Extended stay. Wed Jan 12

Relatives from Brisbane are escaping the floods with a holiday in Sydney and I think they might be staying for longer than planned, judging by the TV pictures. It's hard to get a coherent picture from the coverage but the peak might be reached quite soon with the big clean up to follow.
The overnight lead was pretty good with European indices strong and the US numbers reasonable with good rises in resources as well. After an hour and a quarter of trading the Asx 200 is up 5 points, held back by the tide again. However, the resource stocks have reversed and the index has pushed above the last 3 days' highs.
I've got out of the rest of a small long in Arafura at 143.5 which is a small win. There isn't really a buying set up yet and it was more an attempt to buy a temporarily oversold stock.
A couple of days ago, I read a piece of research suggesting that the steel market was in for a major change this year with tighter Chinese environmental regulations due to shut down blast furnaces and turn the Chinese from exporters into importers. This is obviously very bullish but I didn't want to make the mistake of jumping into a short term trade on a medium term analysis. Anyway, last night US Steel rose by 3% and it looks like just about every major steel company around the world had a strong session in the last 24 hours. Maybe the idea is gaining traction.
Bsl is already trending and I bought the open at 220 as that would break the previous day's high. I'm working on the basis that it could have completed a minor 3 wave correction and the target is around 240. My stop is below yesterday's low.

The situation in One Steel is similar. I've paid 260 and I'm assuming that there is a complete 3 wave correction of the first bounce (wave 1?). The stop is at around 252 and although the chart isn't as good as that of Bsl, the short term upside could be higher because the move has the potential to move into the larger wave 3. It's trading at a steeper discount to analyst estimates than Bsl so a re-rating of the sector would provide a catalyst for value buyers.

12.39 Another trade I've done today is to buy Ozl at 167. It's an odd chart and I hesitated but decided that the stop is close enough at 161. It's a bit elaborate but I thought that if the stock is going to push through the November highs then the action over the last month has been a correction of the start of wave 3.

The market is now under water, down 2 points.

2 pm The technical picture for the index is better now as it pulls away from the recent lows. There's a third higher high and the next step is to rally past the retracement peaks at the end of last week.

2.54 I've had a core position in Wsa for over a month and while it has held support, the performance has been disappointingly stop start. I've traded around that position and made a few dollars - not many - but finally the stock is well bid and looks ready to rock. It's up at 627 and a break through 630 would be a good sign of a run up to new highs.

I've sold out most of my Telstra position at 286, 287 equivalent via the options. It seems like there's some authentic resource buying and my other defensive, Qantas, is chopping back so I want to take some profit while it's there.

4.01 I'm just waiting for the match with the index up almost 11 points. It's not much of a move but there are all sorts of buy signals. Bought back into Mmx at 137.5 average, looking for another tilt at 150. Also, re-entered Aru at 145, using 137 as a stop.

Here's Mmx.

4.15 A little kick at the finish and the Xjo index closed at 4724, up 13. Hopefully, the flood situation is calming down; if so, we're due some catch up.