Thursday, May 23, 2013
Another down day but we finished well off of the lows. The Dow fell 12 points on average volume. The advance/declines were negative. Working off the extreme overbought condition here. So far this still looks like just a blip in the momentum rally. The summation index has turned lower though. No trend lines have been violated to the downside yet on the stock indices. So we will have to give the benefit of the doubt to the bulls for now. I expect a slow pre-holiday Friday session tomorrow. GE was off 1/4 and the volume was good. We've fallen back after making new yearly highs. That isn't really a bullish scenario. A better picture would have been even higher prices. I'll keep an eye on it because GE sometimes gives clues to the overall market direction. Gold rallied back up today, gaining almost $25 on the futures. The US dollar had a very weak day for a change. The XAU didn't follow gold today and only managed a 1/2 point gain. That isn't bullish for the gold shares going forward. ABX, GG and NEM all had slight fractional gains on light volume. We could be in for a sideways malaise for the gold shares if this keeps up. Mentally I'm feeling a bit tired, did not sleep well. Volatility has somewhat returned to the stock indexes with the anticipation of easy money from the Fed coming to an end. It hasn't stopped the money flow yet but eventually the manipulation of interest rates will be coming to an end. This week is the first taste of what will happen when it does. We also should not forget this is a momentum driven rally in stocks which never ends pretty. So we will keep a close eye to the ongoing developments as usual. Gold has held up well this week but the gold shares are lagging once again. Could be a long summer for my ABX October call trade if that keeps up. We'll keep an eye on things overnight and then close out the week tomorrow.
Wednesday, May 22, 2013
Plenty of Fed speak and we got some volatility. The Dow fell 80 points on heavy volume. The advance/declines were about 4 to 1 negative. It was a one day reversal to the downside as we opened much higher on the stock indices. Could this be the start of some kind of pullback? That remains to be seen. If you want buy a dip, we got one today. The Fed might start to ease up on the easy money that has helped fuel the rally and that had the players spooked today. We'll see if we get any follow through to the downside tomorrow. Todays action should turn the summation index lower. One day doesn't make a trend though. GE was up 1/4 on heavy volume. We made a new yearly high today for GE. We did take out the $23.75 level but finished well off of the highs for the day. The fact that GE made a new high today says that a decline in the overall market is not imminent. We'll see. Gold had a one day reversal to the downside as well, as the futures dropped $10. Gold was up over $1400 early on. The US dollar was stronger on the Fed. The XAU gained a point but was well off the highs for the day. ABX, GG and NEM all had fractional gains on heavy volume. The gold shares held up pretty well today despite the negative tone. That could bode well going forward. I'm still waiting to see how the month of May ends up for ABX. That will determine how long I stay in that trade. My October ABX calls are still slightly in the black. Mentally I'm feeling OK. So we got the Fed out of the way and we will have to see how things pan out from here. 2 trading days left before a long holiday weekend. I don't expect any huge decline to take place here. The market was falling today but came back in the last half hour. Perhaps this stalls the upside momentum for a couple of days. Or maybe the long awaited correction is about to begin. It's really all a guess right now. Gold did not have a positive session but it could have been worse. As long as we stay above the crash lows the potential double bottom in gold remains. We'll see how the overseas markets react to todays US price action.
Tuesday, May 21, 2013
The Dow gained 52 points today on average volume. The advance/declines were slightly positive. The overall stock indices were weaker than the Dow. Waiting on the Fed here. Tomorrow should be a market moving day. Which way is the question. The summation index continues higher. Still no overhead resistance for the stock indexes. Overbought, staying there and that condition persists. GE was up a dime on light volume. We made it to $23.75 today and we'll see what happens from here. A break to the upside would be bullish for the overall market. Gold fell back today as the futures lost 6 bucks and about that again in the aftermarket. The US dollar finished the day a bit higher. The XAU fell 2 7/8. ABX, GG and NEM all had fractional losses on good volume. No follow through to yesterdays gains in gold. My ABX October calls are slighty in the black. Mentally I'm feeling a bit tired, did not sleep well. Bernanke will blab and the Fed minutes will be released tomorrow. So there is potential for some volatility. There has been no stopping this rally and probably tomorrow won't matter either. It is a momentum driven move. Gold is still trying to hold the recent crash lows and so far it has. There are possible positive RSI divergences on the gold charts. If things hold together here, some type of longer term rally in gold could take place. We'll have watch what happens here closely. We'll see what happens in the overseas markets and take it from there.
Monday, May 20, 2013
A one day reversal to the downside for the Dow today as we opened higher and closed lower. The Dow fell 19 points on light volume. The advance/declines were positive. I'm not sure this is the end of the rally and it probably isn't. The momentum run to the upside won't be stopped by just one day of decline. Still overbought on all time frames. Summation index still to the upside. We've got Bernanke flapping his gums on Wednesday and the release of the Fed minutes that day too. So Wednesday looks like the day for some market movement. GE was up 1/8 and the volume was light. We'll need to see a solid break above $23.75 to get bullish here. Gold had a one day reversal to the upside as it sold off early and then came all the way back. The precious metal futures gained $20 as the US dollar was weaker on the session. Gold needs to hold up here for a successful retest of the crash lows. So far so good but it remains to be seen if the lows will hold. The XAU rose 5 1/2. ABX, GG and NEM were all up more than a buck on good volume. My ABX October calls made it back into the black. Would really like to see ABX close out the month of May with a solid gain for these calls to work longer term. Mentally I'm feeling OK. Perhaps tomorrow will be a waiting game on the Fed. Not much else to report for today. Gold had a nice comeback for the bulls today but gold can be very volatile in both directions. This weeks action is important. We'll keep an eye on the foreign markets and take it from there.
