Drift off or dress up? Fri Feb 27

The local market is already down 20 points and seems likely to drift off further today as the US indices offer no encouragement and we might find it hard to muster up enough enthusiasm to bid things up esp. with qbe and wow weak after their results. It's the last trading day of February though so could all reverse in the last hour or so.
The oil market is showing signs of moving out of oversupply and that sector could be a bright light and perhaps drag the overall resources up.
Early round up:
Bhp - towards the bottom of the range on daily charts without a lot of momentum, but from my point of view, trading in the very short term it's broken the low of the last 4 weeks recorded on Tuesday this week and failed to bounce back through that 2848 level. It's 2847 now and I'd like to take a short trade on the second time through 2848 assuming it continues to tick up a little.
Fmg - quite undecided, up 6 cents but spiked up early and looks like it's making a lower high. I think it would be well to only trade small while it's still in the range of y'day's opening 2 bars.
Ncm - strong bullish reversal this morning as gold failed to fall heavily. No opportunities for now but since it's moving it could offer a good trade later.
Rio - just bought some at 4730 as it breaks through yesterday's high and then through today's high.
Sto - I like the oils (eg aoe which I'm not trading intraday) and could see this running again today. For some reason this was sold down 30 cents on the open but is now even at 1501. Buy above 1512.
Wow - reported today and down 5% on the result. Only slightly below par but it's been a safe haven so there's bound to be a few nerves. Had a small rall off its lows. Don't fancy buying on the reversal pattern that's formed. Wait for dev'ts.
Wpl - sold off a strongish open but having another go. Buy is at 3636 on new highs. Pretty positive on the daily chart so I expect this to go again today.

11.51 Bought wpl at 3636. Here it is on a 30 minute and daily basis.

I've included the daily chart for context. In this time frame, I generally don't want to get too distracted by the bigger picture but with wpl quite extended, having run 12% in a couple of days, I want to see how plausible it is that the run can continue.

12.06 Long sto at 1514. Bhp has rallied more strongly than I expected too so it's definitely a day for the resources. Fmg now setting up a little bullishly.

12.14 After the fiasco of y'day I'm trying to just sit on my good trades rather than try to force a bunch of second rate ones.

12.22 Here's sto, it looks pretty awesome for today. I hope it goes on with it. Did sell a fraction at 1534 to cover dealing costs and some wpl earlier at 3656 for the same reason.

12.35 Short a little ncm at 3084 as it resumes its fall after a good little countertrend rally. I only took this trade because overall the downtrend is still in place.

12.56 The market is becalmed and I've been fretting about the ncm trade, small that it is, from the instant I put it on. It's too marginal and exactly what I'm trying to avoid. Volume is tiny although at least there's starting to be a regular little queue of sellers of slightly bigger size now that spot gold is down 6 dollars intraday.

1.11 We just had a touch of the wobbles and everything blipped down. Took the opportunity to get out of ncm for cost covering but decided to stay with my longs as rio held and sto and wpl are running and deserve more than a simple trailing stop.

1.19 Long wow at 2678. A small position as I chased this a bit after it broke through 2669. I'll keep a tight stop as it looks like a 3 wave retracement rally but having fallen a lot today there's room for a bit more of a rally. The wpl pullback is really stretching the friendship.

1.46 Wow got up to 2690 but is reversing sharply. Got out at 2682 to make a bit more than costs. Still long rio, sto and wpl. Rio and wpl are about where I got in which is a bit disappointing given that the market is near the day's highs. However, they had been a bit extended and they've chopped around without falling much from their highs so I'm hopeful of some action later.

1.51 Wpl is a bit of an experiment as it actually made a little topping out pattern that I might have shorted on another day. At the moment I would have been better off to have cut and reversed at 3640 odd but I'm trying to reduce turnover and also prioritise clearly trending stocks. I may end up losing a bit more on some of these by having wider stops but when they go well I expect to more than make up the difference.

2.17 Out of wpl at 3615. Also stopped out of rio at 4712. Bought some more sto at 1543 a bit earlier as it makes new highs.

2.46 The market turned around again and I've bought back into rio at 4727 and wpl at 3630. I'm not so sure about wpl now as the pullback overlapped the previous high so it's not trending so clearly as it was. I tipped out the extra sto I bought at 1550 as it started to drop but still have the stock from 1514 this morning. I've shorted ncm at 3060 as it seems to have made a genuine break down.

2.50 I'm long fmg at 270. I watched it go to 268 which was my first buy point but wanted to see more volume, hence chased it up a bit to 270. Wow had a sharp fall from the earlier 3 wave rally. It was just about tradeable but I missed it.

3.06 Short some wow at 2652. A bit late on this but broke some earlier supports. A pretty tight stop here because I'm a latecomer.

3.10 Thinking about my experience with stetching my stops on conviction trades and I need to take a few things on board. I still need a few clear rules on this otherwise it's easy to get anxious because I'm in two minds.

3.17 Sold half of my balance in sto at 1541. Decided I'd have a tight cut for half and give the other half a bit more room. It's an arm wrestle today with the market chopping quite wildly, not great for me.

3.23 I've got to leave fairly soon so bought back ncm for an average of 3052 as it races back to where I shorted it from.

3.28 Wow has sunk fast to 2606. I bought half back along the way and now that it's falling extremely fast I'm going to move my stop tight for the balance. Window dressing could easily turn things around rapidly.

3.34 Out of wow at 2600 as it has a slight rally and I've got other things to watch.

3.39 Keen to get out of sto now as it made a marginal new high at 1560 and has slipped back quickly to 1548. Out now at 1546.

3.48 Stopped out of wpl again at 2608 average, rio at 4720 and fmg at 264 as the rally failed.

11 trades, 4 winners, 4 losers, 3 scratch for a small gain on the day. Managed to confuse myself with thoughts on running wider stops, but in kind of a good way, as I think I might have shattered a couple of illusions and areas of wishful thinking but also cleared up a few things too.

Positive divergence. Thu Feb 26

While the fall in the US indices look incomplete the Australian market could be close to a low and possibly find support around the November 2008 lows of 3200 rather than fall to the next support levels at 2800.
Early on the xjo and spi look bullish with potential higher lows versus y'day afternoon and again from the 24th.
Bhp - a better bullish reversal is shaping up with matching black then white candles and an attempt to push through the highs of those candles.
Fmg - back on board after a big placement to a Chinese group of new shares and a large holding from presumably weak US hands. A positive dev't and the stock is shaping up well. Strong rally after knee jerk sell off and pullback to higher low which still needs confirmation.
Ncm - gold continues to sell off after a strong run and while ncm has had a rally off opening lows there looks to be little enthusiasm for a bounce.
Rio - once more similar to bhp and the index/spi but perhaps a little weaker.
Sto - just broken through with a buy at 1477 and now 1483, will try to get some close to here.
Wow - failed to run on a new high yesterday and looks undecided today.
Wpl - buy signal just after 11am at 3495 and another one is looming at 3509 above y'day's high. Oil strong o'night also helping sto.

11.43 Getting set in sto at 1482. Will have to be patient as it's a bit far from the break but the set up is supportive for a sustained run with a breach of highs covering 5 or 6 days action and a series of higher lows. An obvious target would be 1525. Chart follows.

11.52 Long wpl at 3510 and bhp at 2908. Wpl is a strong signal, bhp more of a reversal but a good enough pattern.

12.14 Was hasty into bhp. Buying one stock straight after another is a bit of a risk as you can get caught up in the excitement of putting on a good trade and take a marginal one. Best to at least look for 5 or 10 minutes. The spi paused for 20 minutes or so but is now up near its highs. Wpl has been strong, now at 3542 and sto is holding well after it's early spurt. If the overall market stays firm then fmg and possibly ncm could be buys.

12.44 Bhp has been drifting down and I've been thinking about cutting but as the spi is chopping about I thought better of it. Long some fmg now at 268, looks a fairly straightforward trade. Here's the chart.1.10 We're still clumping around in a range but most of the stocks I look at are setting up bullishly.

1.20 So much for that idea. It looks like we've failed to press on and the market is drifting down although without a huge amount of commitment. I've shorted some ncm at 3030 on a sell signal that's within a range so I'll be more comfortable if it can trade below the bottom of the range which is 3015.

1.26 Stopped out of bhp at 2889. Could go either way now.

1.31 Stopped out of wpl for a profit at 3534 and sto at 1489. They both look good but are pulling back with the market. Ncm, now through the day's lows.

1.44 The pulback may be over. It shook me out of a few positions although I held on to fmg. I got out of ncm at about 3010 as it was thin and the market rallying. No official stop. This may have been an irritating period but having got rid of weak longs including some of mine, there's scope for a run.

1.54 Fiddling round a bit too much but I sold ncm back out at 3012 after it pushed back through the break then started to slip again. Also sold out of fmg for a loss at 263, a reasonable trade but just didn't go my way. The Hong Kong market is down and other markets in our time zone are slipping back after being firm early. I'm break even for the day now with only one slightly poor trade in bhp costing me.

