Late, late show

Just back in the office, at 3.10 pm, after a few errands, and the market has had a retracement day, thanks to the US failing to hold onto early gains. The Xjo index is down 31 points now although for the moment I'd still say it looks bullish in the short term. Here's a 60 minute chart of the Xjo.

There's a reasonably good chance of another leg up, even if it's just for a day or two.

I did buy a few Ozl on the close yesterday at 102 and they've firmed up slightly to be trading at 104.
A new long is in Transfield at 311. The stock has been grinding down, but now the rallies are overlapping previous lows so negative momentum is much reduced. There's been a higher low at 301, but a short term turnaround is not yet confirmed. That would need a trade above 317. Stop is a cent or two below 300.

4.11 Tse traded through to 318 and closed at 317 so I'm hopeful that this will run up to the 330s.

Overall, there was a loss of 21 points in the top 200 index.

The eye of the beholder. Tue Jul 6

It's not looking so beautiful to me because I'm long a couple of stocks having got drawn in to picking turning points. The market is still grinding down on light volume and I'm close to stopping out of Bsl.
I can see that the market drop might be incomplete but in the short term, there's probably not too far to go.
There's not a lot else to add, we're responding to weakness in Japan and Korea this morning while the US overnight futures have slipped close to 1%. I find it hard to take the US futures seriously as the volume is probably tragically light.

Of interest yesterday were two takeover bids for CSR's Sucrogen business and, relevant to me, a takeover bid of 620 for Centennial coal. I was long Cey for a day or two last week but although the possibility of a bid had arisen recently, the speed at which it came was surprising. The point to draw from this, when there's much negativity about a double dip recession, is that Australian resource stocks are still in demand.

2.02 There's been a decent turnaround from early lows and the Xjo index is up 15 points. The market is waiting for a rate decision from the RBA and there are faint hopes of a cut, an acknowledgement that the May rise of 25bp was misjudged.
Real estate has stalled locally, metals prices have softened, retail sales are weak and corporate confidence is declining so there are a few reasons to ease. It probably depends on how willing the RBA is to eat humble pie. They're not terribly doctrinaire and don't seem to sit on their dignity too much, so a cut must be close, even if we have to wait until June.
It seems unfair to be selling off so hard on recession fears without the comfort of reduced interest rates!

3.09 A cut was not forthcoming but an ackowledgement of the slowdown from the RBA has been enough to help the index rise as much as 1% before easing fractionally.
Bsl has recovered which is good for me, while Cgf has had a good day, up 17 to 357.
Ozl has given a buy signal on a push through 102 and I'm hoping for some weakness which might allow me to buy at 102 because I could have gone earlier on this one. If I do get long then I'm going to have to put my stop below Friday's low of 98 because I missed a chance to buy at around 99 or 100 earlier today. I was reasonably confident that we'd seen the low and didn't need to see the break through 102. Still, it's a more convincing signal now with the confirmation of strength.

4.13 Here's a chart of the Xjo. We had a 96 point rally from the early low to the close on the high. The Spi has had a 106 point reversal as of now. Quite bullish in the short term, I think.

New start. Mon Jul 5

Coming in to work today, the streets were quite clear of traffic because school holidays have started and a lot of families must have taken a holiday. The market has ignored a negative lead, on very light pre-holiday volume, and after an hour's trading we're up by 7 points.
On a daily basis, the Xjo index is trending down and has closed at new lows the last two days. On an intraday basis, there was a lower low on May 21st. My take on the chart is that it probably hasn't hit a low yet, but that the low will be quite close in price and time. Here's the daily.

Looking at the bigger picture of a weekly chart spanning 5 years, I notice that it's quite similar to the daily chart above. There is a solid rally off the lows which retraces about half of the fall and then renewed weakness. In the case of the daily chart, the renewed weakness has obviously taken the index back to the lows and I expect something similar in the bigger time frame.
So my road map for the rest of the year is for general weakness and a sell the rallies type of market.

In light of that overall view, it's with a little trepidation that I've bought some Bsl today at 211. I was short this recently because of it having a slow shallow rally which is typical of an a-b-c correction and although I didn't show enough patience with my own short position, the stock did slip down to a new low. Having made that minor new low, I'm expecting a quick bounce back into the 220's as the first attempt at a rally.

There's a recent low, providing an emergency stop, at 203. The risk reward on this trade is not much better than 50/50 because, having missed my entry at 209, I chased it up to 211. That being the case, I'll need to be conservative with this one.

