Friday, March 30, 2012

EOQ

It's the end of quarter and the market is up again, 19 points to 4357 at 1.36 pm. My stocks are mixed with financials having a rest and resources playing catch up. I was toying with the idea of going long BHP or RIO. They're both holding support but the problem is that the weekly charts are unconvincing.

Here's RIO. It's making higher lows but it has also already had a three wave rally after a big slump in August last year and neither upswing was able to regain those earlier levels.

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Both BHP and RIO gapped up and then rallied strongly from there so it feels like a lost opportunity; well, it is a lost opportunity. Never mind, I have had some joy in OSH. It opened weaker, continuing yesterday's fall and I bought more April 725 calls at 4. The stock made a higher low at 682 (v 681) and is now back at 698. It strengthens the case for a push back to the recent highs around 735-740.

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Out of a quarter of the XJO May 4350 call position at 94 (v 64). I'm reasonably confident that there's more to come in the index but there may be a one or two day reaction once the March end markings are set. The 60 minute chart shows what I think is a first wave (starting on the 23rd) followed by a third wave which subdivided into five and may therefore chop back on Monday and Tuesday.

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3.42 The gains are ebbing away, just 2 points now. It's almost the reverse of the old pattern of ramping the market at quarter end. Everyone is so scared of being investigated that they pull back on the buying even if they're bullish.

4.14 The final verdict was a loss of 3 points to 4335 on the day and a gain of 279 points on the quarter; close to 7%.

Thursday, March 29, 2012

Truckin' on

Another good performance, only down 4 as we approach 2 pm despite just about every other market being weaker. The losses in resource stocks are limited and the financials are steady, locked in at strike prices for option expiry this afternoon.

I haven't added any new stock positions although I've bought a few more OSH April 725 calls at 6 (with more on the bid at 4) as the stock has dropped 16 to 690. I expect the 680 support to hold and for the rally to resume and if that happens this would be a good point to add to the existing position.

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The new option spot contract tends to get sold down as the old one expires with April also under pressure because of trading days lost due to Easter. It's a good time to buy and I've added some April 850 calls at 11 to the stock position in SUN.

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4.14 The index sneaked up to a gain of 7 or 8 before the impact of weak Asian markets began to weigh more heavily. At the finish, the Asx 200 had lost 6 points to 4338.

I sold a third of the SUN position at 847 because I'd bought April 850 calls and later, some May 875s. The funding position of the Aussie banks continues to improve and SUN is looking to join the party in the new covered bond market with a raising at some point.

Wednesday, March 28, 2012

Frisky

The Asx 200 has ignored overnight weakness to climb steadily with the result that at 1 pm the index is through recent highs to 4329, a rise of 27 points. I put my money where my mouth is yesterday afternoon and bought some XJO May 4350 calls at 64 and they've done reasonably well. Here's the updated daily chart.

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It's broad based but banks and financials continue to perform well. I sold another third of the NAB March 2400 calls at 73 (v 22) and also sold the first third of some April 2450 calls. NAB is up 8 at 2474.

Insurers have performed strongly in the last couple of weeks. The laggard is SUN, partly because it is also an underperforming bank exposed to the soft SE Queensland real estate market. However it has held steady in a trading range for some time and is now making a buy signal. Long at 828.

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3.30 The dam has broken and the Asx 200 rise is 43 points. Out of the last March 2400 calls in NAB at 96 but still long most of the April 2450 calls.

4.13 The market gained 42 points to finish at 4343, the best close since November 9th. I sold a fifth of the MSB position at 802.

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Tuesday, March 27, 2012

Housing slowdown

The Australian housing market is soft and SGP came out with a profit warning before the market open. It was a minor one (3%) but enough to knock the stock down to 301 early. I sold into a little bounce at 306 and the stock has slipped back to 302. It's a shame because I'd reassessed my positions and decided that SGP was not a trade I wanted to be in because there didn't seem to be enough upside or an indisputable uptrend. The overnight lead was strong so if they had delayed the announcement, I might have been out for close to my entry price in the 315-320 range.

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That's the only real blot with the rest of my positions following the market higher. The two pharmaceutical stocks, MSB and PXS, are continuing to push on while OSH is up a few cents and NAB is 13 higher at 2454. I sold a third of the NAB March calls at 67 early on, which pays for the position (long at 22) although I'm obviously risking unrealised profits still.

