No catalyst? Wed Dec 8

It's approaching the market open and the US lead was soured as rises of close to 1% vanished in the last hour to leave markets flat. However, with many markets around the world above their April highs, I wonder whether the general tone in Australia will have moved to one of buying the dips. Commodities are doing quite well, although gold had a $20 pullback last night, and valuations are still good. Last week I read a strategist report to the effect that the local market is good value but there is no catalyst for a re-rating. Funnily enough, each time I've come across "where's the catalyst?", it seemed to signal a group recognition that the market was too cheap (or too expensive) and a turning point was generally close or had just happened.
Of the positions I'm already in, I like Wsa the best. This finished well last night and I'm hoping for two or three strong days to take it up to the 650-680 range.

10.57 My theory about the natural drift now being to the upside is being tested by an early fall of 15 points.

Western Areas is turning out to be the stongest of my positions and I just added a few more at 619. I'm out of One Steel now at 266 and 267. Avoca has drifted off 6 to 336 with the overall market although it opened flat so I sold a couple more at 342.

11.31 My most interesting position is a long in Lynas. I've added in a wave count to explain what I'm looking for here. My hope is that we're just finishing a wave 4 pullback before a 5th wave high. The retracement has touched the first wave high and if it overlaps significantly then my scenario is wrong. I'm quite aware that it could be a completed correction of the big fall in late October or early November but if I'm correct then it should be a decent swing to trade. Having missed the obvious top on Thursday last week and held on to most of a tranche of stock bought at 157, I've actually bought a few more yesterday at 152.5 and this morning at 149. The stop is pretty tight here. Depending on volume, I'd sell out at around 144-146.

12.20 The market is down 9 with Japanese and Korean indices a little stronger.

Lynas had a spurt to 154 but is still edgy and just back to 150. I sold a handful at 153.5.

Off to a Christmas lunch with a few former workmates.

2.49 Back from lunch and the market is down 25 points at 4702. In typical fashion, Lynas has been as low at 145.5 and so I'm in a quandary as to what to do. Actually, I'm fairly relaxed about the stock and in no rush to stop out. The issue now is that the overlap could be significant which implies that I might need to be a seller on rallies.

My other positions are fairly flat. Avo and Kar are down a few cents more but are at levels where I'm inclined to nibble at buying a couple more.

4.12 The market fell 27 points and that might be the signal for a retracement of the bounce from the lows.

Here's the Xjo chart.

In line with our recent trend of underperformance, I've had a quick flick through a few charts and notice that the bounce from last week's low to yesterday's high was 4% whereas in other markets it was in the range from 5 to 6%.

Although I'm still skewed to the long side, I'm quite confident that downside is limited and reasonably happy with my long positions even though it was only Wsa which performed well today, closing up 6 at 619.

I sold out of my last Awe at 180 because after four strong up days, this was an inside day.

Lynas is still the problem position, although it finished comfortably above the day's lows at 148.5.

RBA to sit pat. Tue Dec 7

Recent commentary and a weaker economy suggests that the RBA are not going to raise rates at their meeting today although there is talk of rates having been pushed a notch too far, there is no serious suggestion that they'll be wound back. Instead, we're probably due a prolonged period of rate stability.
Best news for me this morning is that rare earths continue to rise and the US listed Molycorp surged 18% on reputed interest from Sumitomo in buying a stake. It's funny actually, because I'd been wondering why the Japanese haven't stepped in to the rare earths market with a corporate tie up especially now that the Chinese are locked out of Australia following their Lynas investment being knocked back. The problem could be that Aru already has a big stakeholder, East China Exploration, although they didn't participate in the recent placement so have been diluted to below 20%. As for Lynas, the Japanese have stuck to supply agreements. Wishful thinking on my behalf, perhaps.
I bought a few Aru back at 124. Lynas is up 4.5 at 155.5. I've also sold a handful of Awe at 178 and shorted more Ipl at 390.
The Dow looks a bit tired, with a couple of small range days after the big run last week.

10.40 I have a new long position in Karoon. Bought at 725 as it breaks yesterday's high, which was a reversal day after a new low which followed a long correction. It's back to the support levels from where it ran. It surged on news of a juicy IPO in Brazil which was designed to spin off valuable South American oil fields but after the failure of this issue, the stock tanked. Stop is a little below 700.

12.06 The market is rising like a phoenix from (the wreck of) the ashes. Up 25 now with most of my positions going well. I bought a couple more Kar at 730 to take my average entry to a tick below 727 and that turned out to be a good move as they've kicked on to 745. Avo is anothe star performer as it finally shows signs of acceleration.

12.35 About to leave for a physiotherapy appointment. Lynas is back under pressure, unchanged at 151 now after hitting 158.5 early. Interesting to see if it holds 148.

2.58 The index is now up 44 points so we've convincingly shaken off the malaise. I guess that a lot of banks have wound down for the year so it's probably going to be fairly illiquid trading. Here's the Xjo chart.

