Demob happy. Thu Jun 30

It's been a tough June for me, my first significant losing month in what's been a pretty good year considering the state of the market. But I've finally come to terms with the pig's ear I've made of things lately and I'm looking forward to a fresh start tomorrow. The US indices rallied above the first recovery wave but haven't overlapped the last significant swing low so the situation is murky as to whether it's a wave 4 (a-b-c) rally or a more meaningful move.

The market has just opened with a 35 point rise.

10.44 It's arguably a better picture in Australia where there's plenty of overlap on the chart. However, it's more like a trend channel where this swing is pushing the upper limits of the channel. If there's to be a breakout, it's likely that there'll be a pullback to the middle of the channel and then another surge. For now, I expect up to drift off although the June 30 factor muddies the waters.

11.06 I got out of the RSG at 114 for a couple of cents my way. It was a momentum trade so I needed to get out quickly once the selling appeared.

11.43 Japanese and Korean markets are flat while the HSI is up 0.55% and easing having been open for a short while. The Asx 200 is therefore outperforming with a 30 point rise.

12.29 The HSI turned decisively northwards and has carried us up with it. The Asx 200 is now up 57 at 4587.

1.12 That's interesting, the rally in the Asx 200 has just broken the last swing high on the way down. It makes it very likely that the downtrend is over. Of course, there's short covering today and institutions are not going to sell much on the last day of a disappointing financial year, but despite that, it means that dips should be bought.

I've been a rabbit in the headlights over the last few days, seeing the potential but not able to act properly. FMG has kicked on today and I haven't managed to buy any stock there. I'm left with July 625 puts that are down to about 14 so I'm hoping for a second chance to buy in the next few days.

3.03 The index has just made another minor high above 4600 although this time its rejecting the level. It could be enough for the day. I'm stopping out of CGF though, it has been as high as 495 today and I'm buying a few at 490 versus an entry level of 482. I've made the odd jobbing profit around this position so it's pretty marginal.

4.10 Never a backward step as the long downtrend meant that there was nobody left to sell into the rally and the Asx 200 managed a 79 point gain to 4608.  I'm disappointed that today just made a bad month worse – and it was the only bad month – but happy enough to be starting afresh tomorrow. I think I'll take things easy though.

This is the last post for Trading diary of a late riser. It's been a useful tool for me but my heart hasn't been in it lately. I hope that readers have got something out of it. I'm going to continue to write about trading but with a focus on the psychological element. The new blog is called Trading as therapy.

On a promise. Wed Jun 29

Nearly there. It's the penultimate day of the financial year and it brings a strong overnight lead as Wall Street assumed the Greek vote would be yes although it's not due till about 7 pm our time. I think it could be buy the rumour sell the fact especially as the US moves were on light volume. Attention will soon be turning more squarely to the end of QE2 and the US budget position.

The sense I get is that the local players are not so easily satisfied as US investors and will probably sell off the early strength. Nevertheless, it's another day when the Asx 200 should hold above last week's low and there could be a tradeable c wave, at least.

10.45 Well, that's a bummer. RSG started to reverse late yesterday and in early trading. It just came out of suspense and jumped to 111 on good corporate news. Might be time to quit trading a stock that's a haven for insider trading scum. I stopped out at 111.

To be honest, charting is quite a good way to filter for odd moves and the late rally yesterday did raise some flags. I was thinking that someone must be trying to push the stock up for the financial year end and really, having smelled a rat, I could have got out quicker.

Otherwise, the market is up 41 but selling off slowly.

12.09 Once again, the HSI is underperforming the US lead while Shanghai is still having its pullback. The Aussie market just punched up to a healthy day's high of 4531, up 57.

I'm in a quandary because I'm anticipating a choppy rally before further falls, but who's to say that the market can't just keep going. I've got most of my short positions via options but they're not much protection for the first part of a move.

CBA is an example, it's just popped above last week's high of 5137. I was looking for a failure there. I'm long the July 5050 to 4900 put spread at a good level but I only managed to hedge two thirds of the puts. Here's the chart.