Looking over this post reminds me of my new (trading) year's resolutions. One of them is to let the market come to me and to trust that it's going to unfold as my reading of the chart suggested - unless there are subsequently clear signs to the contrary, of course. Patience and trust.

In the end, trading becomes an exploration of self as you find yourself dealing with your own patterns of behaviour and beliefs about success and failure, self worth, work ethic etc.

As you strive to improve your trading, it's important to be gentle with yourself. Some of those patterns can be quite deep rooted and changing them may take longer than you think, but it definitely can be done.

4.10 Our market continues to underperform and today we've drifted off after the early rise. The Japanese market is firmer and the Hang Seng only mildly down so there's not an obvious catalyst for the sell off except the pre-existing momentum on a quiet, US holiday affected day. We finish the day with the Xjo lower by nearly 17 points at 4222.

Out of synch. Wed Jun 30

The financial year ends today in Australia. A year ago, the Xjo index closed at 3955 and in mid April it breached 5000. The last 10 weeks have sent us falling back to earth and with the index down nearly 2% at 4269, we're set for a humble 7 or 8% gain on the year.

I probably shouldn't have traded this month because of the World Cup - I've been tired and out of synch. One of my two scenarios for the index was for it to rally towards 4650 and then drop to new lows but I somehow managed to get bearish too early, then bullish too late and ended by missing a nice short side opportunity over the last week or two.

I've compounded the error yesterday because although I belatedly realised just how negative sentiment was as the day rolled on, I didn't re-short Fortescue, which I'd identified as my best downside opportunity and that's lower by 5%.
The longs were ok, Ipl was a reasonable risk/reward but has stopped me out today in the low 270s, while Sgp is actually up on the day. I've bought back my short in Asciano at 162.

The Hang Seng is just opening and so far, the losses are contained while mainland Chinese markets are down a respectable enough 1 or 2%. Meanwhile, US overnight futures are fractionally higher. It's meant that there's been a nervy intraday rally which could go either way. There's a big gap to be filled on the upside but it's obviously a strong downtrend.

I'm planning to have a couple of days off, so may not post tomorrow and Friday and am unlikely to put on any new trades today.

4.06 I'm still holding onto a couple of minor long positions in Challenger and Stockland and apart from some end of year admin tomorrow morning, that'll be it until Monday.

4.12 That's the end of another financial year and although it has been a grind, I've learnt a lot and it started to pay off quite well in the second half of the year.
My goal, and something I've started already, is to do fewer trades, especially intraday and to spend less time watching the market.
My reasoning is that my intraday trading is only mildly profitable but it takes up a lot of time, adds a lot of stress, and it probably costs me money overall because when I'm active intraday, I tend to miss my longer term opportunities.
The market did quite well to only finish down 1% and it closed the year at 4301.5, almost 9% higher.

PS. I forgot about dividends. When they're included, it takes the annualised gain up to a very respectable 15%.

Reversion to mean. Tue Jun 29

Another flat lead going into trading and after having underperformed for a few sessions, it looks like we're in for a catch up day.

I've bought back the last of my short position in Bsl at 219 and gone long 6 different stocks, mostly just for the day. The two positions I'm likely to hold for longer are in Ipl and Sgp.

Incitec Pivot lacks downside momentum. The last couple of rallies have tended to overlap and congest. The latest minor sell off has stalled above the May lows and I've gone long at 287 with a stop around 273.

It was up by the stairs and down by the elevator shaft for Stockland Group, aided by going ex dividend. It's not in an obvious downtrend, just back towards the bottom of the range, so I'm long at 368 with a stop around 350. Trading through yesterday's high of 372 might be enough to generate a snap back.

12.45 The early strength has evaporated with the Hang Seng dropping early on. It's a shame for my day trades which were going well for a while. Ipl and Sgp are holding up reasonably well, while my only short position is Asciano is down. Not the worst day then, but I'd like to see a higher low and another run up this afternoon.

2.01 The Hang Seng and Shanghai markets are dragging us down with falls of 1 to 2% although it really just tells you how negative sentiment is here in the short term, because their last 5 trading days have been mildly weaker compared to our sharp falls, ie their relative strength was not a mitigating factor last week, but their relative weakness is a big influence today.

4.12 The Xjo index just kept driving down as the mainland Chinese markets continued to fall. US overnight futures have followed that lead and are down close to 1%.

I took a hit on my intraday trades while Sgp is still up and Ipl is only slightly weaker.