Tuesday, October 25, 2016
Lower today as the Dow fell 53 points on good volume. The advance/declines were negative. The summation index is trending sideways. Better volume to the downside and that is not a positive. The market really can't get anything going one way or the other. Short term overbought and oversold conditions are met with small moves one way or the other to relieve the conditions. It is a tough and treacherous trading environment. I am still looking to try the SPY November calls this week if we continue lower. Perhaps tomorrow will be the day but the technical indicators are not exactly where I want them for a purchase. I may have to err on the side of caution. GE was off 1/4 and the volume was light. Poor performance here is another sign of trouble. However we've been dropping here for a few months while the overall market has moved sideways. Gold rose over $10 on the futures as the US dollar finished little changed again. The XAU was up 2 1/4, while GDX added better than 1/2. Volume was average. Mentally I'm feeling a bit tired, did not sleep well. I am still recovering from my hospital nightmare but do feel well enough to trade. The short term technical indicators for the major averages are starting to roll over again. That is one of my concerns in attempting to place a trade on the call side in the next few days. We do have some economic data coming out in the next 3 days. The most market worthy in my mind will be the first look at GDP for the 3rd quarter on Friday. I do believe that will be a mover for equities and as always the question is which way? I'm now thinking that if we head lower into Thursday morning, that will be where I'd take a chance on the November calls. But we still have tomorrow to get through. Things are never set in stone with this game. We could also simply head down from here and take out the lows. That would negate any ideas of trading in calls near term. So there's plenty to keep an eye on this week. Europe and Asia were mixed overnight, with nominal moves. We'll get earnings from AAPL after the bell and that could set the tone for tomorrow.
Monday, October 24, 2016
We begin the week with a nice gain as the Dow rose 77 points on what passes for average volume these days. The advance/declines were positive. The summation index is still trying to turn around and I believe that it will. The small stocks along with the overall market were stronger than the Dow. That's a positive and that's what I'd like to see. Getting short term overbought for the major indices. Any weakness now can be bought in my opinion. I'm looking at the SPY November calls and if we see some pullback this week, that is what I will purchase for the next trade. The ideal scenario would be a down day tomorrow with follow through on Wednesday morning. That would be the purchase time if things occur in that order. The market rarely cooperates. GE was of a few cents on average volume. Gold fell a couple bucks on the futures. The US dollar didn't move much. The XAU lost 1 3/4, while GDX shed 1/2. Volume was average. The short term technical indicators for the gold shares appear to be rolling back over here. Mentally I'm feeling OK. We're still waiting for something to happen with the months long trend channel that we've been stuck in. My short term indicators say that we should see some downside tomorrow but they aren't right all the time. Nothing is. Plenty of time in the November option cycle to make a trade. Perhaps I'm wrong here and we will simply continue to move sideways. However with the summation index attempting to turn back up, I'm going to take my cues from there. Europe and Asia were generally higher last night, although the FTSE was down. We'll keep an eye on the overnight developments and go from there.
Friday, October 21, 2016
The Dow lost 16 points today on what passes for average volume these days. The advance/declines were barely positive. We sold off early and spent the rest of the day trying to get back to even. The overall market was stronger than the Dow, with the small stocks leading the way. That is a positive. I'll be looking to get some SPY November calls on weakness next week. Another test of the recent lows would be the ideal scenario for me. GE was off about a dime and followed the overall market pattern for the session. Down early and trying to come back. My idea of purchasing the calls and puts only would have worked if you sold out of both positions in the first 5 minutes of trading. The profit would have been small and certainly not worth the risk. The calls would have been wiped out and the gain on the puts would have barely put the 2 trades into the black. The price movement on the earnings wasn't big enough to make that idea worth it. But of course, you don't know that ahead of time. The gold futures were flat with the US dollar higher yet again. The XAU and GDX had fractional losses on very light volume. Mentally I'm feeling OK. We made it through option expiration week and it was pretty tame considering that it's October. I'd like to think that the market is going to hold in here and some type of rally is about to begin. The short term technical indicators for the major indices are still mid-range. The summation index is trying to turn around here in my opinion. We're at an important point for the S&P. If we roll over and take out the support at 2120, we could see a decent decline. But it seems to me like the market wants to hang in here with the recent price action. What I don't want to see is more of the same sideways price action that leads to nowhere. With the November option cycle now in play, we have a full 4 weeks of time premium left. More sideways inaction will erode the premium and make outright speculation even more difficult that it already is. But we all know that you can't tell the market what to do. It will get where it's going in its own time. I'm sticking with the SPY November calls theory for now. Europe and Asia were mixed last night with slight price moves. I'll check the charts over the weekend as usual. For now it's Friday afternoon and time for a break.