Friday, May 17, 2013
It's like a runaway train as the Dow continues to climb. The most watched index gained 121 points on average volume. The advance/declines were almost 3 to 1 positive. The summation index continues higher. No overhead resistance for the stock indices. I keep thinking that a pause is in order due to the extreme overbought condition and that just isn't happening. It's been quite a bull market run so far this year. Money continues to flow into stocks. It is a massive momentum driven run. Who knows how high it will go? I'm done guessing. When I see some kind of top in place, I'll look to play the OEX puts. Nothing looks like a top yet. GE was up almost 1/4 on good volume. Overbought here as well but that doesn't seem to mean anything. No trades in mind here. Gold took a hit thanks to the much stronger US dollar today. The gold futures lost over 20 bucks and more in the aftermarket. The XAU fell 3 1/3. ABX down 2/3, GG dropped a buck and NEM shed 3/4. Volume was good. We are at the retest of the crash lows for gold and I am assuming that they will hold. Todays price action looks like they won't. Next week will be very important for gold. My October ABX calls are now in the red. Obviously I should have sold them at a profit on the first snap back and then bought them back here. But I decided to just keep them. Everything is in rally mode with the exception of the gold shares. Another key factor here in my mind is how ABX closes out the month of May. That close has longer term implications for the direction of ABX. Mentally I'm feeling OK. There isn't much more I can say about the stock indexes that I haven't already said. Overbought on every time frame and it doesn't seem to matter. The runaway train analogy is appropriate because when the train goes off the tracks, it isn't going to be pretty. But who knows when that happens? The sell in May and go away theory isn't holding up so far this year. How much longer can the rally in stocks go on? Of course I'm sitting here with a losing position in the ABX calls. My trading confidence isn't what it used to be and I have been in a trading slump for months. Money is continuing to come out of gold as the US dollar looks like it is breaking out to fresh multi-week highs. As I said before, this will be an important week for the price of gold. It needs to hold the crash lows or it will be heading to $1300 or lower. I'm not sure what will happen. There was a time when a stronger US dollar led to weaker stock prices. I suppose during a rip roaring bull run, it doesn't really matter. Enjoy the ride. For now it's Friday afternoon and time for a rest.
Thursday, May 16, 2013
We hit new highs today and then sold off as the Dow fell 42 points on average volume. The advance/declines were negative. About as overbought as you can get when we started the trading session, so some of that has been relieved with todays action. But we're still short and medium term overbought. Todays inflation data was benign and the economic numbers were a bit weaker than expected. It has been quite a momentum rally and one down day doesn't change that. But this can't go on forever and we are in the seasonal period of weakness for stocks. Momentum moves can go on longer than you think but in my opinion the upside is limited from here in the near term. I could be wrong. GE was flat on the day and the volume was light. No trades here for now. Gold continues to weaken, losing another 10 bucks on the futures. The US dollar bounced around but finished the day basically unchanged. The XAU was up 1/3 as the gold shares are now outperforming the metal itself. That is bullish for them going forward. ABX, GG and NEM all had fractional losses on good volume. We'll see how the week closes out for these issues. My October ABX calls continue to lose ground but are still slightly in the black. Mentally I'm feeling OK. Expiration Friday coming up. It's been a positive week so far. Nothing has changed for the stock indices. The summation index continues higher. However I do think a pause is about to be upon us. Whether it develops into an actual decline remains to be seen. Whether it even occurs also remains to be seen at this point. Gold has resumed its decline to test the crash lows. I'm of the belief that the lows will hold. Time will tell on that. We'll close out the trading week tomorrow.
Wednesday, May 15, 2013
Bouncing around today but the moving higher theme remains intact. The Dow gained 60 points on average volume. The advance/declines were positive. The momentum remains but it looks like it may be getting weaker here. Less advancing issues as we move higher now. But that could change tomorrow. Still short and medium term overbought. We've been in that condition for a long time. It won't last forever. The economic data today showed no inflation and slightly less economic data measurement than expected. All news is being construed as bullish for stocks. Only two days left for the May option cycle. No OEX trades in mind here as of yet. GE was up 1/4 on average volume. Finally made it past the 50 day moving average. The next upside target is around $23.75. Gold headed lower today on the stronger US dollar. The precious metal futures dropped $28 during the session and more in the aftermarket. The retest of the crash lows is the current price scenario. The XAU fell 4 1/4. ABX and NEM dropped a buck, while GG lost 1 1/2. Volume increased to the downside for the gold shares. My ABX October calls are now just slightly in the black. I'm still a believer in this trade going further out in time. However if the crash lows in gold don't hold, this trade will be a loser. Mentally I'm feeling OK. Still up, up and away for the stock indexes. The summation index continues higher. There is no overhead resistance for the stock indices. These conditions persist and until they change you cannot fight the tape. Gold is back to the downside in a big way this week. We will need to see 1350 or so hold this decline or gold will be heading lower. The way the US dollar is acting here is implying that the crash lows won't hold. But again, that could all change when we reach those levels. As always, the markets will go where they want. We'll keep an eye on things overnight and take it from there.