2.15 I bought back into wpl at 3560 as it breached its old highs. I was sceptical but there was quite a bit of volume trading so felt I ought to do the trade. Short in ncm is going nowhere and while the spi is drifting my stocks are in no man's land. If anything, fmg will be a sell at 259. A couple of brokers are negative because in addition to the Chinese placement there was going to be a bookbuild but it was abandoned due to lack of support at 250.

2.22 Decided to short rio at 4615 as this is the 6th bar that it's been drifting down and it had held 4620 for an hour. There's a more definitive break at 4587 but it had also made a lower high after rallying from an opening sell off. Also out of wpl at 3550 as my scepticism got the better of me. I'm always nervous of a marginal new high with no follow through and the spi is continuing to weaken slowly. One thing in the trade's favour is that there still appears to be reasonable buying.

2.39 Damn and blast. Wpl went up again as the spi rallied and I've bought back in at 3572 - ouch. Have shorted fmg at 257 and bought sto on a resumption at 1493. Also bought back half of rio at 4615. At the moment I'm long sto and wpl which have been the two trending stocks in my bunch and short fmg, ncm and rio on a punt.

2.44 Bhp made a sell signal at 2883 so short a small position - again, would like to see it go through the day's lows to be convinced.

2.50 Out of rio for square as the spi rallies sharply again and it still hasn't made a proper sell signal and out of ncm for a small profit as the bar looks like closing on it's highs making a bullish reversal set up.

2.56 I'm really jumping at shadows today and apart from the iffy trade in bhp early on, that's what has cost me a good day so far. Sto and wpl have been the trending stocks and I was sorely tempted to keep a stop back to the breakout with them both. With hindsight that would have sealed the day. It's approaching 3pm and the spi has reversed now and is gathering steam.

3.23 Bought a little wow at 2812 on a bullish reversal earlier and now also some rio at 4629 for the same reason. On a scatty day for me I realised that my plan is only to take reversals in extended patterns not in trading ranges like these two so I'll try to get out of them without too much damage.

3.33 Got out of rio for square but cost myself 6c in wow.

3.38 Now stopped out of fmg at 263. Really disappointed with this as it dropped sharply from 262 and I thought 262 would act as strong resistance on any retracement.

3.48 Stubbornly tried again to short fmg at 258 as 263 seemed to act as strong resistance and I feel like I was suckered in to stopping out.

3.55 Closed bhp for scratch at 2882 as there's only minutes to go....sigh, fmg at 258 after missing 255. Still long sto and wpl, small size, for the match.

4.23 Sold out of the balance of sto at 1501 and wpl at 3598 in the match, bhp slipped to 2860 so it's a shame I didn't leave some short for the 4.10 close out. Ok, the washup. A tiny loss, and like every other day there have been enough opportunities to make solid money. A bit like yesterday I was slightly flustered and messed up some good positions plus I had a spot of bad luck in fmg where I did 2 reasonable trades and had to stop out at the worst point. I feel like I should have done much better with sto and wpl and possibly should have dealt in bigger size there. There were 15 trades all up, 6 winners, 5 losers, 4 break even. 7 trades were either slightly or very silly. All stops were good although I wonder whether I should use a qualitative filter for the high class trades so as to stay in longer. The two breakout charts are below.

On reflection, the stop and re-entry points probably aren't too costly. The issue might be confidence, ie to go harder at a stock with a clear breakout. I'm dealing in smaller size than usual and I'm not planning to increase volume until I feel like I've mastered the approach I'm trying to take. The last 2 days are a bit disappointing as they've been a step backwards from Monday and
Tuesday. I haven't thrown in a shocker like one day last week and I'm getting better and better at cutting. The problem is trade selection; I'm quite cavalier about taking on marginal trades. From now on, I'll work on being more discerning. This will allow me to build the size on the good trades and keep my composure.

Mr Sensible. Wed Feb 25

If the US markets are bipolar, bouncing close to 4% last night after falling about that the previous day, then the Australian market is a serene zen master.
We limited our fall yesterday to 20 points and at 11.35 am the xjo index is up 29 points. Gold, the safe haven, fell overnight while oil and base metals rose.

A quick summary to start.
The spi futures contract is continuing to pull back from the opening but the initial high indicated that it will probably find support fairly soon.
Bhp - closed in adr form at 3053 but topped out early at 2994. Made a small sell signal just after 11am at 2954 but has not really moved since. A buy at 2965.
Fmg -suspension continues.
Ncm - weak on a sharp o'night fall in gold. Broke y'days low of 3208 and rallied only to fall back through just after 11. Now near it's lows at 3164. Nothing yet, but looks like it could fall further today.
Rio - very similar pattern to bhp. There is a chance of continued weakness now, just a few minutes later, and could be a surprise sell at 4705. (bhp at 2945)
Sto - ex dividend 20 cents and only down 5 so net up 15. Ranging.
Wow - finished well y'day and continued early running up to 2855. Is still up 19 at 2837 but is offering no trade right now.
Wpl - made a buy at 3472 just after 11.30. I bought some at 3478 which I cut at 3489 as the stock leapt up to 3508 and promptly fell back to 3480. Now, 3493 and looks solid enough but I felt uncomfortable as I'd missed the signal by 7 cents so felt it was better to look on.

11.57 Here's ncm showing signs of a bullish reversal. A white hanged man after a decent fall of 3.7%. Could be worth taking.

12.00 Funnily enough in the last few minutes ncm slipped back to form more of a doji - slightly white. Nevertheless, a bit of a sign of a turn so watching closely for a rally through 3180. Glad I cut wpl, it's chopping around after peaking, now at 3476. Rio and bhp are still soft. I'm not keen on either sell signal but can see that there is room to fill a gap on the downside so even tho' I'm bullish it'd be worth taking the trade. Rio below. 12.09 Long ncm at 3182. Wow close to a sell at 2826. B'out was at 2812 so I don't expect a big fall.

12.12 Short half size wow at 2825. Tight stop on this. Same in bhp at 2943.

12.16 Short a little wpl at 3461 as it reverses after making new high, and rio at 4693 - again small size esp. as I missed the 4705 level.

12.28 Sold a bit more wpl at 3459 to average 3460 and have been nibbling at my existing positions as I'm not really convinced by any of them! Ncm near a cut. I did sell half at 3180 and now at 3166. Obama is speaking at 1pm giving more info on the bank bail outs so I guess the market is drifting back to neutral ahead of that.

12.37 Closed out bhp and rio at 2934 and 4688 as 1pm approaches and wow at 2817. I've got no cuts but have so little conviction that I think it's safer this way. Still long a little ncm and short some wpl. I probably like wpl best. The chart failed at a new high and reversed.

12.48 Out of last ncm at 3160. New lows now but missed it, may get another go.

12.58 Out of wpl for square. No pos'n now, waiting on news. Most things have chopped although wow surprised with a spike down to 2793 although it's now 2804.

1.08 Still waiting for Obama and the market. Wpl has ticked up but I'm suspicious after the failed high and think it's more likely to slip again later. Bhp, rio and wow are still grinding down but showing potential for a rally.

1.21 Obama is speaking now, no specifics yet, and the spi is bouncing a bit.

1.32 Wow looking like a reversal buy but the trouble is the stop is quite a long way away and Obama is still speaking, explaining to the US public why they have to bail out the banks. Oh well, deep breath, long wow at 2820.

1.37 Long bhp at 2936, close to dealing in rio.

1.52 Dealt a bit too soon. The market is still going nowhere while the speech continues and US futures are indecisive.

2.00 Decided against shorting rio at 4664 on a continuation pattern because of the cessation of meaningful trade while the speech goes on and on. Wpl might have made a lower high which would give a nice sell at 3450.

2.13 Stocks are slipping again post the speech and I've had to scramble to get out of wow at 2804 and bhp at 2914, not great cuts. I still feel a bit bullish which hasn't helped me today.

2.28 A bit of a dud day now as I've been spooked by the chop around the news and a bit too skewed to my market view. Maybe there'll be something sustained this afternoon.

2.35 I ignored a sell signal in bhp at 2918, writing it off as skittish trade but bhp is now at 2893. Wpl has breached my level and tho' I've been agressive I've still missed selling any as it's now 3437. I hope to get some on a bounce back after the stop loss/automatic orders have got set.

2.45 Sold wpl at 3443. I can see room for bhp to rally from here, the discount to the US close is about 5% and the Dow futures are only down 33 points. Could be some buys soon after 3pm.

3.08 Wpl is very thin. Jumped from 3422 to 3453 in about 30 seconds on no volume. Back at 3427 now.

3.38 A rally didn't eventuate and I've just got one position, a small short in wpl which is now 3407. I'm loathe to do much more now.

3.42 Out of wpl at 3412. My trailing stop is too far way so just bought into a rally off a 3400 low.

3.57 A chart of bhp just before the close illustrates the problem with today's trading. I took the short on the break of a consolidation at the start of the 5th bar but didn't let the pos'n run. No real loss as it transpired but then I bought on some flimsy price action - during the Obama speech and lunchtime - and had to cut. This was exactly the sort of trade I'd done well to avoid yesterday. Then my opinions prevented me from taking a perfectly good ross hook short at 2918.

