Retail therapy. Mon Feb 7

It's the retailers who need the therapy with department store chain Myer having announced a profit warning and fallen 47 to 328 as we approach the end of the first hour. Rival Djs has been dragged down 20 to 453 while Harvey Norman has not escaped the selling with a 2.6% drop. Leading electronic retailer JBHifi has bucked the trend with a strong result but if I covered this one I'd be shorting into the strength. The Jbh result was simply a skilled retailer handling the same problematic conditions better than its rivals. It's hard to see price deflation stopping in electriconic goods and consumers, in general, are very cautious as people are rebuilding their own personal balance sheets.
The morning lead was mildly positive despite disappointing US jobs numbers and an anomalously better unemployment rate. Gold fell back a touch, oil a lot and base metals were firmer.
My positions are generally better in a cautious market that has just squeaked to a 3 point gain. The start of the reporting season has given me a sharp reminder of the volatility at this time of year and it seems like the rest of the market has taken note.
I've added to the short in Aristocrat as it ticked up 1 to 300 resistance and sold off again. Shorted more at 297. I tipped out small amounts in Kar at 784, Lyc at 181, Ost at 278 and Sbm at 197 which were all minor gains from the Friday close.
Having been too quick to buy back into Lynas, I've had to sit out an indecisive period. The stock is now showing signs of having held support and I'm hoping for a move back through 200. There's also a minor buy signal on the 60 minute chart. But here's the daily. I wasn't worried about the retracement having overlapped the early December high of 173.5 but I was concerned about the 167 breakout level just after Christmas because it looked like that was the top of the first wave.

12.33 Last Thursday, I considered buying Qan on a bullish reversal but thought it was too speculative as it's in a long downtrend. I've reassessed and paid 243. What's changed? It's definitely still in a downtrend so it's not the best long position you'll ever see. On the plus side, two days after the blip and it's still pushing the top of the range of the big up day, there's another broker with a buy recommendation and reporting season could provide a catalyst as they're on 10 for this year and a PE under 8 for FY12.

Resolute gold is my best performer so far, up 5.5 at 141.

4.13 It was a very quiet day but the Xjo managed a gain of 6 points.

I just did some housekeeping in the afternoon, bought and sold some Lynas for a small gain, sold a couple more Rsg at 141 and bought back a quarter of my Aristocrat short at 289.

Pushing the envelope. Fri Feb 4

The Xjo index has pushed through recent highs in the first 40 minutes of trading as attention is focussed by the upcoming results season where estimates are that resource stock profits could increase by 43% overall. Forecasts may soon be upgraded too because although China is slowing, the old world economies are providing more evidence by the day that they are pulling out of recession. US jobs numbers are out tonight and that could have been a reason to sell off today after a surprise rally yesterday and with US indices once again bumping into the top of the trend channel.
Here's the Xjo chart; it's up 25 at 4845 at 10.41 am.

The gold price had a surprisingly good night, rising USD 21, and the gold chart would suggest it has completed the sell off in the short term. There's plenty of room for a retracement rally anyway.

Interestingly, Denis Gartman was mentioned in FnArena. They say that he has been buying gold but worrying that it hadn't been reacting to the usual catalysts. Last night's turnaround may have provided him with some comfort. They also quote bullish Barclays technical analysts who like the chances of another run up to 1400 and think that bullish sentiment had hit extreme lows.

Although Resolute is one of the gold sector underperformers on the day, I've bought at 134.5 as there's the potential for a higher low and a breakout if it trades above 136. The stop is close too.

I've also bought gold stock St Barbara at 190.5. This is one that my assistant covers but I couldn't resist the buy because it has had a textbook sell off and is breaking out of a tight turnaround. I've chased the break but can use 180 as a stop which is under the low for the week following the final sell off last Friday which was quickly rejected. The textbook element is the elliot wave style 5 wave sell off from the November highs. The last leg subdivided into 5 too as it fell from a 4th wave correction high of 205 to a low of 174 last Friday.

With a strong chance of the US selling off tonight - even on good news - and our market exhausting itself in the short term, I'm compensating for these buys by easing out of a few of my other longs. So, sold more Aru at 138, some Bsl at 220 and some Wsa at 660.

12.44 The market overall, and the gold sector in particular, has kept running. It reached a peak of 4870 before slipping a little to stand at 4864 which is up 44.

I'm juggling my positions, trying to get out of the last few Aru and Wsa. I also sold some Ost on a brief rally to 277. This is one where my entry was poor and I'm happy to get some out for a tick under square.

