. The index is down 31 as some of the recent euphoria drains away.

3.14 Just noticed that Boral has had a big turnaround on a renewal of US housing worries. It's now very close to a recent swing low at 461. I think I'll wait till tomorrow though.

The index is down 40 points and I'm feeling more justified about my caution of the last few days. I could definitely have been more cautious about Kzl. It's at 66 and a reminder of why I'd stopped doing these sorts of trades.

4.12 The index has finished 56 points in the red and the Xjo chart shows that the last couple of times we did this at the top of the range, further sharp falls followed. I'm thinking more along the lines of the August sell off rather than the June one but it could still be ugly tomorrow.

With that possibility in mind, I made the best of a bad job and dumped Kzl at 65.5 which is still on support but my plan had changed to selling out on any dead cat bounce so I figure I'm only sacrificing 2 or 3 cents if we steady up tomorrow.

I'm left with a defensive long in Qan and a remnant in Linc which is holding up because they've now got a cash stockpile with more expected to come soon once they sell the other coal tenements.

If there's some early strength tomorrow, I'll hunt around for a short position or two.

Selling into strength. Wed Sep 15

Gold broke on through to new highs last night on renewed talk about QE and low rates for longer. The gold stocks have responded quite well but have generally just stuck around their early highs. The market was firm early on with the Xjo 200 going one point higher than yesterday's peak. It's chopping back but is up 11. A few stocks on my list have reversed from early strength, eg Aristocrat, Challenger and Intrepid, so it looks like a profit taking day to me. I've followed that lead and sold out of a small holding in Minara at 83.5.
I'm reluctant to put short positions on and I'm not finding much to buy. Qantas is an exception but I'd like to buy later on in the hope that the market will weaken since I've had this on the radar for a couple of days and could easily have bought at 259 or 260. I'm starting to chase stocks and to do too many intraday trades, perhaps because we've been trending hard for a few weeks. Whatever the reason is, I know what works for me and it's entering stocks at my levels.
Here's the Qan chart, a beneficiary of the strong AUD.

1.20 I'm still waiting. The index bounced back to, but not through, the early high. Up 21.

2.44 Well, my caution was unnecessary and the market is up 35.

For all that, there aren't really any missed opportunities for me although Boral has kicked on, so I needn't have got out of that one yesterday. The chart also looks as if it's starting to trend bullishly too rather than just retracing so it's one to watch closely.

4.14 The index finished up 35 at 4661 and is now through the last 3 swing highs. I know I'm looking for a short term top but there's no sign of it yet and I'm still long, albeit cautiously.

Taking stock. Tue Sep 14

The early peak after about half an hour was a rise of 35 points. It was more than I was expecting after we'd run so hard yesterday. The US was strong last night but they were reacting to the data which had helped us along already.
I was keen to get out of as many long positions as I could find excuses to exit. I flicked the last of the Avo at 315 as that was about all I was looking for from the retracement, Awe has been stuck so I sold them at 165.5, Bld was a better exit at 477.4 average after they popped up to a new high and failed to move on. Mmx is one that I'm less convinced about selling but they tried to get through some short term resistance at 190 and met a wall of offers so I sold out at 186 and I'm hoping for a re-entry in the 175 area. If it pops through 190 I might jump back on board for a quick move. One Steel is the last of my sales, out at 313 and again, I can see this going higher so I'll be hoping for a pullback.
With all these sales I felt the need to buy something which might have some zing in it. I went long Kagara Zinc at 72 but even as I bought, I kind of knew I should be more patient. They're back at 70 now and I like them a lot but, with the market easing back, there was probably no rush. My stop is at around 64. My view is that Kzl is at the start of a third wave which should see a decent acceleration.

And I've had a slice of luck this morning in Iau. Because the golds are in play, I'm looking for intraday opportunities in my universe of stocks and I thought that in the short term this had made a higher low and might complete a bullish pattern with a push up to 108. I bought 20k at 100 and a little later they announced a reserve upgrade. The market liked the news and it re-opened at 108 where I sold 5k, followed by a couple more sales at 112 and 117. They're at 118 now and I'm hoping to sell the last 5k at around 122 if it gets there. Here's the 30 minute chart. You can see the run up last Wednesday which consolidated for a couple of days above the break. The recovery started yesterday and this morning was the higher low, confirmed when the stock got through 105.

I'm not particularly looking to gloat, writing about a winner after the fact. I actually misread the strength here, just as I did in Lynas yesterday (it hit 138 this morning). The speed of the reaction stopped me from stuffing up the trade by selling out all my stock at, say, 108-110. What I take from these intraday trades is that stocks are starting to behave as they do in a bull market, particularly in the hot sectors where there's some genuine enthusiasm. In these sort of situations, I probably need to be less cautious than I've been lately.