The Asx 200 has sold down after the gap opening but I'd be very wary of being short this market. There is a flat top and generally higher lows which is a strong bet to break out and I'd expect there to be some pent up energy in the buying.

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4.15 There was a recovery in the last hour which helped the index to 4301, up 38. Most of my stocks closed well, especially PXS which rallied 10 to 137.5.

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Monday, March 26, 2012

Oil Search resumption

The Asx 200 is continuing to perform steadily, shrugging off a weak overnight futures lead - which was at odds with overseas indices - and spending most of the day higher. It's not a massive move but my long positions are generally responding pretty well.

The main short term interest is with NAB March 2400 calls because they expire on Thursday. The stock has broken through last Monday's high to be trading at 2450. The move is not a dynamic one but NAB has done a bit of work intraday and the sector is continuing to lead.

The options cost $3300 and being in the money, it means I'm long 15,000 stock or $360,000 worth with the downside being intrinsic value above 2400 (plus a couple of cents of remaining premium). It's when options use can really stack up.

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I've also used calls to go long OSH. They are the April 725s, bought at 10 and then at 8.5. The weekly chart, below, shows an uptrend with a three week correction which held above previous highs reasonably well. I'm hoping it's a simple correction rather than a three wave job and a move to a new high would take the stock price to around 750.

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The daily chart shows a shallow correction which has held above 680, a recent support and resistance level.

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4.12 The market sold off in the last half hour to be slightly down and then copped another 6 points at the match out with banks being sold down. The result was a loss of 8 points to 4263.

Friday, March 23, 2012

Fizzling out

The week is fizzling out although it's a better performance than might have been expected. European and US markets used the Chinese PMI number as an excuse to sell off despite an obvious lack of concern in Chinese trading yesterday. Europe wasn't helped by weaker PMI figures of their own but the US had better job figures and evidence of a stabilising housing market to provide encouragement. The Asx 200 is down 14 points at 12.35 pm after falling 35 early. The weaker AUD (104 now) seems to be helping and financials are solid again. NAB is actually the only one of the 4 majors to be down – a modest 9 cents to 2430 – but was the best performer yesterday.

I added more SGP at 317 and I sold out of the LNC at 132 for square as the hoped for rally didn't eventuate.

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2.46 The title was harsh, the market is up on the day now by 2 points. My positions are fizzling though and I'm cranky because a couple of impetuous positions – that I didn't post about – are costing me. Not terrible positions per se, just badly timed entries. NAB is pushing on, at least, and that's the one that can make the difference being the largest by underlying dollar value.

4.15 NAB stalled and none of the others changed much so it was a frustrating day. The index looks pretty good. The Asx 200 rejected a minor new low and changed the recent pattern of underperformance relative to other markets.

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Thursday, March 22, 2012

Flash

The Chinese flash PMI numbers are out in just under 20 minutes and they should provide a check on the  current state of the Chinese slowdown. The Asx 200 is running ahead of the number, rising 27 to 4281. Resources are recovering from early weakness helped along by signs that the AUD is softening while financials are leading the charge. Bank margins have improved with lower cost of funding recently and that may be filtering through to the majors along with the general seasonal lift ahead of reporting and dividends. NAB is up 23 at 2433 but the gain is tentative with the stock in a range over the last 5 trading days; I'd like to see a push through 2450.

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My other longs are flat, except for LNC which has crept up 3 to 134.

I'm buying SGP at 320. The weekly chart implies a resumption after a three wave pullback with support more or less holding.

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The daily has a breakout through last week's high of 317.

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1.44 No so flash....at first glance anyway. The Aussie market is holding on to 16 points of gains though. The Aussie dollar is lower, however, which is nice.

4.12 The market did pretty well to stabilise and hang on to 19 points of the gains. NAB didn't break through 2450 but closed pretty well at 2439 with the 60 minute chart looking reasonably positive.

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Wednesday, March 21, 2012

Oscillating

It's 20 to 2 and the index is almost back to square having been 32 points lower after an hour. I'm increasingly unconvinced about the market so I'm getting out of the trades where I lack conviction.

Unfortunately, one of those is BPT which has started to accelerate. Out at about 158 average with the stock up to 161. I made back roughly what I lost when I stopped out the other day.

