25 or 50

For once, the PPI was an accurate pointer to the CPI which came in well below expectations to leave the annualised number at 1.6% compared to expectations of 2.2%. The trimmed mean, preferred by the RBA, is at 2.2% which is within the 2 to 3% target band. It has cleared the way for a 25 basis point cut in official interest rates next week but the rapid slowing in the economy would justify a 50 bp cut. Consensus is that the RBA is too conservative for this to happen but the speculation is helping the market to bubble along.

It may be short covering ahead of the public holiday tomorrow but the index had already shrugged off very weak overnight performances to sneak into the black before the figures were released and the market pushed on subsequently so that the recent highs at 4377 were almost reached. At 12.48 pm, the index is up 14 at 4366 with an intraday high of 4373.

My short positions are mixed with resource stocks AWE and FMG both lower (I shorted some FMG towards the close at 591 on another potential lower high) while SEK and TOL are firmly higher. I bought a little of each of those on the weak open which turns out to have been sensible.

The other main position is OSH. They published a quarterly and briefly popped up to a new high before falling back. I took that as a short term top and sold out of 200 of the April 725 calls at 15. I hedged the last 100 with short stock at a 741 average.

 

2.03 The market has eased back to square and it has the potential to weaken this afternoon because that's a second failure at the high. I added a short in mining services company NWH at 409. It's another potential lower high with a stop in the mid 420s. It's working so far, having slipped to 404.

4.12 The market didn't tip over, it steadied and finished up 8 at 4360. Out of the last of the TOL at 580, my average today was 575 – the same as my entry level – and I bought a third back at 565 so picked up a small gain overall. I covered more AWE at 181, FMG at 581 and some of the NWH back at 398.

WPL was weak today and I still have May puts – much reduced in value – but I'm hoping they may come again. It was a day for interest rate sensitive stocks at the expense of resources.

The market re-opens on Thursday which is also April expiry day for exchange traded options.