4.01 The wash up is that I lost a small amount, about a third of y'day's result but blew the chance of having a moderately good day. 9 trades, 4 small winners, 3 losers, 2 scratch. The moral of this story is that as a technical trader I can have opinions but the price action is the dominant message. Instead of worrying about the reaction to Obama's speech I would have been better off to follow my signals and perhaps keep position size smaller in case of too much volatility.

A dozen years of futility for the Dow. Tue Feb 24

The US market fell heavily again last night and the Dow returned to levels last seen in 1997.
However, the Aussie market is outperforming again and we're only down 40 points at 11.47 am which is 1.2%. Since, the hedge funds finished smashing the Aussie market in the last 6 months of 2008 as they rushed to repatriate their money, our tendency has been to outperform.

At first glance, my regular stocks look more likely to rally.
Bhp - made a higher low and flirted with a buy signal at 2881. May try again.
Fmg - suspended pending an issue.
Ncm - weak and falling now after having broken y'day's low, rallied back to the break and slipped again. Would like to get on board but just too late.
Rio - very similar to bhp, buy point is at 4610.
Sto - tight range for first 4 bars. Overall, on the bigger scales it looks weak and I'd sell on some reasonable momentum through 1425.
Wow - still ranging but much more interesting as it looks like it could plausibly break a one month range with a bit of a rally.
Wpl - quite firm. Oil was weak overnight but stock is only down 9 cents with a buy above 3281.

12.17 Wpl is a buy now at 3283 but I don't want to deal on a blip up so I'm just holding off for now. 12.19 Ok, it's still not falling back so trying to buy half pos'n at 3285. Had to pay up a bit to 3290 to even get half but it should drift back so I can complete.

12.23 Completed the wpl pos'n at 3290 on a slip back from 3296. The spi is holding but not rallying so we'll see how wpl pans out but it's a pretty clear break.


Here's the chart at 12.27.

12.33 Sto has made a buy signal although again on light volume. I'll wait again to see if it holds. Bhp, wow and wpl also close to a buy signal.

12.36 Bought a little sto at 1442, a bit of buying is appearing just below the market although overall the spi is still in a range.

12.42 Completed sto at 1446 and long bhp now at 2882. Rio is also nearing 4612 where I'd try to buy as it would be the second time through. I have mixed feelings about bhp; it's made a solid buy signal but it seems unlikely to push through yesterday's low of 2913.

1.08 My stocks are extremely thin today and I'm not keen to have super tight stops as the spi is resolutely in its range. Ncm has had a bit of a rally, getting back towards the 3270 level it fell from. I can't really see a trade there. I could have tried to play the retracement rally but it would have been a bit tight.

1.31 A pretty dull day but still holding up well relative to the Tokyo and Hong Kong indices. I've been close to cutting in all 3 of my open positions, bhp, sto and wpl.

1.39 Ncm got back up to 3272 but is losing momentum. There's a short on a sustained fall through 3245 but I don't want to do anything yet as it's so rangy. On days like these you can get chopped about. If anything ncm reminds me of sto y'day when there were 3 small retracement bars which then accelerated up.

1.59 Wpl announced a gas discovery, I don't know how significant. The stock is at 3320, I've got half left having sold some earlier to cover costs and a touch at 3316 on the blip up. So far, I sold a few bhp soon after my entry at 2884 and then a fraction at my cut level of 2870. As in wpl, I let the stop go a tiny bit wider while watching the spi stay tightly in a range.

2.10 The futures contract is still in a narrow band but ticking towards the top of it at least. Wow is looking interesting on a break through 2808 or perhaps 2812. Wpl now at 3379, I sold a tiny bit more at 3372.

2.21 Out of the balance of bhp at 2870. I had run the stop by a cent or two only but I'd given it 90 minutes to rally back and the best it managed was a small run to 2880 which quickly failed. Rio which has a similar chart is also sliding back. Sto is firm at 1448 although not going anywhere fast and wpl is consolidating at 3360. My stop for the balance is at 3339 - I bought at an average of 3289 and the stock has reached 3389 so I want to keep half the unrealised profits as a worst case. I'm obviously hoping that the rally resumes.

2.29 Attempting to buy a small amount of ncm at 3273 as for the 5th candle in a row it pushes up. Set now for a half pos'n.

2.33 Here is a 30 minute chart of the March futures contract. A very dull day so far.

2.58 The futures have convincingly rallied through 3300 and I bought rio a short time ago at 4615, wow at 2809 and sold ncm - for no reason, I was distracted with something else, for scratch. Subsequently, went again in bhp at 2885.

3.22 Wpl had made a tight inside bar which gave me a stop at 3356. I didn't really want to take it but compromised with half of my balance at 3352 and the other still with the wide stop of 3339. Bhp, rio and wow had pulled back a little after their spurts but are now pushing back up and the spi is near the day's highs at 3315. I'm long bhp, rio, half my sto, wow and a small balance of wpl. Long everything except ncm which I sadly cut and is now at 3297.

3.40 Stopped out of the balance of sto at 1446, had sold some at 1453 earlier. Consolidating again as the market got to the earlier highs and has slipped slightly.

3.49 Stopped out of rio at 4630 (stop was at 4624, got slightly better). Sold half earlier at average of 4653. Sold a little wow to cover costs at 2816 but only a few minutes to go. Sold bhp at 2894 and 2899, just a small balance left.

3.58 Sold balance of bhp at 2898. Don't want to wait till the 4.10 match out because we're trading at a premium to the US close of 2875 and there's no particular momentum. Also sold a bit more wow.

4.11 Sold balance of wow at 2818 and wpl at 3360.

7 trades on the day and all long. 5 winners, 1 loser, 1 scratch. Did most things well enough, especially avoiding trades during the long period where the market went sideways. One small error in ncm and a profitable day overall.

The best trade was in wpl. Here's how it went for the rest of the day. The main thing I did was to not stop out of all my position during the consolidation around 3300 during the middle of the day as the stock was thin and whippy at the time.

The early bird? Mon Feb 23

The Aussie market has been outperforming most of the large markets lately but the party's over today. For some reason the overnight spi contract was up 3 points but an hour and a half into trading today the xjo (top 200 index) and the spi are down heavily.
There was a great opportunity to short rio on a ross hook entry just after 11am. Here's the chart; the start of the 3rd bar was a continuation after a bearish inside bar.





There was also an 11am opportunity to short wpl on a traders trick entry where there was a lot of room to justify pre-empting the trade.
A quick round up.

Bhp: trending down, new lows (in this time frame) but losing momentum. Down 127 but 65 cents was the stock going ex div. US closing price was 3040, so 2975 after the dividend compared to 2925 now. Does imply there's realistic room for a further fall.

Fmg is suspended as they've announced a capital raising and Wow is still in a trading range so I'll leave it alone.

Ncm: opened strongly thanks to more strength in gold but has slipped off with the rest of the market. Looks like I could find a trade there, possibly bullish if it can hold this level.

Rio: down 6%, making weekly and daily sell signals. It may have a quick bullish reversal which I doubt I'll trade unless there's a good foundation. I'm keen to find a continuation down later in the day.

Sto: Again looking weak on longer term charts although not breaking down yet. Looks like it is making a second inside bar but they're weak and not indicative of a bullish reversal. 1410 would be a new low and a sell signal.

Wpl: Made a new low in the last 15 minutes but I was reluctant to take it as a natural stop was too far away and the previous bar, while weak, had rallied off it's lows. Is ex dividend 55 cents today.

Every time I insert a chart this editing window goes to automatic double spacing. I haven't found the trick to fix it yet.

12.10 No trades yet as the market has traded in a range for the last 45 minutes after the gap down. Is a fall of 2.5% too much or are we catching up after having outperformed? My two most likely for a trade are ncm and sto.

12.16 I've got a potential buy signal now in ncm but I think I'd like to wait until closer to the end of the bar. There's 14 minutes to go and at the moment it's pushing up but on light volume. Also a break of 3385 would be a more secure entry. I guess there's never any definitive answer to these quandaries. Here's the chart - at roughly 12.19.

12.22 Bought a little at 3377, hopefully the strength will hold (spi is making a bullish reversal pattern) and I can pick up the rest. Stop is at 3353.

12.25 Spacing fixed! Inserted another chart, tho' I can't go back and fix up the earlier sections.
Bhp and wpl setting up for bullish reversals. Both worth taking with characteristic momentum leading into them and matching black and white candlesticks. May have a couple of trades after 12.30.

12.31 Bought bhp at 2945, buy was at 2941. Wpl went a bit too far at the end so I've left it alone. Rio also had a sharp little reversal but a bit hard to trade. It could set up for a second leg up later.

12.41 Decided to buy rio at 4736 as the futures continue to rally and the momentum down into the turning point was strong. Added to ncm at 3384 although given the turnaround elsewhere it's possible ncm will fail - gold is slipping as the broad market rallies.

1.04 Cut my ncm trade at 3360 as it slipped below the range of a very lacklustre rally. Setting up for a short now but would need more volume to get on board.

1.07 Just in time in ncm as it quickly slipped to 3336. Looking to short a little on a bounce. Just sold a small amount at 3352.

