Mood swing. Tue Dec 15

A reasonable overnight lead yet again and finally the local market is moving out of the doldrums. The market is still in a trading range but it's another higher low towards the bottom of the range and after a sequence of weak performances it seems like the only way to go is up - in the short term. I was stopped out of my Sgp short at 399 (v 388) and I'm disappointed I took the trade as it was marginal. Also in the property sector, I re-entered my long position in Mgr at 149 as it finally starts to take off. A lack of patience has cost me a few cents here but now that it's showing signs of life I'm hopeful of a move towards 160.

As anticipated last night, I got confirmation of buy signals in Aoe, Bsl and Lgl and have taken them all on simple reversals.

Here's Aoe, long at 396.Bsl, long at 286........and Lgl, long at 329. Actually, this is more of a tight 1-2-3 buy signal after a double bottom while in Bsl, I'm pre-empting a breakout after an a-b-c pullback following a wave 1.

11.26 The market is holding the gains, up 26 points. I'm about to head off for a few hours and there's one more stock that's setting up for a buy, Goodman Fielder. It just has, in fact, with sales at 156.5. I've bought a half position and I'll see if I can buy the rest when I get back.

3.49 Before I left I closed out my short in Cgf at 408 (v 399). The breakdown seemed to fail quickly so I thought it best to use a tight stop. I completed buying Gff at 154 on a pullback to average 155.25. On the plus side, my longs are all performing well with Cey up 13, Ost up 10 and Mgr at 151.5 while the shorts are flat to down.

4.14 The final figure is up 19. I sold out a few Cey at 353 (v 336) on the close and bought back half of the Ozl at 116 (v 118) as it was a new low after a retracement against me.

Spluttering to the line. Mon Dec 14

Another mildly positive night on European and US markets had left the road clear for us to undo some of our recent underperformance but the Xjo is lacking the firepower to rally at the moment. We're down 6 points at 11.21 am with the mixed signals continuing.
I closed out the last of my short position in Awc at 165.5 (v 165.25) as it spiked on the open. I've been hanging on for a minor new low and had actually been wondering whether I should close out since the risk/reward (I was only looking for a few more cents on the downside) was no longer in my favour and momentum had stalled. Although I could have done better here, I can learn from this one. I was looking for a 5th wave low but after a certain amount of time it's probably reasonable to assume that I'm either not going to see one or that the risk/reward equation is no longer in my favour.

11.33 Out of the last few of my Gff short at 154.5 (v 159.5). The rally a couple of weeks ago looks to me like the start of a bigger move, even if it's just a second similar rally. The short position was fairly opportunist, looking for a pullback to the starting point which is why I didn't put on a full position because I would have had to chase it down to get set. I'm happy to wait and see now and I'm hoping for a bullish set up.

12.10 Closed out the last of the short in Fxj at 164 (v 160). A little unlucky here, just missed buying it on the back foot at 160 and 161 this morning. Fairfax is an optional sort of buy here having made a higher low and pushed through Friday's high after grinding down for 6 days. I'm not enthusiastic though because my stop would be at 155 initially and it's in a trading range so I'm not convinced there's a lot of upside in the short term.

12.26 I closed out a long position in Mirvac Group at 146 (v 144.5) because I've been in it for 5 days, expecting an acceleration but instead it has chopped upwards a few cents. I felt uneasy about it because it looks more like a retracement so I figured that I'd given it enough time and would get out. Here's the chart.

12.51 The steels stocks are favoured by most analysts and are trading well below - about 30% - the average of analyst targets according to FNArena. I'm long a part position at 303 in Onesteel and I'm on the bid for the rest.

2.00 I closed out the last of the Tse short at 387 (v 399) as it continues to hold above 380. Ost is complete at 303. I've gone short Stockland Group at 388 on a bearish continuation, with the stock breaking Friday's low of 388 after a short retracement.

3.54 The market has had an afternoon recovery, rallying from a loss of 26 points to be up 8 now. The other steel stock, Bsl, is almost a buy now. My problem position is Fortescue. I realised that I'd chased this down too far when I shorted it so having acted in haste, I'm now repenting at leisure with the rational place for the stop at 444.

4.11 We finished on the highs with an index gain of 19 points. Another wishy washy day for me with a few going my way and a few against me. I might get buy signals in Aoe, Bsl and Lgl tomorrow.

Flotsam and jetsam. Fri Dec 11

US and European markets were firm last night on minimal pre Christmas volume. At 11.45 am, stocks are bobbing around as the market flows back up 27 points after ebbing lower yesterday. The Xjo chart has been characterised by reversals lately and there's the possibility of a swing up over the next few days as the selling has lost momentum. A break of yesterday's high would be interesting. Despite the rally back in US markets over the last couple of days, I think that they'll probably make a lower high and sell off again so I'm not completely sold on the idea that we're due a broad rally. I've bought Aristocrat Leisure at 386 this morning on a reversal pattern. It's been a slow grind down on the back of US earnings disappointment and subsequent downgrades along with continuing strength in the AUD. Despite the downgrades, it's now well below most analyst valuations and with more optimism lately about the US economy and a USD rebound some of the headwinds could be about to ease.

There's a fairly clear 5 wave pattern on the daily chart so it's a question of whether the 5th wave is complete and the stock is ready for a retracement. There was one false dawn about 2 weeks back. I've bought most of my position at an average price of 386.

Other than that, I've bought a few Gff at 156 (v 159.5) and a couple more Tse at 387 (v 399).

1.57 I've bought back two thirds of my short in Fxj at 159 (v 160) as it's in a trading range still and I don't think there's a lot of momentum for further falls. Given the trading range, the better trade would have been the reversal 6 bars back with an entry around 167.

