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.
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