The F Effect. Mon Apr 20

The US market managed a flat night and Europe was firm on Friday which is probably a better result than our Friday action was anticipating. That is, we gave up early gains of 2% to close pretty much unchanged. Given the relative strength overseas the Spi futures contract rallied quite well in the night session on Friday. However, the wave of selling from Friday resumed and we are now down 1% just bouncing off our lows. It's 12.34 pm.

I'm not convinced that there'll be much more selling today - it still seems like a market that's rotating. I've done a bit of housekeeping; selling out of mcr for 103.5 (entry was 102 and 103.5) as it opened strong and reversed. I've also sold some lyc at 32 as they opened strong and have held to still be up 3 at 31. I sold out a few of my lgl puts to cover costs as, despite continue weakness in the gold price, there isn't a lot of enthusiasm to sell lgl or ncm at the moment. My positions are pretty mixed, a few winners and a few losers, with no cuts on the horizon.

I've put on two new long positions in stocks beginning with F; fmg and fxj. Actually, in fmg I've added to an existing long. Here's the 60 minute chart for fmg.

I noticed that 260 was clear short term resistance, the stock had opened strongly and not pulled back like much of the market. I was waiting to buy at 261 and had to pay 262. The daily chart below is not so crash hot but nevertheless there's reasonable momentum off a higher low about 6 bars back and a break through 280 could cause a run to develop.

In the case of Fairfax, fxj, the stock had stalled after hitting 114 about 2 weeks back. I bought at 114.5, there was a quick surge to 117, and now the stock is sitting around 114. The breakout looks hopeful but I do want to see some acceleration as the weekly chart is grinding up in a tight range.

Here's a 60 minute chart of the same thing.

1.20 Just buying some General Property Trust at 55. Gpt raced up to 54 in late March and spent the last 3 weeks consolidating just below 54.

The daily is below. I'm hoping that it runs up to about 80 which would be the bottom of the previous trading range which failed in January. 3pm Gpt has gone very well and is now 58.5. Two other property stocks were also charting well, gmg and sgp, and they've both continued to run but rather than buy all three I decided to put on a larger position in gpt which I thought had the best chart. I guess, if you buy the group you're reducing the overall risk but I'd rather have fewer positions to manage. Talking of fewer positions, I'm having the most success in low priced stocks at the moment and I'm tempted to get out of csl, iag, and lei because they're churning and perhaps I'm a bit bored with the positions. I'll resist the temptation though because they're all holding above support and I still like the charts. I also think that even if the market has found a short term top, there's probably a retracement rally coming to test out Friday's early high.

3.36 Sold a little gpt at 58.5 and some fmg at 271 (vs 262), also bought a few of short tol at 615 (sold at 602) as it falls back towards where I shorted it - this is as insurance in case it makes a higher low and rallies again because the chart is not clear at the moment. Here's the weekly.

I sold this about 2 weeks ago with pretty bad short term timing and watched the stock rally up to 648. Fortunately, it failed to make new highs so I wasn't stopped out but with hindsight the trade was poorly thought out as a 50 c stop was too much given that I wasn't particularly bearish overall.

4.10 Sold a few fxj to cover costs at 117 on the match as it finished near its highs for the day. Fmg had a strong afternon and closed at 275; 280 would confirm a break.