Stating the obvious

Yesterday's post came across as an exercise in stating the obvious in that nearly every trader wants a methodical approach that they can trust. The significant development is that I'm feeling more confident in my method and, most importantly, in my ability to stick to it without fuss. If you have that and if your approach is one where the drawdowns are modest then you can gear up in the right circumstances and start to cash in.

Today's action has seen the market recover from a modestly weak open which saw a gradual slide to a loss of 0.5%. The index is now up 4 at 4197 which is the day's high. It's 1.32 pm. My positions are slightly profitable.

I probably could have cut the CSR short on the close at 212 but decided against it. After some minor selling dried up, I bought back this morning at 209 (v 211). I'd been looking for a drift down to around 200 but there was no momentum and after nearly 4 days I'm happy to get out for a tad better than square.

I bought back the last of the DJS at the close (at 266, not 268 as I wrote) and that stock has pushed further today, trading up 4 at 270. PBG is just steady but retail seems to be supported and, in general, there's a mild skew towards defensives.

Having said that, in the last hour or so the resources sector has benefitted from some patchy buying too but it looks more like retracement to me.

4.13 It was a real light volume, pre-Christmas day and the index chopped around to finish down 3. I bought some DJS at 269 with a stop at 260. I don't mind a reversal buy where a 5th wave looks like it could be in place. You generally have a good chance of a quick rally up to the previous swing high; mid 290s in this case.

I was going to buy SEK on Monday but felt it was too gappy. After a couple of positive consolidation days when the market was falling and the stock was steady, I have more confidence that the buying is serious and have accepted a second chance to buy. Long at 620 but with a stop down at 593, the position size is smaller to reflect that.

I was tempted to stop out of IPL early – trailing stop is 312 – but decided to wait and see. I was looking for a minor new low; perhaps 300 or 295. There was a trade at 303 this morning but some decent strength saw a close at 311. My short entry was at 314 so it was always a bit of a tight one.

I did stop out of my short in FMG at 469 (v 470) as it reversed above the previous day's high. However, I didn't see it as an engulfing type long which I might buy because yesterday was a gap down. It seems a grey area to me and I'll be interested to see what develops. Certainly there's reason enough to exit.

And I bought half of the KAR short back at 481 (v 506) after it hit a profit target.