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Monday, June 29, 2015

Well, so much for the summer doldrums.  The Dow fell 350 points on good volume.  The advance/declines were almost 10 to 1 negative.  The summation index is heading lower and about to go through the zero line.  This area is rarely breached and when it is, the market falls apart.  That is what we have going on here.  Crash is another term folks like to use but it seems events are more controlled these days.  The Greek drama took a turn for the worse.  I'll be the first to say that I did not see that coming.  I figured we would get the usual last minute deal and be done with it.  I also thought that the summation index would turn around before it broke the zero line.  Obviously, I was wrong.  At least I didn't buy any calls last week.  GE was off almost 1/2 on good volume.  I did place a couple orders here for the July calls but they were not filled.  I may try again tomorrow but the risk in getting long anything here is very high.  That said, this could be an opportunity for a decent trade if the timing is correct.  But I must admit in a headline driven market environment, it will be like playing with fire.  Gold could only manage a $5 gain on the futures despite the turmoil and the fact that the US dollar got crushed today as well.  If this is all gold can do in times like these then perhaps not trading gold at all is the correct path going forward.  The XAU and GDX had fractional losses on summer average volume.  Why both gold and the US dollar didn't have big rallies today is the question.  My thought is that what we are seeing is a worldwide margin call, with players selling whatever they can to cover their exposure.  That's a guess as usual.  Mentally I'm feeling a bit tired after a volatile trading session.  But where do we go from here?  The Greek drama has the markets full attention and it won't be settled for at least a week as of today.  Trading in this atmosphere is dangerous.  If you can get long close to the bottom, you'll do fine.  But nobody knows where the bottom is.  We are oversold and staying there.  I'll be checking the charts tonight but we are in no mans land.  I would still like to try the GE July calls though.  The technical set up is textbook so far but could be negated due to the market unrest.  I probably should have the discipline to just step aside here and let the market settle itself out.  I will most likely attempt this trade in the coming days but not with a lot of money.  However my ideas lately and my take on the market situation have been off the mark lately.  We get the end of the month and quarter tomorrow but it probably won't matter.  Plus the employment report on Friday.  The market is controlled by whatever happens in Europe at the moment.  We'll see if the foreign markets continue lower overnight as we are held hostage by the headlines overseas.

Friday, June 26, 2015

A day of indecision as the Dow gained 56 points on very heavy volume.  The advance/declines were negative.  It was a mixed bag as the small stocks were weaker on the day.  That's not a positive.  It appears we have some early end of the month and quarter moves going on.  I did place another order for some SPY July calls but it wasn't filled.  I'm a believer that weakness can be bought on Monday if there is any.  The Greek saga should be settled over the weekend.  We may just rally on the open when the market reconvenes.  GE was up a nickel on light volume.  I put in an order for the July calls here as well and wasn't filled.  Perhaps I'll try again next week.  Gold was little changed today but did come off of its lows.  The US dollar was up a bit.  The XAU and GDX had fractional losses on light volume.  Still no interest here.  I am going to try the ABX October calls at some point.  Mentally I'm feeling OK.  Earlier in the week I propositioned that Monday would be the ideal time to try the SPY July calls.  Perhaps the market will actually cooperate this time around.  We are not completely oversold on the major averages as the short term technical indicators are merely mid-range.  However one of my other short term tools will be giving a buy signal if we are negative on Monday.  I'll consider my options over the weekend.  A short holiday week coming up with the end of the month and quarter thrown in.  Plus the employment report on Thursday of next week.  So there will be a lot for the market to digest.  The summation index is still heading down but I expect it to turn back up in this area.  I could be wrong.  Gold remains unattractive now even with the Greek dilemma.  The fundamentals here are negative with the stronger US dollar and the Fed looking to raise rates.  However I will be looking for the seasonal rally to take place in roughly the July-September time frame.  The gold shares are oversold on both the short and medium term.  They are unloved and look like they are about to break below the recent nine month consolidation zone.  If that happens things could get worse in a hurry.  Hasn't happened yet but it's something to keep a close eye on.  So there will be plenty of things to ponder over the weekend.  For now it's Friday afternoon and time for a rest.

