In the too hard basket. Thu Mar 26

For a change the Australian market is not trying to pick the overnight move and is simply up 16 points (at 11.10am) with most stocks moving independently, eg of the 4 major banks, 2 are little changed, one is up, one is down.

I've had one mess to clean up which is ilu, it closed on its lows - which could have been a clue for me to get out last night - and gapped 5% lower soon after the open. I sold at 401 versus an entry price of 449. I took a long time to decide to buy this stock and examining the trade in retrospect I realise that the chart was very much like fgl, my other recent dud trade.

In both cases (fgl last week and ilu this week) the signal was negated quickly and only appears as the thin range at the top of the candle. Common to both charts is that they are in trading ranges making lower swing highs after peaking in the last few months, which means that bullish breaks must be very convincing to be worth taking and/or right at the bottom of the range.

I ran through the top 50 earlier and decided to take a trade in fmg at 237. There is no weekly break yet, I would have to see 250 for that, but there is an excellent set up on the 30 or 60 minute chart and the other time frames are quite supportive.

The daily chart shows a slow retracement to 218 after a February run that went from 165.5 to 334. If the daily can get to 244 it will be the first bullish pivot since then.

I've had to expand the weekly chart to get the scale legible but the 2 recent run ups have found higher lows - potentially, at least. The simple nature of the swings, one wave and similar size, is usually a sign that there's more to come. In elliot wave terms, it's possible that the first swing is a wave 1 and the second swing is a wave (1) of 3, ie part of a bigger bullish pattern.Until I get a good confirmation this is simply theorising and my stop will be around 223 based on the 60 minute chart.

Running through my existing positions: aoe is running well now, up 11 to 291; cfx is down 4 to 170 but this seems like a pullback to the trend line and I'm still bullish; cnm is unchanged at 19; ctx is down 21 to 987 after a very strong few days and still looks fine; gpt is up 1 to 36.5 and may still run up; lnc has ground up to 190 and looks ok technically but there is a lot of volume on the offer for a small stock; mgr has bounced back to 89 but needs to accelerate soon otherwise I'm out and I've sold a few more at 89.5; lastly tls which has been toying with a correction is holding well at 314.

3.09 Just got back from a late lunch with some old friends. The big change has been lnc which went ballistic between 2.35 and 2.40 pm going from 193 to 206. It's now 213 and is clearly through resistance. I'd like to buy some more but will only do so if there's an opportunity on a pullback. Given that there was stock on the offer at every price point from 189 upwards I had assumed I would easily be able to get set in the high 190's on a confirmed breakout. Otherwise, fmg has been as high as 247, confirming the break on a daily basis and it's now 243. Tls is back up at recent highs of 318 and the pre-emptive trades in the property trusts, gpt and mgr are looking pretty good at 39.5 and 92 respectively.

3.56 Had a run through the top 50 before the market closes for the day. No new signals although some marginal buys like rio continue to push ahead. The market is up 1.1% today but with the exception of ilu which I cut early on, most of my stocks have outperformed. I bought a few more lnc at 214 as the short term chart kept powering and they're now 221.

4.10 I decided to sell out of cfx, for the reasons I mentioned yesterday, at 170. I sold a few fmg at 247 as I'd bought more earlier at 239, averaging 238, and I just wanted to cover costs. I did the same with a few lnc at 217 on the match. Otherwise, mgr slipped back to 86 and I thought about cutting this but as gpt and gmg rallied today I thought it might just be noise. The market closed up 1% which is a pretty strong day although US overnight futures are firm and we could have gone even further.

One day ahead. Wed Mar 25

The Australian market is playing its usual game of guessing tonights action in the US. So instead of being down on a weak overnight lead, which we anticipated yesterday by selling off all day from the open, the xjo top 200 index is up 28 points. Most of my positions are doing well, in particular aoe, ctx and mgr. The only downer is ilu which has slipped 16 to 431. Not close to a cut but you do like to see momentum when you buy and a quick reversal is never pleasant.

I've run through the top 50 and the top 100. I found 2 potential longs and 1 short in the top 50 and an additional 3 and 1 in the rest. I've already got 9 positions which is too many so I plan to ease out of the trades in stocks outside the top 50 in the short term. There will be exceptions, with a few other stocks taking my fancy.

One of those is lnc which I've been waiting to buy for a week or so. It had a tight 3 wave correction and then a first go at the recent highs only to pull back yesterday. It looks like it will try to rally again today and as the 30 minute chart is breaking out from a higher low I'm buying a small amount here at 187. If the stock can push on to the high 190s it will be a daily and a weekly breakout so I feel justified in using this time frame. Here's the daily.

