Friday, February 16, 2018
The day was mostly positive as the Dow rose 19 points on average volume. The advance/declines were positive. The summation index has turned back up. The NASDAQ was lower though. I sold my SPY February puts for an 85% loss. This was a dumb trade as with less than two days to go when I entered it required that things practically had to go perfect for it to work. That never happens in the trading game. I don't know what I was thinking because before the trade was executed, I thought numerous times to just cancel the order. But I didn't and I paid the price. I do think that next week will have some weakness and I can almost guarantee it. We're short term overbought. The premiums on the SPY March calls are still pretty high since we are just rolling into that months options. I'm not saying that we are going to see another collapse but I do think that we'll be lower in the coming days. GE gained 20 cents and the short term indicators here have turned up. I am still considering the March calls here. If we do see weakness in the overall market it will probably take GE with it. That would be the time to try this idea. Gold lost $5 on the futures as the US dollar was higher. The XAU fell 2 1/4, while GDX dropped 1/2. Volume was average. Mentally I'm feeling OK. I'm hoping that I won't lose any confidence after the latest losing trade. Actually both trades that I've attempted so far this year haven't been the greatest ideas in the world. The fact that one of them was a winner was probably more luck than actual good tactics. The battle for me is always with myself in this game. The market is there for the taking if you are good enough. My view here is that we'll be heading lower at some point next week. Whether or not we go back and test the lows remains to be seen. I do not think that we will be heading back up to new all time highs. I'm hearing in the media that this was a normal 10% correction and that the bull market remains in place. It's possible that could be the case. No major up trend lines have been violated. However I'm more of the view that a top is being put in place and the long bull market is over. I could be wrong. Just because that is my view doesn't mean that we go straight down from here. And it doesn't mean that trying the calls is out of the question either. The market goes where it wants. After seeing the market go straight up, we saw it go straight down. Going out from here isn't going to have the same dynamic that we just witnessed. I'm going to try and take the signals as they come and hopefully not engage in the dumb action that I just did over the past couple of days. I should have sat it out and remained patient. But I'm going to try and not dwell on that mistake over the weekend. I'll need to find the next trade. Europe and Asia were again positive overnight. It's a long weekend in the US. Plenty of time to figure out what to do going forward. For now it's Friday afternoon and time for a break.
Thursday, February 15, 2018
The market continues to climb higher as the Dow gained 306 points on average volume. The advance/declines were 2 to 1 positive. This should turn the summation index back up. We're now short term overbought but that condition can last for a while as we saw before the recent decline. I did buy some SPY February puts today and they are showing a loss. With only one day left for this trade it is already in the cut the loss stage. My only hope would be a sharp decline on the open and that really isn't expected. I should have let this trade simply pass because the timing had to spot on and there isn't any time for this trade to work. Perhaps I was bored or just greedy or perhaps feeling invincible after making money on the previous trade. I had an open order and thought about canceling it throughout the session. But then is got filled and now I'm stuck with it. Not good trading tactics here today. GE was off a nickel on lighter volume. I'm still considering the March calls here. Gold was off a couple bucks as the US dollar was lower. The XAU and GDX were little changed but did come off of their lows for the session. Volume was light. Mentally I'm feeling a little tired. A long weekend is coming up in the US as Monday is a holiday. It looks like I'll have all that time to stew over a stupid trade. I do expect some near term weakness but it probably won't come in time to save me. I also believe that weakness can be bought next week for a SPY March call trade but I don't think that we'll be going to new all time highs again soon. I could be wrong. We do have option expiration tomorrow, so anything can happen. But like I said, unless there is a gap down at the open, my trade is dead. There is nobody to blame but myself. The economic data came in mixed today and it really wasn't a factor. The market is giving the impression that the selling is now over and it's full speed ahead again. We'll see about that. At this point all that I can do is wait to see what happens at the open tomorrow. Europe and Asia were higher overnight. We'll close out the week tomorrow.
