Bank results

ANZ is the first of the big 4 to report and the result was fractionally disappointing to leave the share lower by about 1%. The rest of the sector is a touch weaker too and that has taken the top off the market with the Asx 200 up 6 at 4436 despite good overnight leads.

I've joined in the bank (or other financial) bashing with a short term trade in CGF. After a grinding rally, price dropped below yesterday's low for the first time in a while. I'm short at 396 and will get out on any renewed strength.

After a long period of tedium, IPL has shaken off the cobwebs. I was disbelieving yesterday and didn't take the opportunity to pre-empt a breakout. However, I've bought at 333 today and the stock has confirmed with trades above that level. It's at 336 at the moment.

My longs are muted except for MSB which is up 21 at 771. I sold a portion at 770. The short positions are better. Out of NWH at 398 and 394 and covered a few AGO at 274. OST is up 1 but stalling around recent highs and I'm waiting to see if I can stay short.

I also shorted BLY at 420; I'm looking for another completed retracement there. I'll just use a trailing stop above today's high.

4.17 The market meandered to a mildly firmer finish, up 6 at 4436. I sold out of half of the RSG long at 170.

Strangely muted

The market has shot through 4400 today, up 27 to 4423 at 12.24 pm. In my book of longs and shorts though, there's not a lot of action and the top 20 is outperforming. It's a shame I didn't decide to hold a few WPL longs overnight, the stock is up 148 at 3640 on corporate news.

I've just sold out of DJS for square at 250 and I'm covering some short TOL at 581 as the stock has slipped 5. Of the new longs, QAN and RSG have edged higher while MSB is down 5 but working its way back from a weak open after window dressing on yesterday's match. OST is the worst of the short positions, up 3.5 to 134 but it's still below my stop.

Here's a daily chart for the Asx 200. The index has traded at its highest level since early August and is closing in on resistance at 4445. It's a breakout of a very long range but with resistance so close, I'm fairly neutral on the prospects of strong breakout type gains.

2.40 A surprise 50 basis point cut from the Reserve bank and the market has had another surge and sits up 1% at 4441. It's a very welcome move and quite a surprise from an organisation that had seemed to be increasingly cloth eared in recent years.

2.58 I was too hasty getting out of DJS but QAN is pushing on. I covered the last of the TOL at 581.

4.13 The market peeled back from resistance to finish up 33 at 4430. I ran through a bunch of charts and couldn't find much that was compelling that hadn't already run. I decided against cutting OST when it went through my stop at 136, 137 and that turned out to be a reasonable decision as it ebbed back to close at 134.5. When I'm trying to fade a top, there'll often be a minor new high and, if possible, I try to wait until the close before stopping out. In this case, it's another new high with no oomph to it and I'm willing to hold overnight.

Interest rate sensitive

A 25 basis point rate cut is baked in for tomorrow but there are a couple of interest rate sensitive stocks which are charting promisingly despite the consensus.

One of them is retailer DJS. The stock has been falling for ever but had a decent pop in April and has spent a week or so consolidating without a meaningful pullback. Long at 250 with a stop at 242.

QAN fell out of favour in early April but momentum has stopped and price could be reversing after a minor new low on Friday. Long at 163.5 with a stop at 159.

I sold out of ALL and UGL for square as there was no follow through this morning. I took profits in PRU too early as I was concerned about a double top; it's up 9. But I've gone long another gold stock, Resolute, at 166.5. It's a similar chart to QAN but coming off a higher low after a choppy pullback of the first bounce. My stop is at 159, below Thursday's low.

AGO is at risk of misreading investor attitudes to the iron ore cycle. The management may well be correct about ongoing demand but the market is cautious about the sector and talk of building a railway is not helping. Short at 289 with a trailing stop; I've already covered a couple at 283.

WPL has reminded me why I shouldn't be punting naked long premium. The stock has been strong today and negated the possibility of downside acceleration. I could see a breakout on the cards and sold out the May 3374 puts at 32 (v 76 average) and bought some stock at 3470 for a quick day trade. I'm almost out at about 3495 average which has marginally softened the blow. The short term picture looks pretty good now but the stock price is too high dollar for me to want to hold an overnight position.

The market is making up for weakness on Thursday and Friday although a tilt at 4400 has failed so far and the action is not super strong. Up 29 at 4391 at 2.24 pm.

Of my other short positions, ASL and NWH have pushed higher but I'd already covered half of these and I'm sitting on the balance while TOL is down 2% and OST is flat.