Thursday, June 25, 2015

Another weak session as the Dow fell 75 points on summer average volume.  The advance/declines were about 2 to 1 negative.  The summation index is now heading lower.  Still no resolution for Greece and the next meeting is this weekend.  The short term technical indicators for the major averages have rolled over but they are still in the overbought zone.  I did place an overnight order for some SPY July calls but it wasn't filled and I canceled it during the session.  Weakness in the final hour the past 2 days isn't a positive.  However I will maybe attempt this trade again tomorrow.  GE was off almost 1/4 on light volume.  The techncials have rolled over here as well.  We are at the 50 day moving average here.  The July calls here are still on my radar.  Gold again was off just a bit as was the US dollar.  If Greece is about to blow up, wouldn't you expect to see a rise in gold?  Maybe I'm just not seeing things correctly.  The XAU and GDX had fractional losses on better volume.  I'm still interested in getting some ABX October calls.  I suppose when the weekly charts are oversold I'll give them a shot.  Getting there but not yet.  Mentally I'm feeling OK.  Could the market fall apart here on a Greek debacle over the weekend?  Well yes, it could because it is an unknown if it happens and the market likes certainty.  I guess the question is whether it will or not.  We need to stick to the technical indicators though.  The TRAN just broke to a fresh low.  But the small stocks are holding up better here.  The summation index is moving lower but is in an area that it has turned around in the past.  So we have a few conflicting signals and that makes the trading tougher than usual.  If we do head lower tomorrow, I'll probably try the SPY July calls again.  But the sidelines may just be the best place to be.  A case can be made to let this Greek drama play out and then trade from there.  Or I could simply focus on the GE trade only.  I'll consider the various scenarios overnight and try to come up with a profitable strategy.  We'll see if the overseas markets follow the US lower overnight.

Wednesday, June 24, 2015

Stocks took a hit today as the Dow fell 178 points on light volume.  The advance/declines were over 2 to 1 negative.  This should move the summation index back down again but the pattern here appears more sideways to me.  Perhaps more of the Greek drama fears again.  But we can't just dismiss todays price action.  The overall market wasn't as weak as the Dow which is a plus.  But the TRAN got clobbered today and is about to make a new low.  The ideal scenario would be sideways to lower into Monday and then purchase some SPY July calls.  However the market rarely obliges you.  GE was off almost 1/3 on average volume.  Perhaps there will be a chance for the July calls here after all.  Gold was off a bit on the futures as was the US dollar.  The XAU and GDX were little changed again on light volume.  There's a chance that ABX is putting in a bottom here but I'm inclined to wait for lower prices.  Mentally I'm tired as I did not sleep much last night.  It isn't a good idea to trade in a slower mental condition.  The major stock indices are still overbought.  We closed on the low of the session and that's bearish heading into tomorrow.  The revised GDP final number was a non event.  We've been in a trading range for the past 4 months.  A breakout is overdue.  I'm still a believer in new all time highs coming but I could be wrong.  I'm going to have to look things over again tonight and come up with a game plan for tomorrow.  Perhaps the sidelines will have some appeal but we'll have to see what happens overnight.  Gold was still weak today so there wasn't any apparent flight to safety.  A good nights sleep and a fresh start tomorrow is the best course of action in my mind.  We'll see what unfolds in the foreign markets and go from there.

Tuesday, June 23, 2015

Not much going on today as the Dow gained 24 points on light volume.  The advance/declines were positive.  The summation index is heading higher grudgingly.  There really isn't much to say about todays price action.  In my mind the trend is still up and I'd like to get some SPY July calls if we see a pullback.  The short term indicators are overbought for the major stock indices but that doesn't mean that they can't stay that way.  Greece has yet to resolve itself but that is supposed to happen soon.  Perhaps we'll get a sell the news event.  That's a guess as usual.  GE was up 1/8 and the volume was summer average.  It doesn't look like I'll get a chance at the July calls here but we'll see.  Gold was off $7 on the futures as the US dollar gained a full point today.  Both the XAU and GDX barely moved today on light volume.  The gold shares are oversold and on the verge of breaking medium term support on the weekly charts.  A breakdown will probably take the October gold share call trade off the table.  But it hasn't happened yet.  Gold is still above the $1150 level, which I feel is the key support at this point.  However the fundamental picture for gold here is negative in my opinion.  I'll keep an eye on developments going forward.  Mentally I'm feeling OK.  Although we are in an overbought market environment, I'm still leaning bullish and I'd still like to own some SPY calls.  I do believe that we will break out to new all time highs on the S&P 500 during the July option cycle.  I'm remaining patient for the gold share trade at this time.  We watch the foreign markets overnight and see the reaction to the final GDP number tomorrow.