Wednesday, February 14, 2018
Moving higher as the Dow gained 253 points on good volume. The advance/declines were 2 to 1 positive. The summation index is trying to turn around. Is the decline over? At least it is for now. I would like to try the SPY February puts on any strength tomorrow but with only two days to go in the option cycle the risk is way too high. But getting the puts when we hit the 50 day moving average at about 271 would be the play. I do think that last Fridays lows need to be tested but I certainly don't know when. The summation index is heading near the zero line and that would imply that the market is about to fall apart. However I do think that we will hold up here for now. Perhaps if we see some more weakness before the end of the month, we'll get a set up for the SPY March calls. That is the next idea unless I somehow try the SPY February puts. Almost getting to short term overbought for the SPY. GE was up about 1/4 on good volume. Perhaps today was the day for the March calls but if we roll back down there will be a better opportunity in my mind. And there's still the fact that GE is a slow mover. But I do think that the idea has a chance to work. Gold rallied today on what was perceived as a strong inflation number. The precious metal futures added over $20 as the US dollar got whacked. The XAU climbed 4 1/4, while GDX gained a full point. Volume was good. We now have a bottom in the gold shares. The 200 day moving average was support for the gold shares indices. It appears weakness can be bought there. Mentally I'm feeling OK. My choices here are to try a SPY very short term put trade or wait for the SPY March calls on any weakness in the coming days. Plus the GE March calls if we see some pullback there in the near future. So there are some ideas for profit out there. The VIX is coming back down and there appears to be room to move lower there. This implies a longer term move back up in my view but I could be wrong. Regardless, I do think that a long term top is in. I'll consider whether to try the short term trade overnight. Europe and Asia were higher last night with the exception of Japan. We'll keep an eye on the overnight developments.
Tuesday, February 13, 2018
Still trying to slug our way higher here as the Dow rose 39 points on lighter than lately volume. The advance/declines were positive. The summation index is heading lower. Running out of time for another SPY trade in the February option cycle. I'm looking at the puts here on a very short term basis. But the prudent move would be no move at all here because time is not on your side. The short term technical indicators have started to move up here for the SPY. I think that I'm going to wait for an actual signal though. We don't have one yet. We'll get inflation data tomorrow but one number isn't a trend. However there is a chance the market will be fixated on it. GE was off over 1/8 and the volume remains pretty good. I would like to try the March calls here and now is as good a time as any. But for some reason I'm holding off. I think that the overall market will head lower in the coming days and take GE with it. Then I might try the March calls here if the premiums get low enough for me. Gold was up $5 on the futures as the US dollar was lower. The XAU and GDX were little changed on very light volume. Mentally I'm feeling OK. Three days in a row higher for the overall market and we haven't seen that for a couple of weeks. But we'll have to get through expiration week before a long holiday weekend. I'll expect a rollover here at some point before the end of the week. I'll also be looking at a test of the recent lows to set up the March calls. That is potentially my next SPY trade as well. There won't be any rush to do anything because there really isn't a decent signal one way or the other just yet. So I think that patience will be your friend here. Asia was mostly higher with the exception of NIKK. Europe was down. We'll keep an eye on the developments overnight.
Monday, February 12, 2018
Continuing higher to begin the week as the Dow climbed 410 points on good volume. The advance/declines were better than 2 to 1 positive. The summation index is heading lower. The decline is over for now as far as I'm concerned. We had a five wave move down and we will now form a bottom or simply continue higher from here. The short term technical indicators for the SPY have turned up. I'll be looking for a retest of the lows of last week at some point. That would be the ideal situation. If they hold then calls are to be purchased. If they don't, then we'll be going a lot lower rather quickly. I do not expect that to happen. Only 4 days to go in the February option cycle. I do not think that I'll be trying a trade with the SPY here but you never know. I'll be looking at the calls unless we are up for the next 3 days. I then may try the puts for expiration. But the short term trades are full of risk. GE was off 1/8 and the volume was heavy. I am looking at the March calls here. The only problem for me is that GE is a slow moving equity. It could simply trend sideways for the next five weeks. However if the options get cheap enough, I may attempt a trade. Gold was up $10 on the futures. The US dollar was slightly lower. The XAU rose 2 3/4, while GDX gained 1/3. Volume was very heavy. Perhaps we'll put in a bottom here on the gold shares. They are oversold and have had a nice 2 day pattern on the daily candlestick chart. There's a potential hammer bottom. Mentally I'm feeling OK. We got some follow through to Friday gains and I think the selling is washed up for now. I could be wrong. It is expiration week in front of a holiday weekend. The VIX indicators are mid-range but trending lower. The McClellan oscillator is trying to recover as well. I don't really have a short term signal here yet but my gut wants to go with the long side for the immediate future and into March. I think that we've raised enough fear to keep people guessing. There won't be any straight up moves form here in my opinion. Waiting for the right opportunity will be my challenge. We'll keep an eye on things. Europe and Asia were higher in last nights trade. We'll see how it goes tomorrow.