12.17 Out of Iau at 120. They gapped from 120 to 123 with a small trade but I missed it. Anyway, that'll do.

12.51 Still too conservative, I suppose. Iau got to 126 and are easing back now at 121.

I'm out of almost everything, long Kzl and a few Lnc and Mre. The market still looks ok, if a little extended. We could have another day or two of strength even if my scenario of a short term peak is correct. The Dow Jones chart looks fine and is still 150 points away from resistance.

3.39 All quiet on the Western front. No more trades for me except for some tinkering. The index is up just 14 now.

4.15 Xjo 200 closed up 12 points. It could be firm early tomorrow but I'd expect a tendency to sell off from there.

Plain sailing. Mon Sep 13

The uptrend is still intact and the Xjo has rebounded 42 points after 40 minutes on mild US strength.
Avo has bounced back to Friday's intraday high at around 302-306 and I've sold some out here. Mmx has continued to power and is now up 16 at 190. I sold a few earlier at 182.
I don't really have any prospective trades that I'm planning to hold for a few days. It's a mature uptrend in the market, close to recent resistance so any additional trades are limited to small short term positions.
There's one I've taken, buying Lynas at 125 as a little pennant correction on the 60 minute chart seems to be resolving to the upside. This might pop up to 128-130 later today or tomorrow. I wouldn't expect to hold it much longer.

Just to show how quickly Murchison is moving; in the 9 minutes it took to write the section just above, Mmx bolted up to 193, retraced to 186 and recovered to 188. I don't bother with finding out about takeover rumours but I assume there must be some kind of talk for the stock to be bouncing so hard.

11.19 I might have been overly conservative, I'm out of Lynas already at 130 and they're up at 131.5, showing no signs of stopping.

12.22 The market is strong, higher by 1.1% but I'm conscious that the index is around the swing highs from August and June and the correction high from May. My positions are all longs but the dollar amount of exposure to the market is modest because I'm wary that we could hit some resistance.

My favoured medium term scenario at the moment is for some kind of short term top this week followed by a correction of this last swing and then a decent run up which would take the index convincingly through the 4600-4650 level, perhaps up to 4800-4900. 

12.30 I'm out of Karoon at 718 average today. It hasn't been the excitement machine I was looking for and I'm probably better to stick to my knitting of lower dollar, volatile stocks....like Lyc which has just hit 132.5.

1.44 I'm off to physio later so will miss the end of today's session. The Xjo 200 is up 60 points, helped along by stronger than expected Chinese economic data. I'm seeing a few bullish comments too, although the index looks toppy to me on the day. Here's the 10 minute Xjo chart, a burst up and then a grind from there.

I hope I'm wrong here; I'm still holding on to long positions and I'm going to be away from the screens - which always makes a short term trader jumpy! - although I've left a few offers in my order book at higher levels.

4.18 Back from physio and the market held the line to finish up 55 points.

Before I left the office I bought back the Avo I'd sold early, paying 306 versus a sale price of 304, for a small loss but it worked out as I sold them out again at 311. Just a couple left now and this has covered a fair chunk of Friday's loss in the stock.

Everything else went pretty well too but with the idea of the market getting towards the top of the range, I sold out small parcels of Awe at 167 and Ost at 310.

I did find a slightly longer term position in Mre but didn't buy many because I'm chasing a breakout rather than accumulating into a pullback. Long at 80 and sold a handful on the match at 81.5. Stop is 72ish and it looks quite hopeful for a spurt up.

Murchison finally? Fri Sep 10

Another good lead has given us a small boost with the Xjo index up by 8 points after an hour and a quarter. It's Friday and the end of another bullish week so I'd expect some profit taking, perhaps it'll come this afternoon.
Karoon is strong again and is up at 725 while the rest of my stocks are steady with the exception of Avoca. I didn't read the fine print and hadn't kept up with the sceptical market response to their proposed merger of equals with a Canadian gold stock with interests in Turkey. The selling which had accelerated yesterday was getting a head of steam by the open and whether to cut on the open or not was an interesting decision to make, given that the open was at 298 and my significant support level at 310. I had a look at the merger document and the timetable for the board meetings to approve the merger is for mid December. That gives the market three months to produce an alternative takeover bid in a sector that's ripe for consolidation. The prospective p/e is also around 9 here so I decided to buy a few more and trade them around. With some minor jobbing it means that my second small tranche of Avoca is long at 295 compared with yesterday's purchase at 320. I think there's a good chance that we'll get a minor rally to 306-310 and I'm hoping to get out there. The valuation support means that I'm not overly concerned if it just drifts off - I don't think I'll come to too much harm.
I used to feel that it was important to cut with iron discipline but I now think context is important. An overpriced stock, valued on takeover potential, which announces a no premium merger is one that I would quickly dump but this appears to offer good value and time for another suitor to emerge.
It's not an ideal situation; I don't want to be caught with a stale holding in a drifting stock, but I think I can afford to see the storm out and see what develops next week.

