Each way bet. Wed May 4

May the fourth be with you.
Nearly an hour into trading and down another 27 points. Oil and gold fell overnight and although the AUD is finally retracing (1.084), it's not really helping the resource stocks. The odds of a slowdown in China are increasing and it seems like that's the main driver. There's no love for the banks either as Westpac is the second major to have reported and the stock is down 1.8%.
There's bargain hunting here and there but I tend to think it will die away. I have a few potential shorts on rallies in resource stocks and have added a new short in annuity provider, Challenger, at 473. It's quite far from the last swing high of 493 so I'll use a break of yesterday's high as the stop. The first leg down from 510 to 475 subdivided into 5 waves and I'm hoping that this leg could turn into another extended move.

11.15 Old favourite, Linc Energy, has had a 15 cent bounce to 282. There are no announcements and I'd like to be long it but can't see how I could have bought it. The way it was shaping up, even if I wanted to pre-empt a higher low, I would have been waiting for a tentative rally and minor new low with no follow through. Oh well.

1 pm The Asx 200 has sunk to the day's low, a loss of 1%, with the top 20 underperforming.

The momentum is not slowing so the odds of this being a corrective move - ie a retracement of the rally - are diminishing.

3.13 Time for some consolidation with the Xjo 60 minute chart rolling up.

I bought some Lynas as a small index hedge. There's a potential higher low on the 60 minute chart.

3.50 Out of Lyc for a small hit as the potential rally peters out. I really need to keep away from the screen at the moment...my overnight trades are fine, intraday are useless.

I've got another short position now (overnight) in Seek as I'm looking for this to fail at the recent high. It may go a few cents higher so I have a looseish stop at around 720 which has meant a small position size. The recent pullback broke back below support, albeit temporarily.

4.13 Much the same as yesterday with the Asx 200 falling 44 to 4740 but slightly misleading in terms of the stocks I watch. 15 were down but 11 were up, 2 unchanged.

Equivocal. Tue May 3

I haven't got a clear idea this morning. The index is down 37, 11 better than the lows. The US did nothing as the reaction to the death of Bin Laden was not market moving. Gold and oil fell but within the intraday ranges from yesterday.
The Asx 200 has made a higher low than yesterday so the potential is there for a completed 3 wave pullback and a resumption of rally but I do think that's unlikely. Anz has reported this morning and it's a story of a flat economy; the banks are moderately lower. Resources stocks are also under pressure, although the good news is that consensus opinion considers that there's no chance that the RBA will hike today.
I got out of Qan at 211 but it's actually been up to 214. I was uncomfortable with it though, so I'm happy enough.
One Steel has been re-rated by a few brokers on the basis that the sell off is overdone and it's very cheap. The stock has recovered 7 to 215. Bsl is nowhere near as good a story - no iron ore hedge - but I punted a few of these at 172 assuming that they'll squeeze up too. This is just a day trade though. It's possible that traders could buy one and short the other but at these levels, I doubt it.

11.12 I think it's time to walk away from the screens for a while. I just stopped out of Bsl at 171 about 10 minutes after putting on the trade.

12.41 Out of Toll holdings at 562 and 561. The stock has outperformed in a falling market but although it's well bid, it's not going up, so I'll wait for another chance. Entry was around 565 about two weeks ago.

2.43 No rate increase but warnings about the potential for rises later in the year. No surprises in the commentary as far as I can tell.
The Asx 200 hasn't moved since late morning, it's down 53 and is slightly above yesterday's low.

The AUD has slipped below 1.09 versus the USD and the index has popped up about 10 points in double quick time.

2.49 The tea leaf readers are suggesting that the tone is more hawkish than they thought. I'm clearly not paying enough attention to the nuance. AUD back above 1.09.

I think I'll go away again now before I do something.

3.41 Not sure what I'm missing in Boral; barring a brief slump yesterday, it has been holding up well. Very few brokers like it so it may simply be already heavily shorted. Perhaps more likely to fall when the more volatile stocks find support and traders start looking for low risk hedges.

The index made a higher low intraday and is down 35 now but the bounce is sluggish and momentum isn't great.