12.43 If you can't beat 'em, join 'em. I actually went long RSG at 112 after seeing the scale of the buying. It's always been a good potential story and if they can deliver the Syama promise of 410,000 oz at $730 an ounce then a quick guesstimate of $500 per ounce profit comes out at around $200 million. Not bad when the market cap is $530 million and they've got other mines too.

Fortescue is also looking quite bullish now. The stock has reversed after yesterday's breakdown. It now looks like longer term support from May 4th at 593 has held. If this is a pennant correction then there's good upside for the stock. It's still early days, but I'll look for an opportunity to reverse my position there.

3.08 Today is a different sort of session to what we've been having for the last couple of weeks. The market has sat stolidly in the range for most of the day and the recent day trading opportunities have been scarce.

4.12 A funny old day for me. With the end of year coming up, I'm loath to do too much but at the same time the downtrend and the impending completion of QE2 has me bearish. I stuck to holding on to a few shorts via puts and trying to job around intraday There wasn't much to gain from the jobbing because the market was range bound.

FMG finished at 620, the break of 620 was where I was looking to buy stock against my puts so I haven't done anything there yet.

Le Brady Bunch. Tue Jun 28

It was French banks to the rescue with a proposal for a Brady bond type workout which would enable a rollover of Greek debt held by private banks. Although the Greek austerity vote is not done with – it's tonight – it was enough for US markets to rally 1%. The estimate is for a 1 vote majority to gain passage for the austerity bill so it's a very tight call.

The Asx 200 is almost certain to hold support today after coming within a whisker of it yesterday and the question is whether to square right up as a Greek yes vote might lead to a serious short squeeze or to hold tight. Most of my shorts are held via puts so, pre-market, my inclination is to watch and wait. The Dow needs to rally 200 points to make a minor trend change and even then it would still look like an a-b-c retracement.

11.00 Up 34 or 0.8% at the end of the first hour. About right, I suppose. With so much uncertainty around and the year end coming up, we were unlikely to see strong buying. The banks are doing pretty well, mind you, as the US financials had a good rally and Basel reserve requirements are less onerous than feared. CBA is up above 5100 and my July 5050 puts are back down to the mid 60s. I'm hoping for a lower high on the daily. If I don't get it, I'll need to look to buy stock on dips and try to ride the rally.

11.25 On the smaller scale, the XJO needs to push above Friday's intraday high of 4521.5. The 60 minute chart shows that today's action is neither here nor there.

12.03 Gains are fading as Chinese markets are mixed. The HSI is up 0.4% and the Shanghai composite down about the same amount, albeit after a good rally over 5 or 6 sessions.

LYC is in the red now, down 2 at 193.5 after jumping up early with the broad market. The announcement regarding the environmental impact of the Malaysian processing plant is due at month's end and I don't want to be long or short going into that. I've just bought back a few at 194 and will buy the rest through the day. It looks well offered, there are plenty of 2011 tax year profits to take in this one.

12.50 The other day, I shorted RSG at 106.5. It has broken support today and it's a chance to slump.

1.31 The pullback is surprisingly persistent with the gain just 9 points. Here's the 10 minute XJO chart.

FMG has just broken 600 which has been a good support over the last 7 or 8 sessions. The stock is just hanging in there. I've got July 625 puts there so happy to see it crack lower.

I bought back more LYC at 192, just a few to go. I shorted more RSG at 102.5 and bought some of that stock back at 101, where it is now.

2.58 The market might have found the intraday low. The selling seemed overdone especially with the potential for further rallies overnight on a yes vote. Out of the last of the LYC at 192 and bought back some intraday shorts in CGF and CPU for a few cents my way which helped to compensate for overnight moves against my core positions. I also bought back another third of the extra RSG at 99.5, just in time as the stock has recovered to 103.

4.13 It was a topsy turvy afternoon but the eventual finish was at 4474, a rise of 12. A minor down day for me as financial strength in CBA and CGF did enough to outweigh minor weakness in FMG, LYC and RSG. Out of LYC now anyway.