1.38 I'm finding it a bit hard to change my behaviour for the better. I leapt straight into a short in ncm 3 minutes after saying I'd need to see more negative momentum. However, I've been patient with my longs in bhp and rio. Sto is interesting. The first couple of corrective bars this morning were very non committal but then there was a third white candle and it started to shape up well. I thought about a buy on the break of that candle but didn't take the trade. It's continued to rall nicely.

1.52 Wpl did something similar to sto and now is shaping up as a short as the rally falters.

1.58 Stopped out of bhp at 2951 and thinking about a small short but will wait till things settle a bit.

2.01 Stopped out of rio at 4743 and short at 4737. Has made a little 1-2-3 sell signal but could still be a bit knee jerk.

2.07 Short wpl at 3256 on resumption of down trend. Similar set ups on the cards in bhp and sto.

2.20 Wpl rushed straight through my stop at 3275 as the spi keeps grinding up and then dropped back below so I haven't stopped out yet, I'm just waiting for more confirmation.

2.22 Out at 3280. Ncm is now confirming its weakness and is down through the previous low of 3336 at 3322. Tried to sell more but was hesitant after earlier loss and missed my chance. Wow would actually have been tradeable as it's moved up strongly to the top of the recent range. If it breaks through this week, perhaps when it reports, then it will be worth looking at seriously again.

2.28 Trying to build into a short in bhp as it has a second run at pulling back after a consolidation. Also re-entered the short in wpl at 3268 as I felt like I shouldn't have cut. 4 pos'ns now, all short, bhp, ncm, rio and wpl. The spi is finally pulling back a little.

2.33 Bhp short was at 2948 and added to rio short at 4735. Bought a quarter of my short pos'n back in ncm at 3278.

2.41 Punty trade in wpl now confirmed but the trick is probably to wait for the second time through. There's very often a second go and the move is usually better. Close to dealing in sto at 1435. I'm short quite a bit so I'm waiting for a bit of committed selling and a rally back. If I miss it, I miss it.

3.02 My positions have gone quite well in the last half hour. Bought back most of my second tranche of rio as it tests the earlier lows. Hoping for a failure to hold the lows for a better return on the first set. Bought back a little more ncm at 3281 and half wpl at 3256 and 3231. It's just jumped skittishly to 3260. Bhp is down but holding well. Sto cracked down but rallied back to still be in the range at 1440.

Here's a chart of QBE, an insurance company. I haven't been trading in this because I can't short it, even on an intraday basis, but I noticed the copybook reversal pattern this morning. Most of the banks had something similar. Might have been worthwhile taking a trade as the spi was rallying on positive news regarding the Obama administration putting some money into Citigroup and the financials were always likely to rally hardest.

3.19 Things have stalled here and I'm neither cutting nor adding. Sto is the only potential trade but is holding up well while wpl is sitting back up near where I shorted it. I haven't cut the last part of the trade but may have to soon.

3.32 Stopped out of last ncm at 3298. A bit unlucky as it's pretty thin and has slipped back again. Still short bhp, rio and wpl.

3.38 Stopped out of last wpl at 3271. As always, I'm looking for that one last trade and still holding out hopes in sto but time is running short.

3.58 Out of bhp at 2938 and rio at 4650 on the close. Sto did set up but with a buy signal and a bit too late to trade.

4.11 A better day today. It wasn't error free but I did most things right. There were 9 trades with 7 winners and 2 losers.

The one big error was in ncm where I couldn't wait until either a strong bar or a new high before getting into a long position early on. I cut reasonably well but jumped too fast into the opposite trade. After that I was patient enough in holding while it rallied back but missed the chance to add to my position on the second time through. Here's the chart at the end of the day.

However, I did manage to learn from my mistakes and not jump straight into a short in sto without waiting for a bit more confirmation. Here's a chart showing a small sell signal at 1434. The stock quickly rallied and I would have taken the second time through on the downside but it never came, instead the rally resumed.

Hold on

I'm trying to reflect on my progress so far and the temptation is to fiddle with things. For example, wow is in a tight range while industrials like wes or bxb have been trending nicely. Equally, in my normal approach of trading on a longer time frame there seem to have been plenty of opportunities in the last couple of weeks.
But this process isn't really about maximising opportunities right now but about relearning good habits, changing bad ones and most important of all, detaching myself from the outcome of a trade by learning to cut well and to trust my signals. There's a new openness developing in me because on any given day the movement of a stock can have very little to do with the overall trend, the broad market or the news. In fact, some of the best moves are reversals of the opening direction.
My most profitable trading years were as a market maker where I focussed on a limited number of stocks and responded to their moves without too many preconceptions. I expect a lot of the income came from the market making side but there was an element of fluidity that I want to regain where, for example, I might be short a stock all morning and long it most of the afternoon in response to obvious momentum.
A few months back I did a bit of work on intraday trading using 30 minute charts and comparing results between closing out at the end of each day and holding positions overnight. Holding positions overnight won hands down. Nevertheless, I want to persist with closing out each day because I believe that it is possible to make good money with this approach and as soon as I start holding positions overnight I run the risk of trading yesterday's market rather than today's. Until I feel like I've inculcated good habits I want to avoid this. I also want to continue to start later so that I approach the day in a more composed manner and have more chance of being open minded about the day's action.

I've been scanning through the trades trying to work out obvious errors.
It can be a bit too easy to backfit rules, or rules of thumb based on a few recent trades but one thing worth considering is to be very choosy when the bar size has shrunk and the stock has gone into a range with a lot of doji type bars. I've tried for reversal trades a few times when inappropriate.

Here's a chart of ncm covering the last 6 days trading. On a few of the days there are some nice tradeable reversals. The good ones have some decent momentum leading in to them and a clear pattern at the turning point.
There are dud ones on the first and fourth days. On the first day there's no momentum at all and probably little point trading. (Perhaps an attempt to buy on the 4th bar).
On the 18th of Feb there's better momentum leading into the potential turning point but no energy at the reversal.
I don't want to bank on this completely but it's worth examining further when I've got more time. Got to go, seeing Gran Torino.

New closing low for the dow, rio issue?

The US lead was weak as the dow made a new closing low and intraday low relative to the one in late November last year.
It's 11.20 now and early leads are interesting, particularly that bhp is up 1% and rio down nearly 4% despite rio being up 6% in London and bhp up 2%. I assume that there's a strong hint of an issue rather than a sell down to Chinalco. Technically the stock failed to convincingly breach 5200 yesterday.
Otherwise the golds are down and the oils up in line with the overnight leads. We've fallen steadily from the open to be down 43 points but there's probably room for further falls.

I've decided to cut lgl from my list to try and reduce the number of trades I do. After cutting out the silly or tight trades I would still have quite a lot to watch and lgl, with it's high volume and relatively small ranges, isn't that great for an intraday breakout style.

Bhp pushed up to 3052, through yesterday's high by a cent or two and still looks quite positive.
Fmg is chopping around near support. No trade for a while here.
Ncm is heavily down but with no signals.
Rio the same.
Sto broke through yesterday's high of 1462 and is pulling back. Potential buy on a very tight bar or else wait for a new high at 1472.
Wow could drive down today. Sell at 2730.
Wpl ran early and is pulling back. It actually looks a bit weak but the reversal bars have too large a range to take a short trade.

Fmg made a small doji with a higher low than the open. Pre-emptive buy would be at 293 because I think the correction is complete and the top of the early range is 306 so a failure could still make me money.


11.48 Short wow at 2729. It just popped straight back up a few cents and I sometimes wonder whether I should build slowly into these range break type positions.

12.13 Nothing much happening. Wow coming close to stopping me out.

12.21 The charts for xjo and the spi are starting to make the matching reverse colour candlesticks which could indicate a bit of a rally developing later.

12.24 Bought fmg at 293. Volume is rather thin today which is a concern.
Out of wow at 2744.

12.48 Stopped out of fmg at 289 as the potential bullish reversal was only a pause in the down trend. Wow starting to go through earlier lows. May go again there.

12.51 Short ncm as it breaks 3354 after pausing there for 3 bars.

12.58 Sto looks weak and I'm tempted to take a short trade as it's behaving a bit like wpl. Ie Both rallied up on the overnight rise in the oil price but dropped steadily since finding no support. Have been back to square on the day. The difference is that wpl was more extended and would actually have been a reasonable short. I'll think about it on a break through 1440.
Only position right now is short ncm which is going my way slightly.

1.21 Decided to short fmg at 287. This is pre-empting a lower high and unlike yesterday support is quite close. Already slightly regretting it although I do like the signal.

I was thinking some more about the best signals. I was bearish wpl but shied away from the trade thinking the bars were too big. In fact, it was more to do with my scaling and I could have easily taken the short at about 3405. What's interesting is a stock that's already quite extended and continues on the back of early interest before reversing.

1.30 Closed out last half of my ncm as it stopped me out at my entry level.

1.44 Long half pos'n in rio at 4962 as it reverses a bit.

1.59 Long ncm at 3363 as it seems to be following the pattern of rio which is going on with the reversal. Ditto for wpl at 3363. Bhp close as it rallies back to 3044.

