Friday, September 22, 2017
More hanging around today as the Dow fell 9 points on pretty light volume. The advance/declines were almost 2 to 1 positive. The summation index continues higher. The overall market was stronger than the Dow and that's a plus for the bulls. The RUT is right at the resistance of 1450. I'm thinking that we'll get some strength early next week which would produce some kind of short squeeze higher. Unfortunately I'd be getting squeezed this time around since I'm holding the SPY October puts. They are still showing a small loss. Once again, if I do get stopped out I'll try this trade again. GE was up 1/8 and the volume was good. Gold was up five bucks on the futures and the US dollar was little changed. The XAU rose a point and GDX added 1/4. Volume was light. Short term oversold on the technical indicators for gold and the gold shares. Mentally I'm feeling OK. Still 4 weeks to go in the October option cycle with plenty of time. I do think that there's a chance of another run up in the near term. However I'm also just as convinced that we'll see some type of drop during this option cycle. The potential RSI negative divergence is still there on the S&P weekly chart. Plus the volume here lately has been very weak and that is never a positive for higher prices. But like I said, that doesn't rule out another bounce higher to run in the shorts. However we've got the VIX below 10 and that won't last the entire time left in the October option cycle either. My strategy is already in place and I'll be ready to adjust if necessary. I'll reassess after looking over the details on the charts this weekend. Asia was generally lower and Europe higher last night. It's the first day of autumn and the end of the week. Time for a break.
Thursday, September 21, 2017
A bit lower today as the Dow fell 53 points on pretty light volume. The advance/declines were negative. The summation index is still moving higher. We bounced around for much of the session in lower territory and extended the losses in the final half hour. I don't think that this is the start of a big decline because I am looking for some strength at the beginning of next week. My SPY October puts are still showing a slight loss. I'm not exactly sure what to do with this position but will probably hold it over the weekend. We're still short term overbought on the big cap indices. The smaller stock indicators have already rolled over. GE is moving up and gained 3/8 on good volume. We've broken a short term down trend line that's been in effect since June. I'll be looking for the longer term calls on a drop back to the recent low. Gold sunk over $20 on the futures and has dropped below $1300. It appears that gold reacted to the Fed today. The US dollar was a bit lower. The XAU and GDX had fractional losses on light volume. Mentally I'm feeling OK. So we dropped a little today but it hasn't helped my SPY put options. That is the effect of the time decay which makes options trading a challenge. I'm still convinced that we'll see some type of decline in the October option cycle at some point. Again, if this position gets stopped out, I'll try it again. Perhaps in the middle of next week. RUT has yet to break through the resistance at 1450. Asia was generally lower and Europe higher but not by much. A really lackluster response to the Fed. We'll close out the week tomorrow.
Wednesday, September 20, 2017
We attempted a sell off today but the market refused to go down as the Dow gained 41 points on average volume. The advance/declines were positive. The summation index is moving up. The Dow dropped to down around 50 points after the Fed but then came all the way back. I think we could go a bit higher near term but really are overdue for some decline. My SPY October puts are showing a small loss. If this trade gets stopped out, I will simply try it again at a higher strike price. My work suggests some strength at the beginning of next week. Perhaps trying the puts again then will be the next idea depending on what happens the rest of this week. I do feel that at some point the SPY October puts will be where you want to be. GE was up 1/8 on good volume. I will be trying the longer term calls here at some point. Gold was off $6 on a stronger US dollar after the Fed. The XAU dropped 1 3/4, while GDX shed 1/3. Volume was good. Mentally I'm feeling OK. I'm not sure what the next catalyst for market movement will be from here. Still overbought and staying that way. Perhaps we'll see the speculative blow off top. But that's just a guess. The TRAN had a good day and RUT is about to make a new all time high. If the small stocks get going here and break to new highs as well it will be rally mode all around. It will be interesting to see if RUT climbs above 1450. That's the level to watch in my mind for now. Otherwise it appears that I'm early on the SPY October puts here. We did not get the sustained sell off from the Fed that I had anticipated. Managing the trade from here is the task at hand. Perhaps I'll bail out before the weekend and look to reestablish the position next week. It's something to consider. Asia was higher and Europe mixed in last nights trade. We'll see how the market digests the Fed overnight.