Monday, June 22, 2015

Back to the upside post expiration as the Dow gained 103 points on light volume.  The advance/declines were positive.  The summation index is moving sideways as we have yet to have a solid break higher here.  But I do believe that it will be coming.  I'd still like to try the SPY July calls at some point.  However the short term technical indicators for the major stock indices are overbought.  We are also moving day to day with the situation in Greece.  Supposedly that problem will be solved by the end of the week.  GE was up 18 cents on light volume.  We'll need to see a run back to the bottom of its sideways channel in order to attempt the July calls here.  Gold futures fell $17 today on a positive US dollar and the good news on Greece.  The XAU shed a point and GDX lost 1/3.  Volume was light.  The gold shares bounce of last week looks false and we are heading lower.  We are getting medium term oversold and the time to buy the October gold share calls is approaching.  I'm still looking at the ABX calls as the vehicle of choice.  Mentally I'm feeling OK.  A good start to the week for stocks but we'll need to see a pullback to get long.  Otherwise this will be another missed trade.  The small stocks continue to lead the way here and that's a positive.  Not a lot of economic data out this week.  The final GDP revision on Wednesday could be a mover.  However with the beginning of summer the doldrums can appear at any time.  The trading is never easy and sluggish markets don't help the matter.  The daily gold candlestick chart has a bearish pattern after todays price action.  A resolution of the Greek drama would probably put further pressure on the precious metal.  Patience is still advised here.  We'll keep an eye on the overnight developments and see what tomorrow brings.

Friday, June 19, 2015

A downside expiration as the Dow fell 100 points on heavy volume.  The advance/declines were negative but not as much as a down 100 market would suggest.  The summation index could turn back down after today or perhaps it is moving sideways.  This could be the technical snap back that I am looking for.  However with the unsettled situation in Greece, there is a chance that it is more.  And that is the problem here.  The market is susceptible to headline risk.  The short term technicals are more overbought than oversold at this point.  I'm still leaning bullish here though.  GE was off 1/8 and volume was expiration heavy.  The Bollinger bands here on the daily chart are getting so tight that a breakout one way or the other is imminent.  I still think the resolution will be to the upside and I still like the July calls here.  Gold was pretty much flat on the session and the US dollar had a mild gain.  The XAU was off 1 3/4, while GDX lost 1/2.  Volume was average as the gold shares had poor relative strength vs. gold today.  Not sure exactly what that means but it could simply be expiration related.  With the uncertainty in Greece, I would have expected more of a flight to safety for gold and the US dollar.  As I've said before, perhaps the market knows more than we do.  Mentally I'm feeling OK.  I'm going to have to go over all the charts this weekend to come up with a strategy for next week.  There's another meeting about the Greek tragedy on Monday.  I don't know how long this saga will last this time.  The markets are being held hostage.  But it will get resolved one way or the other eventually.  The RUT hit a new high yesterday.  With the small stocks out performing and the summation index in a zone where it has turned around in the past, I can't be too bearish here.  I still think that a summer rally is in the cards.  I'll probably be looking at the SPY July calls and the GE July calls as well.  But those decisions will have to come over the weekend.  The recent bounce for gold stalled today and the gold shares traded lower.  I'm going to remain patient there for now.  The ABX October calls remain on the radar but the purchase will be put off until they get short term oversold again.  This trade remains viable as long as gold holds the $1150 level.  Plenty to ponder in the next couple of days.  For now it's Friday afternoon and time for a break.