Non reflective

I think I need to change the blog title back to the old one because I've been loth to explore the mental side of the game lately. It's probably because I'm getting my house in order on that front. My goal has been to get a robust approach where I put on the trades and take them off – whether for a profit or a loss – without agonising and without over analysing. I'm comfortable that there are still grey areas but I accept that it's generally a case of "you win some, you lose some" and there's no need to get too concerned about any particular outcome. Within that context, I'm looking for areas of improvement that are systemic while avoiding any tendency to back fit my trading to recent events.

The best thing has been the move to initiating trades at the end of the day; it provides clarity and more certainty. It's also a much more efficient use of my time.

Last night saw a return to pessimism with hefty falls in Europe and the US although the American market recovered some of the losses towards the close. The Aussie market was restrained yesterday and the fall at 12.22 pm roughly matches Monday's rise with a loss of 54 points. It's a shame that I had to cut OSH and TOL which have followed the market down but I'm happy with the decision making process yesterday and the new short in KAR has been a good performer. I dodged a bullet by missing the buy in BLD. I think it will find support well above the recent swing low of 340 but an a-b-c correction seems to be unfolding.

2.15 Looking at the BLD chart again, I realise that I need to consider the possibility that the last few days have generated a sell signal and the stock could drive down to new lows. It is a minor sell signal but what is key for me is that the rally in late October saw the stock break previous lows at 400 and the overall shape is that buying support is now chiming in at higher levels. It seems much more likely that the stock will find decent support again with the next move more likely to test, say, 420. So I'm disinclined to short the stock since I think that the downside is limited.

I'm focussing on the technicals rather than fundamentals but a macro view might be that JHX is rallying on the back of a less bad than expected US economy and BLD is also likely to be a beneficiary of this. On top of this, the Australian rate cycle is now in an easing phase and the same is the case in China. A little weakness in the mining sector is a big plus for housing.

4.12 There was some strength in retailers today as investors seek safe havens, I suppose, and perhaps there is a sign of increased spending after the second rate cut. I bought DJS back at 268 (v 284) on a positive reversal rather than waiting for a trailing stop. The stock has made new (recent) lows and it could definitely keep sliding but there's reasonable evidence that momentum has stalled.

In that vein, I've also bought some PBG at the closing price of 57 with a stop at 53. It was quite a strong reversal day and follows a decent surge a couple of weeks back. This stock is on a P/E of 6 and is yielding around 10% but is in a steady decline profits wise. However, there's no particular reason to suspect that it will not recover one day so I guess there will be bargain hunting from time to time. Anyway, I'm trading the chart not the story and I'm looking for a move to the mid 60s.

Overall, the market slipped 1.4% or 59 points with US overnight futures suggesting a flat open while the Japanese market and the HSI are down a touch under 1%.