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Thursday, October 23, 2014

Zooming back to the upside as the Dow gained 216 points on good volume.  The advance/declines were better than 3 to 1 positive.  The summation index continues higher.  Good earnings propelled the market today.  We broke the recent down trend line in the S&P 500 today.  It really looks like a V bottom has been put into place.  My November OEX puts as now losers.  The probability of this trade returning to profitability is not good.  Although still short term overbought, todays action in the stock indices negates yesterdays decline.  We'll have to see how the week closes out tomorrow.  GE was up 1/4 on average volume but came well off of the highs for the session.  Trying to get through the 50 and 200 day moving averages here.  Gold was off $16 on the futures.  The US dollar had a slight gain today.  The XAU was up 1/3.  ABX and GG were little changed, while NEM shed over 1/2.  Volume was slightly above average here.  Earnings due soon for the gold shares and I don't see anything positive coming from that.  But who knows?  They are overdue for some type of rally.  Mentally I'm feeling OK.  It's been quite a rally off of the lows from last week.  It doesn't look or feel like a retest is in the cards this time around.  Longs are favored.  I'll probably hold the November OEX puts until the Fed meeting unless we see a sharp decline before that.  Doubt it.  Gold is stalling at the 50 day moving average.  The gold shares remain oversold.  I'm still considering the January gold share calls but would like to wait until after the earnings are reported.  We'll keep an eye on the overnight developments and close out the week tomorrow.

Wednesday, October 22, 2014

Back to the downside today as the Dow fell 153 points on good volume.  The advance/declines were 2 to 1 negative.  We were positive early in the day and that created a short term overbought condition.  I do not think this is the beginning of a downside move like the one we just saw.  The summation index is now heading higher.  We did get back to the declining tops line on the S&P 500 and have been turned away.  I did get some November OEX puts this morning and they are in the black.  However this should be a short term trade, probably around a week or so unless something major develops.  I do not think that we are going to go all the way back down to test the recent lows.  I could be wrong.  GE was off 1/4 and the volume was average.  I'm looking at the March calls here.  Gold was down $6 on the futures and a bit more in the aftermarket.  The US dollar was up on the session again.  The XAU fell 2 3/4.  ABX and NEM were off by about 1/4, while GG dropped 7/8.  Volume was average.  Perhaps this will be the final washout for the gold shares but that is a guess as usual.  The trend remains down for the gold shares.  Mentally I'm feeling OK.  So the next trade has begun and the entry was good.  We got some strength in the morning and I was able to get my order filled.  The stop loss order is in place to contain the loss if we rally.  I'll be keeping an eye on the technicals but this trade should not last long.  I will be looking to switch back to the November OEX calls perhaps next week.  The only caveat with this trade is that the option premiums have so much time left that the price movement on them is muted.  The gains, if any, will certainly not be like the last trade.  The overall market and the small stocks are acting better than the Dow so far.  Gold is still unloved.  The gold shares are being sold off again.  This story never seems to change.  Eventually it will.  We'll see what kind of reaction to todays decline we see in the foreign markets and take it from there. 

Tuesday, October 21, 2014

It is hard to believe that a week ago the market looked like it was at the end of the world.  Today the Dow soared 215 points on heavy volume.  The advance/declines were about 5 to 1 positive.  The summation index is moving higher.  We are right at the down trend line that began a month ago in the S&P 500.  I did place an order for some November OEX puts but it wasn't filled.  It has been a straight line up for the major stock indices since the lows of last week.  The TRAN has already moved above its declining tops line.  So is the idea of getting some index puts here the wrong one?  Could be.  I'll think about it again tonight but perhaps strength tomorrow will be the opportune time for purchase.  GE was up 3/8 and the volume was average.  Right back to the 50 and 200 day moving averages here.  The down trend line here has been broken as well.  Gold rose $7 on the futures and the US dollar was higher today as well.  Not sure what to make of that.  The XAU was only up 1/4.  ABX, GG and NEM all had slight fractional moves one way or the other on average volume.  Once again gold is moving higher without the gold shares and that isn't bullish.  Mentally I'm feeling a bit tired.  It has been an incredible turn in price for the stock indexes.  The summation index has turned around as well.  Longer term it appears that a decent bottom has been put in.  Shorter term is a bit tougher.  We'll be short term overbought with any positive action tomorrow.  I'm leaning towards trying the November OEX puts for a short term trade.  I'll consider this idea once again tonight.  The foreign markets seemed to have turned here as well.  Perhaps waiting for a pullback to get long is the better course of action here.  We'll see.  Gold and silver have stopped going down but it certainly isn't the kind of price action that gets anybodies attention.  Staying on the sidelines there for now.  We'll watch what happens today after the bell, check the overseas action tonight and get ready for tomorrow.

