Hotting up. Wed Mar 2

The US indices look very much like they're going to make a lower high and even if the second leg is about the same size as the first, there's still a couple of percent to go. Here's the S&P 500 chart.

It means that the Aussie market's attempt to recover has been derailed for a while and the action yesterday looks intelligent and insightful rather than cravenly negative. Here's the Xjo chart. The test over the next few days is going to be the most recent swing low just under 4720. I tend to think that the recent pattern of higher lows will continue.

This is an early, pre-market post, and the first decisions I have to make surround my attempts to buy weak stocks - Ozl and Qan. I expect I'll stop out fairly quickly. Airline stocks were predictably weak in the US and copper stocks were weaker although copper itself was flat.
Oil and gold were firm on the ratcheting up of civil unrest in the Middle East but the oil stocks were a touch lower while gold stocks did well. That gives me encouragement for my longs in Regis and St Barbara.
Aax and Ipl are charting well (Potash dropped 1.2% though) and may hold up while Linc is anybody's guess.
I've got a bunch of potential short positions, here are a few of the possibilities.
Awc - has been falling for a while but there's more room to retrace after the big December rally and the minor retracement would provide a good stop if there's further weakness.

Challenger - potential lower high with stop in the low 520s. Goes ex dividend later this week which may provide support so I'll go carefully at this.

Western Areas - as with Cgf, looking for a lower high to have been made with a stop around 710.

The market often takes these opportunities away with a big gap at the open but out of my list of 5 or 6, I might put on 1 or 2 fresh short positions.

10.31 Down 40 points with no bounce yet. I don't usually like to sell into the early drop but decided not to mess about and got out of Ozl at 160 and 159.5 because it wasn't down too much. I haven't hedged the Qan calls, probably not worth it, but did sell a little stock I had left over at 229. Reasonably good passenger numbers have just come out, the stock has hedged 96% of its fuel needs for 2011 and there doesn't seem to be much follow through selling so it could surprise later.

10.40 I was disappointed to miss out on the gold run before when my holdings didn't really respond to the rise. Newcrest is the largest gold play and it had a surprisingly steep retracement. I've punted some March 3850 calls at 76. The stock has just pushed through yesterday's high and I'm hoping for a quick recovery.

This time Regis and St Barbara are responding to the gold price gain with 3% moves.
I shorted a few Awc at 238 and Wsa at 680. I'll wait to see if the market can rally before doing more. I thought Oil Search could bounce and bought back some of the short at 690 only to promptly reinstate the selling as the stock is not finding support.

11.36 The market isn't recovering yet. GDP figures were in line.
Regis has been a strong performer and is starting to shape up as I'd hoped. Bought a few extra at 209, they've kicked higher again to 216.

By contrast, Ipl has struggled and is off 12 at 436 but it's a hold here.
Paladin is another new short this morning, as it has a similar look to Awc. Near the bottom of the recent range but with a correction high to act as a stop. I'm looking for a quick move to a new low although I don't expect it to get hit very hard; it's an energy play after all. Short at 492.

12.55 The market has recovered to 30 down which is surprising given that the HSI is about to open about 1.2% lower.

Aax has bucked the trend, up 7 at 347. I flicked out a couple at 344. Ncm has risen and the calls are trading in the 90s. Boral is also a good result. There's a sell signal as it fell through 545 and the March 541 puts have picked up.

3.12 The market has been stable at current levels since the open and it's down 34 at present. Yesterday was a big underperformance so today it looks like the Xjo is compensating.

Aax has kept running and I sold a couple more at 352.

Meanwhile, Challenger has recovered from earlier lows to be down 6 at 496. I just shorted a couple at 495 and will wait to see if there's more strength into the close before going again. Here's the updated daily chart.

4.19 The index poked its nose cheekily above 4800 to close at 4803. That was a drop of 23 points but it looks like a textbook retracement before another leg down when I look at the Xjo 30 minute chart.

Sbm had a strong afternoon and closed up 5.4% at 213. I'm hoping it's acceleration following the reverse head and shoulders.