More traffic. Mon Jan 17

There's a little more traffic around as more and more people are returning from Xmas/Summer holidays and the market has hit some congestion too, dropping 15 points by 11.30 am, after being flat early.
The initial signs were stodgy so I got out of Arafura for 156 and 157 as the US rare earths stocks were down and also sold the last few Western Areas at 660 on a break of daily lows.

I read more bullish commentary on steel this morning to the effect that US demand would kick in for the first half of this year and strength in demand for the second half would depend on the sustainability of their recovery. One Steel is up at 275, although I did sell a few there, while Bsl might be the one that has a spurt over the next day or so. It's up 2 at 223.

Ausenco is still up (4 at 321) and running, albeit slowly but Qantas continues to disappoint as it grinds out a retracement - I hope. I'm using around 240 for my stop in Qan and I didn't actually buy so many last week at 250. I've added another 10k at 246 this morning.

1.35 Shanghai is approaching a 1.5% drop and the HSI has reversed to be lower by about 0.3% on inflation fears which has led to increases in reserve requirements for Chinese banks. The loss in Australia is 0.5% with resources bearing the brunt.

2 pm Karoon has retreated rapidly from last Thursday's burst. I got out of a quarter of my position in two trades at 781. I've bought that stock back at 751. The break level was 739 so my stop is at around 735 which is where I bought last week's tranche.

Here's the 60 minute chart.

3 pm The Asx 200 is down 38 points, about 7 better than the day's low.

I've re-entered Arafura at 148 with a small position. My stop is around 143. I'm assuming that this is a correction of the run up from the low 140s to 158 and I'm using 60 minute signals.

3.41 The bearish scenario for this year is that Chinese demand shrinks as credit is tightened. The Shanghai index reflect this as it fails to continue the tentative rally. I'm looking for the 2700 level to hold over there but it doesn't look brilliant today.

It's possible that the mainland index is too volatile to draw strong implications for Australia; certainly the Hang Seng index is much healthier.

4.11 As for the local index, the 60 minute chart is not displaying a buy signal but the sell off is around a 40, 45% retracement and the pattern looks incomplete so maybe some early weakness tomorrow and a reversal rally. The Xjo fell 38 to 4763.

 

Ebbing away. Fri Jan 14

Some of yesterday's gains are ebbing away as the overnight session was a little weak with profit taking in resource stocks and smaller losses in the underlying commodities. Gold fell again and there is still a head and shoulders look about the USD gold chart.

I don't have a clear idea for the rest of the day. If it wasn't a Friday, I would expect the market to shake off the early weakness (about 7 points at 11 am) and work its way up because the short term signals are pretty bullish. Overall, I'm still leaning that way despite the tendency to drift lower at the end of the week.
The CAC 40 index has been remarkably similar to the Asx 200 and it has reversed from short term weakness and broken above recent highs. I expect something like this for the local market.

The major US rare earths stock, Molycorp, sold off about 6.5% last night but Lynas is almost unchanged. Aru has fallen 4% to 151.5 where I've added to my fairly small position.
Wsa continues to rally, I sold a small amount at 675.
Otherwise, Ost is also strong and has helped to stabilise Bsl.

The one new trade for me today is a part purchase of some Awe at 173.5. I've tried to pick the completion of the retracement a couple of times over the last few weeks but have had very tight stops so the damage has been minimal. The purchase price is 173.5 and my stop is at 171.

12.31 The intraday range has been very narrow; less than 6 points. Down 6 now from down 11 earlier.
Unsurprisingly, most of the moves look pretty random. The gold sector is the one area where there's consistent weakness.

2.19 A couple of days ago, I paid 220 for Bsl. The stock hit 225 that day but twice drifted back to 217 subsequently. It has held above minor support at 216 and is strengthening over the course of the day. Trading above 225 would be a decent indicator that the stock has finished the consolidation and can move above the recent high of 238.

4.01 Qantas has chopped around since I paid 250 on Monday. I would have just stopped out except that the 258 high breached the previous swing high of 256 when it was on the way down. Also, the general market tone has clearly improved. I'm hoping that this morning marked the completion of a brief retracement.

On the FnArena database there are 7 buys and 1 hold and even that has a target of 309, while the consensus target is 331. Valuation is obviously unchallenging, despite the potential for writedowns thanks to the big chill in Northern Europe and the problems with the new aircraft.

The market did recover as the day went on and the final figure was a rise of 6 points to 4801.

Overdue. Thu Jan 13

The peak in the Brisbane river has been reached after being downgraded below the worst fears. It will stay at the peak levels for much of the day but the weather is good in the short term. Bullish overnight leads, including large resource price rises have helped the Australian index to rise 1.1% as we approach the end of the first hour of trading. Rises are across the board and my portfolio of long positions has performed pretty well.
I'm out of the last of my Telstra call options at 288 equivalent as I prefer to focus on the faster moving stocks now that the market overall looks ready to push to new highs.

Western Areas gapped through the 629 resistance as it opened late after declaring strong quarterly production figures.

12.23 The market held the early 50 points and then ticked higher without any appreciable pullback leaving it at 4783, up 62 points.
Western Areas is running hard and I've sold a couple out along the way.

Finally getting a move in Wsa has encouraged me to hope that Ausenco might be ready to go again. I bought a few more at 313, 314 this morning.

The only disappointment today has been the steel sector with Bsl down 3 at 218 and Ost unchanged at 265. Sold a couple of Ost earlier on at 268 but no Bsl at 223, unfortunately.

I'm having another nibble at Karoon. I've paid an average of 735 as it's right on a large support base and while not breaking out yet, it has plenty of upside.