Monday, October 20, 2014

The Dow rising only 19 points today does not tell the story as the overall market was much higher.  The advance/declines were almost 3 to 1 positive and the volume was average.  The small stocks and the S&P 500 were considerably higher.  The summation index has turned back to the upside.  Do we try and trade a move back to test the lows?  What if there is no retest and this is a V bottom?  Plenty of questions as usual.  I think that if we get to short term overbought on the technical indicators later this week, I'll try the November OEX puts.  If not, then I will look to buy the November calls at some point during this option cycle.  That is the game plan at the moment.  GE was up almost 1/4 on average volume.  I still like the March calls here and will look to pick some up on a pullback.  Gold rose $5 on the futures today.  The US dollar Was lower on the session.  The XAU gained 1 1/2.  ABX, GG and NEM all had fractional gains on lighter volume.  Gold itself is short term overbought here and the gold shares did not go along for the ride.  No trades here for now.  Mentally I'm feeling OK.  The Dow was held back today by a huge loss in IBM.  The other major stock indices are bouncing nicely.  Waiting for the next set up here basically.  Perhaps by the end of the week.  The ideal scenario is to keep moving higher on light volume to set up the OEX puts.  Gold has had a nice bounce but the fundamentals there are still negative and could be for a while.  No such rally in the gold shares but they did stop moving lower.  Patience could be the best idea there.  we'll see what happens in the overseas markets tonight and take it from there.  

Friday, October 17, 2014

A very positive expiration bias as the Dow zoomed 263 points on heavy volume.  The advance/declines were about 2 to 1 positive.  This should turn the summation index back to the upside.  But it doesn't necessarily mean that we will be going straight back up.  It looks like the next trade could now be the November OEX puts when we get back to the new down trend line.  It could be sooner than that but we will have to see what the stock indices do from here.  Option premiums for November are high.  GE had a gap to the upside and gained 1/2 on good volume after the earnings announcement.  We did come off of the highs for the day though.  I still like the idea for the March calls here and will be looking to get them on weakness.  Gold was off a couple bucks on the futures as the US dollar was higher on the day.  The XAU was off 2 1/4.  ABX and NEM were lower by 1/3 and GG fell almost a buck.  Volume was average.  The gold shares look poised to go even lower here.  Maybe we'll see one last shake out for the gold shares here when the earnings come out.  That's a guess as usual.  No trades here for now.  Mentally I'm feeling OK.  That was quite a week for the stock indexes.  The small stocks performed better than the big caps.  We will probably test the lows made this week at some point but the decline is done in my opinion.  The short term technicals have turned back up.  The fear level shot up and we did get a high volume washout on Wednesday.  That doesn't mean the market can't go lower as it always goes where it wants to.  It simply means the odds favor higher prices going forward according to the technicals.  My trading tactics this week left much to be desired.  That said, at least I had a winning trade.  After last months blow out, over-leveraged losses to the downside, it was good to see something positive.  My timing for that idea was unfortunately off by a month.  However I can tell you two things that remain true in the game.  You have to believe in yourself and you can never give up.  Gold continued higher this week but the gold shares certainly did not follow.  That usually isn't bullish and probably isn't in this case either.  So it is probably best to remain on the sidelines here.  Plenty of charts to ponder over the weekend as I try and come up with the next trading idea.  For now it's Friday afternoon and time for a break. 