Trying to hold the line. Mon Jun 27

More Euro concerns – Italy was in the picture also – were enough to limit the recovery rallies for the Europeans and to reverse the rally from the previous session lows in the US. The S&P 500 index held above the 200 day moving average but that looks like a temporary situation to me. The Greek parliament will vote on the austerity package on Tuesday night (our time) so that could be a circuit breaker but it's no sure thing to pass.

In the meantime, the Asx 200 is trying to hold the line above last week's 4452 low but it's a close run thing with the intraday low at 4456.5.

I'm working with the premise that the trend channel will stay intact which means I was short and I'm staying that way for a while longer. It's not one way traffic though. I got out of my TLS short soon after the open because the second round of analyst opinion on the NBN deal was less pessimistic. The sale price for the July 300 puts was 13.5.

CPU is continuing to fall and since it's not one of my normal stocks, I thought I'd have another go at developing a longer term strategy. I've sold July 875 puts at 23 which means I'm long the 900 to 875 put spread at 7. My plan is to sell more July 875, or maybe 850, puts once I feel as if the selling is easing. I'd be looking at a net credit for the ratio spread so the ultimate outcome is either getting put the stock at 875 less a discount of 25 for the 900 to 875 put spread and any extra credit from the second sale or the stock rallying above 900 which means that I pick up the credit on the ratio only or expiring somewhere in between with 875 the best outcome.

I've bought July 5050 puts in CBA also. The stock has slipped below Friday's low and I suspect that the retracement might be over. Ideally, I'd like to turn this into a ratio spread after a resumption of the downtrend. If the stock doesn't weaken then I'll have to scrabble out of the trade; maybe hedge with stock etc.

Otherwise, FMG and LYC are heading lower along with RSG.

1.11 The market is on its lows but just above the 4452 level. My positions are performing reasonably well but there is one that got away. I identified LNC as a short and got permission to trade but somehow missed the cue. It actually opened a touch higher before tipping over so it would have been a good day trade. Here's the chart.

2.10 I'm short CGF at 480 as they're slipping away after a 2 week retracement rally.

2.25 Asian markets are outperforming the overnight lead and that might have been enough to help the Asx 200 rally for an hour or two. The rot has set in again though and the market is testing the intraday lows, down 48 at 4460.

3.14 It looks like support will hold for the day; the action is contained within the tight intraday range established earlier and the opening calls in Europe are for a mildly lower open.

4.16 That's pretty much what happened, the index shed 46 to 4462. CPU kept falling and I'm in no hurry to sell the extra puts. I did hedge some of the CBA Jul 5050 puts by selling half the number of July 4900 puts at 49. That's 27 for the 150 spread. LYC drifted off and closed at 195.5, not before it traded below 195 which is a minor support. I'm hopeful that there'll be more weakness tomorrow as I have a core short position there.

Back from the brink. Fri Jun 24

The release of oil from US strategic reserves and a misunderstood communiqué from the EU were enough to jolt the US Dow Jones and the S&P 500 indices (almost) back to square after a near death experience early on in the night. Overnight futures are reflecting that recovery with further small rises. Meanwhile, European bourses were heavily lower.

I'm staying with the theme that the downtrend is intact and the US recovery is probably as much to do with the fact the QE2 is continuing to provide liquidity to the US market. Nevertheless, the Aussie market is up 8 after 43 minutes and the potential is there for a higher low. It's partly why I'm using more options than usual at the moment. After such a long downtrend, we're vulnerable to sudden short squeezes.

Telstra was sold off from the opening, hitting a low of 290. It was a big move for such a stodgy stock and some buying has pushed it back to 292. I'm offering half of my puts at 12 which would cover the cost since I bought them for 6. The opening trade was 11 in these July 300 puts but the stock bounce has left me out of the market. I'm hoping that the stock will slide away once the bargain hunters have got set.

10.55 The gold price followed oil lower last night and it now looks as if a lower high is in place after a choppy 5 wave retracement from the May 5th low.