3.18 Short Cgf now at 401. It made a double top recently and is forming a sell signal with the clear break point at 400.

4.05 Leading into the match the market looks like closing on its highs. My new short position in Cgf traded down to 399 confirming the break but has blipped back up with the market firming. I bought a few more Gff at 154.5 (v 159.5) and Tse at 384 (v 399). Aio is close to a cut but I want to wait till Monday with this.

Push me - pull you. Thu Dec 10

The European indices were pulled down again on more credit concerns, this time about Spain's sovereign debt. Meanwhile the US markets pushed up after the European close on renewed optimism about an upswing in their domestic economy. It's only half an hour into trading and we haven't made up our mind which way we're going with the market having been up and down in a tight range and down 4 points at present.

On a technical level the Spi and the Xjo made a minor new high compared to yesterday, further closing the gap to the break below Monday and Tuesday's low. It suggests to me that after our relatively good performance yesterday we might drift off today.

11.40 Unemployment at a better than expected 5.7% has given the market a little lift and we're up 10. The AUD has also spiked three quarters of a cent. I've bought back my Djs short at 541 (v 561.5) and the second short in Awc at 155 (v 157.5). Asciano is close to a cut and Lgl is not far from a reversal buy.

2.58 I've spent a fair while out of the office today but I'm pleased to see that the market has eased back and is now down 24 points. A couple of hours ago I went long Centennial Coal on a reversal at 336. It's not the clearest chart around having just fallen from a lower high, but equally, it's a higher low and a reasonable rebound can take it to 345-450 quite quickly.

My other trade was a small short in Goodman Fielder at 159.5, as the rally petered out. I'm trying to complete the position with a further sale at 158.5 but so far I haven't got set.
4.15 A small rally in the last half hour left the Xjo index down 31 points. I've left most positions unchanged, 2 longs and 7 shorts. I bought back a third of my short Tse position at 389 (v 399). In the last 10 minutes, I've read 3 different technical opinions, all of them urging caution. Daniel Goulding and "Charlie Chartchecker" are quoted on FNArena and David Rogers, the Dow Jones news wires technical analyst is the third.

Greek tragedy. Wed Dec 9

The downgrade of Greece's sovereign debt was enough encouragement for European markets to topple over last night by around 1.5%. The US markets dropped by 1% and after an hour and twenty minutes the Australian market has settled somewhere in the middle with a fall of 1.4%.
It has been a non trending period for most markets as bullish momentum has ceased and been replaced with range trading. My opinion has been that we were very close to a top and in Australia had probably seen it. For the sake of my trading I'd like to see a downtrend set in, a retracement of the rally since March. I think that will probably develop but until then what we're getting instead is a lot of reversals with little follow through. This has led me into the room of mirrors to think about strategy and my conclusion is to take the reversals as early as possible and get out quick. If a stock is in a genuine trend then I'll try to run a position for longer, as I've been doing in Awc, but otherwise it's guerilla stuff.

The first of my 3 short trades this morning is Asciano, fitting the bill of reversal trades. I'm short at 172.5 as we've ticked below yesterday's low. My read on this is that the last surge up was a 5th wave which made a small new high at 176.5. In the short term it ran dropped and surged again yesterday with no follow through. It's a risky trade as it's a counter trend reversal but on the plus side these usually move fairly quickly. My stop is at 177 and I think a reasonable short term reversal would see it back into the 160-164 range.

Fortescue had the surge to a new high and made a one day reversal on Monday. It just about held up yesterday but is slipping below yesterday's range. I've shorted at 413.5 average with the Monday low having been 417. Like Aio, it's not exactly dumping and seems quite well bid, so I'm a bit nervous but then again, the whole market gapped down and was always going to consolidate for an hour or two. The late afternoon will probably be the acid test for these reversals.

The last short is in OZ minerals. This one has been throwing dummies for a little while and had me grasping at thin air. I'm hoping I've nailed it today on a minor 1-2-3 sell signal which is tight enough to take even though the stock is in a trading range. I've sold half at 118.5 and expected it to rally a little but unlike the other stocks, it's not looking good intraday and has fallen through last week's low, giving a second sell signal and the suggestion that this fall could extend further than the simple reversals. Just sold the second half of my order at 117.5 to average 118.

1.41 The rally from early lows has been quite strong and we're now down only 35 points or 0.7%. Fortescue has rallied against my short to 420 and I'm having misgivings about having put this on quite so far from the recent high at 444.

3.48 Nearing the close, there's a strong possibility of the Xjo finishing on its highs and closing more of the gap formed by the opening drop. It's been one of those days that calls for patience if you're short.

I've mentioned that I've been looking at ways to improve my performance. One of those is to take off positions in part or in full at obvious points. For example, I'm short Tse after it broke support, rallied back to the break down and then started to fall again. There's no real downtrend apparent yet and I've worked out that until you get one, especially with reversals, two or three days is often the optimum holding period. In this case, it hit support early at 381 and bounced rapidly so that now it's up 3 at 394. I missed the chance to buy half back in the low 380s. Next time I'll mentally prepare as you sometimes get a small window of opportunity and need to be ready.

4.17 The market didn't quite fill the gap but closed near the top of the range. I've shorted Fairfax at 160 on the match out. It's been in a trading range for a little while since peaking in early October and, like many stocks such as Tse above, it has the look of a head and shoulders topping formation without having broken down convincingly. I've used a small 1-2-3 sell signal as my entry point and because it's still in a range I'm going to use a fairly tight stop with this one.

I bought back a couple of Djs today at 544 (v 561.5). Again, it's in a trading range so it's more a judgement call as to when to buy rather than in a clear trend when the ideal is to run the position for as long as possible. Otherwise most of my positions finished respectably with Fmg peeling back to 414 by the end.