Mind the gap

More fast and loose action has the Aussie market up 1.8% at 3.33 pm. That's 70 points and the rise was almost 88 at the intraday peak. I'm out of my short in TLS at 314 for a 2 cent loss after my trailing stop was hit at 315. I waited a while but not long enough because it's back at 312. IAU was better as my trailing stop was at 112 and it traded through to 115. It was fairly short lived though and I bought the balance of the short back at 108.5 (v 119.5).

My last position is a short in FMG and this was the one where my fill wasn't that great. I got short at 460 at the end of a big down day and I was willing to cop a retracement rally. I thought I might have got away with it but the stock is back at 467, having touched 473, and I'm in two minds. Essentially, my plan is to trade momentum and avoid sitting through choppy retracements which may turn out to not be retracements at all. However, the pattern is reasonably robust and when I put on the trade I thought it worth the risk. It could rally back through the recent congestion around 480-490 and negate the breakout but the set up favours a move towards 400.

There are a couple of gold stocks which are setting up quite well. In both cases I was pondering a buy a couple of days ago and that would have been a good move in hindsight. However the spot gold price is recovering now and providing support and I'll look to get into both on the close.

The first is in PRU. Today should be the first day in a few weeks to trade above and close above the previous high. There's been reasonable support just below 280 too. My stop will be just below the recent 269 low.

RSG has been performing very well for a few months and broke through 180 resistance in early November. The pullback held at that level and a higher low will be confirmed if it trades through 195.5. My stop will be at 182.

As for the Asx 200; the recent sharp move down from the double top may have completed a 3rd wave with today being the start of a correction. It does make me somewhat nervous about the FMG short.

Bought back the FMG at 470. The trailing stop would have been 458 for a small profit but it was a question of guessing that the opening price would be the lowest of the day and the overnight leads were not particularly strong. So be it.

Long PRU at 284 and RSG at 193. Also long IPL at 319 although I think it's probably just a 4th wave thing so I'll take this off quickly.

Aristocrat holds up – is it a buy?

The market is solidly lower today after European markets gave back early gains to close mildly lower and US futures reflected that, in the absence of any actual trading due to the Thanksgiving holiday. At 2.51 pm, the Asx 200 is 1.6% lower on very light volume.

Back to the main point, I should really have cut ALL yesterday. At first, I assumed that it was whippy action in a thin market but then realised that there was substance behind the move with volume well above the daily average. The weakness today gave me an opportunity to get out but I just missed my fill after finally getting to the front of the queue and I chased it to 231 which was a small profit but obviously I would have preferred 228/229. Ironically it's 229 now but the buying keeps arriving even though there are plenty of sellers. I figure that there's a decent buy order and the operator is keeping some stock on the offer to stop it running away while being a net buyer.

I was considering buying it on a reversal because the combination of bars for Wednesday and Thursday is often a good turnaround indicator. However, it's more effective towards the bottom of a range (or top with the reverse pattern) and the short term pattern looks like an incomplete 5 wave move.

Essentially, I think it's a bearish chart but I've been stopped out of my short position by a decent bounce.

Otherwise, IAU is down 6.5 at 105. I bought back half of the short at 106.5 which was a gain of 13 cents and a basic profit target. Now to let the rest run.

Telstra is going nowhere fast which is its default state. I got the confirmation of a sell signal with some trades at 311 but there's been a rebound to 313.

FMG is continuing to hold up quite well after the break on Wednesday. I was hoping for a quick dip but at least it's moving down. The 60 minute chart is chopping around and looks like it might edge higher but I'm reasonably confident that there's more to go.

There are a couple of buying opportunities in OST and PXS which may come good by the close. I'll post if anything resolves.

4.12 The buys didn't come through. PXS is a solid chart but needed a stronger day for me to step in, while OST is making a reversal but it's such a weak chart that I need a pullback to a higher low to get me in there. The market recovered a smidgin to be down 60 at 3984.

While the cat's away

A sneaky rally today with the index recovering 21 points at 1.47 pm following very weak overnight leads. A fair bit was built in but the surprise would have been the poor result for the German 10 year bund auction. However, it's Thanksgiving in the US and the markets will be closed so there's some relief about that. The other driver seems to be the fall in the AUD which has recovered intraday to .974 USD but is still well down over the last week or two. One of my short positions, ALL, is bouncing and I assume it's currency related.

I'm not overly convinced by the action on a thin day so I'm using Tuesday's high to set my stop.

FMG fell to 443 in the first hour but is back at 463. I was expecting a rally above my entry levels today after the big fall yesterday but was thinking of an early bounce before a trend resumption. I think I need to be patient with this one now that there has been a reasonable sell signal.

