Squeezing

It's 2.20 pm and the market is at the day's high of 4200, up 29. Another day of hand wringing for me as my book is positioned for a falling market. No stops yet and, rightly or wrongly, I'm not super concerned about the positions.

Europe bounced back strongly on another Greek hurdle overcome (no official word yet but it's assumed) and no triggering of CDS insurance. The US was strong too although the gains were smaller. In our time zone there was a weak trade figure for Australia implying softness in iron ore and coal but the market has recovered from that as Chinese CPI came in below expectations. More Chinese data will come through after our close and tonight sees US unemployment data for February.

My worst case scenario is an expanding pattern; one of those whippy periods at turning points where the market will break lows then reverse and break highs before topping out. However, it looks like a standard sort of retracement so far with the chance of another day or two of the same.

I've bought April 1150 puts in QBE. The stock has recovered from a downgrade and a share issue and there are a few buy recommendations floating around but the chart tells a different story, for now. The rally is petering out and there is the possibility of a sharp fall to 1000 if the sell off resumes. Perhaps there is more bad news to come out or buyers were able to soak up all the stock they wanted in the issue. Anyway, I'm looking for a good risk reward set up and at 25.5 cents for the options with about 6 weeks to run, I'm reasonably happy. Actually, a broker has just sold the options down to 22 as the stock has rallied a little, so I'm trying to average down.

4.14 The rally continued on course with the Asx 200 closing up 41 at 4212. QBE firmed with it and I bought a few more puts at 23 to take the average down to 25.