Form an orderly queue. Fri Dec 10

Yesterday afternoon I posted about a possible rush to risk assets when commodities and commodity stocks have clearly been running for some time already. The context is what matters. For example, Bhp has run pretty hard since the market turned in late August but it is still on forward PE ratios of 10.7 and 9.5 for FY11 and FY12 according to the survey on FNArena. Those are the sort of valuations you get at the top of the cycle when everyone assumes that growth is going to fall off a cliff. If you assume that growth is surprising to the upside then the valuations make a lot less sense. There's a discount in place for a long period of below par growth as the old economies work their way out of debt but it's a very large one. Maybe not a rush then but there could be a long queue.
The early action in the market is a small rise of 4 points with the banks performing well and the big miners under some pressure after slight weakness in commodities overnight. The gold stocks are still selling off despite a minor recovery in the gold price.
My positions are little changed. Chinese figures are due out today and tomorrow with inflation figures having been brought forward to Saturday in a sign that authorities there will raise rates.

11.21 The index is looking toppy now. It just touched a new high at 4750 and has quickly reversed a dozen points. I'm out of a few more Karoon at 776 and have bought back some Ipl at 375. Sold a couple of Wsa early at 629 and sitting with the rest. Here's the Xjo chart.

12.27 Incitec Pivot is the best performer for me today and where before I was hoping for a turnaround, it looks quite probable now. The key pivot point is 364 which was a swing low a few weeks back. I have been buying some of my short stock back but I'll also be looking to re-short on minor retracements so it's just tinkering with my position, trying to add a little value.

1.05 Higher than expected trade numbers in China, both for exports and imports. The Aussie market has stabilised and is back into the middle of the day's range. Perhaps it's just that the world is waiting for a weekend rate rise in China and therefore nothing is happening but I'm encouraged by the index holding up compared to the last month or so when the default position seemed to be for the market to sell off steadily.

The Hang Seng has gone nowhere in early trade while mainland markets might have had enough of selling into the rate decision, they're up mildly. 

2.37 A drop of about 0.6% in Hong Kong has taken the wind out of our sails although the Asx 200 is hanging on to a 2 point gain.

Linc has resumed its run over the last couple of trading days. I haven't been long and I'm slightly disappointed because I considered buying again after a pause of 4 days was unable to effect a substantial pullback. These trades are usually quick ones with very tight stops and often worthwhile. For example, if I'd been sharp enough to get some yesterday, I'd be out of at least half now.

4.10 It was a really quiet day as we wait for Saturday's rate rise. Some buying in the match helped the market to close up about 5 points.

Most of my stocks retreated mildly. Karoon was unchanged at 769 and I sold out most of my stock around 776. Ipl fell to 376 so the one short position paid off. Lynas is still under pressure although it bounced off Wednesday's support of 145.5. Since it's only at 147 that's not necessarily very significant.

More on Monday. Have a good weekend.