Normal service – part 2. Tue May 11

This might turn out to be a better piece of software. It feels strange to be using a Microsoft product rather than a Google one for design and ease of use reasons.

 

The chart above is Western Areas, not dissimilar to Resolute in the shorter term. I went long this mid cap gold stock at 109 yesterday as I’m trading a potential completion of a pullback. Stop is at 103, 104. Gold retraced a further 1.2% overnight – a little less in AUD terms – and the potential is there for a quick move into the high teens…116-119.

The market is surprising to the upside after 20 minutes with a rise of 20 points. I'm out of OSH at 709 because the late breaking news was another rise in margins, this time for oil, at the CME, I think.

The run in FMG is continuing and I've tipped out the last of my long stock at around 640. The stock is at 644 but I still have stock and puts so, in effect, a May 650 call option.

10.54 Happy enough with the move in FMG. Sold out the stock at 642 and got 19 for the puts so captured some premium too.

The Asx 200 has given up the gains and I'm left with longs in RSG and WSA, both drifting off, and a hedged position in BLD. It's a very poor performance in the index and my inclination is to dump these last two longs and sit on the sidelines.

11.40 A very strong trade result has strengthened the AUD and the near term prospects for a rate rise. It hasn't helped the market though and we're now down 18.

12.39 The market is very skittish, looked like it was going to collapse but found no follow through. The loss has been pared to 13 points and the market could go either way; the potential exists for a higher low and another leg up or it's as you were with the sell off after a brief hiatus. Here's the XJO daily.

1.47 I've had a small win with Lynas on an intraday trade but there's not really a good overnight opportunity. Instead, I've bought some ARU at 112.5 because the stock has the potential to make a higher low and I can have a tight stop at around 107.

3.28 The market is looking quite ropy again. Oil and gold stocks have been mixed today so any kick from the overnight commodities rebound was wiped out by fear of a resumption in falls following the CME margin rise. Oil and gold are lower in Asian trading but not heavily down.

4.12 The Asx 200 closed on its lows at 4726, a drop of 31 points. My few longs are ok for now and the day was profitable thanks to FMG, OSH and some jobbing in LYC.

Normal service? Tue May 10

I hope normal service will be resumed after technical problems yesterday. Talking of technical problems, I paid for my brinkmanship in OZL yesterday as I had to stop out at 137 with the stock finishing at 136 as the broad market gave back most of the gains.
Overnight action saw a bounce in oil, gold and base metals along with the relevant stocks so it may well be that OZL bounces right back. Apart from that, it was a reasonable result yesterday as I eked out a gain and I'm long coming into what could be a more sustainable rally today.
WSA was another one that was disappointing, drifting back to 642. It was at least well clear of my stop. I'm testing Live writer to put content into the blog so here goes with a chart....














Well, that worked, but still a few wrinkles to straighten out.

Good value. Mon May 9

In the light of a fresh week, the market looks pretty good value. The resilience on Thursday and Friday signalled that the wave of AUD related selling was over and a benign jobs report helped the US to hold on to gains despite fresh European debt worries. Oil was down again but the base metals were only sold off lightly while gold recovered 20 bucks.
The Asx 200 raced out of the blocks as the market ignored a conservative 8 point rise in the overnight SPI. At 10.48 am, the gain is 39 points, just coming down from a 50 point peak.
I got out of the last  IPL early at 389 on a good result but no obvious positive surprise. FMG has been a great performer; I sold a few at 628 on the open in case the 16 cent jump was a fluke. I've since sold a couple more at 636 and it's sitting at 635.
I'm out of the short in BLD, buying stock 1 for 1 with my puts as it breaks the previous day's high for the first time since April 21st. Average buying price was 478.
OZL might have made a double bottom at 138.5 and now the stock has traded above Friday's high. I'm long at 140 with a tight stop at 137. You don't actually get many exact ones like this and for some reason they seem to perform very well overall...here's hoping.

11.34 OZL isn't giving me an easy ride; probably because I'm trying to pick a bottom there.

In a better percentage play, I've bought back into OSH at 696. I switched into FMG on Friday but after OSH slipped early on the oil price decline, it seemed like a nice opportunity to pre-empt a potential higher low on the 60 minute chart. It's working out so far and a trade through Friday's 704 high might see a little acceleration in the share price.

1.02 Asian markets are generally firm and US overnight futures are up about half a percent. The Aussie market has been pretty flat since the open but is doing reasonably well to hang on to the gains.

WSA has broken the high of the previous day for the first time in a couple of weeks. I was over anxious to pick the turn in this one and paid 657, 658 the other day. Simply waiting until this simple signal is a better approach and will usually save a couple of days of sweating if you've bought the false dawn as I often do. The entry price would have been slightly better too. Anyway, I did job a few on the day of the low and today I've added a handful more to the long position at an average of 652. The stock is now trading at 655.

I'd add the chart but it's playing hard to get.

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.