Pushing the envelope. Fri Feb 4

The Xjo index has pushed through recent highs in the first 40 minutes of trading as attention is focussed by the upcoming results season where estimates are that resource stock profits could increase by 43% overall. Forecasts may soon be upgraded too because although China is slowing, the old world economies are providing more evidence by the day that they are pulling out of recession. US jobs numbers are out tonight and that could have been a reason to sell off today after a surprise rally yesterday and with US indices once again bumping into the top of the trend channel.
Here's the Xjo chart; it's up 25 at 4845 at 10.41 am.

The gold price had a surprisingly good night, rising USD 21, and the gold chart would suggest it has completed the sell off in the short term. There's plenty of room for a retracement rally anyway.

Interestingly, Denis Gartman was mentioned in FnArena. They say that he has been buying gold but worrying that it hadn't been reacting to the usual catalysts. Last night's turnaround may have provided him with some comfort. They also quote bullish Barclays technical analysts who like the chances of another run up to 1400 and think that bullish sentiment had hit extreme lows.

Although Resolute is one of the gold sector underperformers on the day, I've bought at 134.5 as there's the potential for a higher low and a breakout if it trades above 136. The stop is close too.

I've also bought gold stock St Barbara at 190.5. This is one that my assistant covers but I couldn't resist the buy because it has had a textbook sell off and is breaking out of a tight turnaround. I've chased the break but can use 180 as a stop which is under the low for the week following the final sell off last Friday which was quickly rejected. The textbook element is the elliot wave style 5 wave sell off from the November highs. The last leg subdivided into 5 too as it fell from a 4th wave correction high of 205 to a low of 174 last Friday.

With a strong chance of the US selling off tonight - even on good news - and our market exhausting itself in the short term, I'm compensating for these buys by easing out of a few of my other longs. So, sold more Aru at 138, some Bsl at 220 and some Wsa at 660.

12.44 The market overall, and the gold sector in particular, has kept running. It reached a peak of 4870 before slipping a little to stand at 4864 which is up 44.

I'm juggling my positions, trying to get out of the last few Aru and Wsa. I also sold some Ost on a brief rally to 277. This is one where my entry was poor and I'm happy to get some out for a tick under square.

My dollar exposure is about the same after buying Karoon at 756. This is making a minor buy signal as it trades above 760. It's fairly illiquid and at the bottom of the trading range, so it can move a quick dollar. The stop is about 30 cents lower.

2.17 I had to chase the price down in Aru to 135 and Wsa to 655 to sell out the last of each long position. In both cases, there was a moderate bounce and I made a few dollars but the likelihood is that the rally is not going to be clean and simple. Here's the updated Wsa daily chart.

Both the new gold positions are doing well, as is Karoon, which has risen to 775.

3.11 Sold a couple of Karoon at 780. The market is drifting, now up 39.

4.36 The index rose 42 points. Qbe was the standout as it came out of a trading suspension and announced an earnings accretive acquisition when the market was expecting a capital raising. Despite an earnings downgrade the stock rose 7.4%.  Karoon and Sbm were the standouts for me and they finished at 777 and 196 respectively. I also reinstated a small part of a short position in All on a bounce to 299. Aristocrat may find some resistance at 300, otherwise I'll wait for higher prices.