Carry bagged. Wed Nov 17

The mainland Chinese markets sold off hard again yesterday afternoon although it's in the context of a stellar run since their return from the holiday week in early October. Here's the Shanghai futures chart.

Along with a ratcheting up of European debt worries centred around Ireland, it was enough to spark the capitulation I was starting to worry about yesterday. All the risk stuff was hammered, gold, oil, base metals, the AUD etc. European indices fell over 2% and the US was marked down by about 1.5 to 1.7%.

Despite the market having fallen pretty hard over recent sessions, I can't see a lot of missed opportunities on the short side. Here's a possibility in Minara.
I think I could reasonably have been looking to short a potential lower high after a very marginal and fleeting peak in mid October. 81 might have been the entry level, but it's not a startling trade yet.

A better one could have been Lynas. When I stopped out at 141 there was a good case that it would swing back towards the recent lows - I was thinking about trying to buy around 120 with a tight stop. So again, that 141 level could have been a cut and reverse situation. Also, it's quite plausible that this doesn't hold 116 but instead heads for the 105 support level.

Apart from these, I haven't seen much that stands out which is comforting.
My reaction after a tough trading period is pretty standard; I look at my rules and guidelines and try to make them more specific. It's a dumb thing to do though. Let's say I've identified a stock in a nice clean uptrend and I want to buy dips. My rule of thumb might be to wait for at least a 50% pullback of the previous swing and to try to buy at a target level. Quite often the retracement will fall short of there and at other times it might be closer to 80%; and that's when it goes right.
So, if I've bought the pullback of a move from 300 to 400 at 350, I might have to watch it go back to 320 even if the uptrend resumes as I've hoped for. I try to fine tune my entries and wait for deeper pullbacks to improve my risk/reward but ultimately the situation is inherently fuzzy. There are all sorts of factors that come into play, eg, if overall sentiment is weak, say, or there happens to be a big seller, then the sell off might go deeper than normal. And since the situation is fuzzy it makes sense to me that my approach should match that. This means having to use my judgement, perhaps to work my way into a position or to chop and try again or to go harder than usual etc etc.
When I use my judgement - within a framework of how I approach the market - it can create more stress and I'm not sure how I avoid that. My approach is probability driven and I can trade with that understanding but as a human, it's not so easy to feel good about it. I can keep telling myself to trade like a casino and try to suppress the fear and greed. A second way is to practice a zen like detachment and that's probably the way to go. It sounds like much the same thing but I'm not sure that it is. The first approach is for the mind to dominate the emotions but emotions usually bust out at some unfortunate point or another. The second is more wholistic, I think. It might be expressed as a way to get all the parts of you working together.
It's handy too, if you have a monastery you can pop into for a month or two to develop that zen like detachment.

10.10 We've opened with a drop of 75 points with resource stocks quite hard hit. Soon after the opening is usually the weakest point on days like this.

10.17 And here's the Xjo chart, working its way towards the bottom of the range. There's a bit of support around 4620 and that's held it so far.

10.51 After falling to 124 early on, Lynas has rebounded to be almost unchanged at 131. Using that as an indication, I've gone long the other main rare earth play, Aru, at 107 as it's just above some decent support at around 103, 104 and I can use that as a stop.

Aax upgraded its forecast profits early and is trading down 3 at 246. It made a very minor new low early and I bought a handful more at 235 as the upgrade had been announced but some stops were still being triggered.

11.29 Sold the extra Aax from early on, at 249. They're up to 253.

11.57 Aax is really taking off, up 18 at 267. I just sold 2.5k at 265 using my usual fuzzy logic. I've still got most of my overnight stock, 27.5k left.

12.08 Still running. Out of another 2.5k of Aax at 277.

Overall, the market has made a double bottom on the intraday chart. Japan and Korea aren't down much. If China hangs in there we can bounce this afternoon.

12.33 Aax is still the big story and seemed to be starting to stall so I sold out a couple more at 280. They're up to 284. I have to be careful now. I'm happy to have sold 10k out at a reasonable average (given a jobbing profit earlier) but I do want to see what the rest of the day brings.

The market is hanging around near the lows because the Shanghai market has opened and is down another 1.5%

12.56 The Hang Seng looks like opening down 1.1% (it was pretty flat yesterday) and the mainland Chinese markets have trimmed their losses to under 1%. We're still sitting down 68 points but I think that there's a reasonable chance of a bounce.

I've added two new positions that I've been following. I've only bought partial size because on a daily basis, there's no obvious sign of a bottom yet.

The first is some Awe at 168. It's just trying to gauge reasonable levels for the retracement.

The other one is Ost where I'm long at 260. This is not in a trend like Awe but sentiment is changing towards the stock, the last bounce overlapped the previous swing high and it briefly got back through resistance levels at around 280. I'm hoping for another leg up here and the stop is close.

2.14 After all the action, it's now a quiet choppy rally. I'm assuming that we'll see new lows on the Xjo but maybe not until tomorrow morning. I'm also hoping that those new lows would be minor since I've got a few positions, including the new ones, which are sitting just above support.

Here's the Xjo chart.

Aax is still pushing up although the momentum has slowed right down. Lynas is also firm at 133.5 but I'm long Aru and that has fallen very close to support at 105.

2.41 The little rally has faded and maybe the new low I was looking for is going to happen today. Most of my stuff is hanging in there.

I'm planning to get out of Challenger. I bought them at 468 and that's where I've started tipping them out. I think they still look good but now that the market has fallen, this trade doesn't offer as much upside as the others.

3.37 Ausenco watch.....Now up 20% on the day at 300. Just sold another 2.5k at 299. I only have 12.5k left but my average sale price is ok and I don't want to get too smart. It's just below the September high of 303.

The Xjo made a higher low by a tiny fraction and bounced slightly but we're still down 1.4% which is about the worst in the region. It's a reasonable enough reaction on a standalone basis with commodities so weak but given our underperformance lately, it's a bit grim.

4.20 That was a turn up for the books; made quite good money today thanks to Aax (closed at 291) and the rest holding up reasonably well.

The index finally made a lower low after a congestion (on the intraday charts) at about 3.50 pm and the closing mark was 4624. I'm hoping that 4620 can hold.

My dollar exposure is about the same with sales in Aax and Cgf and new longs in Aru, Awe and Ost. Linc is my main concern. I was too agressive yesterday and I'm worried that it will drift back lower towards the breakout.