2.19 Cut rio to keep something after sharp dip from 5028. Cut wpl at 3354 for small loss on reversal.

2.33 Cut ncm 3371. Only one pos'n, short fmg. The market is indecisive. Rio has steadied up again and looks the best of the stocks that reversed with another entry signal at 5029.

2.48 Scratch in fmg as I've got to go soon. The spi is having a more sustained rally but fmg really does look shabby so maybe I should have waited a bit longer.

Slightly down and half looking for a little catch up trade...which is a small short in wpl as it makes new lows and another half trade in rio. In that case a traders trick entry where there's enough room on the downside.
3.06 Short fmg at 283 as the fall is gathering momentum and I could make some money before I leave in about half an hour!

3.13 Cut rio and immediately regret all 3 trades as the motivation and time frame are poor.
My personal El Guapo is impetuousness.

3.35 Out of wpl - scratch trade.

3.37 Gave to go soon.

10 trades, 1 still open, 3 winners, 4 losers, 2 break even for a slight loss.
A pretty quiet day with few missed opportunities except perhaps that chance in wpl. Having to leave early has worked against me a little as I fretted about fmg and cut a good position too early.
Out of fmg at 281 and off to yoga.

Extra late start

I've been running errands all morning and it's almost noon.
I'm glad I'm late really as we've rallied on a weak lead in that the US hardly moved after a big fall and we had already rallied strongly yesterday from mid morning. I'm trying hard to look at each day on its merits but I think I would have been a bit skewed to the bearish side.

My initial thoughts:
Bhp - rallied for 3 bars off a low open. 4th bar just completed is an inside bar, could go either way although it is in a little downtrend.
Fmg - had a volatile afternoon yesterday. Further clarification this morning about potential investment interest has helped the stock to firm. So far it's topped out at 332 just below y'days high of 334. Again, this could go either way. New highs are on the cards but there's enough room to go short for the 3rd wave of a pull back.
Lgl - Gold is still running and the stock has reported a reasonable profit but it's created a tight range just below y'day's high of 364. Looks bullish.
Ncm - Pulling back off a strong open but it doesn't look extended enough to try the quick reversal trade. Wait and see.
Rio - Similar story to ncm but looks most likely to have another go at 5200 and could get through this time. 5140 now after peaking at 5192.
Sto - Strong open, solid report, condensing into a tight range. Bullish but there may also be room for a short trade after having gapped up.
Wow - Still in a very tight range. Small buying opportunity at 2771.
Wpl - Continued strength after yesterday's bullish reversal. Looking for a buying opportunity after a few tight bars here but may also be a small shorting opportunity.

No trades yet!

12.14 That didn't last long...short bhp at 3018 - break was at 3023 and short fmg at 318 - second time at this break point. Positions sizes smaller than normal as I don't want to fall into the trap of doing too much too soon.

12.25 Sto and wpl are looking ready to run again.

12.30 Covered bhp at 3034. Keeping the stop very tight early so as not to dig a hole. Bhp now starting to look red hot. I was already thinking that bhp opened very well and is making a reverse head and shoulders pattern. Buy signal at 3036.

12.34 Long bhp at 3039 and cut and reverse fmg at 324.
Wpl has given a buy signal but it's still very thin.
Would buy more bhp at 3050 on real confirmation as it's not far away.
Out of fmg at 323 - realised that as it's starting to consolidate it would be better to be out. Decent enough sell signal at 316, would offer more certainty and still enough room to support at 290ish for a trade.
Long wpl at 3388 - hope hesitation won't be costly.

12.50 Short lgl at 354. Lower high and a break through 357. Chart looks good enough but could fall to low 340's. Sell on fact?

1.23 Sitting on my positions as the spi consolidates.
Turns out the reversal trade would have worked in ncm as it has weakened sharply. Perhaps there'll be an opportunity to trade it later. Hopefully, lgl which has rallied then slipped since I entered the trade, will follow suit.
Long sto at 1455.

Here's a test as to whether the really good trades stand out.
bhp - think it could run hard this afternoon.
lgl - confident it will fall
sto - seems certain to rally

wpl - confirming break, I'm positive but not super confident.
rio - reasonable good chance of rallying again.

1.33 Long rio at 5145.

1.35 Added to lgl short at 353 as it breaks yesterday's low.

1.46 Now long fmg at 327 as similarly to y'day it starts to gather steam after a shallow correction. Not entirely convinced but the upside is large if it cracks on.
Also added to bhp at 3044 at a clear buy signal on the last 4 bars with a stronger signal at 3049.

1.51 Finished the second tranche of bhp at 3050.

1.55 A lot of positions on now. bhp, fmg, rio, sto and wpl long with lgl short.
I feel a bit nervy but the challenge is to trade each on its merits and detach yourself from the outcome.

Once again I did too many trades early and chopped in and out losing money. Now that there are some much better signals the challenge is to stay with them.
The only punty trade I have on is fmg.

2.07 Out of fmg at 325 as it ran to 330 but couldn't go on.

2.16 Stopped out of sto at 1448. Stopped out of wpl at 3391.
Short fmg at 322 on potential lower high. I know I'm flogging a dead horse.

2.33 Fmg cut at 322. Went to 319 and rallying with spi.

2.46 Stopped out of bhp at 3027.
Now long rio, and close to stopping out there, and short lgl which is going my way.
The market made a minor new high about an hour ago and now looks like falling away.
I want to be awake to new opportunities here.

2.50 Shorted fmg at 315. 5th time I've been in this today but the first decent signal.

3.01 Bought more rio at 5205 just because it's a new high and I'm trying to train myself to take the obvious signals rather than try the sneaky entries all the time.

3.21 Bought back half lgl at 352, a bit impatient and half fmg at 304. Futures still very choppy. I could see sto giving me another buy signal (I think I'd need to see 1462) for a late day run.

3.37 Stopped out of both rio trades at 5172.

3.39 Short small wpl at 3375 after break at 3380. There is a shorting opportunity in ncm but the wpl trade is a better signal so I'm willing to take it.

3.56 Bought back two thirds of wpl on a quick move my way. I'm fine with this as it's a very quick in and out trade.
Bought a touch more fmg at 287.
Will close out balance of shorts in fmg, lgl and wpl on the match.

4.10 Slightly negative match with lgl jumping back to 353.

Overall, break even on the day. 14 trades, 5 winners, 6 losers and 3 scratch.
I didn't make yesterday's error of running my stops and I think that's why I ended square. I did make every-day-so-far's error of doing too many trades. I wouldn't necessarily say that there were any dumb trades but I think I need to be clearer on what's an acceptable trade. When I did get trades to go my way I was definitely more patient.

3 trades in bhp.
Trade 1, I shorted at 3018 on the 5th bar looking for a resumption of the down trend. However, the rally had overlapped previous lows so not great.
Trade 2, I realised there was strength, got carried away and leapt into a bullish trade. Eventually I got a signal to confirm.
Trade 3, this was a high quality signal with a new high for the day and 2 supporting higher lows. It failed and I cut - no regrets.

Fmg was a bit of a fiasco, with 5 marginal trades and one good one. Trade 1 was the best of the marginal trades. There were two matching candles at a lower high, first white then black, often a good sign for a turning point. Was a bit unlucky with the cut here.Trades 2 and 3 were silly knee jerk trades.Trade 4 was better but with the stock still in a range, not great.Trade 5 was an easy trade and went well. If I hadn't been in a hole after the first 4 trades then I could have gone harder at this.

In wpl, below, I took 2 trades. The first trade was a buy at 3388. I was caught between 2 stools here. I didn't rush to take the pre-emptive trade at 3381 nor wait for confirmation at 3398. My cut was ok. I took the second trade towards the close, shorting at 3376. There is another example of a matching pair of candles, followed by a small bearish bar and then weakness. I guess I could have gone earlier at 3396 which is the break of the small 3rd bar but since the stronger signal was not much lower at 3380 it was worth waiting.

What have I learnt today. That you just have to be machine-like with your stops; that I need to be more choosy about my trades. As far as the pre-emptive signals go, I think I'll avoid traders trick entries unless there's enough room for a failed rally to still make some money and I should favour a bar or two with very small range at the bottom. It's still worth looking at the reversal trade in a running stock, there can be terrific momentum and I should keep an eye out for a range break of a yin/yang pair of candles.

Looking back at Sunday's post, I mentioned this set up regarding a bullish reversal in rio but didn't spot the characteristic candlestick pattern.

Heading for new lows

It's approaching 11.30 and the market is down 95 points or 2.8% following a weak lead from the US and the correction from mid November last year seems to be well and truly over.

Of my 8 stocks the two golds are up as is fmg, defying the overnight weakness in the larger resource stocks but maybe buoyed by the continued Chinese interest in buying resource stocks.

11.31 Wpl broke through the morning low at the end of the last bar and I've put on part of a short at 3159. 3152 was a level held since late December and it's already been below that.
Also short fmg on a reversal at 275. Sold a bit more wpl at 3145.

