Watching the wheels. Thu May 12

The unwind of the short USD, long commodities trade resumed in earnest overnight. The US indices fell around 1% but commodities were hard hit. The outcome for me is not great in RSG, which is down 3 to 105, or WSA, down 29 to 632. Fortunately, my book is fairly conservative because the picture is not clear. I'd decided that there was a good chance of some short term upside in the index but after that....

Anyway, that didn't work. The Asx 200 is down 60 after 54 minutes as it traces out a choppy retracement from a low of down 68. The usual course of these moves is a tentative bounce about now, a slip down to a new low and then the chance of a better bounce. I'm hoping that we've already seen the low and have bought a few extra WSA at 635 because they're close to support and are probably due an intraday retracement. I did sell about half of my long out in the 650s and 660s yesterday so I'm just hanging in on this trade. It doesn't look great on a daily basis though.

11.21 The index is still edging higher so it's looking increasingly possible that the day's low has been seen. The XJO chart also shows a marginally lower low and rejection of that level so there's local bargain hunting. It makes sense given that local stocks are pricing in a continuation of the current headwinds and still aren't bad value. That won't help us if overseas sellers keep dumping what for them is also a successful currency play. However, it does suggest that the gap opens are buying opportunities while that phase is occurring.

11.52 The first thought was the right one. The Asx 200 has slipped to a new low after the first rally attempt. Here's a 5 minute chart.

1.07 The market is recovering and the Asx 200 is sitting at 4715, a loss of 65 points. I'm holding onto most of my positions as Asian markets are performing a little better, US futures are flat and the AUD has slipped almost a cent on weaker than expected jobs numbers.

2.01 I have to go out for an hour or so which is a shame because the market is just hotting up as we reach the heady heights of 4725.

4.07 Approaching the matchout and down 55 was about as good as it got. There was a marginal new low just before 4 pm and I sold out the extra stock in WSA at 629 although I'm still in the balance from earlier as well as my long in RSG. In both cases, I could easily stop out but am prepared to risk a bit more.

The final result is a drop of 84 points to 4696. After 9 consecutive winning days for me, a fairly chunky losing day.

Back on board. Wed May 11

The overnight leads were pretty good with the sell off in commodities seemingly over. After fearing the worst in our session yesterday regarding Greek debt, the outcome was quite different with strong rises in Europe. The result is a catch up day and a strong start has been maintained with a 48 point rise after 48 minutes.
I bought OZL on the opening match at 143. I was very tempted to buy back in yesterday and probably could have done but after two broker upgrades this morning, it seemed clear the stock would be well bid. It's an oversold bounce so the rally is likely to be short and sharp and I may be out by this afternoon.

11.19 The rare earths stocks in the US took a hit and after ARU failed to match the stock specific early strength of LYC, I sold for a small gain at 113.5.
I've gone long SEK at 705. It looks like a pennant correction which is breaking to the upside. My stop is just below the low from 2 days back because it's too far back to the last swing low.

12.04 The Chinese monthly figures are out. Early indications are that the numbers are fairly benign, with the economy slowing. I thought it could be a negative for the Aussie market but so far the reaction has been just a small drop. Still up 38.

12.44 I sold out half of the OZL at 146 as the market started to weaken. The index is recovering though and it looks most likely that there's more strength to come in the short term. Here's the XJO 30 minute chart. It's choppy but there was a rally from Friday's opening low, a fall to a higher low on the close yesterday, while today's rally has found support and could easily have another leg up of 40 or 50 points.

I'm getting to grips with different software for composing the blog and while it's generally superior to the other package, there's a real problem with fonts which is why I'm experimenting with them. It's particularly difficult to save a font size so it could be a day or so before things settle down.

2.39 There was an opportunity to buy LNC on a resumption of the rebound after a short consolidation. I'm long at 286 although I dithered for an hour or two and missed a cheaper entry. Stop is in the low 270s.
 

3.25 Out of the balance of OZL at 148. The market is having another attempt at the intraday high, up 50 at 4776.

4.15 Another leg up looks on as the Asx 200 pushed to a new intraday high and closed near that level at 4780, up 54.
I reconsidered ARU and bought back in at 114.5 as the stock took heart from the overall market strength and finished mildly firmer.

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.