I've been itching to buy Murchison for a week or more but the rally it was having was pretty unconvincing and was unable to breach recent swing lows. Today the stock is finally starting to accelerate and is now through those lows. I've bought a few at 158 and I'd really like to get more on the back foot but as I don't think I would have been the only one looking for a significant change of tone in this stock, it's probably ok to chase the break. Maybe an afternoon sell off will help me to pick up a few more at cheaper levels.

12.21 I bought more Mmx at 159 and they're still firming, up 6% at 161. Avoca is going nowhere though, still at 297.

1.12 That's interesting, Murchison is really going now, up at 172.5 a couple of minutes ago. I've sold a third out at 168.5 average. I wonder is there's a sniff of a bidder or it's just a squeeze after big underperformance versus the rest of the sector recently.

2.03 As the day draws on and there's no sign of an intraday rally in Avo, I'm getting altogether less sanguine about the stock. I think my logic is reasonable in the medium term but if the short term prognosis is less good I may be better off to cut completely and then look to trade a countertrend rally back up next week. Avo is at 290-291 now which is back at the early lows.

2.08 Out of Avo now at 290. Yesterday afternoon's buying was for a small amount but it's still eaten up the day's profit. Not the worst outcome though, the market is down 20 points and all my positions are long. 

Sold a handful of Awe at 168, Kar at 725 and Ost at 299 earlier which has helped because they've all fallen back since.

3.11 It's a quiet day and I've found myself just buying back a few Avo at 288. It's actually getting closer to the sort of signal I like, with a minor new low and - so far - not a lot of follow through. It's still a countertrend trade of course.

4.11 All over for the week, finishing at 4560 which is down 22 points today.

Murchison received a speeding ticket from the exchange ie please explain why your stock is up 15% today. They could offer no particular reason and sometimes that's enough to take the wind out of any rally: no mention of corporate interest, for example. In this case, the stock has finished well bid at 174 on the high for the day.

Avo recovered to close at 292.

Power struggle. Thu Sep 9

The Sydney Morning Herald has a front page story concerning mass shutdowns of Chinese steel mills as a dramatic energy saving and pollution cutting measure. Supposedly this may cause short term reductions in demand for Australian iron ore and increase demand for steel. It doesn't seem to have had any impact on local iron ore stocks so far today - it's 11.20 am - but I have gone long One Steel anyway.
It rallied through the previous swing low last week, trading up to 303 but fell back this week. I felt confident that the break of that swing low indicated some short term strength so I was looking to buy on a pullback. I could have bought yesterday but waited and went long this morning on the open at 290. Stop is around 276 and there's a good chance of a swing up through 303 now, perhaps to 320ish in the short term.

Challenger disappointed yesterday with a fall which broke the lows of the previous 3 days so although it has rallied back this morning, I've sold half out at 398 which was my entry level.

I'm also out of Ipl for a small profit at 353 because it has lost all momentum.

Best performer today is Karoon, which has reversed sharply to be up 5% at 699. It went close to my stop yesterday but now looks ready to motor. It has been helped along by an announcement of plans to list the Brazilian assets on the Brazilian exchange and retain majority ownership.

Like Karoon, Awe is starting to break out too, up 3 now at 166 and clear of the recent congestion.

11.34 Oh, and the market is up a strong 1.1% with good gains across the board.

1.42 The market has given back a few points but we're still up 40 points. Boral has eased back to 466 and I'm thinking of buying a few more at a better level here. Haven't done anything yet though.

2.49 I've had visitors to lunch today and I notice I've missed a chance in Boral in the low 460s, back to 468 now. The market is up 30 so continuing to ease. I sold out of the balance of Challenger earlier at 402 and some Mml at 458. Otherwise, the rest of the positions - still just longs - look fine.

4.14 At the finish, the index had started to run back up and was higher on the day by 45 points or 1%.
Awe, Kar and Ost finished quite strongly. I nibbled at a few Avo on the close at 320 as they pull back from a short term high.