PRU could be worth buying if it can hold up this afternoon. If I'm buying a potential reversal in a weak stock, I'd rather buy the second attempt (Tuesday was the first effort). I'm not super enthused but I think I should take the signal if it's there on the close rather than try to second guess it. Plus, it's weak in the short term but unlike much of the market it's clearly above the year's lows.

4.11 ALL finished quite strongly on good volume and I'm wondering whether I should have cut. The close was 231 and my stop is at breakeven, 235. It took the gloss off the day with FMG drifting back down and IAU also while TLS ticked between 312 and 313, finishing at the higher figure. No new trades.

The Asx 200 also drifted lower to finish down 7 points.

Nearly but still some work to do

The market is catching up today with a snowballing sort of fall that has the market down 63 at 4070, just after 2 pm. The overnight leads were flat to down.

I'm pretty pleased with how I've been going and although it's a tad frustrating that I decided to close out shorts in AWC, FMG and WSA last night, I've been over the trades and I don't see that I should have done anything different. I may well reinstate a short in FMG on the close, now that it's showing signs of breaking down out of the triangle.

The main thing that I can improve is to run things. My plan is to take half a position off at a target level which might range from 5-6% on a 4 to 6 dollar stock to 10 cents on a stock priced between 50 cents and 150. The other half is supposed to run until the trend shows signs of pausing.

In three cases over the last week, I've failed to let that happen and missed out on some easy money.

The first exhibit is PRU. I closed out the last half at 301 last Friday. I was planning to use a trailing stop or a reversal and that would have got me out on yesterday's close (reversal day) or the break of yesterday's high this morning. Somewhere between 285 and 290.

The second case was OST. I was worried about a bounce back on completion of the BSL issue but there's always something to worry about and a smarter move would have been to be very watchful, and the fact is that I had already taken off half the trade and booked some profit so the insurance plan was in place. This has continued to fall and is down a further 5 cents from my exit level.

The last one is ALK. I bought half back at 99 this morning and that was fine. I'd shorted at 108.5 so it was close enough to my 10 cent target rule of thumb. I then decided to buy back the last half at 99. The stock is now 94 and my motivation to buy back the rest was traders' god syndrome where you decide that this is as far as a stock is going without waiting for any firm evidence.

I'm doing better with running my positions and enjoying it and this is encouragement to leave well enough alone and let the market do the work.

In the meantime, I've had to stop out of SEK. It's fairly well supported but through my level. My remaining positions are two shorts, one in ALL and one in IAU. They're both doing pretty well. Here's ALL.

The IAU daily chart is below.

4.11 It was a panicky afternoon with Chinese PMI figures helping to pull the rug from under Australian resource shares. The market finished at its worst with a loss of 2%.

I put on the short in FMG at 460. I was hoping for something in the low 470s and that's the issue about waiting till the close to transact when the signal is already triggered. But there are plenty of occasions when the reverse happens and you avoid a few dud trades too. Fairly typically with this sort of compressed pattern, you get a strong breakout and I'm hoping for a quick sell off.

I'm short TLS at 312 on the basis of a lower high at 320 and a 1-2-3 sell signal if the stock trades at 311. My stop is at 321.

Putting on a brave face

The market has been resilient today after woeful overnight leads from Europe and the US. There was a late rally in the States but the losses were around 2% despite that. The initial fall for the Asx 200 was about 71 points but the drop is 26 at 2.42pm.

It has been a reasonably good day for me with a predominantly short book. OST has benefitted from a BSL capital raising as fund managers sell the stock to make room for the extra BSL they'll be buying at the heavily discounted issue price of 40 cents per share. I'm tempted to take the balance off because this kind of selling as a knock on effect can be a bit of a freebie as the investment merits of the affected stock reassert themselves in subsequent sessions.

3.52 Fortescue has been very well bid for the last 4 sessions, defying the overall market weakness. I was close to stopping out on yesterday's close but felt that it was due to get crunched. It was soft early but the buying came back and it is once again rallying from early lows. I'll be closing out the short (482) on the match.

AWC has reversed after making a marginal new low relative to the mid October level. I was looking for a drop to about 130 but a trailing stop was actually triggered earlier with a trade as high as 141.5. I wasn't quite convinced at the time but it's closing well so I'll get out of this one too.

It's the same with WSA, while in OST I'm buying back also. The book is going to be pretty flat overnight.

One new trade is a short in IAU. It hasn't been walloped today despite the gold price slump but there's a 1-2-3 sell signal with trading below 120 and the possibility that last week's high was a short term peak.

4.25 The index closed down 30 although the futures are dropping after the close. I'm out of shorts in AWC, FMG, OST and WSA. I'm short IAU at 120. The trend looks set in and I didn't really want to buy back – except in OST – but there you go. The Asx 200 has been outperforming for the last couple of days so I doubt if we'll have a sustained bounce tomorrow even if overseas markets pop back up.