I've shorted gold stock Resolute at 106.5. It bounced from a May 17 low to reach 117 but that now looks like a wave 4 retracement which just failed to break the significant wave 1 low at 119. If it can duck through Monday's low at 103.5 then it could be a fast move to around 95.

11.18 LYC is starting to tip after rallying for most of the week. I've added to my short at 204 this morning but this is what I've been doing all week, selling the early strength to buy back later while keeping a core position. This time I might be able to hold the extra stock overnight because a sale at 200 might be enough to trigger the resumption of the downtrend.

I'm generally wary though, I've been playing this game of selling early just about every day this week but the market is setting up for a potential rally this afternoon. There's been a dip into the negative but it's only a few points below yesterday's low so there's not huge conviction.

11.36 Sold out half of the TLS puts at 11. The traders have backed off after buying a lot of these at 10 soon after the open. I sold to what looked like a non-trader bid.

12.10 The HSI is up over 1% but that market is a beneficiary of a lower oil price and it hasn't carried through to a rally in Australia.

2.48 The index did manage to turn around and is 15 points higher. Not too much damage to my positions though. TLS is down at 288; I've got the second half of my puts on the offer at 16 so will need a few cents more to get set. CPU has actually slipped lower to 888 which is still up 4 on the day but below this morning's levels and FMG is also higher but no worse than the morning peak.

Actually, the rally is largely confined to the top 20; there is marked outperformance there.

3.25 The market is just coming off an intraday high but I'm sceptical for now because the intraday action is choppy with overlapping waves. Here's the XJO over 14 days (10 trading days) on a 60 minute chart.

4.12 All over for the week with a late sell down trimming the gains to 8 points. It's been a battling week for me but at least I've seen a return to profitability after a couple of tough weeks. LYC wouldn't give ground and I closed out the day's short for a fractional gain. The rest didn't do much.

Chinese markets are particularly strong today and European markets are set to bounce strongly at the open after closing last night before the US saw its late rally. I'm still short and concerned about getting caught in a squeeze. Here's the daily XJO chart.

Overcrowded? Thu Jun 23

Ben Bernanke's testimony was enough to put a shiver through the US market and the indices dropped late after looking on track to post another winning day. The local market has been quite resilient and also very whippy as it's option expiry day. After 75 minutes, the index is in the red to the tune of 11 points, having opened weaker, rallied and softened again. It's a mixed picture for me with shorts in FMG and LYC stubbornly holding on to a few cents of early gains but OSH well down and CPU looking promising as it failed to sustain an early bounce.

TLS has announced the NBN deal and I'm not on top of the details yet. However, the stock has reversed course after an early rise and is down at 299. I was regretting having bought June rather than July puts as I felt it wise to take what premium was left yesterday on the June 301 puts. Expiry day has bought some reasonably priced July puts and with the stock very close to a 298 sale, which would confirm a change in short term trend, I've bought July 300 puts at 6.

What I like about this trade is that the long position, driven by a great yield, is a very overcrowded trade so there could be a rush to the exits.

On a 60 minute scale, the index is holding above the breakout level from Tuesday. The bullish case is that the institutions will be looking to support the market as we approach the end of the financial year. The bearish case is that a lot of the fund managers that you see on the financial tv stations are in no hurry to buy. I'm tending to the bearish camp simply because we remain in a downtrend and I hope the index slides right through that support level this afternoon.

11.58 I didn't think it would happen before lunch but with the HSI opening weaker, the XJO took fright and sold down to 4504. It's at 4512 now, down 21, but the die is cast and I'm pretty comfortable with the short positions. Just as well, I will be out of the office until about 2.15 pm so I didn't want to be fretting too much.

I've almost closed out the OSH short, buying stock as the puts are intrinsic and will exercise automatically tonight. I've bought at 654, 652 and 647.

2.12 The last two hours has been a period of consolidation. I bought CPU July 900 puts at 30 before leaving as I'd like to hold that short position via options. I delayed selling the June 900 puts and was lucky enough to get them away at 16 as the stock fell as low as 881, back at 888 now. I include the CPU daily chart over a longer time frame than usual, you can see that there's a chance that this break could be the start of a longer selling wave because the consolidation was quite lengthy.

