Repositioning

I was pleased not to have thrown in the towel on the longs yesterday but it hasn't done me much good. I stopped out of MSB at 750 as the support level came under threat again and I'm glad I did because the slide has taken the price down to 732.

This was a situation where I was looking for another run at the 800, 810 level but that didn't eventuate. I sold bits and pieces at good levels so there was a small gain overall but it's slightly disappointing nevertheless.

My other pharmaceutical long is in PXS. I've been expecting the stock to drift back into the mid 120s and stop me out but so far the price has held.

SBM has bounced back to be up 5 at 208. I think I'm trying too hard to pick a rally in gold stocks and if the action is subdued over the next couple of days, I'll probably cut this.

The other two longs are held via call options in OSH and SUN. Neither are doing much and since my options are out of the money, there's a daily cost in time decay. The OSH April 725 calls are down to 4 and have two weeks to go. The stock is at 699 so there's ample time for it to run through the strike but a range seems to be developing and momentum has stalled.

SUN failed to accelerate as I'd hoped and the stock is slowly retracing an upswing which went from 768 to 847. The April 750 calls are down to 1.5, virtually written off. I have some May 850 and 875 calls which could amount to something eventually. In retrospect, the stock has been in a range for some time which made buying call premium risky. I'm still looking for a higher low – relative to 768 – but if that happens, I'll probably just trade stock.

I'm reasonably happy with the short position in WPL. I expected the stock to rally harder today and I hope to add some more May puts if it pushes up towards resistance but doesn't go through.

The whole repositioning idea is that my base scenario has changed. I'm now looking to sell rallies and I'm ready to get out of any long positions. I don't want to leap into a bunch of short positions without a great entry because there's no confirmation that the rally is over, it just looks that way.

4.12 The market pushed up further in the match for a rise on the day of 34 points to 4280. Even if this is to be a turning point, we could easily see another few days of retracement. See late October, early November as an example.

Where's the rhyme?

Sell in April and ....? Or, April is the new May. A catchphrase works better. For the third year in a row, it looks as if the rally has petered out ahead of schedule. It's a stretch to call it a rally, maybe just a pause in the bear market. The Asx 200 is almost 1% lower at 2.08 pm but the usual intraday recovery seems to be finished already.

Anyway, my book is long but conservative and the damage is at the irritating end of the scale. SBM is down but the sector is up and it started to move yesterday. MSB and PXS are lower but stand a reasonable chance of outperforming if the sell off gathers pace. I'm out of a remnant position in the NAB April 2450 calls for 22 (v 32) but it was a good trade overall with profits in March calls and three quarters of this April trade sold at around 60. The other two positions are held in calls. OSH is actually up and maybe there's some positive news in the background. The final one is SUN and, as with OSH, the calls are marked down to the point where further losses would be minimal.

I have a new position and at last, a bearish one. It's in Woodside Petroleum and I've bought both April 3374 puts and May 3374 puts at 52 and 89 respectively. The weekly chart shows that the stock has had two rally attempts since last October which failed to regain 4000, which was a support level from mid 2009 to mid 2011. There has been an initial fall, followed by a 4 or 5 week congestion and the price is now moving lower.

The daily chart shows that congestion which tended to make lower highs but hold support at just under 3500. The stock broke the level yesterday but closed back near the support line. Today has seen a more conclusive move lower and I'm looking for the fall to accelerate. If there's serious weakness in markets then 3000 is not out of the question in the next few weeks.

4 pm Actually, BHP had quite a significant breakdown today, as it fell below and failed to regain the 3400 level. It's at 3361 now and I'm tempted to buy some puts but the stop is some way distant and the premium is fairly high so I'll let this one go.

4.14 The Asx 200 finished at the day's low of 4246, a drop of 46 points. The daily tells the story. The slow grind up, failure to break out of the range and an accelerating fall.

Range trading

The Asx 200 has recovered almost half of the early losses to be 26 points lower at 4294 as we approach the day's end. US markets fell in response to disappointing employment numbers released on Good Friday, a non-trading day, and slightly worse than expected Chinese inflation. Since the Australian market is marooned in a tight range, I didn't expect much of a reaction and was surprised by the size of the early fall. I bought a few shares here and there which I've flipped out a touch higher. Otherwise, it's a minor down day with my stocks roughly tracking the index.

I've added a new long in gold stock, St Barbara. This is recovering after a recent sell off, led by falls in physical gold. However, this company does not have the political risk of some of the other locally listed gold producers and the weekly chart is making a higher low while the daily would confirm a breakout with a trade at 214. Here's the weekly.