4.12 Down 41 at 4785.

A big hammer. Mon May 2

It's the same old story and the Aussie market is being hit with a very big hammer. Down 44 points after 70 minutes.
I haven't done anything new but my book is short, the only long is in Toll which is unchanged, and Boral has conclusively dropped out of the recent trading range.

11.37 The market is steadying; down 43 but 15 better than the low. I bought back bits and pieces of my short positions: some Fmg at 600, Lyc at 199.5 and Osh at 696. The sell off has plenty of momentum, especially in the resource sector and I expect lower to come. The Xjo chart shows a lower low in an unstable market. Unstable because recent swings are testing range highs and lows very quickly.

An example of that volatility is silver. It was 12% weaker in early Asian trade after a series of exchanges have increased margin requirements following the explosive rally. It rallied off the early liquidation lows but I don't have a live feed for silver so I'm not sure how strong that bounce has been.

The first quarter house price index came through at 11.30 and showed a drop in most capital cities of 1.5 to 2.5% barring Perth, the capital of resource rich West Australia.

12.53 It was funny, I was just looking at the 60 minute chart of the Xjo, thinking it might be ready for a rally and it came very quickly. Not for technical reasons though, apparently Obama is about to announce that Osama is dead.

I'm not really sure what implications you can draw. Al Qaeda would presumably carry on unchanged, there could be reprisals, so is it really bullish. I guess it is in the medium term.

Anyway, I've squared up a bit. Out of the short in Lynas at 202, most of Osh at 706 and Fmg at 606.

1.18 Lots of speculation on TV as they spin out the small amount of information they have. The index is sitting down 23 points, fairly flat since the initial recovery.

I'm now out of shorts in Fortescue, Lynas and Oil Search so the only positions I have are a long in Toll holdings and a short in Boral.

1.38 President Obama is speaking and I guess half the world is watching. Obama is probably smart enough to keep a lid on the triumphalism and avoid fuelling terrorist reprisals.

The market is still stuck and it's hard to know what way things will go. A euphoric bounce in an oversold US dollar...weakness in oil on calming in the Middle East...or the reverse.

Obviously the US indices can rally on the news but that's been irrelevant to us lately and the significant AUD/USD exchange rate is flatlining, giving no lead.

2.02 Many Asian markets are closed today along with the UK.

Still no significant action here or in the currency markets.

3.28 It took a while but the index has recovered further to be down 10 points.

Boral is back to 490 and although the chart continues to look weak, I was hoping for a cleaner break today. I've bought and sold stock and averaged into the buying back of some shorts at 478 so I didn't leave all the gains on the table.

3.36 Most of the charts are showing the potential for an oversold bounce without any convincing buy signals so it's a bit hard to trade this rally.

I've punted some Qan at 212 on the basis that they're a beneficiary of reduced risk in the form of lower oil prices and terrorism threat. I'm not necessarily sold on my own theory but there's a low at 205 so I've got a stop just below that.

4.13 The index squeaked back into the black, up 2 at 4825.

I'm unimpressed by the Qan trade; I felt compelled to find something to buy but frankly, if I was flying in the near future, I'd be more rather than less worried. The chart looks like a pause before a test of 200 but maybe there'll be a little pop up to 220. I think I'll get out of this at the first reasonable opportunity.

Not a bad day and although I was late onto the down move, I've got off the ride at a reasonable time and made a few bucks.

Still the beat goes on. Fri Apr 30

Another good US lead ignored as the currency and interest rate henchmen put their steel capped boots into the Aussie market. A fleeting 2 point rise has turned into a 29 point drop at the 40 minute mark. Another day, another stop out as I sold Linc at 275. My last long position in Toll is holding support and with oil prices flat over the last couple of weeks, this transport company is a beneficiary of a strong AUD. Most stocks are off so the lucky escape may be short lived.
Overall, it's a good start to the day. All my short positions are lower, Fortescue by 3%, and I've added a short in Oil Search. I think it is making a head and shoulders type top so there could be some momentum to a fall. Stop is in the high 730s and my entry is at 718. Not an excellent stop - 3% - so I'd probably actually use yesterday's high of 728 which is a swing high on the 60 minute chart. Here's the daily.

