Tuesday, September 30, 2014
The month and quarter ended with a whimper as the Dow fell 28 points on heavy volume. The advance/declines were negative. The overall market was weaker than the Dow. The summation index continues lower. It is edging closer to the zero line. That is why I'm still holding on to the October OEX puts. If we go through that line things will get ugly. Hasn't happened yet. The stock indices are short term oversold. Friday should be the day of reckoning, one way or the other for the market. The employment report and the reaction to it will tell the story. GE was up 20 cents, gaining back what it lost yesterday. If GE is a precursor once again, the market will hold up here. No trades for GE at the moment. Gold continues to fall as it dropped ten bucks with the futures and aftermarket combined. The US dollar continues to the upside unabated. The technicals aren't working anymore for gold and silver. The simply remain very oversold. The XAU dropped 1 3/4. ABX, GG and NEM all fell 1/3 or more on good volume. My January ABX calls were almost stopped out. I am wondering if I should move to the next strike price lower if they do get sold. The long gold share call trade hasn't worked at all for me so far this year. Perhaps just abandoning this idea would be the best course of action. Mentally I'm feeling OK. The stock indexes could go either way here but I have to keep leaning to the bearish outcome. The RUT has underperformed here by so much that I do believe lower overall prices are in the future. I could be wrong. I said before that some of the medium term technical indicators are at levels that have contained the previous declines and led to rallies. Friday should be the key. I don't know what else I can say about the gold and silver market. Lower prices are met be even lower prices. No bounce, no bargain hunting, no nothing. This market will recover but when that happens is not something that I can predict. With all the world wide turmoil that exists, the non rally in the precious metals is beyond confusing. Perhaps this isn't a market to trade after all. However it could also be said that the strong dollar trumps all else and is the only reason for the demise in gold and silver. And with US interest rates with only one way to go, gold may not be any good from the long side for some time to come. Just a thought. We'll keep an eye on the overnight action and see how the 4th quarter begins tomorrow.
Monday, September 29, 2014
Another volatile session today as the Dow fell 41 points on average volume. The advance/declines were negative. The market fell straight down at the open and we were down over 170 points early. But the stock indices spent the rest of the day making up ground and it was pretty impressive after the opening. The decline is either over or we are hanging on for dear life before something big to the downside happens. The summation index continues lower. The small stocks hung on better and that is a positive. End of the month tomorrow. GE was off almost 1/4 and the volume was average. Solidly below both the 50 and 200 day moving averages now. Gold was up a few bucks on the futures but back down in the aftermarket. The US dollar was flat on the session. The XAU was off another point. ABX, GG and NEM all had fractional losses on light volume. The gold shares are completely blown out to the downside. The technicals have been so oversold for so long that they don't even mean anything anymore. My January ABX calls are in the red and on their way to the stop loss point. Mentally I'm feeling OK. The stock market made quite a comeback from the early bout of selling. That cannot be ignored. I would expect to see more buying tomorrow. But I cannot get too bullish until the summation index turns around. There is a chance that the selling is done for now. Some of the medium term indicators are at levels where we have started to rally again. Tough game as always. The gold shares are decimated. We'll probably see some more end of the month and quarter selling tomorrow. That trade looks like it will be a loser. We'll see how the foreign markets react overnight and go from there.
Friday, September 26, 2014
Quite an interesting day as the Dow climbed back 167 points. The advance/declines were almost 3 to 1 positive. That is better than we have seen lately. The volume was light though. The summation index continues lower. Volatility has really picked up. I thought we would simply be heading down but now it looks like anything could happen. With todays price action the daily S&P 500 candlestick chart is showing a bullish belt hold pattern. We will have to see if this rise continues next week. My October OEX puts are still in the black but they lost a lot of their value today. GE was up a few cents on around average volume. Trying to hold the 50 week moving average here. Gold was off $6 on the futures as the US dollar had another strong session. Well above the 85 level for the dollar and there is no indication that the rally will end. Overbought and staying there for the dollar. The XAU lost another point. ABX, GG and NEM all had fractional losses on light volume. I have expected a bounce in the gold shares for weeks now. The positive seasonals never kicked in. The gold shares have remained oversold for weeks. Gold will not rally with the dollar continuing its strength. There is nothing on the horizon that will change that scenario. I suppose I should have not tried the gold share calls again. Mentally I'm feeling OK. It wasn't exactly the way I would have liked to see the week end in the stock indices. Todays up move was not what I expected. Perhaps the decline is over but I'm not sold on that idea just yet. Plenty of time in the October option cycle. We do have the end of the month and the quarter coming up on Tuesday. Plenty of economic data due out next week including the employment report. I would expect more of the same 100+ point moves next week unless there is a dramatic change in the landscape. I have no idea when the decline in the precious metals will end. Oversold for many weeks now and I think perhaps I may even stop trading there and simply focus on the stock indexes. The US dollar has gone straight up for three months. It eventually won't end well there for the bulls but I cannot predict when that will be. With all the turmoil around the world, normally you would expect to see a flight to safety. Usually that includes the gold market. This time around it looks like money is concentrated in the US dollar for that reason and the looming rise in US interest rates. So gold and the gold shares continue to suffer. That's my view there. Plenty of work to do over the weekend. For now it's Friday afternoon and time for a rest.