TLS is steady but did trade at 298 to confirm that sell signal while FMG has traded below yesterday's low to give a fresh entry. As with CPU, I've bought some July puts instead of letting the exercise of June puts leave me with a simple short stock position.

 

3.32 I've hedged up the last of the expiring June 625 puts in FMG with stock at 603 so just have the new July 625 puts at 32.5. The Asx 200 is back on the lows, down 29.

4.12 The index shed 32 points to finish at 4500.5. A reasonably good day for me with CPU and TLS finishing close to their lows. Short via July puts in CPU, FMG and TLS and still running a small short in LYC which edged up 2 to 204. I did pick up a few bucks shorting some extra LYC early on which I bought back later.

Here's the updated Telstra chart.

Winter solstice. Wed Jun 22

It's a good day for the Druids and the optimists with a further 1% plus lift in the market after half an hour following on from similar gains overnight. The Greek no confidence vote squeaked through with a yes after the US closed although the S&P futures are only a tick or two higher so it must have been built into their rally.

The balance of probability is a move back to the top of the trend channel rather than a trend change especially as the Greek parliament still has to vote on the nuts and bolts of the austerity bill which may turn out to be more of an issue than the no confidence vote. A push up to 4600 is only 37 points away and that would be enough for a new swing high and would change my approach back to buying dips. In the meantime, I'm shorting a couple of things on an intraday basis while holding on to minor shorts.

11.44 While the Japanese market has been strong on the Euro-Yen cross moving in favour of Japanese exporters, the HSI has opened with a relatively moderate gain of 0.7% and the Shanghai index is flat. It's helped to accelerate a pullback from the early high so that the Asx 200 has trimmed gains to 37 points.

12.45 So far, the strategy of selling the open to buy back has worked. I've had some joy in BHP, FMG and OSH to pay for much of the loss on the overnight short positions. There isn't too much downside for those positions now so I'm happy to hold overnight while the market is in the trend channel.

The elephant in the room is LYC. I suspected I should cut the last of my short on the close of trade yesterday at 195, which was breakeven for that portion, especially since I'd done pretty well with some intraday trading in that stock. I've let it go a couple of cents past my stop but unlike the rest of the market, it hasn't eased back significantly from the open. I'm tempted to use 211 as my stop, since it's now the most rational level having missed the chance last night.

2.30 Stalemate for the last hour or two as Chinese markets soften and the Aussie market holds the line. I'm out of my last TLS June 301 puts at 1.5, with expiry tomorrow I think I've had my chance with this one.

3.41 The early indicators are for a flat opening in Europe and along with a muted day on Chinese markets, the index has slipped further to 4535, a rise of 26.

I've had an expiry day punt in Computershare. I paid 6, a touch over the odds for the CPU June 900 puts. The stock has been downgraded to sell today (the only sell recommendation, admittedly) and it looks like one of those a-b-c corrections where the c wave is weak. They often fall sharply and I'm hoping that happens tomorrow.

4.16 The index closed at 4533, up 24. CPU closed at 900, the day's low...fingers crossed.

Normal programming? Tue Jun 21

It looks very much like the last couple of days with a slightly surprising bullish lead from Wall Street providing early support to the market only for that to fade. The action is a touch stronger, 50 minutes in and the market is up 39 points from an early 55 point high. In previous days, the bulk of the gains were gone by this time.

My book is exclusively short and I'm watching carefully. FMG is up 9 at 611, LYC up 5.5 at 190.5, OSH unchanged at 656 and ditto for TLS at 303.

The DJIA looks unconvincing to me; it reminds me of the action here about a week ago where the structure for a retracement rally was in place but there was no acceleration away from the turning point. With the Greek problems having eased temporarily, I'm not sure that there's too much more of a gain from that front.

11.25 Foster's Group has rejected a takeover approach from SABMiller at 450 on the grounds that the bid undervalues the company. The market agrees and has pushed the stock up 57 to 510. When the stock resumed trading at 11am it helped push the market back above 4500. Yesterday's high was at 4520.6 and the market might have a tilt at that level. I've had a browse through my watchlist but can't find anything to buy.

