Collapsing over the line. Fri Apr 16

The Xjo index actually closed above 5000 yesterday at 5002. It was above 5020 during the day but failed to hold indicating that there's not a lot of buying interest at these levels. Today, we've latched onto some after market weakness in the US following a seemingly good Google result (sell on fact?) and the index is down 22 points now at 11.40 am.
I was going to write about a short in Centennial coal but the horse has bolted already. I was able to short some at 451 and I've bought most of them back at 435 on a quick slump in the share price. That leaves me with a long in Alumina. I've bought at 170 as the stock has been retracing from a recent high of 189.5 and the last swing low is at 164.5. It looks pretty dreadful but the risk reward stacks up and it was looking very good at the time when it peaked.

Not a high conviction trade, more of a playing-the-odds trade.

4.15 The market ran along fairly quietly for the rest of the day with a late afternoon rally reducing the deficit to 17 points. Awc held ok, finishing at 169 as did Ipl, while I sold out the rest of my Fortescue options.

Pivot point? Thu Apr 15

A very good night on the US stock market hasn't quite been replicated in this time zone with most markets only mildly stronger. The Aussie market is up 12 points at 1.41 pm on a day which has weakened gradually since the open.
My trade for the day is in Incitec Pivot which has been grinding down for a month. I was actually short it for a little while after a small retracement rally a couple of weeks back. Anyway, I've gone long today at 331 - rushed into it slightly - and I'm looking at a stop below the recent lows of 322 and 323.

The action since the high in January all looks corrective. I'm banking on the c wave part of the correction being complete or close to it. I suppose if I'm forced to stop out I'd still be looking for an opportunity to buy soonish.

Other than this I've had a quiet day. Aristocrat is weaker today. I don't know why it has fallen but there have been a couple of big lines of stock put through at 425 and 430 which has dragged the market down as low as 434. It's at 438 now where I've bought a couple of my shorts back.

3.42 Well, Ipl isn't doing well. It's down at 323,324. I'm going to stretch my stop to the February low of 314. Always a bit dodgy but I like the trade: a correction holding within a trading range with an extended little move.

The problem isn't really the trade or the stop - the problem was rushing into it at 331.

Not overly convincing. Wed Apr 14

At midday the Xjo index is up 0.5% which is a muted bounce after another small up night in the US which was followed by a good result from Intel after market. Alcoa was expected to drag the US indices down last night and there was early weakness which didn't stick.
My feature trade for today is a short position in Aristocrat, maker of gaming machines. They've been retracing from a big sell off since early December and I'm looking to sell into what I'm hoping will be a lower high. My stop will be just above that recent high at 473 so I've just sold a handful so far at 455 and I'd like to sell more a little higher so as to limit my risk.

3.50 It's a better performance now with the Xjo index up at 4993 having been as close to the magical number as 4997.

Aristocrat hasn't joined in though and I sold some more at 454 to be short at an average of 454.5.

Fortescue is back up to 535 and I sold out a third of my options at 34.5.

Sticker shock. Tue Apr 13

The Dow Jones Industrial Average managed to close above 11000 last night although the S&P 500 couldn't manage 1200. Meanwhile, the Aussie equivalent is 5000 on the ASX 200 and we're shying away from it. Admittedly, the all ordinaries managed to break that level yesterday but these days it's the top 200 index which is the most watched benchmark. We haven't been helped this morning by the opening shot in the US earnings season with a fractionally disappointing (didn't beat estimates) Alcoa result after the US market close which has dampened overnight US futures and taken some of the steam out of our resources sector.
So down 18 points at 11.37 am and I haven't initiated any new trades.
Fortescue has been upgraded quite dramatically by Citi and that's holding its ground at 526 but is well off an early spike to 540. I sold my stock out yesterday and this morning in the high 520s leaving me long the April 500 calls.
I started shorting One Steel yesterday with the idea of trading a pullback with a tight stop. I sold a few at 409 and thought I'd wait for today to do any more as yesterday was stronger than I'd anticipated. Anyway, they've had a problem with a blast furnace and they gapped down as low as 394. I sold a few more at 403 which I bought back at 395 but it's slightly disappointing as I was hoping to get short a reasonable quantity at around 410 when planning for the day. The Ost chart is below.

3.51 The 5k aversion rolls on and the market is down 37 points with Alumina one of the worst performers, down 11 cents or 6% to 177. Fortescue is holding up pretty well at 520 although it's generally a day for defensives with Telstra the best performer. It's a shame about One Steel which is down at 394 - I had stock to sell on a bounce to 403 over lunch but it never made it. My other steel short is ok though, Bsl is down 6 at 289.

Beowulfescue. Mon Apr 12

The Fortescue saga continues and I've gone long again, this time chasing an entry because it's a reasonably tight breakout.

There's a small swing low at 496 so using that as my stop, I've gone long at 512. It was an early peak but the stock is running again now and is up at 515. I've also bought Fortescue April 500 calls at 21 cents which were quite cheap, probably because the stock has been chopping around for a month or two.

I've been substituting a few of my watchlist stocks because I never seem to do much in things like Mirvac. So one of the new stocks I've chosen is Murchison Metals which is another West Australian iron ore stock. I wasn't confident enough to buy a very minor pullback last week and now the stock has sped away like most of the sector. Unlike Fmg, the relative distance to that last swing low is too far for me to be comfortable with buying the breakout. I'll be looking to buy any corrections though.

I've just airily said that the Fortescue options were cheap. Well, technically they were expensive because recent volatility has drifted down to 20% and I bought these short dated calls at an implied volatility of around 30%. However, since I think the stock is breaking out, the historical volatility goes out the window if I'm correct and the options in this stock generally carry more premium than they do right now.

With the rest of the sector running, I'm sufficiently confident to buy something short dated and slightly in the money so as to limit the premium I'm paying and get more equivalent stock exposure.

3.42 Lihir update: out at 398 because despite the gold price continuing firm (in USD terms) Newcrest is down 2%. This means that the discount has narrowed. Newcrest are saying that their offer is full and fair also so although I'm pretty confident that they'll sweeten the bid eventually, I don't want to hang around forever.

Here's the chart.