11.56 Sold rio at 4775. There was a traders trick entry at 4779, during the 11-11.30 am bar and since the stock hadn't rallied I decided to take it.
Wpl is finishing the bar fairly strongly but I think I'll keep a widish stop as it's a major break on the daily. Obviously, as yesterday's 10 minute experience showed, the 30 minute signal is the relevant one for me.

12.07 Quite a few potential signals as the spi is having a bit of a rally. I could buy bhp at 3042 or ncm at 3598 and lgl at 360. Wpl is also testing my patience. For the moment I'm sitting tight. Ncm is the best quality trade, if a bit extended.

12.34 the market is grinding up and I've been failing to bite the bullet. I've stopped out of rio at 4843 but could have done 25 cents better.

12.51 Bought some ncm at 3609, semi reluctantly. I was hesitant yesterday but it was the best trade of the day.

12.54 shocking start to the day. All trades gone against me and I've been running my stops to make things worse. The market is grinding up and could well offer some bearish trades later in the day as this peters out.
I think I forced the trade in rio and I definitely did in fmg. I could have cut wpl at 3176 and been ready to have another go on the short side. As things stand, it's been up through 3200 testing resistance and is now at 3191.

1.08 Tipped out ncm at 3605. Had a quick run up to 3620 but slipped right back. Zero momentum, unlike yesterday afternoon.

1.13 Just realised I missed a simple buy signal in rio at 4862, stock is now 4900. It's also one I could have taken at 4813 with a cut and reverse so more gnashing of teeth.

1.30 Closed out wpl at 3210.

1.33 Short sto at 1423 on resumption of fall.

1.44 Just noticing that fmg was setting up really well having failed to pull back and that I'd stretched my cut ridiculously. Missed 284 and had to pay 286. Now long at 287.

1.51 Short bhp at 3037 and ncm at 3590 as the rally falters.

2.05 Short rio at 4916 after 3 wave rally.

2.11 Short lgl at 356 looking for correction. Half position size.

2.29 Closed short in ncm at 3612.

2.35 Closed short lgl at 357. I've been thinking that I've been doing too many trades. It's a fair bit to do with impatience and I think often the best trades are the ones that you see setting up and you're not expecting them. Eg fmg has kept running up to 290 and that became pretty clear when the stock was at 283,284 and holding well. Likewise rio made a great little buy signal that I couldn't bring myself to take because I'd put on an impatient short.
So I closed out lgl because it was a forced trade.

2.41 Stopped out of sto at b/even 1421. Stopped out of rio at 4960, was never a great trade but after it went my way initially I had a chance to take off a fraction to cover costs and then close out at square but I was hoping that it would take a big chunk off my losses for the day so I let it go. That's how bad days spiral so I guess it's instructive for me, if irritating, to learn to deal with these situations.

2.47 I've ignored a potential long in rio but I still think it looks like a complete wave count and might be more profitable on the downside.

2.49 Shorted sto again. A bit irritating but I didn't want to ignore another cut and it's a good sell signal.

3.05 Sold a little fmg at 299 a bit earlier, now at 307.
Closed short in bhp at 3040 as it's gone nowhere for 90 minutes.
Long ncm at 3627 as it looks like the correction is over.

3.14 Rather hastily sold out the last of my fmg at 312 and it's now 321. sigh.

3.25 Fmg in suspend with last trade of 333. the way to make money with this, or any, style of trading is to hold on to your winners.
Bhp now 3023 so that cut wasn't the smartest.
Looking to try again in rio.

3.35 Stopped out of ncm at 3616.
Short rio at 4906 for a quick trade.
Fmg out of suspend - speeding ticket - back to 313 but bhp now 3007 so the kicking myself factor still high.

3.40 Stopped out of sto for scratch as stock holds into the closing bar.
Rio not pretty, close to another stop out.

3.54 Stopped out of rio at 4985.

Where do I start. An awful day but nearly all brought on by myself.
13 trades, 1 winner, 7 losers, 5 scratch.

Bhp - 1 trade. Good entry, impatient exit - no stop was triggered, should have been closing out now.
Fmg - 2 trades. First trade was silly. I was looking for the sharp reversal but there had only been 3 bars up, this set up needs more than that and a real sense of the rally sputtering out into a narrow range. Made things worse with a cowardly cut. Had the guts to go long but the set up looked great and I could have gone harder. Cut too early. Even tho' the stock fell rapidly to 289 from 333 after the speeding ticket there was still an easy exit at 320.
Lgl - 1 trade. Not a very compelling trade, scratched it.
Ncm - 3 trades. A bit unlucky. All respectable enough but the stock kept reversing and I kept taking small hits.
Rio - 3 trades. First trade was punty but ok but my cut was rubbish. Also, my opinion was that rio could well rally first then fall later so why did I take the punty short trade? Second trade was also punty and could have got out for square rather than a small loss. Last trade was the triumph of hope over experience and a pretty shabby cut again.
Sto - 2 trades. Both ok. A little unlucky with the minor stop trigger in sto but it had already started falling again when I cut so also a bit dumb. I showed courage to go again and the cut was fine.
Wpl - 1 trade. Short was ok. It was debatable to give it such a wide stop. The stop was when wpl burst back through resistance and really there was a reasonable buy opportunity as it took 3 bars to get through. A failed break down and reversal is a lot less punty a trade than most of the ones I took today.

In the end I lost a bit more than I made yesterday. Given how many mistakes I made it's a good outcome.

A few points. I'm tending to go hard with 2 or 3 trades in the first half hour just as I've often done at the 10am start. I think I'm trying too hard to make money rather than letting it come to me. Each day when I sum up, I can see that there were 2 or 3 great trades they just weren't all at 11.31. For example, fmg stood out after the consolidation held so well. If I'd cut wpl sharply I probably would've seen the good trade there and rio was also a damn good buy trade.
Today when the early hasty trades all went badly I got stubborn and wasn't awake to the opportunities.
It would also be best to limit the trades to the good ones ie where there are clear signals. Having fewer trades on might help me to stay with the slow ones like bhp.

Still, I feel like I'm learning. Today it was learning the hard way not to soften into my old ways of running stops in hope till they hurt and being blind to obvious signals because of preconceived notions.

Here's the rio chart as an example.

Dow still closed, switching from BHP to RIO

Overall the market is only down 4 points as there wasn't much of a lead overnight. The European markets were weak and bhp and rio fell equally in the UK but the switch to rio continues here.

11.25 I like fmg and there was a buy signal midway through the 11am bar. It hasn't moved far though and I still might be able to buy some. Bhp is probably a cautious sell, rio is very strong but there's no buying point for me. Wpl is in a tight range and could go either way, ditto for wow.

11.31 Bought fmg at 277. The buy signal was at 276 so haven't missed much. Everything else is a bit tight. Bhp broke support that had held for the previous 7 trading days on the open and is not managing to bounce convincingly back through this level which is at about 3190 so I'm watching it for a short.

11.58 Out of fmg as it's closing with a doji below the opening high. I've been looking at a short in ncm and haven't taken it. There's a bit of a head and shoulders with a level at 3357.

12.03 Oops, there it goes. Ncm skipped straight through 3350. Maybe, I'll get a short on here although it's very thin. Sold a little at 3347 and hoping for a rally to sell a bit more.

12.13 Sold the rest of the ncm for 3345 as it couldn't rally. I've been looking at a long in lgl but I've decided to wait for a break of 340, ie a strong signal, as it's in a range.
Short bhp at 3179. A small sell signal although it's still within the range of the opening bar.

12.24 Short a little wpl at 3257. Not that keen on this so let's see if can follow my routine properly.
The spi seems to be setting up for a fall with a solid break of support. Fmg and rio are looking close to a sell.

12.41 Shorted rio, sto and wow as the market fell broadly. Rio is one of those hair trigger reversal trades but I don't think it's as good as the recent ones in fmg, for example, as it had only just cleared the highs from the other day. Actually looking more closely it's made a double top at 5200 so maybe I should give this a bit more room.

1.00 Shorted fmg at 267 as it fell tho' it's steadied up to 269. Just shorted lgl at 333 so now short 8 out of 8 of my stocks. However, I bought back half or more of bhp, ncm, rio, sto, and wpl on a sharp dip as the spi fell to 3420 having fallen 60 points in an hour.

1.10 Bought back short ncm as it broke my trailing stop.
Fmg is right on support. I'd like to see it break through.

1.29 The stocks have been rallying slightly but not enough to stop me out. I'm pleased that the bar is ending as I can tighten up my stops a bit.

When I get more adept at this type of trading I'd like to do some pyramiding. For example, sto consolidated for one bar and I could have added to my short at 1469. However, I'm still short 7 out of 8 of my positions. I'd be more comfortable pyramiding if I only had one or two positions and could focus on it more fully.



Here's a chart for sto. I took a short at the start of the 6th bar after the low of the third bar of the small rally was breached. You can see the opportunity to add to the short now. Chart is as at about 1.40.

1.51 Just bought back fmg for square at 267. Seems like the old story in fmg of being too inpatient but it did fall and then rally quite rapidly. It also looks a bit similar to the wpl chart which I put on Sunday's post where a 5th wave failed to break support then reversed.

Here's the chart.

