Waiting for the dust to settle. Mon May 16

The blogger system was down on Friday so I didn't get the opportunity to post. The day was a choppy up day which didn't amount to much but the takeaway was that I held onto my few long positions which are sharply down this morning as the Aussie market continues to seriously underperform, helped by a loss of confidence in commodity plays. This despite a mixed lead overnight regarding commodities; gold was down but silver up, copper and zinc managed gains while aluminium, lead and nickel fell, WTI crude was up and Brent down. The US indices were down but the AUD also fell one cent which has been helpful in the past.

Anyway, we now have a picture on the XJO chart of 5 waves down retracing almost 2 thirds of the mid March to mid April rally.

I gambled with a couple of my stops and let them go too far. So, I'm out of ARU at 106.5 – couldn't have done much better there – but am still long RSG which is down 3 at 99 when I could have got out at, say, 104. That's quite a big miss in percentage terms so I'm disappointed with that one.

In the bigger picture, I tend to like trading reversals and you can see from the XJO chart above that the market has been unusually extended in both directions lately. It's probably why the last 6 weeks has been a tale of me trying to pick reversals and then having to stop out with reasonably good overall discipline and the odd winner meaning that I'm just above breakeven for the period.

My take is that the strategy is appropriate for a range trading market but that the recent moves have been unusual. If we were to enter a bull market, I'd be keener to buy breakouts and continuations.

1.55 The market has rallied moderately off the session lows but is down 1.2% at 4653. It seems like a buyers' strike rather than heavy selling. I sold out half of the RSG as the stock has rebounded to 100.5.

No new trades for now, the market is closer to to a buy than a sell but no end is in sight to the selling.

2.48 In my watchlist, 25 of 28 stocks are down with DJS, LNC and TLS the exceptions. The top 20 is much the same with 90% lower.

4.10 Got out of the last RSG at 100 and most of the SEK and WSA on Friday. Still have LNC which closed unchanged. The Asx 200 finished down 61 at 4650. Grim stuff and I'm counting the cost of some loose trading.