Plus ca change..

More of the same, with a fiscally conservative government elected in Spain but an acknowledgement that the mess will take years to clean up, the market has slid away after some buying early. It's fairly tame so far, just 25 points, but the cracks are appearing. The Chinese Premier was talking about a long recession globally and US overnight futures are weak after a terrorist plot was discovered. The intraday low for the Asx 200 is 4140.4 and that's a point under the low reached on November 2. If the recovery is over, and I think it is, then the likelihood is for new lows in the next month or so.

I have one long position in KAR. The chart is fairly stretched and I'm assuming I'll end up stopping out but the 500 support level has held. My short positions are all lower but nothing fantastic. OST is the best, down 3 to 93.5 as the company discusses the possibility of closing down its loss making steel production. I have an order to buy back half of my short at 93 (v 99.5) on a target. It's very close to support and the trend is long in the tooth so I want to take some off because of the possibility of a short covering rally.

ALL has had me cutting a short position and then a long in the last week – an occupational hazard in this sort of market – but a weak close would be bearish. IAU is also on the bearish radar with the chance of a short term peak having been made.

3.45 It's getting towards the end of the day and it's mostly been a bit rubbish for me. OST is ok, I bought back half at 93 and the chairman's address which came out around 2.30 pm, has helped the stock to hold. But FMG keeps finding support and is up 5 to 490. I'm close to stopping out but I think it would be smarter to use a break of today's high as a stop. KAR is just above my stop and the other two shorts are flat.

Otherwise, I'd like to be shorting LYC which is fading after a slow, anaemic retracement but the company is waiting on a Malaysian government decision which is quite binary. It's either very good or very bad. So I've decided to leave it alone. I'm using ALK as a proxy. It's in a similar sector and also charting weakly. It was a short on Friday but I think it's reasonable to chase the entry.

4.11 I shorted some ALK at 108.5 and ALL at 235. I chopped KAR at 500, pre-empting my 499 signal, which was a mistake in the short term because the stock held and closed at 502. I went long SEK at 605. I'm not convinced that it will push to a new high but it's still making higher lows and there's a fairly tight stop at 590.

The market closed down 14 points which was solidly off the lows in a lacklustre day's trading.

Tension mounts

US markets fell late on thin volume to eventually follow suit led by more European falls. The local market was unable to withstand the pressure after yesterday's outperformance and has been weak but in a tight range with a few minor rallies as Asian markets are restrained in their falls. The index is down 65 points at 2.30 pm having been 78 off at the day's lows.

I've got a mixture of longs and shorts, reflective of the choppy market we've been seeing and the success story was PRU where I bought back the last half of the short position at 301, on the open. It was another gap down of 6% and having sold at 355, I decided not to get greedy. The stock has chopped around subsequently. I've also bought back half of a WSA short at 552 (v 580) on a profit target.

The longs are mixed. ALL has held very well, BLD is possibly a cut, KAR is bouncing and OSH also has me pondering stopping out.

My initial stop in BLD was 353 and it touched that earlier. I like the chart, it has a reverse head and shoulders look about it. Also, stocks with exposure to an improving US economy are doing well, eg ALL and JHX. However, if it makes a higher low, I could easily get another opportunity to buy this and there is no clean uptrend, although there are a few higher lows. My thought is to wait until the close to see if any late buying improves matters and to sell if it doesn't.

The other problem long is OSH and this has also been through a stop at 618. It touched 614 and is now 619. I'm usually prepared to wait once stops are triggered intraday because if volume is light and it's a gap opening then the situation can change quite quickly. In this case, it hasn't become much clearer. I think I should cut because it is starting to form a downtrend but I suspect that it's just a correction and it hasn't, so far, overlapped the peak of wave 1 which was at 612.

My aim is to get out of stocks which aren't going my way and this is one of those situations. Again, I think it might be worth waiting to see if the market firms into the close.

3.02 Another point to bear in mind is that the potential for the market to rally upwards out of a pennant is much lower now. There's a sell signal on the XJO chart with the bottom of the recent range at around 4150 starting to look vulnerable.

4.08 Approaching the closing match out and I'm selling out of BLD and OSH and also ALL, which has slumped in the last hour. There are no new positions, the shorts are mostly too far gone while there was one potential long which has weakened into the close and lost appeal. It's been a choppy week and it's interesting to see how this style works. It's pretty sharp to take me in and out but because entries are on the close of day, it's not overly intense. This week has been modestly positive, a series of small gains and losses with a couple of better gains in IAU and IPL and a good result in PRU.

That's the finish; out of ALL at 236, BLD at 356 and OSH at 621. I'm still long KAR and short AWC, FMG, OST and a half position in WSA. The index closed just above the low at 4177 for a loss of 1.9% or 81 points.