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.

Not with a bang. Mon Jun 28

The financial year is stumbling towards the finishing line with another weak performance so far. The news from the G20 appears to be that the US want to continue with stimulus measures but the Europeans are for austerity (not sure about everyone else) and the general view is of a country by country approach rather than a co-ordinated strategy.

The market is down 0.5% at 11.40 am and my performance has been dragged down by Mml which is defying strength in gold to sell off further. The chart looked shabby on Friday afternoon and I would have been better off to sell the lot rather than just under a half. The stock is quite whippy and I get the feeling that there's a big seller overhanging the market. My inclination is to hang on now because it's quite possible that the seller will disappear after June 30th and the stock will whip back, and if not, the stock is close enough to levels where natural buyers will step in.

I've sold out of Telstra for a minor profit. I timed my buying quite well, getting in after the sell off from the initial euphoric rise on a deal with the government. If there was any enthusiasm for the stock, it should have been driving up and it wasn't, so because it wasn't behaving as I'd hoped, I got out rather than waiting for a stop. I also sold out more Challenger on some early strength. It's back down with the broad market now but I'd like to rebuild my position if it shapes up again.

My trade for the day is a short in Asciano. I'm assuming that this has run its race having bounced solidly in 3 waves since a low in May. I'm short at 167.5 with a stop just above last week's high of 173.

1.43 The market has been making an attempt to bottom and I've bought back shorts in Fmg at 437 and Ost at 309.

3.32 I'm beginning to think we're making a short term low. Fortescue has held quite well and is now up 7 at 443. It's probably a good indicator for the smaller resource sector. I don't think there's anything to buy right now but I'm hopeful that tomorrow morning might offer an opportunity or two.

Bought back a few Bsl at 217.

4.12 No further action, but the market edged up. Mml got smashed though, down at 415 and missed my chance to cut early.

Not much of a honeymoon. Fri Jun 25

The honeymoon rally for Julia Gillard lasted about 2 hours before the selling resumed yesterday. Another double dip inspired fall overnight has left us down a further 1.1% after an hour. It's the fourth day down and the third big one, so it would often be a good day for some buying but on an intraday basis, the Spi looks as if it hasn't found a low yet.

I've bought back the last of my Stockland short at 371 and 373 for a tiny profit after having to cover an 11 c dividend and having gone too early with my position, I'm happy to have got something out of it.

I've got my obsessive compulsive World Cup watching under control. Last night I went to bed early, got a decent night's sleep at last and watched the recorded games this morning. Great result for Japan, beautiful football and excellent news, along with S Korea's progression, for the Asian Confederation of which Australia is now a part - and nice for the arguments with my European friends who always claim that their qualification groups are far superior than the Asian ones. 

Anyway, enough about South Africa 2010, the point is that I've got enough energy to focus on my work. Two new trades to feature today, one long and one short.

The long is in Challenger. The rejection of the low yesterday was impressive and there is nice overlap with the previous congestion zone, suggesting that short term selling momentum has dissipated. There have also been a string of upgrades overnight - the stock is on a forward PE of 7.5 - and it's a much cleaner company to analyse, no longer the dodgy boom time vehicle that it was considered to be. Long at 338 and it has already started to reverse quite strongly.

The other featured trade is a short position in Fmg. This might be a sell on fact situation after the driving force behind the company, Andrew Forrest, was heavily involved in the mining industry's campaign against the RSPT and indirectly, the deposal of Kevin Rudd. There's still going to be a deal on the tax, it's probably factored in, but the plan is certainly not going to be dropped. Short at 446 with a stop above yesterday's high at around 465. I'm half expecting a quick tumble here because it's a nice trading vehicle for hot money in the resources sector.

3 pm The market is just bouncing off recent lows and may have done enough for the day. The two featured trades are doing well so far, Cgf is at 359 and Fmg at 437.

Broadly, it's a switch out of resources into defensives sort of day, with gold being the exception as most of the golds in the Xjo are up. I suppose gold is often a defensive but sometimes it moves with the cyclicals. Seems like it's a win-win situation for gold stocks at the moment, although sadly not Mml which is stalled just below 450.

4.10 pm There was more slippage to leave the market down 1.5%. I'm out of a third of my Cgf position at 360 and a few Mml at 440 as they disappoint.

Ruddy hell! Thu Jun 24

Australia's PM, Kevin Rudd, has stood down after his popularity had plummeted over the last few months, not helped at all by the proposed resources super tax. His (former) deputy, Julia Gillard, is the new leader and although she is a much more down to earth character, she is also part of the inner circle which has been controlling policy so it's quite a gamble that the electorate was tired of Rudd for personal reasons only.
I'm tired for personal World Cup reasons as our brave Socceroos went down fighting with a victory not quite enough to see them through to the knockout stages.
There was a "thanks goodness for that" rally early on, despite a flat night, but at 12.42 pm the Xjo index is up just 12 points. The big gainers have been the miners, particularly the iron ore stocks, although the picture is muddied with end of year movements and bounces from oversold lows in stocks like Cgf and Tse.
I got out of my Cgf at 347, which was roughly a reversal of yesterdays 5% fall. I even managed to buy and sell a few extra on the way.
I've put on a new position, a short in Bluescope Steel, which has had a much less pronounced retracement over the last month, more typical of a correction before a resumption of a downtrend. I'm short at 228 with a stop around 242.

4.11 The Gillard surge faded and the Xjo finished down 6 points. Macquarie was sold down nearly 5% after announcing a cautious outlook. The double dip recession - globally at least - is still a strong possibility. I'm happy to have a pretty neutral book.