Holiday mode. Wed Apr 27

The Aussie market is having a sleepy start to a shortened week. It's a safe assumption that many participants are away and despite quite strong gains overseas, when the missed days are netted out, the rise is just 7 points after 45 minutes.
The best mover for me is Lynas which has fallen 16 to 229 after some bad news over the break. According to the Dow Jones news wire, its Malaysia based processing plant is facing an environmental review next month. Lyc has first mover advantage so delays in the commisioning process will be a big negative. Secondly, there is a bit of a stink about a related party transaction which has also put investors offside. I suspect that if more players were on deck, the falls would be larger. The situation won't be resolved until next month and that's plenty of time for uncertainty to do its worst.

I've been watching Arafura with the intention of shorting it and although Lynas' misfortune could be construed as Aru's gain, the action is not positive. It's down 5 at 122 and I've shorted a small amount at 122.5 although I might have done better since I'd identified it as a short pre-market and the stock opened unchanged at 127. In mitigation, the opening market moves were strong. Anyway, here's the Aru daily.

11.19 The Asx 200 is just hovering above breakeven but with quarterly CPI figures due at 11.30 am there may be some impetus soon. I heard an estimate for 0.7% compared with two recent 0.4% rises as the flood effect is anticipated to kick in.

11.48 The CPI figures came in higher than expected and the market has dipped into the red by 6 points.
Early reaction is that I've read that a hawkish economist is calling for rate rises while the dovish RBA is pointing to the effect of the Queensland floods. Gee, a resources rent tax would make sense! Shame that the Rudd government lost the PR battle so badly.

12.15 The loss has extended to 23 points. I've been having a look at the top 100 to see if there's a pattern. It's generally a switch to defensives although that's a debatable strategy given a 2 speed economy. In the short term, the logic could be that downgrades due to the recent AUD strength are yet to find their way into analyst estimates.
One takeaway that is working in my favour is some weakness in Boral. Continued US housing weakness and the prospect of more of the same in Australia has seen the stock slip 11 to 501.

2.22 Back in the saddle after running some errands to find that the index is making new lows, down 32 points.

I sold some of my Resolute long at 126.5 before leaving the office, on the basis that momentum is fading and it could test the lows again even if the trade idea is ultimately correct. The stock is a shade lower now at 125. Stop for the rest is at 118. Entry level was 122 but even if I stop out for the balance, the trade will be about breakeven overall.

There's some selling across the board in the gold stocks and 13 out of 19 stocks in the Asx 300 gold index are down 2.9% or worse. One of those is Perseus which is back at 303, roughly my entry level. The stop is at 295 there.

3.01 Just bouncing now, down 33 but 9 points off the lows.

Bought some Linc at 284 so I'm glad I managed to hold myself back from buying too many at 292 last Thursday. This is more like the level I was looking for.

4.13 The index drifted down to new lows before closing just off the worst at 4873, down 41. An ok day for me with shorts in Bld and Lyc doing well.

I think the market might have over reacted to the headline CPI.