I've just sold out half of my position in cfx at 173 (entry at 167.5 yesterday); not because of a sell signal, although the intraday chart has paused, but more because I'm feeling uncomfortable with the number of positions I have (especially in stocks like cfx that I'm unfamiliar with) and also to take a little profit here and there.

3.00 The market has traded in a fairly tight range since around 11am. It pushed up a bit towards 2.30 and is slipping again now. I've only done a couple of things today, buying a few lnc at 187.5 average and selling some cfx. I was thinking about selling some mgr earlier as it spiked up and now I'm disappointed I didn't as the stock while still up on the day, retraced quite a bit. Otherwise aoe and ctx have been the standouts, like much of the energy sector.

3.28 Sold out of org for 1463 versus entry level of 1455 as it's all happening a bit slowly for me and I'm unconvinced about this trade. Sold a tiny amount of ctx at 1000 for luck and to cover costs. Tah has been on my watchlist to buy for over a week and is getting close. It may be a buy tomorrow. Newscorp, nws, was a buy yesterday. I hesitated and it's up again today. However, the 30 minute chart is making a bullish consolidation pattern. I could buy some with a good chance of the stock rallying on the open tomorrow. It would then be a question of assessing the scale of the move. I can't decide whether the intraday chart is showing a typical 4th wave consolidation before a fairly minor new high or whether there is a larger scale jump about to occur. Either way, I think a small position is justified. Here's the 30 minute chart.

The more I look at this, the more I think it's a reasonable short term trade but not the sort of thing I'm really looking to do. The weekly chart below shows that it was a simple reversal low with a break of the high of that engulfing bar being 1042. It's now 1133, so on further consideration I'll let this one pass.
4.00 I just ran through the top 50 to see if there was anything interesting shaping up into the end of the day. There are a few possibilities but nothing requiring action now. Of my existing positions, tls is the one of most immediate concern. I'm in this as a reversal trade on the weekly but the intraday chart has made a potential lower high while the daily chart has formed an inside day. I'm still bullish but I'm concerned that the stock could slip back towards 300 before resuming a rally. Here's the daily chart.

I'm thinking of stopping out at 310 if there's weakness tomorrow.

4.10 Sold a few mgr at 86.5 (entry 85.5) and tls at 313 (vs 310) as they've both disappointed slightly on the day. Ilu closed near its lows at 425 and gpt drifted a bit to close at 35.5. Otherwise the rest were reasonably firm. Lnc finished at my entry level of 187.5 and although the entry signal was from a 30 minute chart, I decided to stay long overnight as support in the short term is at 184.

A little bit left. Tue Mar 24

Following on from the massive overnight rally in the US which was largely pre-empted in our time zone yesterday, we are continuing to rally with the XJO index up 1.5% at noon, slipping back from a high of 2.7% early on. The large cap stocks have again led the way with the only weak spots being the former safe havens such as csl, coh, wow and also the golds. Speaking of gold, I'm glad I sold out of my lgl position yesterday although I'm still in ncm. Ncm has recovered from sharp falls earlier but as it overlapped what I thought would be support levels, I'm planning to sell it out once the rally loses steam.

My other underperformers are org and tls. At the moment the pullbacks in these two are minor and there are no signs of lower highs forming on the 30 minute charts as yet. So I don't see any reason to stop out of either but I can imagine them falling a bit further because it's shaping up as one of those days where the market might sell off slowly all day. On March 18 and 19 the spi gapped open and sold off all day. Given the much larger gap it's more than possible that it could happen again. Of my existing positions, ctx is the most satisfying as it's really starting to take off today and I'm pretty confident that it will get to the February high of 1050 quite soon.

I ran through the top 100 stocks this morning and found quite a few potential trades, too many in fact. I'm considering cutting back to looking only at the top 50 as a way to ration the positions I put on, although I've often got a few favourites which I'll make exceptions for. The most interesting theme was property. As the latest US initiative encourages traders to speculate that credit might ease, the Australian property sector, which was overgeared and heavily sold ahead of expected equity issues, is looking quite interesting.

I've put on 3 positions in the sector this morning. One is a straightforward buy signal while the others are more questionable but the upside potential makes them worthwhile for me. The first is in cfx, a retail property trust.

The daily shows the stock breaking out this morning, and I bought some at 166.5 and more at 168.5 to average 167.5.

The other two positions are in gpt and mgr, 2 former powerhouses of the sector that overextended themselves in the boom. The charts are almost identical (as is gmg, another one in the sector) so I'll just show Mirvac Group, mgr.

I'm working on the assumption that the tightening consolidation between late October and mid January was a 4th wave correction which then failed as the stock fell to a 5th wave low a couple of bars ago. If that's the case and the stock is now correcting with a reversal low at 60 you might expect a rally to around 120, near the middle of the 4th wave consolidation. A confirmation would be if the stock pushed through 99.