2.03 Decided to sell more rio at 5080, ie to pyramid as it seems to be making a stronger sell signal here.

2.17 Closed out bhp at 3159. It made new lows then rallied straight back with the spi. Lgl is rallying and I'm a bit worried about it.

2.25 Stopped out of lgl at 336 and the last of the short sto at 1474. Closed out the second lot of short rio at 5036, nervous about pyramiding. Also stopped out of wow so now only short half the original quantity of rio and wpl.

2.38 Ncm is rallying a bit but not convincing yet. Would like a better set up if I were to buy it. Wpl is back at the 3200 level from which it bounced on Friday. I think it won't hold but I'll wait and see.

2.57 Bought back rio - a bit prematurely as the market rallied a bit. Ncm held so I went long, lgl and spot gold are also firm. Just bought some fmg at 269 on the pattern I mentioned earlier. So now still short a tiny bit of wpl, long ncm and fmg.

3.07 Stopped out of wpl at 3225. Bought lgl on the earlier buy signal at 341. So now, no shorts and long fmg, lgl and ncm.

3.20 Realised I'd been wrong covering rio and tried to short again and only got a few away at the wrong price so I scratched them for a few dollars my way. Ncm has spiked up and I've sold most of them out as it's past 3 and sold half my lgl.

3.30 Sold the rest of the lgl at 344. Still looks good and could be a good opportunity tomorrow. Ditto for ncm at 3393. They were running so fast that I went to the 10 minute chart and took the trailing stop there. I'm not sure if that's just going to confuse me but I think I can justify it towards the close.

3.36 Just long some fmg as we near the close. I doubt if there'll be any fresh trades and I'm just hoping for a little bonus with a run up in fmg. Having said that, I've been toying with a tiny buy in sto for a rally in to the close if it trades through 1469. It's at 1465 right now.

4.04 No more trades and selling the last of my fmg into the match. It didn't rally alas.

Also answered my own question about taking a 10 minute signal in lgl and ncm as they both resumed and are at their highs.

Overall, today was a better day and I made reasonable money given the postion size. 14 trades, 9 winners, 3 losers and 2 scratch. No dumb trades today so that's a major improvement. I cut my losers very well. I'm still too anxious to cut short my winners though - it didn't cost too much but I would have made more in rio, lgl and ncm.

It was a pretty volatile day so I feel like I should have made a bit. However, it still had to be done and I was pleased to make the switch from short to long later in the day.

Here's a chart of ncm. It was excellent for day trading today. A short that I caught on the 4th bar of the day then a little buy signal in the middle of the day setting up for a strong finish.

Ongoing strength?

The market has steadied after a weak start and the strong stocks like fmg and wpl have rallied, especially fmg.
11.30 Fmg is petering out though and I've got a potential short at 292 and bhp which was looking like it might have made a higher low seems like it could be running out of steam.
So no trades yet.

Wow is once again consolidating, in the same tight range of 2760 - 2775 as last Thursday but this time looks more likely to break down.

11.45 Short fmg at 291 as it dropped quickly and ncm at 3434 as it slipped below a morning rally which finished with a doji.

11.58 Still a very indecisive market. Bhp shaping up as a short at 3222, ie this is the third inside bar of a retracement and is closing on its low. A similar pattern for rio.

12.05 Short bhp at 3222 and wow at 2756. Close in rio.

12.35 No more trades and the market is chopping first down, then back up with no conviction. Bhp has edged back to 3229 and would be cut and reverse to go long at 3236. I could cut here as 3227 is a simple trailing stop but I'm prepared to give the trade a jot more room.

My bearishness is still predominant, our market has shown strong relative strength especially compared to the US indices and the spi tried hard to push back through 3500 but seems to have failed for the moment. I've seen how my overall opinions can negatively effect my trading though, so I'm being careful.
I've ignored my stops a bit when getting out of good positions as well so that's another reason for being patient.

12.46 Both rio and bhp are shaping up as potential buys or sells depending on which way they break and the spi is continuing to tilt at 3500.

1.06 Rio popped up through 5030 but I didn't buy as there seems to be little momentum. So far it's paying off.

1.15 The spi is dropping now. Sold lgl at 339 on the premise that it has made a lower high. Still short bhp, fmg, ncm and wow. All going my way except bhp which is 3224.

1.37 Bought rio at 5038. It's rallying in a choppy fashion and I don't want to second guess the signal any more.

1.41 Bought back fmg for a small profit. the stock spiked down as I hoped and then found pretty good support. It may have another leg down but overall the rally looks incomplete.

1.48 Nervous about bhp as it has sat in a tiny range for 3 bars.
1.53 Closed at bhp at 3226. If anything it's shaping up for a rally and the overnight adr close was at 3270. Small loss.

2.13 Sold out rio long at 5037 and shorted at 5025 as rally was thin and seems to have failed. Bhp holding up relatively well at 3220.

2.19 Shorted fmg on ross hook at 283. I'll probably look for 5 or 6 cents and get out as the comments above still pertain.

2.28 Sto raced through a buy signal at 1521. It's now 1525 - not sure whether to take it as the chart is a bit extended. I'm starting to feel like I'm on the wrong foot, too many positions so I'll leave it alone and fix up what I've got.
Out of fmg, a scratch trade and only short a little wow now.
Rio problematic as it's still very choppy and is back at 5050.

2.39 Bhp could provide a really good trade this afternoon but I've been tempted to pre-empt about twice in each direction so far so I'll try to be patient.
Out of the balance of wow. It could be an interest buying opportunity much like wpl on Friday except that the stock has been in a tight range for 12 days now whereas wpl was consolidating for just a few days after a decent fall.

2.47 Out of rio at 5055. A hasty trade that I thought best to leave. Closed out ncm also as it was the third bar in a row where the stock was rallying off its low. Only position is the balance of the short in lgl, now at 335.

Wpl is setting up bullishly and I'd buy stock above 3320. Bhp and rio are still chopping about and time is running out for a decent signal.

2.54 Once again, too hasty. Fmg is now at 276, slightly below where I was planning to take the short off. The message is, take the signal and don't second guess it! (now 272, 5 minutes later)

3.03 Short a little sto at 1519. Made a small new high, looked like a 5th wave and then started to reverse.

3.26 Bought some bhp at 3231. The stock is still shaping for a late rally but keeps hitting a wall here. I'll keep a tight stop on this.

3.36 Closed out sto at 1527.

3.40 Out of lgl at 334. Still looks weak, if I was holding positions o'night I'd keep this but would rather get out near the close.
Just got a small long in bhp which I couldn't help pre-empting.

3.49 Out of bhp at 3221. Kicking myself for not resisting the temptation.

Net result is a small profit on a difficult day where stocks chopped on light volume because the US market is closed tonight.

10 trades, 4 losers, 5 winners, 1 scratch.
Two of the losers were dumb trades, none of the winners were dumb trades where I got lucky.
Regret is that I second guessed the short trade in fmg at 283 which would have been the best of the day. Even if I'd held, I was planning to take it off for 4 or 5 cents (whereas it fell as far as 18 cents once the sell signal was received) as I wrongly assumed that the uptrend was too strong for a big fall.

I did well in wow and cut at a good time.
I did reasonably well in ncm and lgl although not patient enough with my cuts.

I recognised most of the opportunities that were available and made something out of them.

This sort of trading is a little limited because there's no chance to hold on to good positions overnight. However, in a time of unprecedented volatility it's worthwhile accepting the limitations.

I've added the chart of fmg below. I took the difficult initial short trade at 292 but chopped out of the relatively easy short trade at 283 where the stock had established a downtrend.

If I used a trailing stop I would have been in until the close, in which case I could have taken the price just before the match of 269 or risked waiting and closed out my short at 266.

I'm not trying to beat myself up over this, it's a bad habit I've had for a long time. The idea is to change my habits for the better.

Oh ye of little faith.

This is a thirty minute chart of Fortescue, and you can see (or you would if I could get this chart to display better) where I got the buy signal on Friday. This is the sort of trade that I'm hanging out for and once I got the buy signal at 263 there should have been no problems in holding the long through to the close. Obviously, I was leaving early and sold out but it's instructive to see that the second guessing I did initially was driven by my overall bearishness and not by any clue from the price action.

I'm encouraged though, that I commented at the time that the pattern was implying acceleration. Next time I'd like to approach this set up much more aggressively.

Here is the chart for Woodside and the set up I was pleased to take. Early on in the day there was a sell signal and as the stock failed to fall it seemed clear that the consolidation from the 11th would hold. I cut the short on the fifth bar of the day which was a doji bar and went long on the break. I'm using a simple trailing stock but as I get more comfortable I'd like to hold some of a position like this with a bigger stop and have the chance to add on the second bullish entry signal near the end of the day.



The next chart is Rio Tinto and it shows an interesting set up I was watching.