PXS is looking good though, resuming its rally after a few days of retracement.

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By dint of the March 2400 calls, NAB is my biggest trade. The stock is grinding up slowly and much of the time premium has come out of the calls so it's close to a one for one gain with any stock rally while the loss is capped at the value of the options; around 42 at the moment. There's just over a week to go on these.

The daily chart is below, and I'm looking for the stock to push up above 2450 in the next couple of days. That might be my cue to take some profit in the March calls.

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4.12 The index seemed to be tracking the Hong Kong market today and that market recovered from early weakness before selling off again. The Asx 200 closed at 4254, down 21. NAB followed it back down, closing at 2410.

Tuesday, March 20, 2012

Nothing to see here

The index has slipped back into its torpor with a loss of 25 points at 1.44 pm. The overnight lead was mildly bullish but BHP and RIO are talking down the iron ore price and the market seems to have taken fright. It's a motherhood statement – everybody is aware of what's happening with the iron ore price – and I assume it's a political response to the passing of the mining tax.

I haven't done much except to punt some Intrepid. This stock has been crunched as Indonesia declares its intent to own majority stakes in Indonesian based resource projects. I liked the fact that the stock had made a marginal new low relative to last October and that downside momentum was slowing. IAU made an announcement mid morning about the fine print; which is that this process will probably take up to 6 years after initial production and that, presumably, a price is going to be set for the stake. Either way, after the usual overreaction, it was due a bounce and I bought at 86 and have tipped out half at 90 with the rest on offer in the mid 90s.

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1.56 And I stopped out of the AGO short at 306, slightly against my instincts. It was through my stop and seemed to be ignoring the iron ore chat but now it has sunk back to 302.

4.12 The market recovered somewhat; the finish was 4275, down 16. Anyway, a minor down day for me and the irritating thing was that if I'd held in AGO (last price 296), I'd have had another winning day. Oh well. IAU closed at 90 which is where I sold three quarters of the long and I'm holding a few for the morning. Otherwise, not a lot of change.

Monday, March 19, 2012

Testing 4300

The Asx 200 is catching up after a few days of underperformance despite a flat lead overnight. The index is at 4299, up 23, having been as high as 4309. There are a string of highs at this level in the last couple of months and it would be exciting to finally move out of the range.

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Most of my stocks have performed ok. The short position is in AGO and that has bounced back against me, up 13 to 306. The Friday close was unrepresentative of the day's action with a late portfolio pushing the price down about 4 or 5 cents. I did buy back some stock at 293 which softens the blow.

I've bought a few LNC at 132.5 and I'll add more if the strength holds as the day goes on. It's at the bottom of the trading range, above support and looks to be making a higher low.

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4.08 I'm selling out of RMD for 302 as the stock has hit a marginal new high today with no follow through. The momentum has stalled so that'll do for now.

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I also bought back into BPT this morning at 154.5; this finished a touch higher at 157. LNC closed at 133 and I bought a full complement at 132.2 average. MSB is volatile but went in the right direction with a 19 cent jump to 750.

The Asx 200 had another run at 4300 but failed to get through with the final reckoning a rise of 15 to 4291.

Friday, March 16, 2012

Theta

The market is chopping around again, down 8 at 4270 and it's 12.25 pm. NAB is up 6 cents to 2400, but it's moving too slowly to counteract the time decay – or theta – on my option positions. PXS has had more good news about Bronchitol, this time with EU processes, and the stock has sustained a rise of 11 to 127.5.

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BPT is a touch lower and I remain slightly concerned. I added to the AGO short at better levels – 306.5 average – soon after the open. The selling came back and it's now trading at 298.

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12.49 I'm going to be out for much of the afternoon and I'm too uncomfortable with BPT so have sold at 148.5 (v 152) for a small loss.

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3.58 Damn, I should have waited for the close or my original stop in BPT. It's recovering nicely. Apart from that, it has been a good day and NAB pushed higher so that the options are starting to perform now.

The biotech stocks are performing well and I've added a third sectoral long in MSB. I'm looking for a move above the recent swing high after a retracement. I'm long at 730 but not for too many since my stop is around 685. The upside is good though, a 5th wave move could get to 850.