2.19 I posted the wrong chart under the Karoon note. Here it is, adjusted for the passage of a couple more hours and showing good signs of strength. Still well and truly in the range but having traded higher than at any time since Dec 14.

3.31 One of those days, in a good sense, and Karoon is up at 781 where I've sold a very small amount. Also sold a handful of Aru at 156.

4.12 The gains held and the index stopped at 4795, up 71 points or 1.5%.

Also sold a few Ozl at 174. Best performers were Kar, Aru and Wsa.

Extended stay. Wed Jan 12

Relatives from Brisbane are escaping the floods with a holiday in Sydney and I think they might be staying for longer than planned, judging by the TV pictures. It's hard to get a coherent picture from the coverage but the peak might be reached quite soon with the big clean up to follow.
The overnight lead was pretty good with European indices strong and the US numbers reasonable with good rises in resources as well. After an hour and a quarter of trading the Asx 200 is up 5 points, held back by the tide again. However, the resource stocks have reversed and the index has pushed above the last 3 days' highs.
I've got out of the rest of a small long in Arafura at 143.5 which is a small win. There isn't really a buying set up yet and it was more an attempt to buy a temporarily oversold stock.
A couple of days ago, I read a piece of research suggesting that the steel market was in for a major change this year with tighter Chinese environmental regulations due to shut down blast furnaces and turn the Chinese from exporters into importers. This is obviously very bullish but I didn't want to make the mistake of jumping into a short term trade on a medium term analysis. Anyway, last night US Steel rose by 3% and it looks like just about every major steel company around the world had a strong session in the last 24 hours. Maybe the idea is gaining traction.
Bsl is already trending and I bought the open at 220 as that would break the previous day's high. I'm working on the basis that it could have completed a minor 3 wave correction and the target is around 240. My stop is below yesterday's low.

The situation in One Steel is similar. I've paid 260 and I'm assuming that there is a complete 3 wave correction of the first bounce (wave 1?). The stop is at around 252 and although the chart isn't as good as that of Bsl, the short term upside could be higher because the move has the potential to move into the larger wave 3. It's trading at a steeper discount to analyst estimates than Bsl so a re-rating of the sector would provide a catalyst for value buyers.

12.39 Another trade I've done today is to buy Ozl at 167. It's an odd chart and I hesitated but decided that the stop is close enough at 161. It's a bit elaborate but I thought that if the stock is going to push through the November highs then the action over the last month has been a correction of the start of wave 3.

The market is now under water, down 2 points.

2 pm The technical picture for the index is better now as it pulls away from the recent lows. There's a third higher high and the next step is to rally past the retracement peaks at the end of last week.

2.54 I've had a core position in Wsa for over a month and while it has held support, the performance has been disappointingly stop start. I've traded around that position and made a few dollars - not many - but finally the stock is well bid and looks ready to rock. It's up at 627 and a break through 630 would be a good sign of a run up to new highs.

I've sold out most of my Telstra position at 286, 287 equivalent via the options. It seems like there's some authentic resource buying and my other defensive, Qantas, is chopping back so I want to take some profit while it's there.

4.01 I'm just waiting for the match with the index up almost 11 points. It's not much of a move but there are all sorts of buy signals. Bought back into Mmx at 137.5 average, looking for another tilt at 150. Also, re-entered Aru at 145, using 137 as a stop.

Here's Mmx.

4.15 A little kick at the finish and the Xjo index closed at 4724, up 13. Hopefully, the flood situation is calming down; if so, we're due some catch up.

Wet blanket. Tue Jan 11

The rains keep coming in Queensland and the floods are now affecting Northern New South Wales. It's the big dampener on the market and once more the index is below 4700 and flirting with support.

 The situation is not helped by European and North American markets which have been much stronger but are now showing signs of fatigue. The one European market that most nearly matches the Australian index is the beleagured French CAC 40.

I've been resisting the conclusion that the Asx 200 has made a lower high - and that wouldn't be confirmed unless the index fell below the November lows - but it looks like a trading range is well and truly in place.

I sold a few Aru on the open at 146.5 and that's most of the good news as my stocks are dropping in line with the index which is lower by 18 points. It's not the magnitude, more the grind. Telstra is the best of the bunch with a 3 cent rally to 281.

11.07 There's some resilience finally, with the index back to 4708, a drop of 4 points. Some early estimates of potential losses are coming through from the mining services companies and the sector is steady to mildly up so perhaps fears were exaggerated.
The shorter term Xjo charts are still showing signs of an attempt to turn with the 60 minute, below, having made a potential higher low which would be confirmed with trades through 4716. It could still struggle to make it though.

12.15 The local business channel has the Queensland floods on continuous loop with parts of central Brisbane on alert: it's not helping things and that attempt to rally has failed with selling once more gaining momentum.

1.43 Qantas is having a pullback but still looks fine. The strength is in safe havens with stocks like Djs, Mirvac, JB Hifi, Tls and Wow all among the leaders. The market is down 8 but having yet another attempt to bounce.

3.03 The index has battled its way to a 1 point rise, helped by some strength in Hong Kong.

I sold out of Awe at 174 on the open. It was a small position I'd bought at 178, hoping to be able to build it up on strength.

3.45 With the switch into defensives, some of my high beta resource stocks are more badly hit than the 4 point drop might suggest. I allowed for a small amount of overlap in Kagara Zinc but have now stopped out at 79.5.

4.13 A drop of 2 points was the final verdict for the Asx 200.

Telstra ran as high as 286 and closed at 284. There's no regulatory news but perhaps some jockeying ahead of any announcements. I'm hoping for a couple more days like this.