My dollar exposure is about the same after buying Karoon at 756. This is making a minor buy signal as it trades above 760. It's fairly illiquid and at the bottom of the trading range, so it can move a quick dollar. The stop is about 30 cents lower.

2.17 I had to chase the price down in Aru to 135 and Wsa to 655 to sell out the last of each long position. In both cases, there was a moderate bounce and I made a few dollars but the likelihood is that the rally is not going to be clean and simple. Here's the updated Wsa daily chart.

Both the new gold positions are doing well, as is Karoon, which has risen to 775.

3.11 Sold a couple of Karoon at 780. The market is drifting, now up 39.

4.36 The index rose 42 points. Qbe was the standout as it came out of a trading suspension and announced an earnings accretive acquisition when the market was expecting a capital raising. Despite an earnings downgrade the stock rose 7.4%.  Karoon and Sbm were the standouts for me and they finished at 777 and 196 respectively. I also reinstated a small part of a short position in All on a bounce to 299. Aristocrat may find some resistance at 300, otherwise I'll wait for higher prices. 

 

Lunar New Year. Thu Feb 3

It's a new start for many and maybe Queensland can look forward to a better time ahead. The cyclone is working its way inland and gradually losing force. Thankfully, damage has been limited to property and crops.
The overnight lead was flat after protests in Egypt became more heated. After an hour and fifteen the market here is basically unchanged.
My book has become flabby once more and I'm concentrating on taking positions off.

11.20 Fortescue has lost momentum and it was a quick reversal trade so I'm out at 661.
Lynas is stabilising and is up a couple at 175 while Bsl is a slow mover but reasonably constructive. A push through 218 would confirm the buy signal that I've pre-empted.

On a 30 minute scale, the Asx 200 made a double top soon after the open at 4807 but the subsequent sell off looks to have stalled already and the index is pushing above 4800 again. If it can push through the early peak then we might get a run up to last week's high around 4825.

1.20 It's a quiet day with most Asian markets closed but the Xjo index has been as high as 4814, helped by a better than feared outcome from Cyclone Yasi.

My positions are mildly positive and I haven't added anything new. I did sell a few Aru at 136 (v 129.5) as they edge higher but haven't taken off, perhaps held back by the Lynas weakness yesterday.

1.51 Awe has continued the rebound so my delayed stop yesterday wasn't so clever. The false break and reversal is common at the moment, a reflection of a choppy market.

Strategically I'm pulling my head in and looking to buy support in uptrends and to sell conservatively. It's basically my normal strategy but it takes a certain amount of discipline to do it because it's counter to most people's instincts (including mine). I think I've been impetuous recently.

2.53 The market is up 27 and almost made it to 4825 (4824.7). It still looks ok so maybe we'll see another tilt at the recent high of 4837. My positions are unexciting and it's galling to see things that I stopped out of now running hard over the last day or two - Awc, Awe, Mmx. One of those things, I think, but as I wrote earlier, I'm conscious of entering trades at the right levels which means I'm on standby today.

4.08 My one decision of note to make was whether or not to buy Qantas. The stock is in a long downtrend but it's having a reversal day following an announcement of a rise in fuel surcharges. Given that this trade is the flavour of the week, I was tempted to buy but decided that the context was different. The reversals in Awc, Awe, Fmg and Pdn were all in stocks which have been in uptrends.

The market has closed with the Asx 200 at 4821.

What's old is new. Wed Feb 2

Or what's bad is good, buy is the new sell.... Overnight strength as most indices are back at new (recent) highs has catapulted the Australian market to a 54 point rise by 11.08 am. Activity continues to strengthen in the old economy as loose monetary policy works its magic. Meanwhile, China is gradually slowing in line with their tightening bias.
Among the biggest gainers are the stocks that had been sold down hard so that Paladin has continued its rally with a 7% gain while Mmx is up an impressive 12%.

Fortescue was that sort of trade and it has gained a more modest 2.5%, rising 16 to 657.

With the new highs overseas, all bets are off regarding potential shorts. I'm also wary of buying the top of the range too. The outcome is that I'm nursing my existing long positions.

I've added a long in Wsa. A short term position about half my normal volume as I look for a topping pattern to play out. There was a brief sell down soon after the open and I bought these at 650.

12.36 The market is up 1% having chopped a few points lower. It's in that intraday period where the jury is out on whether there's another kick higher or not.