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4.11 There was a large portfolio on the close. I was the beneficiary in AGO which closed at 293 but watched frustrated as BPT gapped up to finish at 156.5. If I'm lucky I might get another opportunity to get some on Monday morning.

The Asx 200 finished with a loss of just under 2 points at 4276.

Thursday, March 15, 2012

Beach Petroleum – corrective chop or buy signal?

I've bought some BPT at 152 on the basis that the stock is in a very strong weekly trend and is potentially making a buy signal on the daily chart after a sharp pullback. I'm slightly nervous because it's a risk off market with the AUD falling along with commodities and most resource stocks.

Here's the weekly. Still in a decent trend with no obvious topping out in place.

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The daily chart shows this pullback did overlap the previous swing high in late November/early December but is bouncing off it. There's a minor higher low and breakout (yesterday) and my stop is just below that higher low at 145.

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I actually bought a few QBE stock back near the close when it held really well. I sold out that extra stock at 1301 on the open and the last of the puts at 4. I don't think they'll be of any value now that the stock is through resistance. I also sold a third of my RMD position at 302 while PXS is steady at 118.5 as the Asx 200 retraces in a tight range. NAB is solid, up 7 at 2393.

2.43 I'm planning to go short AGO again. It had a second attempt to rally after I stopped out and seems to have failed. I'm waiting till closer to the end of day. Stop will be at about 317 with a target around 280.

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4.14 Shorted a half position in AGO at 303 on the match. I was trying for higher, there was a minor rally but it couldn't hold into the close. A pretty flat day, all in all, with the index down 9 points.

Wednesday, March 14, 2012

Better late than never

Out of the rest of the QBE hedge at 1280 which has more than paid for the puts. It's such a strong move that the stock could easily push through the resistance around 1290-1300 but I expect the first reaction will be a pullback. I've sold out a third of the puts at 6 and I'll keep the rest which provide a bit of crash protection until the end of April.

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It was all systems go last night with the DJIA through 13k and the NASDAQ past 3k. The Asx 200 is just below the pivotal 4300 level but it seems unlikely that it would stop. It might pause or chop back but a serious reversal has already been tried and failed.

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NAB is firmer in a strong banking sector. I'm looking for some steady continuation of strength and since my target is around 2550, I've added some more calls, this time the April 2450s at 32 as the March calls are vulnerable to any consolidation because they only have 11 trading days left after today.

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The headline refers to Pharmaxis. I didn't pull the trigger at 100 when I got a buy signal last week and I was kicking myself when it ran up from there. I've been watching the consolidation and bought some yesterday at 114 and more today at 111. I was tentative about this stock because it's in the volatile biotech sector but it had been smashed last year on a new drug approval delay and failed to recover when the yes finally came through. A lot of hot money must have been lost and it's arguably true that any bad news was overly discounted. Anyway, I just came back from the gym to find that the government has added the key drug, Bronchitol, to the Australian Pharmaceutical Benefits Scheme which means that patients will be reimbursed a large part of their medication costs.

The news has lifted PXS to 123. When I noticed this stock last week, it occurred to me that the weekly was making a higher low and a move to 180 was more than possible. Here's the daily and the weekly follows.

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4.16 The Asx 200 closed up 40 at 4287. What was interesting was that after a few days of solid rally, there wasn't an intraday pullback of any size. It implies underlying strength in the move.

PXS chopped back but held on to 2/3rds of the gains to finish up 9.5 at 118.

Tuesday, March 13, 2012

Buy signal for QBE

An interesting start to the day has the Asx 200 roaring back with a gain of 42 points to 4239 at 12.32 pm. I cut my short in AGO at 305 for a 6 cent gain and I'm left with a short in WSA which is up 3. My puts in QBE have halved today (or would have done if they had traded) but I hedged with stock at 1201 as it broke through the top of a narrow trading band and the stock has pushed on to 1225. I still think that this is a retracement but there's a gap to the breakdown level at 1291 and if QBE can push through two recent highs at 1229 and 1230 then maybe it can get close to that 1290 level. If the stock gets to 1250, I'll have covered the cost of the puts.

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The Asx 200 is closing in on resistance also, with the breakdown level (around 4248) fast approaching. It's possible that the index could fly through to the top of the range if it does break as shorts would likely be squeezed.

