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Friday, July 31, 2015

A bit of weakness to close out the month as the Dow fell 55 points on average volume.  The advance/declines were positive though.  This should turn the summation index back up.  The short term technical are mid-range for the S&P 500.  I do think we are heading for higher prices.  The beginning of the month money flows should kick in on Monday.  Plenty of economic data due next week, with the employment report on Friday the key release.  GE was flat on the session and volume was very light.  Nothing doing there for now.  Gold found some buyers as the futures were up six bucks on a weaker US dollar.  The XAU was up 7/8 and GDX rose 1/3.  Volume was lighter than it's been.  ABX was flat on the day.  Mentally I'm feeling OK.  Three weeks to go in the August option cycle.  We have yet to see the summer doldrums appear in the stock market but that could change going forward.  After we get through the employment numbers, things may slow down.  That's a guess as usual.  As I said the short term technical indicators for the most part are mid-range for the major stock indices.  So you can make a case for either direction.  The small stocks have acted a bit better here and that's a positive.  With the summation index turning around, I think you have to look for higher equity prices moving forward.  Gold has moved sideways for a couple weeks.  It could just be a consolidation after we dropped off from the $1180 area.  That's what it looks like.  $1080 is the new level to watch on the downside.  It's held so far but there is nothing to say the decline in gold will stop there.  I'm banking on the positive seasonality showing up but it's simply a guess if that will happen this time around.  My ABX October calls remain big losers.  I'll be going over the market data this weekend as always.  For now it's Friday afternoon and time for a break.

Thursday, July 30, 2015

Almost unchanged on the session after selling off early.  The Dow lost 5 points on average volume.  The advance/declines were about even.  GDP came in about where expected and the market lost some ground early.  However we came all the way back and that is a positive.  The small stocks had good relative strength as well and that is a plus.  The summation index is trying to turn around here and a decent positive breadth day should do the trick.  I'm looking for higher prices going forward.  GE fell about 1/8 on light volume.  No trades in mind here.  Gold dropped on a stronger US dollar.  The spot gold price fell $7 on light volume.  The XAU dropped 1 3/4, while GDX shed 1/2.  Volume was good here.  Still no love for gold and the gold shares.  My ABX October options remain mired in red ink.  Mentally I'm feeling OK.  We'll finish the month of July tomorrow.  A couple of minor economic reports are due.  Position squaring for some funds as usual.  It was a positive month for the major averages.  If we can get the summation index heading back to the upside, I'll once again say that we're headed for new all time highs in the S&P 500.  Gold has been going nowhere or lower.  We are entering the positive seasonal time of August/September for the precious metal.  If we don't see some kind of rally here, I'd be surprised.  The oversold condition here has lasted longer than I would have imagined.  The gold shares have been decimated.  The carnage seen hasn't happen since the last major bear market in gold.  But bear markets don't last forever.  I suppose I am hoping for some kind of bounce to cut my losses in the ABX October call trade.  We'll see.  We'll watch the action overseas tonight and finish up the week and month tomorrow.

Wednesday, July 29, 2015

Continuing higher as the Dow gained 121 points on once again heavy volume.  The advance/declines were about 3 to 1 positive.  The McClellan oscillator should be back to around the zero line, while the summation index is trying to turn around.  The Fed came and went and there was nothing really new there to report.  The market viewed the statement in a positive light and the early daily rally continued.  I think that the decline of last week has run its course and higher prices are coming.  The TRAN broke through its daily downtrend line today and that is a positive.  Perhaps this is the beginning of the summer rally that I've been looking for.  GE was up over 1/8 and the volume was light.  No trades in mind there.  Gold was slightly lower on the session despite a good move up in the US dollar.  The gold shares were slightly higher as the XAU and GDX had slight fractional gains.  Volume was good.  My ABX October calls are still very much in the red.  I did purchase ABX outright today in a non trading account.  Still very oversold on all time frames for the gold shares.  Mentally I'm feeling OK.  Two triple digit up days in a row and we'll see how tomorrows GDP report affects things.  Stabilization in the Chinese market would probably help the bullish cause here as well.  The short term buy signal on Monday was valid.  Now it is a matter of how high will we go.  Unless we see a dramatic turnaround tomorrow, the trend is up.  Gold is trying to stop its decline here in my opinion.  The jury is still out there.  Gold remains unloved but perhaps we will get a short covering rally here soon.  That is a hope and not a prediction.  Still very oversold on the precious metals.  We'll watch the action tonight and see how the market reacts to the GDP report tomorrow. 