Friday, February 09, 2018
The Dow held up today for a change and rose 330 points on extremely heavy volume. The advance/declines were positive. The summation index continues lower. Did we hit bottom today? Could be for the short term in my mind. But this is a crazy time in the markets and we do have option expiration week coming up. It was another 1000 point range day for the Dow and we certainly aren't used to that. 5 days left in the February option cycle and the premiums remain very elevated. The risk is also because if your timing isn't spot on here there won't be enough time to recover. I'm going to have to look things over this weekend and make a decision as to what to do. GE was up 1/2 and the volume remains extremely heavy. Perhaps I could go out to the March calls here. That would at least give the trade some time to work. I'll look at it over the next couple of days. Gold and the US dollar were both little changed. The XAU fell 1 1/2, while GDX dropped 1/3. Volume was very heavy here. The gold shares have been falling for three straight weeks. Mentally I'm feeling OK. It appears that we have a positive divergence for the short term with the McClellan oscillator. We've hit lower prices with a higher oscillator reading this week. It also looks like we have potential double bottoms on some of the short term technical indicators for the SPY. Along with another potential completion of an A-B-C-D-E wave down on a very short term basis. That's what it looks like to me here. The February SPY calls are very pricey though, with the abnormal volatility that we've seen this week. I am going to have to look things over carefully this weekend and determine if a trade is worth it. I also should keep in mind that I usually don't perform well with the short term trades. Going out to March with GE may be the better idea but I'll decide that over the weekend. It was quite a week in the markets and there were plenty of opportunities for profit. Next week should prove the same. Asia and Europe were both lower but Europe not as much. There will be plenty to ponder over the next two days. But right now it's Friday afternoon and time for a much needed break.
Thursday, February 08, 2018
The Dow got clobbered again and lost over 1000 points for the second time this week. The most watched index fell 1033 points on extremely heavy volume. The advance/declines were 8 to 1 negative. The summation index is heading lower. At this rate we are moving into the potential crash zone for the summation index. We're not there yet but if the decline continues we could get there soon. Volatility remains elevated and the trading is tricky as premiums are sky high for the SPY options. That said, the retest of the early week lows has already failed. Where we go from here is a guessing game. I guess 2500 on the S&P 500 would be a good spot to have the decline take a breather. It's a nice round number and it is below the 200 day moving average. But looking at the daily chart, there's support that comes in right where we are now, give or take a few points. And a few points here means about 25 or 50. We've now had a 10% correction but the market is in crazy mode. Tomorrow will be interesting. GE lost 3/4 and the volume is still heavy. New lows for this move lower in GE. Gold was up over $5 on the futures as the US dollar finished little changed. The XAU and GDX had fractional losses on good volume. Not exactly a flight to safety for gold and the dollar. Mentally I'm feeling OK. Short the rallies is about all I can say here. If there are any rallies. We did have a bounce but it died rapidly yesterday. I might consider the SPY February calls again if we get to 250 there. There's better support at 245 though. It is all in a state of flux at the moment. On a very short term basis this could be the 5th wave down of the move lower that began on January 29th. That's my best guess for now. Trying a trade here would be very risky. After somehow getting away with the last trade, it may be better to just sit on the sidelines for now. I'll consider the alternatives overnight. What we are seeing is the result of the parabolic move higher in January. This is how those moves end. The trip down can be just as fast or even faster as we are witnessing right now. There will be opportunities though if you are good enough to find and take advantage of them. We'll continue to keep looking. Asia was higher and Europe lower overnight. We'll finish out this volatile week tomorrow.