Long at 210 with a stop at 202.

4.13 The index lost another couple of points, down 28 at 4292.

Book squaring

It's been that sort of week round the world, the upcoming Easter break and some reassessment of European risk has led to positions being unwound. It always seemed unlikely that the Asx 200 would suffer much today since there hasn't been much activity to unwind. Surprisingly, the index fell as much as 48 points by mid morning but it's down 25 now at 4309.

MSB got caught up in that liquidation, selling down to 751 on very light volume but bouncing away from that support level to be up 3 at 782 now. I bought some more stock at 762 average and I'm easing out of it now.

PXS is unchanged while the larger cap stocks where I'm holding option positions are mixed to up. Specifically, NAB is down 5 at 2474, OSH is up 6 at 698 and SUN is up 5 at 838. The performance of OSH is a pleasant surprise since the sell resources theme is ongoing. The recent action is choppy but positive with the stock bid up whenever it trades into the mid 680s and today's action could be the third higher low in a short period. With any luck, that could be the foundation for a decent swing up.

4.12 The Asx 200 index stands at 4320 as we break for Easter. That's a good performance on the day, a loss of just 14 points. MSB kept reversing and I sold a few more stock at 793. PXS rallied to square and OSH finished close to the day's high at 701.

Banks again

A weak overnight lead was eased with a late recovery in the US as some investors took the view that the lack of need for QE3 might be a good thing. The Aussie market was always a chance to outperform today because we'd already had two days of congestion after a good run. An unexpected monthly trade deficit took the wind out of an early recovery attempt but as the afternoon rolls on, the Asx 200 has almost regained yesterday's close thanks to a resumption in the rally for financials and defensives.

As far as my book goes, a residual position in NAB has rallied and SUN has also pushed higher to 834. I have April 850 calls, May 850s and May 875s plus some stock. The options aren't doing much but the premium markdown thanks to Easter is almost over and there's often a bounce back post the holiday.

I sold the last portion of KCN at 622 on the open and that's now trading at 600. MSB and PXS are flat after falling earlier and I'm looking for them to resume their rally following a retracement. I've bought more MSB over the last two days at an average price of 781 having tipped some out around 800.

I'm less confident about PXS. It may have topped but I'm looking for another high. A fall into the low/mid 120s would be a sign that the party was over.

4.11 The Asx 200 edged into positive territory but matched a touch weaker, down 3 at 4334. PXS finished with a push to 135.

On second thoughts..

After a bit of a think, I decided I didn't like the KCN position but unfortunately, I sat and watched it for half an hour while it traded unchanged and then it got hit. I was idly hoping for a few cents of profit. Anyway, it's down 16 at 633 which is a recovery from the intraday low of 625. A lot of people looked to have stopped out and a buyer has stepped in so I'm waiting again. Out of a third at 628 though.

Otherwise, the RBA failed to cut rates but commentary is implying a May reduction if the CPI comes through alright. The market gave up early gains and went back to square but is ticking back up to leave the Asx 200 at 4337 at 3.30 pm. That's a rise of a little over 7 points.

I got out of the last of the XJO calls at 79, a few more of the NAB April 2450 calls at 48, half of the stock balance in SUN at 833 and some OSH April 725s at 9. I can't see any compelling trades and am just trying to reduce positions before Easter.

4.12 Not much change, the Asx 200 closed at 4337. Out of more KCN at 630 on the match.

Enough for now?

A good overnight lead plus a better than expected Chinese PMI number helped the Asx 200 to burst out of the blocks. That was as good as it got and the gains have largely evaporated. I sold most of the index calls at 95 and it looks as if I should get out of the rest.

The financials are retracing today while the risk assets have some support. NAB had most of its fall on Friday and is just down 4 at 2455; I have a few April 2450 calls left. SUN has had a bigger drop, falling 15 to 825 and the calls are down in line. OSH has done well though and I tipped out some of the extra April 725 calls at 9.5.

A new trade today is a long in gold stock, Kingsgate. I'm looking for the stock to have completed a retracement and have bought at 648 with a stop around 625.

I'm a bit iffy about this trade because I'm not sure if the correction in the gold price is over but the underlying price is finding support, at least.

Longer term trades in MSB and PXS are doing ok, both up about 1.5%.

4.12 The theme continued with financials slipping all day and resources tending to hang on to gains. Down 6 to 4329.