Thursday, October 16, 2014

Not as volatile today as the Dow fell 24 points on heavy volume.  The advance/declines were over 2 to 1 positive though, as the overall market was stronger than the Dow.  Trying to find a bottom for now in my opinion.  The summation index may start to turn back up here.  The short term technicals are trying to turn around as well.  I'm looking at the November OEX calls now for the next trade.  The other choice is to wait for a return to the newly formed down trend line and then buy some puts.  Not exactly sure which to do.  We'll let the expiration happen tomorrow and go from there.  GE was flat on the session and the volume was heavy.  The earnings out tomorrow will be the driver perhaps for the overall market as well.  No idea what to expect there.  Gold was off a few bucks on the futures as the US dollar finished the day basically unchanged.  The XAU was flat as well.  ABX and GG were up 1/4, while NEM was flat.  Volume was average.  The gold shares haven't moved up with gold and that isn't bullish.  No trades here for now.  Mentally I'm still kicking myself for yesterdays lousy trade execution.  But it doesn't matter now.  You've got to keep moving forward in this game.  It isn't always easy to do.  The battle is always against yourself.  I'll try and do better the next trade.  The markets really don't care about you.  But you have to care about yourself.  I'm expecting some near term upside once we get through the expiration tomorrow.  The technicals point to that.  However the option premiums for November are high due to the recent volatility and the extra week in the cycle.  So I'll probably tread lightly.  Gold has found mild interest here but not the gold shares.  Earnings due there at the end of this month.  I can't think that there will be any good news there but who knows?  We'll see if the overseas markets can put a halt to their free fall tonight and brace for option expiration tomorrow.

Wednesday, October 15, 2014

It was an extremely volatile session in the stock market today.  We opened down over 200 points in the first ten minutes.  The market then made its way back to being less negative for an hour or so.  We then sold off hard and midway through the day were off 450 points.  The VIX climbed above 30.  But then the Dow made another comeback and finished the day off 173 points on extremely heavy volume.  The advance/declines were negative.  This is the blow off session that I was looking for.  Unfortunately I did not trade it well.  I did get rid of the October OEX puts but I did not get the best price that I could and should have.  My intra-day tactics were poor.  Once again I was not up to the task.  It is a humbling game at times.  The profit was 750% but it could have been better.  The low is now in.  That's my opinion.  GE was up over 1/8 and the volume was extremely heavy.  I'm still going to wait for the earnings report on Friday before I do anything here.  The March calls are the trading idea here.  Gold found a bid and the futures rose ten bucks as the US dollar got crushed.  The XAU was flat however.  ABX, GG and NEM all had slight fractional losses.  Volume was average.  With such a crazy day in the stock market, the gold shares didn't have any sustained interest.  That isn't bullish.  Especially with the dollar getting hammered.  Not sure of what to make of that.  No trades here for now.  Mentally I'm feeling pretty tired.  It has been a while since we've seen this kind of volatility.  The comeback today was impressive and for that reason along with the extended oversold technical condition, I feel confident that the low today will hold up going forward.  We may drift our way back down there over the rest of the month but it should hold.  That is around the 1820 level on the S&P 500.  The extreme volume constitutes a shake out to the downside in my opinion.  I simply did not take full advantage of it and I had my opportunities.  My entry for this trade was very good.  My exit was poor.  Even making whatever money that I did doesn't matter if the trading tactics can't be executed properly.  Perhaps I'll feel different about that tomorrow but I doubt it.  I should have had a better game plan for the day and written it down.  When the market gets crazy like today, that's probably a good idea.  But it doesn't matter now.  Still a couple of days in the October option cycle but I won't be making any more trades this week.  Perhaps some November index calls will be in order.  I do expect to back and fill for a while here though.  Gold found buyers but the gold shares remain stagnant.  That is not a positive.  Perhaps I will lay off trading gold for the rest of the year.  The stock indices had a downside blow off today and I think that the lows are in.  Notice todays chart of the RUT.  I'll be looking for November calls perhaps on a retest of todays lows.  We'll see how the foreign markets react to todays market activity overnight and see what happens tomorrow.