Atishoo, atishoo, we all fall down. Fri Feb 5

The fear of contagion affected markets last night with Portugal the new target as a bond auction was unsuccessful while Spain is also in the spotlight. Allied to fears of a jobless recovery or perhaps further unemployment in the US the mood is now distinctly frosty. An hour into trading and we're down 2.6% and waiting for Asian markets to open to gauge the mood. I suspect we can fall another 1% today because the US markets finished on their lows and it's another leg down.
So far I've bought back the last 5,000 Ipl for 324.5 (v 338) which is another 675 gain, 2300 in total less 33 costs. I've also bought back 2,500 Cey at 342 (v 365) for a gain of 575 - this is the second tranche of selling, the first was done at lower levels.
I do have a new trade to feature although as the market gapped down it's not going to be the greatest of entry points. I'm trying to short on the early oversold bounce. The stock is Boral which is a new one for my watchlist but I've got rid of Csr because there's too much corporate and legal action going on.
Boral fell through support on Monday and had a good retracement which briefly popped through the previous breakdown level at 567. It's failed again and looks less mature than some of the other downtrends. So far I'm short 7,500 at a tick under 535 and the stock is at 538.

Click to enlarge

1.11 The market has held a level of down 2.8% through the Asian openings with those markets settling down about the same amount. The Xjo index level is 4493 which is below the November lows and I'm hard pressed to see where the next support levels are. There's a minor one at 4400 and another around 4280. It's possible that we'll turn around and regain the 4500 level either today or early next week but with the European sovereign debt crisis growing by the day, the selling momentum is quite strong. Here's the Xjo daily chart; it looks like it's in a 5th wave but there's plenty of room for extension.

I bought back the other 2,500 Cey at 347 for another 450 profit, 1025 all up less 12 dollars cost. Still short 10k at 354.

3.11 It's been pretty dull vis a vis intraday trading and we've actually rallied back above 4500 as markets in this time zone steady. The epicentre of the crisis is Southern Europe so there's not a lot of action here and even the US overnight futures are flat.
I've had some buying on for Awc but I haven't got set. Meanwhile, Tse is almost square on the day. Bld is up at 550 although I've done a bit of jobbing around there and at least got my average down to 540 for short 10k.

4.13 Once again we rallied into the close to finish down 2.3% at 4514. My short positions moved against me with Bld finishing at 551, Cey at 356 and Tse was actually up at 385. I didn't short more Tse because it looks like it's bounced off support, although I think it's just temporary. Awc at least finished on its lows and I bought 10k back at 156 to leave me short 20k. Profit 650 on that portion.
Although it was positive that we held the 4500 mark on the Xjo index, I'm sceptical that it was wise because the nature of the attacks on the European bond market are such that it probably doesn't matter what central banks or governments say or do; the fever will have to run its course.

Heavy Metal. Thu Feb 4

Almost an hour and a half into trading and the market is just sinking after holding a 25 point loss which matched the US S&P 500 fall without taking account of a resumption in selling of metals.
I completed selling in Tse at 386 so that leaves me short 13,000 at 387.5 average. It wasn't the greatest trade execution again in this but the stock is down at 384 now.
My trade of the day is another short in a resource stock, this time in Alumina. I've completed the order early, selling 30,000 shares at 162.5. I'm looking for a quick move to a new low here and I've taken the trade because there's been a decent enough bounce from last week's 153.5 low to give me some profit potential.

It has actually edged up to 163.5 since my short despite a quick sell off now to down 39 points.

12.27 The market is down 49 and I've been buying bits and pieces.

I bought 3,000 Tse at 378 because I figured my trade entry was poor so there's 9.5 cents on 3,000 which is, ah, 285 dollars profit. I also bought back another 2,500 Ipl because it rallied enough to make me unconvinced that there are further lows coming. Price was 332 and the short is at 338 so it's another 150 dollars profit and I'm still short 5,000 hoping to buy on the back foot.

1.37 Here's the Ipl chart showing a fairly neat 5 waves down. Although the 5th wave could have further to go, it looks unlikely given the size of the bounce back on Tuesday and Wednesday. I expect it's more likely to form a higher low over the next couple of days.

3.06 Transfield had another sell off so I just bought back another 3,500 at 375 for a tick under 440 profit. Still short 6,500. Also short 30k Awc, 15k Cey and 5k Ipl. Market down 38 points and slipping after an early afternoon bounce.

4.14 The market rallied into the close to finish with a respectable loss of 26 points. My positions are ok although Awc finished towards the top of the range at 165.

Attachment. Wed Feb 3

I was quite irritated when trading had finished yesterday because I knew I had become wedded to the bearish view on stocks so that I talked myself out of taking a perfectly good trade in Fortescue. It's up at 490 now after half an hour and if I was long I'd be getting out of at least half as it was a countertrend trade. The only trade I have done is to cut my half position in Qan for a 600 dollar loss as it broke the resistance at 290.
I wonder if it's the hardest trick to learn with trading - detachment - I'd looked at 60 minute charts for the Dow Jones and the Xjo at the end of the day and they both looked set for another kick up but I was still looking for bearish trades like the Qantas one. A trading buddy of mine has been working on automation for a long time as his solution to the problem of personal bias but I still prefer to trade manually. Despite the frustrations and perhaps because of the frustrations trading is as much a vehicle for self discovery as it is for profit and that's probably the enduring appeal. I've known enough traders who've made more than enough to retire on but there's no way they're going to stop.
As things stand, the second day up in a countertrend rally should be more choppy. We've had an early pullback from a strong open and we might be heading for a midday high and an afternoon sell off. Up 43 points at 10.46am.