11.34 RBA Governor Stevens just spoke and reiterated the need for rate rises later on but with no immediate urgency. Nothing new there but no solace for the market either and enough to stall the rally.

12.33 There was a marginal new high on an intraday basis at around 11.30, since then the index has faltered and there's a minor sell signal now on the XJO 10 minute chart.

1.14 TLS is starting to look weak. I should probably have bought July puts but the June 301s might just bring some joy.

3.09 I spent the morning shorting a few things intraday to buy back on the seemingly inevitable sell off. Fortunately, I bought back the day trades because the market has finally shown some gumption and is back above 4500.

I sold another few OSH June 675 puts at 22 but still have have half the original balance. The stock has recovered from a post lunch low of 652 to be up 4 at 660.

3.22 About two weeks ago, I was listening to an executive from the new National Broadband Network on the radio. This is the superfast connection which Australia apparently can't live without and which will be the lifeblood rejuvenating TLS. The presenter asked about the rollout in Tasmania and the spokesman rabbitted on. Eventually the presenter asked how many customers they had signed up. It was 300 (or something very close). The presenter was polite but clearly incredulous; this was the $46 billion project which was more important than public transport bottlenecks in most of the major Australian cities. This was the project that warranted huge amounts of public money when there are plenty of private alternatives available to the Australian consumer...the pet project of the once and future (?) king, Kevin Rudd. It was pretty funny.

3.42 The point I'm making is not to kick Kevin Rudd (specifically..anyway, I'm the bigger fool, I voted for the man) but to point out that the NBN is unlikely to be the saviour for TLS.

Meanwhile the index just peaked at 4510, I think, which is 10 points shy of yesterday's high. It's sliding back now.

4.14 The market closed with a gain of 56 points. The 60 minute chart looks quite promising so maybe we'll have a further day of consolidation tomorrow. Still short though but mainly via options.

Weekly weakness. Mon Jun 20

Another bout of procrastination in Europe over Greek debt was enough to prompt a rally in European and US stock indices, albeit one which tended to weaken over the course of the day. The postponement of potential write downs on Greek debt also helped the Aussie market to rally about half a percent but that gain has nearly vanished now in a repeat of Friday's pattern.

In a stock specific sense, LYC rallied up to 196 early on a company press release that things are progressing smoothly with the building of the processing plant in Malaysia. That's good news but the crucial news concerns the approval – or not – of the plant by the Malaysian government and this is due by the end of the month. It reminds me that I need to be careful with this stock as a yes could force a decent rally. The stock is still up 4.5 at 188.5. I shorted more stock at 194 and bought it back at 189 and I still have most of the short from Friday.

Twenty years ago, I heard a story about an older client who simply wrote puts on his favoured stocks until he eventually became long a stock, after which time he'd write calls on that stock. Despite spending more than a decade as a market maker and understanding that this is simply a buy write and can be disastrous in bear markets, the strategy is still quite appealing and makes some sort of sense when you have money on the sidelines. Apparently, this client did very well over many years, and I assume it was because he didn't apply the strategy thoughtlessly and chose his stocks wisely.

Having dithered over my call selling when trying to get my longer term strategy started, I realise that it would be a lot less hassle to simply follow this example. With that in mind, I've been looking at weekly charts of some of the major stocks, which are the ones with liquid option markets. Unfortunately, the charts are just too weak to seriously look at initiating my plan. Some of the biggest falls occur in markets which have already been weak for some time and with QE2 coming to an end, there's every chance of liquidation in the US if the Fed doesn't immediately step up to the plate with more stimulus.

An example is RIO. At 7815, it's on a prospective PE of around 7 for the next 2 years, the consensus target price is $110 and it's close to the bottom of the trading range. The trouble is, it has just made a sell signal with the trade below 7850 last week and if the 7671 support doesn't hold, the next plausible level is August 2010's swing high at 7422. This may turn out to be a great buying level but the level of risk is too high.