4.39 That's the end of the month. I thought the market might sneak up to 4400 on renewed strength this afternoon but it fell just short, finishing up 35 at 4397. My new longs were mixed but on average were about breakeven. AGO did well, closing near the low at 280 and I bought back a third of the TOL short at 583.

Towards the close of trading, I bought MSB at 747. It's my third attempt at buying this – the other two were minor gains – and I'm hoping that a pennant shaped correction is complete. Long on the reversal with a trailing stop and the potential of a move to 810 or higher. The closing price was somewhat misleading as the stock jumped on light volume.

On their own

The Americans are on their own with another decent rise last night on the back of more good results from a strong reporting season and soothing words from Uncle Ben. The Aussie market faces a different set of circumstances and it was sell on open again this morning. At 1.08 pm, the Asx 200 is down 5 points at 4370 and I've been tinkering with existing positions and putting on a few new ones.

Of the existing ones, I've shorted and mostly covered additional stock in ASL, BLY and NWH. I sold out half of the PRU for a small gain at 254 but I'm late into the trade and it has stalled at resistance.

I've added a couple of longs. First, ALL at 315 with a stop at 309. A flat correction which may just pop up to a new high at 330ish.

Second, UGL at 1307 with a trailing stop. It's more of a consolidating sort of chart but a strong pattern as it breaks out of a short term triangle.

 

I'm hoping for a bearish reversal with OST. I'm short this at 132 after it made a marginal new high yesterday and failed to follow through. Stop is at 137.

TOL kept running after I stopped out at 580 on Tuesday. I've sold this at 595 as it's another marginal new high and the action seemed more like a short squeeze.

3.29 Out of PRU at 252 for a minor gain and covered a small short in BLY at 409 (v 418). The index is now down 8 and it's the resources that are weak again. WPL hasn't cracked but it's beginning to look vulnerable to a downdraft. Fingers crossed.

4.17 A late flurry of selling left the index on the day's low, down 13 at 4362. OST and TOL didn't do much but I held them, the same is true for the new longs in ALL and UGL. It has been a fun week now that I've focussed on what I enjoy about trading and that's despite some stodgy action in the market.

Coming to a head

I've been bearish and wrong for a week or two but the latest leg up has formed up into a textbook 5 wave pattern and there's probably not much left in the short term. Our market seems to think so too because we've eased back after an opening which didn't quite match the overnight moves. Up 20 at 12.43 pm.

I bought back the AWE short at 181 and stopped out of the last of the SEK for 699. NWH has bounced and I've re-shorted some stock at 408.

I've also shorted some ASL at 410, it's a similar chart and sector to NWH.

I'm gambling that PRU has more upside. Long on a resumption of strength at 248 with a stop at 236.

Of my existing positions, FMG has fallen further to 576 and I've bought back a couple more at that level, WPL has drifted to be up 3, OSH is hedged and will contra out tonight and SUN is up a few cents too so the May calls are holding their value.

2.33 Out of FMG now, buying the balance at 565. I've been conservative when taking profits in a couple of these because I need to rebuild the P/L account after a poor start to the month and I still have puts in the index and in WPL which provide quite a lot of downside potential.

4.02 Approaching the match and the market has flirted with a fall into the red but steadied to be up 11. I bought back the extra NWH short at 404 and 402 and covered a couple of the ASL at 404 too but remain short. SUN has reversed after some early strength so the 8 cent May 850 calls are down to 4 but WPL has also reversed lower which helps my puts.

4.13 The index rose 15 points today, closing at 4375.

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.

Nothing doing

It's a boring old day as we wait for the CPI tomorrow. We had the PPI which was much lower than anticipated but the correlation with the CPI is not so strong in the short term. The HSBC flash PMI number came out too and that showed a slowing economy but also a slowing rate of contraction. All mildly bullish for us but the index merely bounced back to the middle of the intraday range. At 2.08 pm, it's down 9 to 4358.

I nibbled at short positions, buying back some BLY at 402 and TOL at 565. I've traded a couple of things in the hope that they would start to get a wriggle on but neither are doing much so I'll probably exit. OSH suffered some profit taking early but is almost back to square.

AWE is one of the tentative trades. It may have completed a retracement towards the high. I'm short on a break of yesterday's low as news of cost overruns on one of their projects is providing a catalyst for some selling. Stop is at 200 but I'll see how it looks as we near the close before I fully commit to the trade.

3.42 Out of BLY, buying the rest of the short at 397. It still looks weak although it has traced out 5 waves on the 60 minute scale. There may be a shorting opportunity on a retracement.

I've added a short in SEK. It's another faltering correction which could be a lower high.

4.12 The action increased as the afternoon wore on and the Asx 200 drifted lower to close at 4352.