The stock came out of suspension to report that they'd sold some of their crown jewels to Chinalco at what might be the bottom of the cycle. I was pretty bearish and was happy to get a sell signal at 4990. The next bar showed indecision as the stock rallied a little but finished in the middle of the range. The following bar was a bullish bar with a very small range. While there was no appreciable rally (and I took my short position off with some relief), it had been an hour since the break of 4990 and rio was showing no signs of the heavy selling I was expecting.
I wondered if I should buy a break of that small bar but felt that I would be manufacturing a trade. I actually would have made a little out of the trade but what's more interesting is that it's probably a pattern worth looking at in future. My logic is that there's a clear break which fails to follow through followed by a small range bar in the reverse direction and then acceleration once the market realises the stock isn't breaking down. In essence, it's the same process in operation as in the wpl trade but without the satisfying bungy jump shape that you got there.

Strange days

I found it a bit strange, starting so late today. I got into town reasonably early and even after a leisurely breakfast it was only 9.30. I did a bit of admin and mooched around to look at the open. Since I don't trade until 11.30 I listened to a meditation tape for a while.
It's 11.30 now and I can see I haven't missed much. There was a little buy opportunity in fmg at the open which might have made a few bucks, otherwise an indecisive market - the US was very weak all night then rallied strongly towards the close to break even.

The trade I fancy is to short rio, so I'm looking for a break below 4990.
Lgl and ncm are giving ross hook entries but I feel more uncomfortable than usual with this signal and am neglecting it.

11.41 Sold wpl on a break of 3207 - a bit unconvinced on this.
Sold rio - had to chase them to 4980 but feel good about this trade.

11.50 wow is shaping up bullishly and I notice that the resources are drifting off relative to strength in industrials and financials so it could be a typical Friday unwind day.
ncm and lgl are already drifting back while bhp looks weak.

12.20 market tracking sideways. rio making me nervous - holding well, bhp setting up for a short, wow still in their tight range.

12.45 the spi has been tickling up and I've cut my two shorts for small losses and bought fmg on a traders trick entry (Joe Ross terminology) at 264. It's a bit of a frustrating day and I'm not too convinced by this trade but feel that I'm in a bad habit of ignoring some bullish signals.
Wpl is also giving me an unorthodox buy signal of the type I discussed yesterday where a sustained move peters out in a small range bar. So I'm long at 3211.

12.55 lgl is weak and ncm is suggesting a lower high. I'll sell a break below 3445 or this bar's low if it turns out to be a bit higher.

1.03 bought bhp, a bit late at 3235 after the signal was at 3230. Like most of my bullish positions today I'm uncomfortable but trying to be patient.

1.12 bought wow on trades above 2790 but the stock is very thin so maybe I've been hasty.
Just sold fmg out at my entry price of 264. The pattern was implying some acceleration but with the spi continuing to firm the stock was going nowhere fast.

1.31 realised quite rapidly that I was too impatient in fmg and bought some back at 266. Also sold out of bhp and wpl, bhp far too early. I think I'm still driven by the fear of losing and I'm too quick to bail out of good positions. There's also a degree of overthinking where I'm overlaying a general view and not seeing the trade clearly enough. For example, I'm bearish today and have not let bull trades run.
While there's a heirarchy of signals it still pays to keep your eyes open.

Short ncm, a little at 3450, waiting to add a bit more.

2.07 Got Szechuan chicken at Lee's Malaysian which I ate at my desk. Realised that I have to leave early today, about 2.30ish so got out of wow for a small loss as it was still stuck in the range and sold fmg out at 271. It still looks good but is consolidating.

2.16 Just need to buy back ncm which is in a very tight range. Depending on what price I pay it'll be either a very small profit or loss, so today is about breakeven.
A small loss as it turns out...
Ncm also seems like it will finish strongly as the pullback hasn't come. If I was able to trade till the close I'd go long here.

So, it's a very short trading day for me. Starting at 11.30 and finished by 2.20. There were three trades I liked which were short rio, short ncm and long wow. All of these resulted in cuts leading to small losses and my overall view of the market which was to start to fall from mid morning was completely wrong. Despite all that, or perhaps because these opinions were clouding my mind, I missed the chance to make much better money in bhp, fmg and wpl and could easily have done quite well.

Will I be able to learn from these mistakes? I hope so, that's partly the point of this diary.

I'm very happy about the wpl trade. It's a set up I've been looking at for a long time and I feel like this process of diarising has clarified my ideas about it. If anything it deserves a more aggressive approach.

I'm trading a fraction of my usual size right now as I want to be sure that this approach works for me before I start to scale it up. I know that this sort of trading is very workable I just wasn't sure if I had the right focus for it. I'm starting to think that I do.

Here we go...

This is the first post for my new blog, Trading diary of a late riser and I aim to ramble on about my trading, as much for my own benefit as anyone else's I suppose. Nevertheless I hope it will be useful for other traders and not just as a source of cautionary tales.

If a trader is experimenting with something it means that they're not making any money at the time and I'm no exception. I'm playing with day trading using 30 minute charts and while there are plenty of good signals I can be overly influenced by overnight news and moves and being that I'm generally a bit pressed for time I thought I'd experiment with starting later. Often the Australian market will initially follow an overseas lead and then quickly reverse direction and lately I've found myself fighting the market on a lot of those days so that I miss obvious entry and exit signals. It's also quite an exhausting time frame to trade in as I'm using tight stops, so that once I start trading I'm glued to the screen for the rest of the day. On good days, my profit usually peaks after a few hours and doesn't change much after that while on poor days I'll often make things worse after the first few hours as frustration kicks in.

The advantage of starting later is that I'll be paying more attention to what is happening and not what I think should be happening. The disadvantage is that secondary moves tend to be smaller but on the other hand they seem to be more reliable.

This morning there were four short term breakout trades I could have taken in bhp, fmg, sto and wpl and all would have paid off handsomely so there's Murphy's Law in action for you! I'm trading long and short in 8 stocks, all but one resource stocks as I can't short financials until the ban is lifted. The two gold stocks I'm looking at are lgl and ncm (Lihir Gold and Newcrest Mining) and as they gapped through the breakout level I wouldn't have taken a trade.

It's just past 11.30 am now and a couple of little trades are suggesting themselves. I was thinking that we might be due for a tradeable pullback in a couple of the stronger stocks but there's no sign of that yet. The best quality set up is in wow (Woolworths) where a little upside breakout has congested for 4 bars. I'll buy a few if it gets to 2776-2778.

It's 12.30 pm, I bought some wow which have climbed a bit to 2790. I also sold a little ncm as it had surged up and had a doji bar with a very small range so I thought there could be enough for me to scalp something on a pull back. So I sold at 3357 and cut and reversed at 3371 as the pull back was very tight. The high of the day is 3383 and I'd like to see ncm push through that quickly otherwise I'll cut and wait till later.
I also bought some fmg (Fortescue mining) at 260 as it congested without any pull back and then started to push through to new highs for the day.

I've got 3 positions and I think that'll do me for the moment.

1pm - cold feet on ncm as it pushed up to 3410 then drifted back to 3385-3390 so I got out of my position for 3397 - a small overall gain after costs given the earlier loss.
Replaced it with long wpl on a Joe Ross trader's trick entry. See http://www.tradingeducators.com/ if you're interested.

1.45pm Was not comfortable with fmg - too extended - so tipped it out at 264 and 265. The market started pulling back so I cut my wow at 2790 and wpl at 3288 (to just cover costs).
A friend popped in for lunch so I missed a shorting opportunity in bhp at 3300.
No positions on right now.

2.30pm Shorted ncm and wpl, both small size but cutting them almost immediately as I've got cold feet. The signal in wpl is good but I'm in too late. Trying too hard to find trades, I'll wait and see if I can find one or two more by the close.

3pm Shorted lgl on a punt and quickly covered for a small loss. Would have been smarter to stay with wpl, was a good signal, I just had missed an opportunity to put on the trade earlier. Shorted bhp when it tipped after a one hour pause but covered for costs plus a bit after it failed to go on with it.
Just had my third go at shorting ncm today at 3371 although this time I've got a higher quality signal ie it pulled back to 3372 earlier rallied again to a lower how and now will hopefully continue to drop.

3.45pm Bought back ncm for a loss at 3390 (stop was 3388 but stock is thin). Chose not to take buy signal in lgl at 339 which went to 343. Not so fussed as it was a bit late in the day but it's often a trade I'm reluctant with.
If there were a couple of hours to go I'd buy sto and wpl as they seem to have both had a 3 wave correction and are now pushing up.

The market's about to match and I'm done for the day. I made a tiny profit after 9 trades with 6 scratch, one small loser (the last ncm short) and two small winners in fmg and wow.
The two big missed opportunities were in bhp and wpl. I think on both of them I could have improved on the entries. I was also far too quick to cut the trade in wpl given the quality of the signal.
Another set up I like is a run up (or down) petering out with a very small range bar or two. The entry is to short the break of the low of the highest small bar. It's punty but seems to have a good risk/reward and also a tight stop being a new high. This would have given a short in bhp at 3317 rather than 3300 and in wpl at 3384. Also, a couple of trades that wouldn't have had an orthodox entry such as short fmg at 263 and wow at 2789. There would have been a short in lgl at 332 with stop at 334 for a loss and two shorts in ncm at 3369 (which I got on at 3363 - a scratch trade) and another at 3389 for another scratch.