Tight shoes, clowns... Wed Sep 8

Things the market hates.....tight shoes, shopping centre Father Christmas's, drivers who don't use their indicators, American chocolate, oh and uncertainty. I've been listening to the financial and political news over the last day or so as the election result has played out - usually I press the mute button - and I would like to hear a fuller list of what the market hates so I can learn to understand it better. The pundits are united in agreement about the uncertainty thing but it's not going to really help with shopping for presents for Mr/Mrs Market.
After a weak but lightly traded overnight session in the US, the Australian market has chopped around for most of the morning and at 11.23 am, we're on the day's lows, down 25 points.
Gold was up overnight and I've been hoping to get back into a gold stock or two on a pullback. I missed Sbm yesterday at 35.5 and they're back up to 37.5. I managed to buy back into Intrepid though as they sold off yesterday and were weak early on. I bought at 92, 90 and 88.5 before the stock bounced back to where it is now, 93.5. Long at an average of 90.5 with my stop at around 80. This is in a strong uptrend and there's a pretty good chance that Iau goes straight to a new high above 100 without having a more elaborate 3 wave correction.

Stocks exposed to the US housing market are reflecting a growing school of thought that the worst has passed. James Hardie and Boral have been quite strong in the last week or so and I've also gone long some Boral at 470 this morning. This is another buy where I'm getting in on a pullback but I missed the best of the day in the low 460s and I may have been too hasty here. However, it's another situation where I think the trend is strong in the short term, although unlike Iau it's probably a corrective rally, and the short term momentum should carry me through. My stop is at around 450 which would be a break of a little swing high and back into the previous range.

1.03 After losing momentum but grinding up for the last few days the Xjo index has traded below the lows of Tuesday and Monday. I'm quite bullish over the next week to ten days but can see the chance of a retracement over the next few days. Here's the chart.

3.02 I've got qualms about Boral regarding a lazy trade entry so I've sold half out at 475 to reduce the risk there. I've also sold out half of the Intrepid at 95.5, on the 50/50 chance that they make a lower high although they're still rising, up to 98.5 now.

The index is near the lows, down 33 points while Chinese and Japanese markets are down 1.5 to 2%.

3.49 Out of the other half of the Iau at 99.5 and 103 as it turns into a day trade, hitting my target already.

It's still rising too.

4.14 The closing mark was 4537, down 36 points.

Intrepid covered a couple of mark downs in Challenger and Karoon. I bought a few Lynas at 120 - another fast moving stock but unlike Iau, having more of a pennant correction, I think. I was hoping this would drift back to 108-112 but it doesn't look like it's going to happen now. It means I can't risk buying too many.

Tumbleweed. Tue Sep 7

Today I am taking some time off since it's pretty devoid of interest and we're basically unchanged after an hour and a half. Challenger came back to bite me so I bought back in at 398, they're 401 now.

1.59 Back from a nice walk and a good lunch. Still no word on the new government. One of the independents has announced that he will support the Liberals and that is being interpreted as meaning that the other two will support Labor, enabling them to form a government. The announcement from the remaining two independents is due at 3 pm.

The market found its way to an intraday peak at around 1.45 with a rise of 13 points but has quickly wound back to down 2 points; perhaps on the realisation that Labor is still favorite and therefore a mining tax is on the agenda.

A good day for Cgf, up 12 at 407. Karoon might finally be starting to move, up 10 at 690 and a break of 700 would leave the chart looking very healthy.

3.23 Rob Oakeshott is milking his moment for as much as it worth and hasn't yet confirmed that his casting vote is for Labor. But it sounds like it.

3.27 The market is falling fast anyway as we wait. It looks like the independents are setting an agenda that wasn't what the public voted for so it's going to be questionable as to how much legitimacy this coalition is going to have.

3.31 Finally, he's spat it out. The last two independents support Labor and after 17 days we have a new coalition government.

3.35 Interestingly, the market is recovering a little. Perhaps because it's seen as better than having another election.

3.50 Broadband policy was a key factor in the vote for Labor and it's a huge issue in country electorates, certainly one that the Liberals could have thought more about. My understanding is that broadband is essential for Australia and a useful piece of nation building. I'm not too sure though, whether we need another Telstra or whether the administration which gave us the home insulation and school buildings fiascos is the right one to deliver it.

As it was for most of Australia, it was very hard to make a personal decision on these sorts of issues and probably the right decision would have been to go back and think again with another election.

It would have been tedious and a good time for an overseas trip but better than an election hijacked by a couple of marginal electorates.

Oh well, coalition governments actually have a good record and the independents seem honest and sensible enough. Also regional Australia could probably do with some pork barrelling.

4.11 Someone's just trotted out "The market hates uncertainty" on Sky. Pass me the bucket.

The Xjo closed almost square, so it's clearly uncertain as to how to assess the coalition news.

Not a lot of change for my stocks and I'm looking forward to reading how the papers assess the news.