Monday, May 21, 2012

June 17 is the driver

The game has shifted to hypothesising about the Greek election on June 17th. Will Greece leave the Euro and how will the world cope? What attitude will the authorities takes? For example, there has been confirmation that EU leaders want Greece to remain in the bloc but they will probably stop short of making life too easy for the anti-austerity camp.

My take is that the worry and unlikelihood of stimulus talk will continue to depress markets but that there is scope for more of a bounce in the next day or two. It's just past 3 pm and the market has yo-yoed but is up 21 now. Margin calls took the wind out of an early bounce in smaller miners and mining services but there's a second attempt now.

I've had a hairy day with my holdings in this sector but there's a little improvement now. One example is IMD, a mining services stock that has been hard hit but with the possibility of a reversal if we get a good close. I was long at 199 and 195 and bought more at 191.5. I've managed to sell some out at 195 and 197 while staying long as I try to finesse my way into a possible bounce. The daily looks ready to turn but there's no signal.

chart

The 30 minute chart shows a minor breakout above 192.

chart

Funding should continue to be tight for Australian banks so I'm staying short WBC despite a 1% bounce today and QBE is falling on fears of regulatory change affecting US insurance margins. Here's the QBE daily.

chart

4.25 The market pushed up to finish 27 points higher at 4074. It's an inside day and probably not terribly significant but I got some relief with the potential reversals as they mostly bounced off the lows and some rallied on the day. IMD finished at 196.5 but I sold some more at 199 to take the average buying price to about 193. It was much the same in AGO, BLY and WSA although NWH fell on the day. I got out of NCM early on at a good price along with the remainder of a long in RSG. The shorts didn't move much but did bounce a touch with the market. However, I also covered some of the CPU, JHX, NUF and ORG at reasonably good levels as I was mildly bullish in the short term.

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