12.03 The rot stopped at 4803 when the Asx 200 was down 70. The loss is 49 points now, although it seems pretty likely that the recent 4789 low will be broken in the next few days.

A fair few stocks have already broken their equivalent lows. Here's Fortescue.

I bought back about 10-15% of my short positions fairly near to those lows with the exception of Boral where I added to the short at 493. It seems to have escaped notice lately but I have the feeling that support is weakening. It's tending to close towards the day's lows. This latest short is more exploratory though, it's not a great entry point, it's more that I want to get a feel for the support or lack of it.

2.40 The index just made a new low at 4797 although it has bounced a handful of points from there. Boral is hanging in at 493 so I may not get the break I was hoping for today. Osh has slipped further and is 700 offered now.

4.08 It looks like 4800 has held for now, with the index 4819 approaching the match. Most of the stocks I'm short edged back up but Boral is closing at 492, its lowest level since early February.
That's the end of April and a better day to finish off. The final level for the Asx 200 was 4823, down 50.

Reluctant participant. Thu Apr 28

More strong leads overnight have not given the Aussie market much cheer with a grudging rise of 21 points at 10.37 am after an initial 35 point pop.
With the AUD up at 1.09 versus the USD, it's fairly understandable. Despite all that, it's a bit hard to imagine much conviction to the selling given the way markets are running everywhere else.
This is a daily chart of the German market which has recovered strongly despite the Euro strengthening sharply against the US dollar.

11.34 A range has been established and the index is up 29. It's April expiry day for exchange traded options and that may hold most of the majors in a tight range for the rest of the day.

I'm always telling myself to do fewer and better trades and the holiday break has had me thinking about that.

Taking a critical look at the trades I have on, most of them are reasonable although only a few are compelling. Of the ones I'm in, I'm most interested in Alumina and Linc today because I can add to an existing position with a reasonably good margin of error.

Awc has had a sharp pullback after the nice run from the March sell off. I think a 3 wave retracement rally is the most likely but because there's plenty of room to the 272 high, a c wave could quite easily get to 255 rather than being a flat thing. I've bought some at 238 and my stop is at 231.

Linc is the most bullish looking of all the stocks I watch. I don't see it as a potential head and shoulders. I think that the 305 high in mid February was the completion of a move which corrected in 3 waves down to 237 at the mid March lows. Since then, the bounce to 300 looked like wave 1 which has been followed by a choppy correction. I'm hoping that correction is complete and looking for an explosive breakout through 300 as wave 3 begins. The danger - even if this is broadly correct - is that the correction chops along for some time and I have to stop out again. Nevertheless, I've bought more at 285 this morning with a stop around 274 and the chance of a range break and acceleration on the upside.

2.30 Back from a lunch and the market has drifted lower. Out of Bsl earlier at 188.5 but didn't stop out of all my Ost before I left, which was costly. Out of the last at 218 as the steels can't recover from the blow of the currency strength.

2.58 Expiry day hasn't stopped the market as I expected, the weakness has continued and the rise is just 9 points as the Aussie market reacts to higher rates and worsening terms of trade for many companies.

I cut my Fortescue hedge at 643 so I'm left with May 650 puts again. It looks like another leg down is possible.

It could, of course, find support and have another leg up. But unlike Awc, say, there's not much space for a retracement rally to push into.

I got out of my last Rsg at 123.5 because I had very little conviction about the trade.

My remaining longs are in Awc, Lnc, Pru and Tol which are all stocks with the potential for a higher low. Shorts are in Aru, Bld, Fmg and Lyc.

4.02 As the gains keep ebbing away, my conviction in any longs diminishes. I decided to stop out of Awc at 233 and Pru at 301. I can't necessarily justify it, the stocks are still above my stop, but the market seems under genuine pressure and I figure that there'll be other opportunities to buy.

4.13 The Asx 200 finished almost unchanged. Up 0.1 at 4873.

I'm still around breakeven for April, which isn't a great result, but better than how I feel which is as if I've been hammered after numerous stops. I guess I haven't let anything get out of control and that's the main thing.