Tuesday, September 19, 2017
Another day of waiting on the Fed as the Dow rose 39 points on light volume. The advance/declines were slightly positive. The summation index continues to head higher. The McClellan oscillator gave a signal last night for a big move in the next two trading sessions. If the signal is valid we'll see some movement one way or the other tomorrow. We remain short term overbought for all the major stock indices. I still think tomorrow could go either way despite the overbought condition. However I did purchase some SPY October puts today. My original open order wasn't filled so I canceled it and went with a closer strike price and less money at risk. The stop loss order is in. If we do rally from here, I will try this idea again in a few days. GE dropped 1/4 on good volume. Trying to find a bottom here? Who knows? Gold rose a few bucks and the US dollar was a bit weaker. The XAU and GDX had slight fractional gains on very light volume. Mentally I'm feeling a bit tired, did not sleep enough. So the next trade is in. Plenty of time for this to work but tomorrow will probably tell the story if there will be a profit or not. There is really nothing out there that says we're on the verge of a huge decline. However we are overbought, have been and are overdue for at least some downside in the near term. That's my story and I'm sticking to it for now. It could all change tomorrow. I will say that there are potential negative RSI divergences on the weekly chart for the S&P along with some other big cap stock averages. So we'll see. Europe was higher and Asia mixed overnight. We'll watch what happens tonight and check out the markets reaction to the Fed tomorrow.
Monday, September 18, 2017
More new highs as the Dow gained 63 points on light volume. The advance/declines were positive. The summation index continues higher. The market may be on hold until we get the Fed announcement on Wednesday. We're still short term overbought and staying that way. Things technically could go either way after the Fed despite the short term overbought status. I did place an open order for the SPY October puts this morning but it wasn't filled. I've left it in overnight but may change my mind by the open tomorrow. There's a chance that the small caps could break to the upside here and then we'd be off to the races. There's no overhead resistance once we get above where we are now on the small caps. It's either that or we have some kind of double top put in. The overall market was weaker than the Dow today. GE was up 1/2 on good volume. If GE can finally get something going to the upside, that would paint a bullish picture as well. Gold fell $14 on the futures and the US dollar was a bit higher. The XAU lost 1 1/2, while GDX shed 3/8. Volume was about average. Gold seems to have lost some of its luster as rates in the US have ticked higher. Mentally I'm feeling OK. I suppose that I'm convinced that the weak seasonal pattern for the stock market is about to show up here. That combined with the overbought condition of the market at the moment are two reasons to look at the puts here. The light volume is another. My hope is that we'll see one more attempt at new all time highs. That would be the ideal time to try the SPY puts in my mind. But we know the market rarely cooperates and there's the possibility that we have some kind of blow off top first as well. As with any trade, there's always some risk. However getting short in here at the moment seems to present less risk than getting long. We'll have to see how things go tomorrow. Europe and Asia were higher overnight. We'll keep an eye on the overnight developments.
Friday, September 15, 2017
The beat goes on as the Dow added 64 points on expiration heavy volume. The advance/declines were decidedly positive. The summation index continues higher. Some indices are breaking out to new all time highs and the small stocks look to be on the verge of doing so. The short term technical indicators remain overbought. It appears as though there isn't anything in the way of higher prices. I'm still looking at the SPY October puts but I don't want to be married to this idea. We are in a seasonally weak time period but that hasn't meant anything yet. GE lost about a dime on heavy volume. Gold shed $5 despite another threat from North Korea. The US dollar was a bit lower. The XAU and GDX had fractional losses on light volume. Getting short term oversold for the gold shares. Mentally I'm feeling OK. I guess how high will we go here is the question. An extra week on the October options, so the premiums are pricey. It would be hard for me to go long here because we're already very short term overbought and have stayed that way. However there could be another short squeeze on the way and I would not like to be stuck in that. We've got the Fed next week and it may be tough to take a position ahead of that as well. I'm going to have to reassess my ideas at the moment and try to come up with a viable game plan. There is really no way to tell how much longer the market will climb but it certainly won't last forever. Todays positive action could also just have been expiration related as well. I'll have plenty to think about over the next couple of days. I'll go over all the charts and try to figure out what to do. Asia up and Europe down in last nights trade. It's Friday afternoon nearing the end of summer and time for a break.
Thursday, September 14, 2017
A mixed bag today with the Dow higher and the overall market lower. The most watched index rose 45 points on average volume. the advance/declines were slightly positive. The summation index continues higher. The S&P along with the NASDAQ were lower, with the small stocks getting the worst of it. This underlying weakness could spell trouble going forward and I am kind of counting on it. The short term technical indicators remain overbought for the major averages. We'll s get retail sales tomorrow and we'll see how the market reacts. GE was up fifteen cents on good volume. Gold rose five bucks on a lower US dollar. The XAU and GDX had slight fractional gains on about average volume. Mentally I'm feeling OK. Not much else to report today. I'm letting this week go by and then hopefully getting some SPY October puts next week. We've got option expiration tomorrow and the Fed coming up next week. I'm not expecting nay surprises from the Fed but you never know. We remain overbought with the small stocks kind of stalling here. The VIX is oversold at the moment and it appears to me that we are at least trying to set up for something lower in the near term. But I could be wrong and often am. What I would like to see is a light volume levitation from here going into the close on Monday. The market rarely cooperates. Europe and Asia were generally lower overnight. We'll see how we close out the week with the expiration tomorrow.