Thursday, September 25, 2014
I guess there will be no doubt about the market direction now. The Dow fell 264 points on average volume. The advance/declines were 5 to 1 negative. The summation index continues lower. The major averages closed on their lows once again. The McClellan oscillator is pretty oversold but in market declines it can stay that way. The advance yesterday turns out to be nothing more than a dead cat bounce. The summation index is starting to get close to the zero line. That is the area that must hold or the stock averages will begin to fall apart. Caution is advised. GE dropped over 1/3 on average volume. GE took out yesterdays lows and is back below both the 50 and 200 day moving averages. Gold found a slight bid and the futures were up a couple bucks. The US dollar was higher as well and now above the 85 level. The XAU was flat on the session but rose from the daily low. ABX, GG and NEM had slight fractional gains on OK volume. Perhaps if the stock indices continue to drop, gold can find some buyers. Hasn't happened yet. My January ABX calls are still in the red. Mentally I'm feeling a bit tired. Perhaps we are at the beginning of a multi-week decline. That would be my guess as of today. My October OEX puts are solidly in the black. Now the decision when to sell the puts becomes the next job. I'm going to give it some time. Because if we are into something big here, the profits will be pretty good. It won't make up for the money that was lost last month but it certainly would help. Some of the major stock indices are at up trend lines that began in May. If these lines don't hold we will be heading lower in a hurry. Getting oversold on the daily technicals but not all the way there yet. Still no real buyers in the precious metals complex. I don't know when that will turn around. But as I said if there is a rout in the stock market we could see a flight to safety occur. The decline began in the European markets last night. We'll keep an eye on what transpires there tonight and close out the trading week tomorrow.
Wednesday, September 24, 2014
A nice bounce today as the Dow gained 154 points on average volume. The advance/declines were positive. However the breadth was not what you would expect with a market up so much. That is the problem that I'm having with any recent rally. I still think it is setting up for some decent downside in the October option cycle. Now I could be wrong and we simply move higher from here and on to new highs in the major stock indices. The summation index is still moving down. My October OEX puts are still profitable but another day like today and they won't be. It will be important to see how this week closes. GE was off about a dime after being much lower. Volume picked up. No trades here for now. Gold was off a few bucks as the US dollar hit the 85 level. The XAU shed 7/8. ABX, GG and NEM all had fractional losses on average volume. The January ABX calls that I own are in the red. The story remains the same in the precious metals complex. Mentally I'm feeling OK. The move higher today was more than I expected. The major stock averages now have a bullish candlestick formation on the daily charts. We'll see if there is any follow through tomorrow. Some economic data due tomorrow. Silver is very oversold and trying to hold up so far this week. Some kind of bounce here is way overdue. Perhaps if that occurs, the precious metal shares will find a bid. Things here cannot stay oversold forever. Tonight we'll see if the foreign markets rally back up following the Dow today.
Tuesday, September 23, 2014
Continuing lower as the Dow fell 116 points on average volume. The advance/declines were 2 to 1 negative. The summation index continues lower. The small stocks did not decline as much as the Dow which may mean that we will see some bounce tomorrow. However I think that it is safe to say that things have changed for the stock indices. No longer term up trend lines have been violated yet but that could occur. We closed right on the lows for the day on some of the stock indexes and that is not a positive. I'll be keeping an eye on the breadth as it gave a clue as to what is going on at the moment. My October OEX puts remain in the black for now. GE was off a few cents and the volume was light. GE is holding up well here. Perhaps it is not going to be a precursor this time around. Gold was up around $5 on the futures. The US dollar finished little changed. The XAU was up 1 3/8. ABX, GG and NEM all had fractional gains on average volume. Still no love for the gold shares. The January ABX calls that I bought are in the red. Plenty of time for this trade and the stop loss order is in. Perhaps some overall stock market weakness will spur some interest in the gold shares. Mentally I'm feeling OK. Perhaps my timing on the October OEX puts was correct this time. We'll see. The short term technicals for the stock indices haven't reached oversold just yet. The up trend line for the Dow comes in at around 16600. We are not close to that yet. Gold stopped falling today but that by no means says the decline is done. Silver has held up for a couple of days as well but that doesn't really mean anything yet. These markets are overblown to the downside in my opinion. The gold shares indices are trying to stop at the lows made in June. Sooner or later there will be a decent bounce here. We'll see how the overseas markets react to todays decline in the US and take it from there.
Monday, September 22, 2014
The week has started on a down note as the Dow fell 107 points on average volume. The advance/declines were 5 to 1 negative. The overall market was weaker than the Dow. The small stocks are so far leading the way lower. One day doesn't make a trend though. The summation index continues lower. My October OEX puts are in the black but not a lot. Breadth is getting worse and I still think lower prices are in the near term picture for the major stock indices. GE was off almost 1/4 but the volume was light. No trades here for now. I may go out to next years March calls here eventually. Gold barely closed higher despite a weaker US dollar. The XAU lost another 2 1/2. ABX, GG and NEM all had fractional losses on average volume. Silver was lower but at least came off of its lows. The January ABX calls that I bought are in the red. Mentally I'm feeling OK. Weakness today but the week has just begun and the market can be fickle. Not a lot of economic data due out this week. The short term technicals have rolled over but are not oversold yet. The daily candlestick chart of the Dow has a bearish topping pattern on it. I believe lower prices are coming but how low is the question. As always, I could be wrong. But I would advise caution in the market right now. Gold and the gold shares are in a steep drop. How long this will go on is anyones guess. I'm taking a chance with the gold share calls here but the stop loss order is in. If the trade doesn't work out, at least there won't be another huge loss. We'll keep an eye on the foreign markets tonight and see what tomorrow brings.