12.30 The market has edged back since the open so it may be that the high was early. Chinese markets are just opening so if they're strong they could drag us up. Japan is flat.

1.27 The market is only up 19 points now and I'm thinking about short positions in a couple of stocks where the first retracement might have gone far enough. The best one might be Transfield which is trending down and has reversed intraday after touching 401 this morning.

3.05 Still haven't put on any new trades apart from some intraday stuff. I'm leaning towards Fortescue as a short now as I was looking for a rally toward 500 and it reached 498 earlier on. At the moment the market has got a second wind and we're shaping up to finish on our highs so if I deal it could well be just a portion into the match with the plan of completing the trade tomorrow.

4.12 Shorted 6500 Tse, a half position, at 389. Didn't quite wait till the close as it wasn't participating in the rally to any great extent but it blipped to 392 in the match so going early cost me a few cents. My existing featured positions are shorts in Cey and Ipl. Cey pushed towards my stop level early but eased later to finish up 3 on the day at 372. Ipl also squeezed up to 343. I'm hoping that the market is, indeed, in a retracement rally and that it's close to having run its course because I could have had tighter stops on these two.
The ASX 200 finished with a gain of nearly 43 points, 9 points away from the early high.

Partial recovery. Tue Feb 2

The rot has stopped for the moment and the market is up 1.6% at 11.18 am. It's not particularly favourable for me as I have two short positions. Ipl is up 11 at 328 but I'm still quite comfortable with that. Cey is the problem. I shorted another 5k at 365 on the open, thinking that I was completing my selling at a better level and it did drift off for a few minutes but now has pushed on - with most of the rest of the coal sector - to 370 which is a gain of nearly 6%. I'm confident that the break of 360 was quite significant but it could rally to the high 380s before I could assess whether I was right or wrong.

I'm interested in the possibility of a retracement rally in Fortescue. It fell right back to support and today has reversed up to 460. I'm not willing to chase it at this point but will see if it shapes up on the intraday scale later on.

2.34 I've been out of the office for a couple of hours and the market is little changed although something might happen now with the RBA unexpectedly leaving interest rates on hold.

3.02 I'm starting to put on a short in Qantas. This gave a sell signal 3 days ago when it fell through support at 283. It has since rallied but without going through the recent pivot high at 290. I'm short 10,000 at 286.

3.06 While I was out of the office Fortescue ran up as high as 471 and is now back at 464. Still no great intraday set up so I'm leaving it along for now.

4.06 A grinding day that is finishing near the highs despite caution in other markets in this time zone. Not a lot I could do but watch my two positions move against me as they're not at stop levels. I've put on a half position in Qan which is closing at 286. I don't think I could have done much different yesterday, I closed out Ozl, for example, and half of Ipl - it's just a frustrating day. The down trend is very much in place but there's certainly the potential for another day like this which could squeeze me out.

Overdone. Mon Feb 1

The new month has started with a rally despite a weak overnight lead, we probably got oversold by Friday's close. I haven't put on any new trades so far although I've got a buy signal in Aristocrat. The problem is that it gapped up on a better than expected forecast of operating profit.

The buy was triggered on trading above 425 so I can just hope that it chops around for a while and gives me an opportunity to get long. The preceding pattern, an extended 5 wave thing, looks complete for the time being and you might typically expect a rally close to the 4th wave retracement high around 480 unless it's the start of a new bull run in which case it could go further.

12.54 Soon after midday the market took a rapid turn for the worse as confirmation of continued heat in the housing market and government gloom over budget forecasts - ludicrously estimated out to 2050 - soured the mood.
I've bought back 5,000 Ipl at 320 for a 900 dollar profit. Ozl is down a couple of cents too. Aristocrat is holding its gains and a couple of shorts I'm looking are holding above support so apart from a bit of intraday trading in the Spi, I'm watching and waiting.

1.48 Although Centennial coal is extended, the general mood of the market is for decent falls in the miners. I've had a small sell signal over the last couple of days but I've been cautious because we're so near to previous highs around 360. In the last hour, Cey has tipped below that support so I'm going to work my way into a short position. So far, I'm short 5k at 357.

2.19 I've bought back the balance of my short in Ozl. 10k at 104 and 10k at 102.5. It's right on the early September low and looks pretty weak but this was roughly my target and I'm happy to take my piece of the action. Altogether the trade made 2850 less 29 dollars costs.

3.38 The market continues to fall, down 44 points at 4526, as commodities are sold off on the back of disappointing Chinese growth numbers. I've sold another 5,000 Cey at 351, so now short 10k at 354 avg.

We're getting very close to the next support level of 4503 recorded on Nov 5th last year.

4.11 We've closed with a loss of 45 points which is about 1%. I'm imagining a day tomorrow where it opens weak and rallies, we seem pretty oversold now and if metals prices don't get hammered tonight then we'll bounce I suppose. I didn't finish my Cey selling, might get a chance tomorrow and I bought another 2500 Ipl at 315 for a further gain of 575 dollars - still short 7500 shares there. Those are the two featured positions.