Friday, April 21, 2017
We finished off the week with a thud as the Dow fell 31 points on OK volume. The advance/declines were slightly negative. The summation index is moving sideways. We bounced around all day with the overall market a bit weaker than the Dow. We're still trying to make up our mind what to do here. The VIX may be trying to turn back up here and that would be a negative. My story remains the same. I don't have a good signal one way or the other. Plus my read of the market here lately has been wrong. I'm on the sidelines until I get a better idea of what to do. GE got clobbered today, off 3/4 on very heavy volume. So much for GE perhaps leading the way higher. The earnings were in line with estimates but the stock still got sold off. Gold and the US dollar were both up slightly. The XAU and GDX were little changed on average volume. Mentally I'm feeling OK. We are moving on to the May option cycle. The major stock indices are not in sync at the moment. The small stocks are still leading the way though and that is a plus. The short term technical indicators there are getting overbought. The big cap indicators are mid-range. The VIX could go either way here but has at least rolled over for now. With mixed signals like these, I will have to wait it out for now. Perhaps over the weekend I can find some clues on what to do. But for now it's the sidelines as the best choice for me. I've put aside the last debacle of a trade but I still need to see some type of signal before attempting the next one. At least that's the plan for now. The major foreign markets have been weak of late so maybe it's time for them to turn around after the French election on Sunday. That's just a guess as usual. Asia was a bit higher and Europe mixed in last nights trade. I'll be checking the charts over the next couple of days. For now it's Friday afternoon and time for a break.
Thursday, April 20, 2017
Up and down we go as the market is trying to figure out what to do here. The Dow gained 174 points on good volume. The advance/declines were over 2 to 1 positive. The summation index is still basically moving sideways but another day like today would change that. The small stocks are still acting good here so I'm still in the bullish camp going forward. I would like to purchase some SPY May calls at some point. Yes, I'm still looking for new all time highs if this is the beginning of the next leg up. That however, remains to be seen. GE was up 1/4 and volume was good. Perhaps the recent rise in GE is a clue as to where the overall market is headed. Gold and the US dollar both finished little changed for the day. The XAU and GDX had fractional gains on light volume. Mentally I'm feeling OK. Volatility has returned and that has increased the price of the option premiums for now. There is also plenty of time left in the May cycle as it really begins on Monday. The short term technical indicators for the S&P 500 are mid-range at the moment. I do not have any clear signals from my own indicators. So it's a time to wait. I'll let the expiration go by tomorrow and then assess the situation from there. Both Europe and Asia were positive last night. We'll finish up the trading week tomorrow.
Wednesday, April 19, 2017
Opening higher and closing lower as the Dow fell 118 points on average volume. The advance/declines were slightly negative. The overall market was once again stronger than the Dow, with the NASDAQ in positive territory. The summation index is trending sideways. As I've said before I can't quite make out what is going on here. However with the small stocks acting well, I don't think that we're on the verge of any major breakdown. I'm still looking at the May SPY calls. GE was up over 1/8 on average volume. No trades in mind here. Gold shed over $10 on the futures as the US dollar bounced back. The XAU lost 2 7/8, while GDX dropped 7/8. Volume was heavy. Gold is at some long term resistance here and a pullback isn't out of the question. If gold can get through the $1300 level on good volume the picture would turn very positive in my view. But that remains to be seen. Mentally I'm feeling OK. The big cap indices have been slowly trending lower since the start of March. I'm still thinking that this is simply a long consolidation before we attempt new all time highs again. There isn't much else to report. The Fed minutes came and went. The usual positive option expiration week bias didn't last. Perhaps the bounce on Tuesday was a chance to get short. But I have to believe that any decline will be short lived. The major indices are not in sync, therefore it appears to be more consolidation in my view. I'm going to wait for a clear signal and go from there. Asia was generally lower and Europe generally higher overnight. We'll keep an eye on overnight developments.
Tuesday, April 18, 2017
Back to the downside today as the Dow fell 113 points on light volume. The advance/declines were slightly negative. The summation index is now trending sideways. No follow through to yesterdays gains as the day began with a gap to the downside. The overall market was much stronger than the Dow so I'm still in the bullish camp for now. But I have to admit that I do not have a good idea of what is going on here. The sidelines seem to be the safest place for me at the moment. The RUT is holding up for now above the 1340 level. As long as that holds, I'm still going to look for higher prices going forward. GE was up 20 cents on average volume. Gold was flat on the day despite the US dollar getting crushed. The XAU and GDX had slight fractional losses on average volume. The lack of movement in gold and the gold shares isn't positive with the drop in the dollar. We should have seen some gains for the precious metal. Mentally I'm again feeling a bit tired. The short term technical indicators for the major averages are oversold but not completely. We do have the Bollinger bands converging which implies a big move one way or the other coming up. My thinking is that the sideways price activity that we've seen for the past month and a half is a consolidation before we head higher. If not we have built a pretty good top and prices should fall quickly. The recent action in the VIX indicators points to a rally coming. However as always, the market goes where it wants. We could turn those indicators around and the market could fall but the odds favor the opposite. We've got the Fed minutes tomorrow and that could be a market mover. It's also earnings season and anything goes there. It's a time to pay attention perhaps a bit more than usual. But like I said, I don't have a clear idea of what's going on. Asia was mixed with Europe lower once again. Europe could be moving in anticipation of the French election coming this weekend. That's a guess as usual. We'll see what tomorrow brings.
