Ho, ho, ho? Thu Dec 2

Could it be a Christmas rally? European and US indices rallied 2% plus overnight on enthusiasm about economic recovery and an easing of debt fears in the Eurozone. Base metals and oil surged in a sign of renewed enthusiasm for risk assets and the fundamentals for metals such as copper are on the improve.
After recovering from the range lows yesterday for the third time, the market is up 72 points at 4659 after less than an hour, more than 100 points above the afternoon low for Wednesday. My positions have gone reasonably well, skewed as they are to resources. Aru is up at 126 and I sold a handful at 127; Awe is at 166 and I also sold a few extras I bought yesterday.
I've sold out of Linc at 277 and 278 as the chart is extended and I suspect other stocks will run if the market has bottomed; Lnc has been somewhat of a safe haven.

I bought back into Avoca yesterday at 321 because although they sold off further after I stopped out, they were able to hold support and look as though they'll have another rally attempt. I've tipped a few out at 331 but I'm hoping for a pullback to 327 because I'd like to buy more.

Having said that, it's not really a day for the golds, there's more room to move in base metals. Perseus hasn't done a lot, up 3 at 324.

I've added a couple of new longs in base metal stocks. The first one is copper/gold producer Pna where I've paid 75. I'm hoping it has made a higher low with the break of yesterday's high and a little buy signal would be produced with a trade above 76. In common with quite a few of the charts around, due to the slow retracement, it's not a clean chart with the pullback having overlapped the September high. Despite that, it looks reasonably healthy and the strong rebound from the recent low at 67.5 was quite encouraging. Stop is around 70.

The other new long is in nickel miner, Western Areas. This is the second time I've tried this one and I've paid about the same, 598. I haven't bought a full position because there seems to be steady selling around and it may fade away if the market tops out for the day. It looks like a long, shallow retracement which is generally quite bullish. Stop is at around 570. After my last foray into this, I pondered targetting 580 as a buying level, trying to hunt for a good entry. I didn't go through with it because of the tone of the market so I've maybe missed a few percent here.

11.57 Bought the rest of the Wsa at 600 as it holds up, along with the market.

12.19 I probably need to give myself an uppercut, but I bought some Ost at 251. It's still not the sort of trade I should be doing...but, it did make a new low yesterday but only by a cent and today has rallied again; a renewed emphasis on world growth is probably the catalyst that the very cheap steel stocks need; and rival Bsl is rallying nicely and is up 4% today.

For the "what was I thinking?" file, here's a chart of Bsl. Last week, I wrote that this was technically better than Ost but, what the hell, one was as good as the other. Guess what? The stock with the technically better chart has performed better. The only surprise here is why didn't I switch? It's too late to do it now whereas when I wrote about it, Bsl was around 190.

1.48 It's ho, ho, hum as the market sits pat with gains of 1.7%.

2.46 A breakout of the early consolidation has the Asx 200 up 2%. The index made a buy signal and broke through short term resistance early this morning when it advanced through 4620.

3.33 For some reason Avoca has come back to 321. Bought some at 323 on the way. Not sure what's happening there, just a jittery sell off?

Lynas has also, more slowly, returned to breakeven for the day. It gapped up 4 or 5% on the open but now I wonder whether it has completed a 3rd wave (with 5 subwaves). I'm regretting not selling a few early. I thought about it but got a bit greedy. Here's the daily.

3.52 With the exception of Awe, which has strengthened through the day, my long positions have been flat to weaker since the open despite the index going higher. The top 20 index has outperformed the top 200 index with the major banks doing well. It's slightly counterintuitive except that the early stages of a rally usually favour the large cap stocks as investors want to get set quickly and strategically. Ie, it's an index bet rather than a sector or stock bet.

4.17 The final number was 90 points for a 2% rise. The 20 leaders came back to the pack to also gain 2%, with retailers, Woolworths and Wesfarmers, providing the ballast.