After hanging on for a few days, wondering whether the market would pull out of its nosedive, there's some welcome relief as the index has rallied a considered 34 points after 37 minutes. The US rose a similar amount after a late sell off reduced the previous gains of around 1%. There's arguably more reason to buy the Australian market with the rate situation having eased and on recent form even a continuation of the trend channel would imply further gains of 60 to 90 points.
IPL has had a nice bounce today as fertiliser stocks respond to rising food prices. I bought a few stock yesterday most of which I sold out on the open at 383. My Jun 400 calls are alive again too with 8 trading days to go after today(holiday on Monday).
I have a new long position in OSH. Like most stocks, it has been grinding down, but it is above the March lows and the last 5 or 6 days have seen a marked reluctance to sell it down further. Long at 670, I had to chase it and I'm hoping for a pullback to buy a couple more.
The conundrum today is where to write calls against a position as part of my longer term buy write book. So far, WBC has been going well, got long on Tuesday at 2138 with the intention of writing calls on a rally. The conservative target is just below the recent swing high at 2228. The stock is at 2198 so it's pretty close.
My solution is to just keep a tight watch. I think I can give it room because the odds are good that the overall market will firm in the short term. The 60 minute chart is showing an acceleration away from the base around 2120 and I'm hoping that a reasonable level for selling calls against the position might turn out to be 2280, the next swing high.
11.33 The market is quite edgy and just accelerated down on a modest opening in the HSI. The rise was pared to 14 points. I expect the index to hold gains today but the public holiday on Monday may mean that serious buying is shelved until we return.
12.52 The Asx 200 is hovering around the same levels as Asian markets throw a bucket of cold water on our early optimism. The Kospi is down on a rate rise and Chinese markets on fears of an imminent rate rise. It should be largely irrelevant to us if we assume that the Chinese authorities are successfully slowing down their economy without crunching it. The key driver is generally interest rates as shown by US equity market performance relative to ours over the last year despite the better economy and better value on offer here.
1.05 Chinese trade figures are out but don't seem to be market moving, the issue is commentary about overheated property prices.
1.48 The 30 minute XJO chart looks promising with the market having held above the last couple of swings and started to recover. No acceleration though.
2.35 Fortescue is lagging behind AGO, which has a pretty similar chart. They're both top picks in the iron ore sector but the issue with FMG is that one of the early investors is said to be offering an 8% stake in the company.
Meanwhile, the gains are nearly all gone with the index up just 5 points.
2.47 It's typical of a bearish market that any negative news is seized upon so we're reacting to drops in Hong Kong and ignoring good news from Europe and the US. With respect to a down trend that has been in place for just about 2 months, I think the bears may have got it wrong today. I'm seeing more and more commentary on TV and the news wires about the change in tone from the RBA. Given that rates are a major factor in market performance and valuation is undemanding, the risks are in being short (or underweight). On top of which, we have an inflection point today with the break of yesterday's high. So unless the index falls back below 4520, short term direction should be higher.
.4.14 Looking forward to the weekend, it's been a slow, old week. The index held on and closed up 12 to 4562.
No comments:
Post a Comment