Watch out below. Fri May 6

It's a couple of hours before the open and I've come in to find that the risk sell off has snowballed with resources and the AUD hit hard. It's not a huge surprise and it's the reason I was uneasy turning my book around yesterday. You often get the first attempt to rally followed by one or two more down days.
I suspect that will happen today but most of the usual linkages have broken recently with the Aussie market selling off hard on AUD strength while US markets surged. I'm holding onto the hope of another counter intuitive rally today but realistically, I think it's too early. Overseas buyers are still getting out of their longs and the locals usually stand aside.

10.44 So far it has proven to be a buying opportunity. The Asx 200 is down 4 points after dropping 40 on the open. I bought one or two things on the open which I'm tipping out soon but holding most positions.
I closed out the short in Seek as my broker has a big upgrade on the stock and it was showing decent resilience. Unfortunately, I missed the real cheapies and paid 698 which is the current price. I can always re-short if the rally fades.
I've added a long in IPL. This one reports on Monday and is due a short squeeze after falling very hard on currency fears. There is a textbook 5 wave look to the swing down from 448 after a marginally lower high in mid April. I think the stock could recover to about 400 but may have further to fall after that. Long at 371 and I'll probably sell most out by the close ahead of the result.

11.45 I thought it was a vain hope but the rally is holding. Down 2 was the best and the index is down 7 now. It has looked like falling over a couple of times and hasn't done so.

The resources stocks are very mixed; BHP and RIO are still well down and here and there some of the mid caps are under pressure as if there is serious liquidation going on. Elsewhere stocks have recovered their early losses and even pushed into the black.

1 pm This has the capacity to be a reversal day. The market traded lower than yesterday and has now pushed above Thursday's high. I think it has to close above to be a key reversal.

2.20 After reaching a gain of 8 points, the Asx 200 has had its first pullback since the open and is down 9. I've sold out of OSH at 703 for a small profit. The chart is having a nice reversal day but it traded down to 680 and the stop seems too far away now. If I'd picked up some more at lower levels I'd still be long but my entry price was 697 for not enough stock so...

I'm short term bullish though so I've replaced it with a long in FMG at 612. The stock made a marginal new intraday low on Wednesday but rallied into the close. It's shaping up to have made a higher low today so offers more protection than OSH and the prospect of a better quality buy signal.

3.25 Western Areas is my worst performer of the fresh longs from yesterday. However, I picked up some cheap stock early on and sold it reasonably well which has made me more comfortable to stay long this. My stop is now a touch lower at 629.

4.14 IPL was a good performer, closing up 12 at 383. I've sold out 3 quarters of my long position because the company report is due on Monday. I'm mildly bullish but the volatility around a result means I don't need a large position.

The Asx 200 finished with a respectable loss of 11 points but no key reversal.

 

Inflection point? Thu May 5

With the AUD back to 1.075 the market wants to rally but is definitely conflicted. I don't know what to think either. There are plenty of patterns that look close to complete in the short term so some sort of rally is in order but it could just be a very short term affair.
Base metals were hit hard last night, with gold and oil falling and the US indices were weak, Europeans even weaker. Nab has reported and jumped 2.7% but hasn't dragged the rest of the sector with it.
Here's the Xjo chart on a 30 minute basis. The last swing has come from Monday's high of 4832 near the close and fallen in a 5 wave pattern until the opening low this morning. It looks like a bullish reversal from here but - and it's still early - the buying seems quite tentative.

11.58 I've got to go out for a few hours and I'm conscious that the market could rally hard. It got in the black, pulled back to down 10 and is back to square.

Out of my Cgf short at 471 for a small gain but still holding shorts in Bld and Sek. I picked up some stock in Bld at 476 but I'm hoping that a recovery in resource stocks will leave these two flat. I know that Challenger falls into the non-resource boat too but it was a late, momentum style trade and the momentum didn't really eventuate.

I've punted a few resource longs. One of them is nickel stock, Western Areas. Nickel was heavily sold in London last night but the stock bounced off a minor new low yesterday and is firm again today. Bought at 657 and 658.

2.19 Slow but surely...the market is pushing up at a measured pace. Higher by 10 points now. Short positions in Bld and Sek are not squeezing up and longs are ok, although Wsa has gone nowhere.

Oil Search is another long; bought at 697 before leaving and some sort of bounce after the recent 3 wave fall is probably in order. It's up to 701 and needs a trade at 703 to push above the last 2 days highs.

4.15 The market held up, with a final gain of 14 points.

My book is now net long although the new positions are fairly flat. Boral slipped to 474 and Seek closed nearer the lows too. It was a day or recovery for the smaller resource stocks, I hope there's some follow through.

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.