11.49 The market is recovering, up 19, and looks potentially bullish on an intraday basis. Asian markets are generally firmer and I'm watching my short positions carefully, but so far there's no need to take action.

12.55 The index doesn't seem to be under any real pressure but the gains have faded and the rise is just 5 points. The 10 minute chart shows the story, a marginally lower peak relative to Friday then the disappointment (for the longs) kicks in. One of these days, there'll be a second pulse up and it could still happen today.

1.18 Underwater now, down 3.

I doubled up on the OSH Jun 675 puts earlier, at 12.5, and that's turning out well as light crude is under pressure in the Asian session. The stock has given up minor gains to be down 9 at 656 and the puts are pretty much intrinsic with expiry on Thursday.

I've also gone long June puts in FMG. The chart is weak now but the best entry level was at 625 last Wednesday. The stock has stalled at 617 for 2 days so I think there's a reasonable chance that the consolidation is over and another down leg is due. The reason for buying the puts is that it's basically a 625 stop plus a few cents of premium. Long them at 18 with the stock at 609.

2.32 Out of a third of the OSH puts at 20 since the stock has hit the recent low and could have a minor bounce. Also, the position was on the large side. I've had a salutary lesson this month in FMG through punting rather than trading via options and I need to stick to my disciplines.

3.37 The index is following the recent script, now down 23. FMG has dropped to 601 but OSH is holding support at 655. LYC is clinging onto gains, up 1.5 at 185.5.

3.52 Further to the point about the longer term charts being weak. BHP has now broken the August 2010 swing high which was at 4165. BHP is currently at 4135.

4.14 We closed at 4452. This is the low for the day and a loss of 33 points. Even the safe haven, TLS, eventually fell a cent. I bought back another 5k of LYC at 185.5. The report is complete but the judgement will not be made for 10 days.

Reprieve. Fri Jun 17

Some signs of a steadying US economy has given us a reprieve this morning and the index has bounced back 1% at 11.10 am.

For the time being we have a potential double bottom but I've been hunting around for retracement trades and can't find any standouts. Actually, IPL looks ok but it has gone a bit far from the opening low for me to chase it now. I still have some Jun 400 calls which I've written off but with expiry due next Thursday, I'm likely to run out of time.

I've also been pondering a long in TOL on the basis of a potential double bottom and with the last leg up having overlapped the previous swing low showing that selling momentum has faded. However, I feel that I should get with the program and sit on the sidelines until I can sell a rally. I'm doing too many marginal little retracement trades, I generally make a little out of them but I'm also then swimming against the current of the major trend.

11.42 Just had an expiry day punt in TLS, buying Jun 301 puts at 2.5 cents. The rally has a 5 wave look about it, everyone is long it and a recovery rally this morning has quickly faded to leave 2 secondary highs at 307.

12.10 Glad I resisted the temptation to punt the rally, the gain has slipped to 19 points with Asian markets generally ticking lower.

I've added another short in OSH, buying Jun 675 puts at 12.5. I traded the little reversal rally which stopped short of the 690ish resistance. I'm looking for a move to fresh lows in a sector which is under pressure.

1.55 The gains are drifting away. The index rallied off an intraday low of 4482, up 3, but that second bounce is fading now.

It's nice to be going with the tide of events for a change. I added a third short position in LYC...a bit late, because the latest sell signal was at 199 but I'm short a few at 195 with a stop at 201. It's also a sell on a weekly scale as the stock breaks the early May low of 197.

3.28 Actually, I'm not quite swimming with the current in TLS where the stock has been in an uptrend but the shorts in LYC and OSH are going well as the market has continued to drop, now down 9.

3.38 With that drop into the red, the Asx 200 has dipped below the March lows confirming a trend change in the bigger picture. The next swing lows are 4314 in late August, 2010, and 4182 in early July of last year.

4.12 Some late buying helped the index to close higher by 6 points as we await Greek developments over the weekend. It could go either way, which was why I bought puts today where possible in order to limit damage if there's a strong rebound. LYC kept falling, closing at 184. I bought a handful at 185.