US reporting season approaches. Fri Apr 9

The US markets managed small gains last night as a rebound in retail sales papered over poor jobs numbers. Reporting season arrives next week in the US and it might be the catalyst to break the stalemate. The Australian market is slightly firmer today but off early highs with only one stock in the top 20 having moved more than 1% (Woolworths - down 1.3%).
In my universe of watched stocks, I've added a couple of positions where I've sold into the bounce with the hope that a stock will make a lower high while using the recent high as a stop. Qantas is neither here nor there so far (12.26pm) but I've had some joy in Bsl which has quickly shed some early strength. I'm short at 297 and 296. Here's the daily chart.

3.56 An update on the state of play with Lihir. The chairman has made conciliatory noises about the takeover and stated that shareholders would like to see Newcrest raise the bid price. This has served to narrow the discount to about 17 cents. It jumped into the high 20s earlier in the week. Stock is trading at 400. Newcrest is still firming and the gold price is holding up, tending to edge higher.

Slow train crash. Thu Apr 8

It's quarter to 12 and I've had the Manchester United v Bayern Munich game on in the background. It took till about the 75th minute but you could just "smell" that Bayern were going to get the equaliser that would put them through on the away goals rule. Anyway, the market here seems to be following a similar pattern. We're down a very modest 22 points but the overnight lead was very weak. Greg Peel has pointed out in his morning round up on FnArena that the US market only rallied very late and the volume on this decent sized down day was 50% higher than recent volume on the grinding up days.
I've taken the opportunity to sell out of my long positions in Fortescue and Linc Energy on trailing stops. I'd like to buy back into both positions but I think I'll get a better chance.
Here's Lnc.

I bought at 167 and 162 on the pullback from the 184 high. If the subsequent rebound turns out to be part one of the next move up then I might be a chance of getting back in somewhere in the low to mid 160s. My exit was at 174.

As the Greek situation continues to sour at the expense of the Euro, attention remains focussed on gold which I highlighted on Tuesday. The gold price was strong again last night and closed above the previous high of USD 1145 which is quite encouraging. Ncm is up 22 and Lgl is still recovering, back up to 397 which is a discount of 20 c to the equivalent bid price.

12.50 pm I've added a link to Brett Steenbarger's excellent blog TraderFeed. It's full of interesting and useful information with a psychological perspective. I've been reading a few bloggers over the last hour or so because the market has traded in a very tight range. Tim Price at thepriceofeverything is particularly gloomy right now and gives a European based reality check which is in useful contrast to the China led bullishness driving the Australian market. He makes a very good case for gold in the medium term. 

4.23 Not so much a slow train crash as a freeze frame. The market barely moved all day and closed down 23 points. Still, Linc fell further to close on its lows at 166.5 so I might get a chance to buy back in tomorrow.

Simplicity. Wed Apr 7

A couple of weeks ago I decided to be more consistent with my entry into positions. I would no longer chase breakouts or put on positions where the stop was uncomfortably far away but I would continue to try to pre-empt moves if I felt there was a clear trend or potential trend to support my view with the proviso that the stop must be tight. I wasn't changing the sort of patterns I'm looking for or the type of stops or exits that I take or my approach to position size, for example, so I wasn't sure how significant a change this would be.
So far, it seems to be both significant and positive and also to have had unexpected consequences.
For example, I thought I might put on fewer trades because I will now buy or sell only when there's a close stop and/or there's been a pullback after a move. The opposite has happened though because I will generally pre-empt a resumption of trend or a breakout as long as the risk is clearly defined. I'm putting on positions which I might have missed out on in the past because once there was confirmation, it might have looked too extended to take the trade.
Additionally, there's more clarity. If I realise I've missed a nice move but the trend looks strong then I just set some pullback levels where I'll try to buy. In the past, if I thought there was some more short term action I would often try to jump on the moving train and sometimes fall off, of course. The corollary to that increased clarity is decreased stress. With fewer decisions to make the trading day becomes much more pleasant. Some traders talk about stalking a trade and I'm starting to do this more often. It might not suit everyone but an increase in patience is just what I need.
Increased focus on tight stops has also meant that I'm more willing to put on short positions if I'm bullish the broad market, for example. There's no logical reason to expect every stock to move in tandem with the market but quite often I find it psychologically difficult to ignore the broad market when looking at a stock chart. Knowing the stop is tight gives me the crutch that I need.

Watching and waiting. Tue Apr 6

The market has had a nice little lift on the back of good US jobs numbers and has shaken off a 25bp rise in the RBA's cash rate to 4.25%. I haven't really done anything today in terms of new positions.
Most things are going quite well except that Lihir has had a 22 cent drop to 382. This is despite a rise in the price of Newcrest of nearly 4% which adds approximately 14c per share to the bid price which equates to over 411 now. So, the stock has gone from a premium to the bid to a discount as brokers have generally suggested that Lihir should accept the bid and some are even nervous that Newcrest might walk away. Given that they only initiated this process recently, the consensus is that Ncm will hang around and might sweeten the bid. There's also a realistic possibility of another bidder emerging for Lgl.
Personally, I think it's an overreaction on the downside while the chart tells me nothing as it's just some gap filling. The Newcrest chart is interesting though. It actually looks very good itself and could drag the Lgl price up even if the discount remains.

Another salient point is that the share register for both is dominated by many of the same institutions and if they feel that the bid should be accepted they will have a fair bit of sway with the company.

Here's a chart of spot gold which looks like it is early in a third wave with plenty of upside potential.

Nice work if you can get it. Thu Apr 1

Another takeover bid, this time in Lihir Gold, from fellow gold miner Newcrest. It's a scrip offer with a small cash component and amounts to about 381 at the moment (1.30pm). I bought a few on the pullback last Friday at 300 and a few more yesterday at 306 on minor weakness again. The company has rejected the bid but has made it clear that they will sell at a better price. There's some chance that an overseas miner might be interested and the stock has been trading above the bid price, mostly in the 390s.
A small fly in the ointment has been that other smaller resource stocks have risen in sympathy including Awc which is through yesterday's high. I haven't stopped out yet, I should have done at 178 and now the stock is at 179.5. I won't leave it much longer...or further. I'm holding off because I can see a small possibility of weakness in the index futures which might drive things down.
My book is quite balanced though with some longs and shorts and close to delta neutral.

3.10 The Spi sell off came and went fairly briefly but Awc has drifted off the early highs. I'm out at 177 versus 173.5.
Just had another stab at Fortescue. It ran up this week so I now think that the chance of further corrections towards support are much smaller. I've been waiting for a pullback and it dropped about 50% of the little move and then stabilised. Long at 493.

Click to enlarge

4.10 Asian markets have ignored the overnight weakness in the US to rally nicely today and the Australian market has followed that lead with a late flurry helping things along. It's a good start to the new quarter and the market is now closed until Tuesday.

If you're having some time off, enjoy your break. More next week.