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2.01 I've been in two minds about the bearish case for stocks because this is the time of year when the high yielding banks run very hard ahead of reporting and dividends. NAB has been forming a pennant which could have broken either way. There has been a minor buy signal today which would be strengthened by a break of the last swing high at 2385. Long the March 2400 calls again, at 22. Most of the bank charts are looking good and this could be the catalyst for a reversal to a new high for the index. Here's NAB; after the correction to 2300, it has formed up bullishly.

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3.40 Out of a third of the QBE stock at 1248 with the stock now up to 1250. Have pretty much paid for the puts now. Meanwhile, the Asx 200 went as high as 4253 – through resistance – but is sitting just below now. Also out of the short in WSA at 561.

4.12 The market finished up 51 at 4248. I've switched my book around to be long. Fingers crossed.

Monday, March 12, 2012

Out of sync

I'm not quite in step and today's little surprise has been PDN. I shorted at 177.5 and it had moved back to around breakeven. I thought that 180 would just about hold if the stock had finished its rally. That seemed to be happening until a company announcement of a Canadian court victory allowing Paladin to drill in Inuit lands. The stock gapped up and I've stopped out at 185.

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The Asx 200 is 11 points lower at 4201 at 2 pm and the AUD is lower as a result of weaker Chinese export figures. BHP has failed to hold on to the overnight ADR price and RIO has fallen from a flat opening to be down 0.7% but the smaller end of the resource spectrum is quite solid. FMG is moving close to my stop while AGO and WSA are edging higher.

The bright spot is a good lift in RMD to 587 and some minor weakness in QBE to 1185 where I've accumulated some more April 1150 puts at 21. The weekly chart of QBE is below and my trade is in anticipation of the recovery being complete and another leg down in the offing.

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3.48 The trade in FMG was impulsive and has gone quite badly. I usually like to sell into some weakness and instead I've been caught in a whip back to a new high. I have to think I'm not the only one because the iron ore sector is going nowhere but this is up 3.8%. There is a corporate investor taking an interest but it doesn't make sense for them to chase it so hard on a day when two states have public holidays. Anyway, I'm looking to stop out by the close now that last week's high has been passed.

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4.12 I stopped out of FMG at 586 as it closed just below the day's high. The Asx 200 actually fell 15 points to 4197.

Friday, March 9, 2012

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.

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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.

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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.

Thursday, March 8, 2012

As you were

The market has slowly gathered confidence after a quiet opening to be 33 points higher at 2.45 pm. It's a reasonable result for me because it's a risk on sort of day which doesn't suit my book. However, RMD is back to square after early weakness and my resource shorts in AGO, PDN and WSA peaked first thing and haven't moved much since; up 0.5-2%.

Employment figures came out at 11.30 showing full time employment to be steady with part time employment down a little. Along with renewed weakness in PMI numbers over the last week, it raises the prospect of a rate cut next month. The AUD is also softer and the net effect is mildly bullish. Banks have bounced back well and I might missed the opportunity to get back into some NAB calls.

Overall, minor support has held in the short term but I think it's a temporary reprieve. There might be another day or two of sideways to up but a new low was made yesterday and the next swing down will confirm a change in trend.

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I've put on another risk off trade with a short in FMG at 546. The first leg down was pretty sharp and broke the previous low. I'm selling into the rally and my stop is at 583, above Monday's high, but I'll tighten it up as soon as possible.

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4.12 The Asx 200 closed up 27 and my resource shorts squeezed up so it was a mildly disappointing day. We could be due another one like this tomorrow.

Wednesday, March 7, 2012

Pausing for breath

The market is recovering intraday to be 33 points lower at 12.47 pm. Overnight markets followed our lead and went a bit further so it makes some sense. The resources sector is weak again and defensives are in favour so my positions are ok. The long is in RMD and that is unchanged while short positions in AGO and PDN are performing with AGO down 7.5 and PDN off by 4.5. I sold out of the last of the NAB calls at 15 since they're short dated and I'll wait to see if a better set up evolves.

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The index is clearly through 4200 with 4140-4150 likely to provide some short term support. It was support in October and early November and minor resistance in late December.

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I have a new short position in WSA at 535. My stop is above the recent swing at 570 and I think that if 520 fails then 500 should follow.

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4.27 It was just a pause and the market dropped again to close at the day's low of 4144.