I left some Lynas on the bid at 149 and missed them as they touched a low of 149.5. I've paid 152.5 as I like the pattern of a slightly lower low after a decent attempt at a bounce.
Here's the 60 minute.

3.06 Just bought a few Wsa at 605 as they finally escape from a two week congestion which has contained a little buy signal.

3.53 Out of some more Awe at 183, which is up 7.5 on the day. Also a couple of Karoon at 750.

4.14 A late sell off but a rise of 38 points nonetheless. The Hang Seng and the Kospi were firmer by about a half a percent and US S&P futures are a couple of points higher.

Sold a couple of Avo at 342 on the match. Only disappointment were Aru and Lyc which were flat to lower. I'm hopeful that the Lynas correction is over though.

Oh, and the RBA kept rates unchanged. Outlook is for rates to be steady for a few months at least.

Becalmed. Mon Dec 6

The ASX has been upgrading systems lately and, as with most bureaucratic organisations, it has been a debacle. They've tried again today and half the market has access while the other doesn't. Rather than close the market, the ones without direct access can still trade via a backup system. All very well, but it doesn't really suit me as I prefer to massage my positions rather than plonk them on or off via a broker order.
Therefore I'm strangely becalmed, watching my positions and feeling not very much like Warren Buffett. His idea is that you should be happy to hold your investments even if the market closes for 10 years. 10 minutes and I'm getting anxious...
The market has drifted from a rise of 4 or 5 to a loss of 2 or 3 but there's some buying in my stocks and they're generally higher with Lynas flat.

11.43 Still locked out but bought some more Avoca at 329 through my broker. Gold was very strong overnight but the gold stocks aren't going crazy. The rise in the AUD would have cancelled out the rise in our terms but that's applying logic to a connection which is ruled by sentiment (in the short term). I've enclosed a gold chart (in USD terms) and it looks a good chance of pushing through the November highs.

Anyway, here's the Avoca chart. It's not flying away but has built a base just above the second attempt at a breakout. Stop is at around 310.

1.02 I'm doing some housekeeping but no new positions. So, sold a few Aru, Awe, Ost and Pna at levels a little higher than Friday.

2.47 The market is flatlining. It's possible that all eyes are on the cricket where Australia are fighting to save the second test.

I sold out of all the Pna at 76.5 and 77. I'd decided earlier that it was too late an entry (75) and I also remembered that I'd passed this onto my assistant to trade so I'm supposed to leave it alone. It looks quite good now I'm out although that's not the point...sort of.

3.45 This is like a public holiday; really, really quiet.

I'm having another go at shorting Ipl. It's lost momentum so that although it is grinding back up towards the recent high at 400, the pattern looks increasingly like a head and shoulders top. Short a few at 388 with a stop a touch above 400. I'd prefer to sell more stock in the 390s.

4.10 A typically disappointing day for us in our current idiom. After a muted rally on Friday, failing to react to another strong overnight lead, the reason given was concern about possible negative reaction to US employment figures. The numbers weren't great but since they seemed out of step with recent data, the US markets ignored them and finished up. Instead of having a delayed reaction though, we've drifted off 5 or 6 points in desultory fashion.

Compared to our recent form, losing just 5 points - rather than retracing most of Thursday's rally - is probably wildly optimistic.

I'm out of most of the Aru after a couple of nowhere days and after I missed the obvious short term peak in Lynas last Thursday, I'm gritting my teeth as it falls to support at around 148. If that doesn't hold, my scenario for the stock is inaccurate and I'll have to get out. It'll then be a question of stopping out or playing a bounce if the short term looks ok.

 

Shrugging it off. Fri Dec 3

Another strong night in Europe and the US has been met with a subdued response today with the market up 29 points after an hour and a quarter. S&P rebalances have meant that Ost will fall out of the top 50 index while Awe will drop out of the Asx 100. They're both still in the Asx 200 and since that's generally the benchmark for funds, it doesn't seem to have affected their performance today. They're the best of my longs so far, with Awe up 4.5 at 173 and Ost up 6 at 258. They've both been a cent or two higher as well. I've sold a small amount of both early at 170.5 and 256 respectively as I was concerned that there could be some sentiment driven sellng based on the down weighting.
Avoca continues to confuse and opened 12 cents higher at 332 but is now back at 326. I sold most of my stock at 332 as it's very indecisive action. Perseus is unloved as the gold stocks are lacklustre today. My purchase at 320 was in anticipation of a breakout and since it's not happening after a couple of days, I'm getting out at 317.

Ipl has been through my stop and I'm out at an average of about 388.

12.02 After waiting for a week or two, Awe is really taking off and I've bought back the stock I sold earlier at 174.5.

Lynas is retracing again and is back at 161. It's a mixed picture for the rare earths though, with Arafura up at 125.5. Sold some out at 127.5 in the first hour.

Back into a few Avo at 328.

