Carbon Tax. Fri Feb 25

The Australian government is starting the process of bringing in a carbon tax. It's not great for the steelmakers and I'm not sure how much is built into the share price. I decided to sell my Ost position at 278 and 277 this morning. It has just gone ex a 6 cent per share dividend so it was a net small profit on the trade. It's a tricky chart too, but if it makes another base around 270 it may be worth a look.

It was a volatile night with the oil price surging and then reversing on various rumours with the US finishing fairly flat. The Aussie market is square after an hour or so and I was mostly worried about my gold stocks as the risk indicator came back about 10 dollars overnight and the stocks I'm long had been underperforming.

Rsg is steady on a solid but unspectacular result. I'm finding this stock a disappointment though and the chart is overlapping so, as with Ost, I've sold most of my long at around 135.

St Barbara is a touch lower, so the golds have done better than I feared especially with American giant Newmont having been crunched 7% overnight.

Qantas has not reacted as well to an easing of the oil price but is slowing climbing off the canvas and has pushed back up a couple to 235.

1.12 Linc has just resumed trading after a brief suspension due to an announcement. Lnc has acquired some old oil fields in Wyoming from bankrupt company Rancher for US$20 m. These are full of stranded oil and are negligible producers because of pressure loss (?) but the company believes that they can produce as much as 10,000 barrels per day by using a technique called carbon dioxide flooding. I've just done a quick search on wikipedia and this has been successfully used since 2000 at the Weyburn field in Canada. It all seems a bit too good to be true but I punted some more stock at 275. It's up to 277.

The fields have produces 146.6 million barrels of oil to date since the early 1900s from an estimed original oil in place of 466.6 million barrels. Why didn't Rancher use this technique? Maybe they wouldn't have gone bankrupt.

Linc has proved to be a very astute acquirer of assets so maybe I shouldn't be so sceptical. Also the skill set involved seems to be linked (!) to their underground coal gasification techniques so it's possible that other companies are going to miss these types of opportunities.

2.37 The Xjo has risen sharply in the last hour as the HSI rallies, we're up 27 points.

I've gone long Ozl at 164. This has come down towards the bottom of the range after a failed high. There's a reasonable stop just below the last swing low of 160 and the leg down has split into 5 waves. There's no evidence that the sell off is complete but since the stop is close and there has been some form of 5th wave, I'm comfortable with the risk.

3.22 If the market was to close now, the Asx 200 would have made a bullish engulfing candlestick. Apparently, it's a moderately reliable reversal pattern! The word "moderately" doesn't fill me with enthusiasm but there you go.

3.58 Boral is a stale old short position but I'm still there and starting to get some confirmation with a minor sell signal yesterday that's been backed up by a relatively weak performance today; down 2 in a firmer market. I bought back some short stock at 549 and replaced it with March 541 puts at 9.5 average. I'm hoping for a move back down towards 520.

4.12 The index finished 27 points higher and didn't quite manage to make a bullish engulfing signal.

I sold a handful of Lnc at 279 on the close to reduce the average of the extra stock I bought. I also sold out some Qan at 238, having bought Mar 225 calls at 13 yesterday. There's notionally a few cents of premium in these calls but I figure that I can replace some of the stock I'm already holding for parity so my downside risk is reduced.