The daily chart shows a nice run up from the lows with a roughly 61.8% fibonacci retracement and then strength today. It's a bullish continuation pattern setting up so I've taken it, for a few days at least, hoping that it can convert into a weekly position. I bought mgr at 85.5 and it's trading slightly above that at 86. I chased gpt early and paid too much, 39.5, as it's now 38. As I wrote earlier, its chart is very similar to that of mgr. The recent difference is that yesterday formed a white candlestick and I was desperate to buy towards the end of the day. I decided that if I was going to pre-empt a weekly move I should at least have some daily confirmation so I thought I'd wait till I saw a break above yesterday's high. The stock gapped open and I fell into the traders' trap of worrying about missing out. Don't! There's always another trade.

1pm Just sold ncm at 3312, which was still a profit having bought on the 19th at 3255 and sold some the following day at 3396. I suspect that this could be a stock I'll be shorting next week along with lgl. I also sold out of my penny dreadful, fms, at 6.7 versus an entry price of 6.3. No problems with the chart but it's a small position and I don't want to become overwhelmed with too many trades.
Having said that.....I then put on a position in another one, Carnegie Corporation, cnm. I saw the breakout at 18 last week but it was on news and sold off quickly from a brief high of 20. Presumably, a fair number of holders were waiting to sell into the news but a couple more days have passed and the stock is still looking firm so I jumped in at 19.


My excuse is that they're involved in wave power and I'm a fan of alternative energy technologies. The chart set up is quite promising. The dramatic change of scale between the first rally in December and the rally from February on, implies that the move from 12 to 21 was the first part of a larger scale move that should see 30+ faily soon. My only concern is if the correction has further to go.

2.58 Since my first post around noon today, the spi continued to slip away but only slowly and it's very stable now at 3602, hinting at a rally. Org and tls have been weak as feared and even made lower highs but as they don't seem close to complete I've stayed long and they're recovering somewhat.
I'm about to run through my stocks again. Of the positions I could have taken but didn't, I like Aristocrat, all, and Iluka, ilu. Iluka actually made a signal yesterday which I failed to spot and has continued today but with a pullback which may give me an entry.

3.47 After prevaricating all day I've bought some ilu at 449 as unlike a couple of my other trades today it has actually made the set up I'm looking for. Here's the weekly chart.

The daily chart shows the breakout through 440 yesterday. Iluka hit 456 earlier today so I'm not unhappy with getting in on a pullback at 449.

As ilu is the only one out of the possibles that has a clear signal I've left it at that.

4.10 The spi didn't manage to rally much at 3pm and kept slipping to 3582. After 4, and now after the match, it's rallying. Not in time to save me from some slightly negative markings. I put on 5 new positions today and 4 of them have closed a little against me. From the start of the day, I stopped out of ncm and sold out of fms. Tls is down 1, org down 12, aoe up 5 and ctx up 19.

Ring the bell for Telstra? Mon Mar 23

Two hours into the trading day the Aussie market is up 1.3% in a broad based rally. Even the weaker stocks are not showing signs of heading back towards their lows, they're mostly just pulling back after vertical rallies. Of the top 100, the only ones I could find that might give me a sell signal soon were ipl and mts.
On the positive side, there are quite a few stocks continuing to run or resuming after consolidation. I've added to my longs with a position in tls. I've taken a simple reversal signal with a break of last week's highs after a heavy 4 week slide. It's not a set up I'd always take - I generally like to see a higher low - but the market is bullish and similar recent set ups in mqg and nab have led to very sharp rallies. Here's the weekly chart.


The daily chart is supportive with a similar and stronger sort of bullish reversal. A black candlestick to new lows followed by a strong bounce back on Friday and a further rally breaking Friday's highs today. Going through my existing positions:

aoe - up 10 to 258 after pulling back on Thursday and Friday.

bsl - I'm sceptical really but after opening sharply lower this morning, bsl has fought back to be close to even. I see less upside for this than for my other stocks so I'm probably a bit closer to cutting this.

ctx - after chopping around at the end of last week this is now starting to look very good again.

fms - my speccy resource punt is a bit firmer and is charting well.

lgl - this has rallied well off a weak opening and has pushed up to 3 week highs but is starting to look temporarily complete on an intraday scale. I'm keeping a trailing stop fairly close.

ncm - slightly down on the day, looks like it should push above Friday's high in the next day or so.

Link energy, lnc, has consolidated after a sharp reversal and although it hasn't had a clean swing down on the weekly chart it has had a very tight consolidation and having fallen from 537 in late September to just under 100 a few weeks ago there is a fair bit of room to move.

The daily charts shows a bullish correction where the second leg down which completed on Friday did not go below the first leg down the week before.