12.56 It's a return to form as the market almost went back to unchanged on the day. Up 12 at 4688.

No changes. Awe still firm at 175 and Ost on the highs at  261.

2.25 Up 13 but not looking too flash for the rest of the day with HK up a jot and the mainland markets now down. In recent weeks, the local market has been looking for the grey cloud not the silver lining and what with it being Friday....

3.42 Tea in the cricket from Adelaide and the Aussies making heavy weather of an easy batting pitch. Despite that, the market has managed to hold on to some gains and is 19 points higher.

It's sleepy hollow as far as my positions are concerned.

Boral is in my watchlist but I hardly ever trade it. It has been a star performer in the last couple of days as the US housing market is showing signs of life. The weekly chart is below. The rot has been stopped and I'd be looking to buy pullbacks in the short term.

4.10 Once again, there's been no afternoon follow through for the smaller resource stocks and my positions have drifted against me in general. Worst is Lyc which is down 7.5 to 158 today. Awe and Ost did at least hold on to most of their gains. I'd like to see a day soon where something really takes off.

Index closed up 18. Lots of figures out in the US tonight could account for some of the caution.

Ho, ho, ho? Thu Dec 2

Could it be a Christmas rally? European and US indices rallied 2% plus overnight on enthusiasm about economic recovery and an easing of debt fears in the Eurozone. Base metals and oil surged in a sign of renewed enthusiasm for risk assets and the fundamentals for metals such as copper are on the improve.
After recovering from the range lows yesterday for the third time, the market is up 72 points at 4659 after less than an hour, more than 100 points above the afternoon low for Wednesday. My positions have gone reasonably well, skewed as they are to resources. Aru is up at 126 and I sold a handful at 127; Awe is at 166 and I also sold a few extras I bought yesterday.
I've sold out of Linc at 277 and 278 as the chart is extended and I suspect other stocks will run if the market has bottomed; Lnc has been somewhat of a safe haven.

I bought back into Avoca yesterday at 321 because although they sold off further after I stopped out, they were able to hold support and look as though they'll have another rally attempt. I've tipped a few out at 331 but I'm hoping for a pullback to 327 because I'd like to buy more.

Having said that, it's not really a day for the golds, there's more room to move in base metals. Perseus hasn't done a lot, up 3 at 324.

I've added a couple of new longs in base metal stocks. The first one is copper/gold producer Pna where I've paid 75. I'm hoping it has made a higher low with the break of yesterday's high and a little buy signal would be produced with a trade above 76. In common with quite a few of the charts around, due to the slow retracement, it's not a clean chart with the pullback having overlapped the September high. Despite that, it looks reasonably healthy and the strong rebound from the recent low at 67.5 was quite encouraging. Stop is around 70.

The other new long is in nickel miner, Western Areas. This is the second time I've tried this one and I've paid about the same, 598. I haven't bought a full position because there seems to be steady selling around and it may fade away if the market tops out for the day. It looks like a long, shallow retracement which is generally quite bullish. Stop is at around 570. After my last foray into this, I pondered targetting 580 as a buying level, trying to hunt for a good entry. I didn't go through with it because of the tone of the market so I've maybe missed a few percent here.

11.57 Bought the rest of the Wsa at 600 as it holds up, along with the market.

12.19 I probably need to give myself an uppercut, but I bought some Ost at 251. It's still not the sort of trade I should be doing...but, it did make a new low yesterday but only by a cent and today has rallied again; a renewed emphasis on world growth is probably the catalyst that the very cheap steel stocks need; and rival Bsl is rallying nicely and is up 4% today.

For the "what was I thinking?" file, here's a chart of Bsl. Last week, I wrote that this was technically better than Ost but, what the hell, one was as good as the other. Guess what? The stock with the technically better chart has performed better. The only surprise here is why didn't I switch? It's too late to do it now whereas when I wrote about it, Bsl was around 190.

1.48 It's ho, ho, hum as the market sits pat with gains of 1.7%.

2.46 A breakout of the early consolidation has the Asx 200 up 2%. The index made a buy signal and broke through short term resistance early this morning when it advanced through 4620.

3.33 For some reason Avoca has come back to 321. Bought some at 323 on the way. Not sure what's happening there, just a jittery sell off?

Lynas has also, more slowly, returned to breakeven for the day. It gapped up 4 or 5% on the open but now I wonder whether it has completed a 3rd wave (with 5 subwaves). I'm regretting not selling a few early. I thought about it but got a bit greedy. Here's the daily.

3.52 With the exception of Awe, which has strengthened through the day, my long positions have been flat to weaker since the open despite the index going higher. The top 20 index has outperformed the top 200 index with the major banks doing well. It's slightly counterintuitive except that the early stages of a rally usually favour the large cap stocks as investors want to get set quickly and strategically. Ie, it's an index bet rather than a sector or stock bet.

4.17 The final number was 90 points for a 2% rise. The 20 leaders came back to the pack to also gain 2%, with retailers, Woolworths and Wesfarmers, providing the ballast.