Lynas is having a surprise sell off and has slipped to 181 but apart from that, most positions are fine. I closed out the short in Aristocrat at 296 which is just about the high of the day. I'm looking to reinstate the short in a day or two.

1.36 The index has slipped further but still up 37. With Hong Kong opening up 1.4% (China closed for holidays) and Japan strong too, the pullback may be done.

I was uncertain that Lynas had finished the retracement when buying yesterday but the sell off, which has hit 176, has dipped below Monday's low but is clearly above the breakout. Having sold out half of a small position at 187 average yesterday, I've added more in the high 170s. The sell off could still be incomplete but with the extra leg down I'm more confident than I was yesterday. The stop is still in the low to mid 160s.

2.18 No resumption of the rally for the Asx 200 yet and I've walked into a wall of selling in Lynas. It hit 173 although it's having an attempt to bounce with a push back to 175.

Fortescue is up 20 at 661. I'm sitting with my long position for now and targetting the top of the November/December range of around 690. I've also punted a few Feb 700 calls at 5 in case it has the sort of reversal there's been in Mmx and Pdn. That's probably less likely since there are plenty of longs at 680 (I think) from the recent Temasek placement but I'm prepared to risk the option premium.

2.32 Getting my head out of my own stocks and looking at the bigger picture, there's a severe cyclone expected to wreak havoc in coastal North Queensland today and tonight. Queensland based bank, Suncorp, and reinsurer QBE are the hardest hit with the major banks flat to down. That's what is keeping a lid on the market.

3.04 A Lynas director put in a notice regarding a large share sale - although he still has most of his holding. It's such a speculative stock and that has been enough to generate the selling today. Back at 177 though.

4.15 That little bounce was shortlived and Lynas closed at 173 which was a bit above the intraday low of 169.5. I would have been better served to take a day off. Lynas cost me - at least temporarily - and I paid the top in Aristocrat which closed unchanged at 288. Wsa was a small offset.
I sold out the last of my Awe at 174. I wanted to get out after yesterday's 171 close but held on to most and was rewarded with a mild bounce. The chart wasn't disastrous, just confusing, which is why I didn't want to stop out robotically.
The index closed up 44 at 4796, once more within striking distance of the top of the range. The January high was 4839.
The cyclone is due to hit the coast at 10 pm tonight. I hope no lives are lost.

I ate already. Tue Feb 1

There was a decent rebound in the US last night with oil and base metals among the leaders. The local reaction, at 10.30 am, is muted because we're still running about half a session ahead of the rest of the world in some kind of psychic trance and our bounce back came along around lunch time yesterday.
There are a few stocks on my list that I wouldn't mind shorting - Bld, Cgf and Ozl spring to mind - but they're too far away from my stop levels so it's another day where the buying opportunities are presenting.
The first is Lynas which has a similar set up to yesterday's long in Aru. I'm not convinced that the correction is over but I do think that there's a good chance that the bull run has further to go. The risk/reward is reasonable with a stop at around 165 but a lot of upside in a volatile stock. Long at 180.5 for about half of my usual amount.

The second trade is a long in Fmg at 643, with a stop at 633. I'm looking for a quick bounce from an oversold position so this may turn out to be a day trade. I traded one of these in Paladin yesterday and made a few dollars but regret not holding overnight. Here's the Fmg chart which doesn't look particularly special except for the fact that the price has moved above yesterday's high after the second sharp fall and it's close to the bottom of a trading range.

Here's the Pdn chart to illustrate the sort of thing I'm looking for.

1.33 Hong Kong has opened mildly stronger while Japanese and Korean indices are firmed too. The Xjo has been chopping around in a tight range all day with a positive skew. We're up 9 now.

I've had a few winners and one loser. Aristocrat is down 8 at 289 and I bought back some stock at 294 and 290. I sold a few Aru as they rose to 133 and a handful of Lyc at 185.5. Awe is more problematic and has slipped 5 to 173. My take on this chart now is that there could be another corrective leg down so that while I'm bullish in the medium term, it may be wise to stop out in the short term and see how far the stock slides. I'd guesstimate that the mid 160s would hold it. For the moment, I'm watching it, having sold stock yesterday at 180 and 178.

 2.39 And no rate rise. As expected, I assume.

4.13 Without big rises in Asia to help us along, the Asx 200 dipped lower to close down 2 points.
I sold a few extra Lyc at 188.5 and Aru at 132.5 and stopped out of some of the Awe at 172.