After gapping up this morning on good news about the potential sale of some coal mining interests the stock has ranged tightly around 190. I'd buy some on signs of strength.

1.34 Stopped out of bsl at 247 as shorter term charts imply the stock might fall a bit from here and I'm a bit concerned that on the weekly scale there could be new lows to come soon. Entry was at 244.5 so a slight profit including the sale of some on Friday at 256.

3.11 Stopped out of lgl at 340 as it looks ready for consolidation. This was also a position where I was chasing a break and had some concerns about the potential for a lower high. Entry was 326. I've just bought some org at 1456 as the stock starts to resume a rally after a two week consolidation. The weekly chart had a slight swing down providing a buy level but it's easier to see on the daily chart.

I'm a little unsure of where I think the stock can rally to, but I suspect that the previous consolidation level around 1550 to 1600 would be a reasonable guess.

4.10 A very strong day with the index up well over 2% as the market focussed on overnight optimism in the US reflected in their futures. The top 20 was particularly strong with tls being a beneficiary, finishing up 4% at 315. Ncm was down on the day as gold stocks paused. I sold out of lgl and bsl and switched into org and tls. Neither of the stocks I sold needed to be cut but they were both consolidating, I had some misgivings about both, and I felt more confident moving into stocks which appeared to be in breakout mode.

Juggling. Fri Mar 20

Having bid up financials madly over the last week or so investors' focus has now moved to inflationary hedges as gold, oil and base metals rally and the US dollar continues to fall. So far today, at 11.15am, the result has been a stalemate with the market down a few points as materials rally and financials fall.

My positions are going reasonably well with the 2 gold stocks firm as well as bsl and ctx. Aoe, an energy stock, is surprisingly weak while fgl is flirting with 517, the low it reached earlier in the week. My stop is at 510 as I think that primarily it's range trading but I'm not too excited about the trade's prospects.

Unless fgl and aoe weaken sharply today, I won't be stopping out of anything. The next question is whether I should take any profits in the other positions but at this stage none of them are showing signs of topping out on an intraday level, such as confirming or suggesting lower highs. If they were to, I'd consider selling a portion out. The other cases where I could sell out of part of a trade might be if there was a wild move in my direction or if the stock hit a target.

I was thinking that 3400 would be a conservative target for ncm and it's trading at 3407 having been as high as 3434 but the daily chart, below, implies higher levels.

I've been running through the stocks in the top 100 index and can't see an opportunity to go short. Bhp, if it were to turn around next week, could suggest a lower high but that seems unlikely given the inflation hedge idea gaining ground.

There are two stocks that have cropped up over the last couple of days as potential buys. The first is Tabcorp, tah. The chart shows a stock that has lost all momentum on the downside. It made a marginal new low (by 1 cent) of 605 in late Feb and is shaping up to pivot through last week's high of 644. It's clearly in a trading range so not super exciting, but the top of the range is near 700 and it might make a straightforward low risk trade.

The daily chart shows that while tah is in a tight range there is a series of higher lows and a fairly flat top. There have been quite a few strong white candlesticks lately followed by mildly drifting pullbacks. For a stock that has low volatility there could be a sharp little move up.

Orica, ori, has also piqued my interest. It pivoted through 1354 last week and confirmed a higher low earlier this week when it ran up through 1430 to 1472.

I'm not keen to chase the market where I've missed the entry point but a look at the daily shows that ori is behaving bullishly with sharp moves up and slow corrections. I'm hoping that the current pullback might take the stock down towards 1300 giving me the opportunity to buy on a bullish daily set up. It might show up on the weekly anyway if it's slow enough.

12.28 Decided to stop out of fgl at 516 rather than use a wider stop at 510. Another look at the weekly makes me think that if fgl falls through 510 it might fall quite sharply so I'd rather just get out now. I've also sold out of a small amount of ncm at 3396 and bsl at 256. Ncm because it was stalling at 3400 and bsl because I'm not completely convinced it's hit a short term low so I want to sell small amounts into the rally.

3.28 I've been having a trawl through the penny dreadfuls and there are a few promising charts. I try to filter for volume so as to avoid wasting time and also to find stocks that others are using as trading vehicles. This is Flinders Mines, fms, a small iron explorer. After a big run in January there seems to have been a shallow correction with a resumption of strength this week as the stock broke through 6 cents.

I like fms, which I've bought at 6.3, because the daily has made a second recent buy signal after initially pulling back below the 6 cents level.


4.07 Approaching the end of day matchout my positions in aoe, bsl, and ctx have drifted off a little through the afternoon as the index sits towards the low of a day with a narrow trading range. It looks like lgl and ncm, the best movers on the day, will finish reasonably strongly. I'm off to yoga so that it's for the week.