Thursday, October 20, 2016
Bouncing around today as the Dow fell 40 points on light volume. The advance/declines were negative. The summation index is trying to turn around. What happens here with the summation index should tell us if we are going to get some type of rally or plummet. That is what I believe right now. The short term indicators for the S&P are back to mid-range I also still expect a positive resolution to the multi-month channel that the S&P 500 is in. I'm still looking at the SPY November calls as the next trade. GE was flat and the volume was average for lately. I did like the idea of getting both the $29 puts and calls for October, with the earnings due tomorrow. However I did not risk any money on this idea. We'll see if it would have worked. Gold was off a few bucks on the futures and the US dollar was higher today. The XAU and GDX both had very slight fractional losses on pretty light volume. It's possible that the decline in the gold shares is over. Mentally I'm feeling OK. Not a lot of volatility considering it is option expiration week. Things have been pretty orderly so far. We've worked off the short term oversold condition, so there's a possibility that we'll head back to test the recent lows again. If that occurs, I will be getting some SPY November calls unless the retest is a collapse. I don't believe that will be the case. Perhaps the recent slight move higher has some legs as well. We are going to have to let the market figure things out. Many are cautious at the moment and you usually don't get a big decline with that type of environment. But who knows? Europe and Asia were both higher in overnight trade. We'll close out the week with option expiration Friday.
Wednesday, October 19, 2016
We managed to continue higher today as the Dow rose 40 points on light volume. The advance/declines were 2 to 1 positive. The summation index is trying to turn around here. Today may have stopped the decline in the summation index. This is important as it would signify that the broader market is gaining strength. I'm a believer in this hypothesis and will continue to look at the SPY November calls as the next trade. The market softened after the release of the Feds beige book but it was not a wholesale decline. It is option expiration though and things could get tricky in the next 2 days. The S&P 500 has bounced off of a short term oversold condition. GE was up a few cents and came off of its highs. Volume was about average for lately. Expect movement here on Friday with the earnings release. Perhaps purchasing both puts and calls at the $29 strike price would be a good idea. Gold added $7 on the futures as the US dollar finished little changed again. The XAU rose 2 1/4, while GDX gained 2/3. Volume picked up. A nice bounce so far this week for the gold shares. Mentally I'm feeling OK. 2 days doesn't make a trend but I like the fact that the market has held up at this juncture. Of course it remains to be seen if this is the start of something real of just another fluctuation in the continuing trend channel. If we can get the summation index turned around, that would be an important clue. I would like to let this week pass and then attempt to purchase the SPY November calls next week. That is the ideal scenario for me at the moment. the market rarely cooperates though. I am more and more leaning towards a bullish resolution to the ongoing price action though. I do not see a collapse here as imminent. I could be wrong. Asia was mixed, with Europe slightly positive overnight. We'll keep an eye on aftermarket developments.
Tuesday, October 18, 2016
We did get a slight bounce today as the Dow rose 75 points on light volume. The advance/declines were 3 to 1 positive. The summation index is still heading lower though. However the overall market was stronger than the Dow. The short term technical indicators have turned up from an oversold reading but that doesn't mean that a rally is imminent. We could simply turn back down again tomorrow. I would be more convinced of a sustained move higher if we can build on today and get the summation index turned around. Hasn't happened yet. I am still looking at the SPY November calls though. GE was up 1/8 on light volume. Gold gained $7 on the futures as the US dollar was little changed. The XAU added 3 1/8, while GDX gained 7/8. Volume was OK. We've held the 200 day moving average on the gold shares for now. Mentally I'm feeling OK. The economic data today was in line with expectations. We'll get the Feds beige book tomorrow and that could be a mover. It would be a positive if we could build on todays gains. However the volume remains anemic and that is troublesome in either direction. Plus there's the possibility that we're on hold until the election here is over. We did get a signal for a bounce and it worked. But where we go from here is the next question. I don't have the answers at the moment. Both Europe and Asia were positive overnight. We'll keep an eye on things tonight as it appears that INTC disappointed with its earnings in the aftermarket.
Monday, October 17, 2016
Lower to the beginning of option expiration week as the Dow fell 52 points on light volume. The advance/declines were negative. The summation index continues lower. No buyers to be found as we drift lower. Technically we're short term oversold so a case can be made here for a bounce. I'm not sold on any type of sustainable rally at the moment. We would have to see the breadth improve and the small stocks take the lead to the upside for a longer term move higher. However the decline needs to be contained here and now or it has the potential to spiral down much lower than where are now. So we are at a key point in time in my opinion. I think that the bounce is possible but beyond that I'm just not sure. GE lost few cents on average volume. Earnings due on Friday. Gold was little changed and the US dollar was a bit lower. The XAU added 1 1/4, while GDX rose 1/3. Volume was light. Mentally I'm feeling a bit tired, did not sleep well. A fair amount of economic data still due this week along with the Feds beige book and more earnings reports. If we don't bounce tomorrow it could be an ugly session. If we do bounce, the nature and strength of a move higher will tell us a lot about where we are going. There has been a lot of chatter about being on hold until after the US presidential election. That could happen as well, which would simply keep us moving sideways in a channel. That has been the case for quite a while. But I think tomorrow is important, given where we are at on the charts. I'm thinking that we will bounce but I could be wrong. Asia was mixed and Europe lower overnight. Stay tuned.