Monday, April 17, 2017
We had a gap to the upside to start the day and the market never looked back. The Dow gained 183 points on pretty light volume. The advance/declines were 3 to 1 positive. This should move the summation index back to the upside. After Fridays action we did have both short and medium term buy signals on a couple of my indicators. I did place an order for the SPY April calls this morning but there was no pullback and it wasn't filled. Today was the type of day I was looking for last week. But what can you do? It is frustrating sometimes though. The volume is light but I do believe that this is the beginning of something that will take us to new all time highs. I'll now look to the SPY May calls for the next trade. GE was up 8 cents and the volume was light. Gold lost a couple bucks on the futures and the US dollar finished a bit lower. The XAU and GDX were both little changed on light volume for the session. Mentally I'm feeling a bit tired, did not sleep well. Some buyers showed up today and I'm sure we saw some short covering as well. The VIX got to the overbought level where reversals take place. We saw all of that today. It's also options expiration week and the positive bias should be in effect. Declines can be purchased in my opinion. The only thing that would change my mind is if we're down tomorrow as much as we went up today. I do not expect that to happen despite the light volume today. I always say that light volume rallies cannot be trusted. So we'll see how it goes tomorrow. After last weeks debacle of a trade, I'm trying to stay positive and on an even keel. We'll see how that goes. Asia was mixed and Europe lower overnight. We'll keep an eye out on the developments tonight.
Thursday, April 13, 2017
The market continues to drop here as the Dow fell 138 points on light volume. The advance/declines were 2 to 1 negative. This should turn the summation index lower. I'm not sure what is going on here. I now have solid buy signals on a couple of my indicators. However the market has the feel of wanting to fall apart here. We are however, not in a crash zone on the summation index. My weekly SPY April call trade was a 100% loser. That is ridiculous. I was so certain that we'd see some upside that I never even put in a stop loss order. Unacceptable. Not to mention that the entry was wrong and we are in a holiday week. I don't know what I was thinking but it was all wrong. Today I actually placed another order for the SPY April calls but later canceled it. Some of my technical indicators are in the buy zone both short and medium term. But I really have to think about what is going on here and I do not want to make a trade to just try and make back what I just lost. I'll consider what to do over the weekend. GE was off 20 cents and the volume was light. The daily technical indicators have rolled over here. Gold was up over $10 on the futures and the US dollar was a bit lower but came up from the lows of the day. It appears like a flight to safety is in order as the US has just dropped some kind of huge bomb on Afghanistan. But the gold shares were quiet as the XAU and GDX finished the session little changed on average volume. Mentally I'm feeling OK. Interesting markets as it looks like we are about to drop below the support of a trading range that has been in effect for weeks on some of the major indices. Some of the technical indicators are not completely oversold so there is a chance that we are going to see some extended decline after a bounce. That's my guess at the moment but my take on things here is shaky at best.. My own indicators indicate that upside is due. The VIX indicators are in the area where at least a bounce is seen. I will really have to consider getting long on weakness Monday morning. However my confidence isn't exactly in a good place after the last trade. I also don't want to compound the recent loss with another negative trade. But it does look like an opportunity here for me, if I can manage it properly. That remains to be seen. It seems like there just were not any buyers this week, for whatever reasons. Geo-political concerns are in the forefront as well. I'll have to go over the charts this weekend and try and decide what to do. Also the sooner I put the losing trade behind me, the better my mind will be at trying to figure out where to go next. The game is never easy and the battle with myself never ends. Asia was mostly lower and Europe was red across the board. Plenty to ponder in the next 3 days. For now it's Thursday afternoon and a long weekend break is upon us.
Wednesday, April 12, 2017
Heading lower as the Dow fell 59 points on light volume. The advance/declines were 2 to 1 negative. The summation index is moving up but prices are not. I don't know what to make of that. My weekly SPY April calls are dead. The upside I expected never materialized and is long overdue. I will try and sell these tomorrow if possible if we get a pop at the open. But they will be 90% or more losers. Bad entry and trying the weekly options again was the wrong idea. I should have cut the loss right away but expected at least some upside this week. It never happened. My read on things here is wrong and I'll have to return to the sidelines I suppose. I still think that yesterdays low should be some type of bottom here. GE was off 1/4 and volume picked up a little going lower. Gold was up a bit again on the futures as the US dollar fell almost 1/2. The XAU and GDX had slight fractional gains on average volume. Mentally I'm feeling OK. Way overdue for some type of bounce here in my opinion. I'm not saying that it would be the start of another leg up but we are at a point where at least some upside should have occurred. But as usual the market goes where it wants. Light volume and no interest is not the best trading environment. The buyers have disappeared. After yesterdays comeback to almost unchanged, I expected some follow through to the upside. It didn't happen. My management of this trade has been awful. It's a step backwards really. If I had some more confidence, I would purchase some SPY April calls that expire next Friday. But the prudent thing for me to do here is sit things out until the next valid signal comes around. The SPY trade that I did this week did not fit those parameters. I think it was more of a case of me wanting to do something rather than wait for a decent set up. That's on me. The toughest battle for me in the game is always against myself. So where do we go from here? The VIX is overbought and at levels where we should see some type of move higher in equity prices. The short term technical indicators for the S&P 500 have rolled over. They are not oversold at the moment. So it is a mixed picture at best. With the lack of participation lately, sitting out for a while is the course that I will probably take. I'll book the loss tomorrow and then try to collect my thoughts over the long weekend. Asia was mixed and Europe generally lower last night. We'll finish up the trading week tomorrow.