Tuesday, July 28, 2015

The bounce arrived as expected as the Dow rose 189 points on heavy volume.  The advance/declines were about 3 to 1 positive.  Even with todays action the summation index is still heading lower.  In the days to come we will see if this is just an oversold reaction or the beginning of the next leg up.  The short term technical indicators have turned up for the major stock indexes.  But that doesn't mean that we can't turn around again.  The TRAN had a very good day so perhaps the trend has turned.  If the TRAN can break through the downtrend line that has been in effect since March, that would be a clue.  The McClellan oscillator hit an area yesterday where previous rallies have begun.  GE was up an 1/8 or so on average volume.  Bouncing off the 200 day moving average here.  Gold was off a bit on the futures as the US dollar had a slight gain.  The XAU was up 3/4, while GDX gained 1/8.  Volume was lighter than lately.  ABX was flat on the session but volume remained high.  Mentally I'm feeling OK.  We'll get the Fed statement tomorrow and it should be on course for a rate hike in September.  That is what the market expects.  Yesterday was the time to purchase some SPY calls.  Being preoccupied with my ABX trade obviously has its disadvantages when other opportunities are missed.  This could be the case right now.  The oversold signal for at least a bounce was valid and I have missed it.  But you've got to keep moving on.  As usual the mental capital wasted always is worth more than the money.  I'm still cautious here though because of the proximity of the summation index zero line.  But there is always the chance we'll hold there as well.  The game is never easy.  I may just buy ABX outright tomorrow if it heads lower.  That will be a longer term proposition and not a trade.  After the Fed tomorrow we'll get the first read on the second quarter GDP on Thursday.  End of the month on Friday.  So considering that it's the summer, it should be rather busy.  The volume lately has been heavier than we've seen in a while as well.  All eyes are on the Chinese stock market now, as the decline there has reappeared.  I guess we've forgotten about Greece for now.  So we'll watch the overseas action tonight and wait on the Fed tomorrow.        

Monday, July 27, 2015

Still lower to begin the week as the Dow fell 127 points on good volume.  The advance/ declines were about 3 to 1 negative.  The summation index is heading lower and going through the zero line.  Short term oversold to be sure here and a bounce should appear in a hurry.  I'm not sure that a bounce will hold at this point.  Some of the major stock averages are trying to put the brakes on at their 200 day moving averages.  I don't know it they'll be successful.  I'm still advising caution for now.  GE was up 20 cents on summer average volume.  GE is bouncing off of its 200 day moving average here.  Perhaps GE will be a precursor for things in the overall market.  But I will take a wait and see attitude for that.  Gold was up around 8 bucks on the futures but that was basically catch up from Fridays aftermarket action.  The US dollar was lower on the session.  The gold stocks moved back down with the XAU shedding 1 7/8 and GDX off 1/2.  Volume remains above average here.  ABX was off 1/3 on heavy volume.  My ABX October calls remain big losers.  I'll be holding them until at least the earnings report due in a couple of weeks.  The gold shares remain very oversold on all time frames.  Mentally I'm feeling OK.  We've got the Fed on Wednesday which should be a non-event.  Policy should remain unchanged.  GDP on Thursday may be the more important topic.  That's a guess as usual.  The stock market is short term oversold here.  We should see some upside to relieve that condition.  The problem is that the summation index is heading through the zero line and that gives the chance for a collapse.  That doesn't mean that it has to happen.  But it does put you on alert that it might occur because we are not in this technical area very often.  That is why you have to be careful at this particular juncture.  Gold remains unloved, oversold and the selling is back after a day of respite.  I'm thinking that we may see more selling going into the end of the month.  I don't know how much lower the gold shares can go here.  Oversold, staying there and I really think that this is a long term buying opportunity in that area.  I could be wrong and often am but the downside here is out of control.  I am trying to buy ABX outright a bit lower from here but not in my trading account.  The overseas markets were weak as well today.  We'll see how they react overnight to the continued downside from the US equity market.

Friday, July 24, 2015

The market continued its decline as the Dow fell 163 points on heavy volume.  The advance/declines were about 3 to 1 negative.  The summation index is now heading lower.  I will have to revise my thinking here as we are close to the zero line in the summation index again.  There is a possibility of a collapse when we get near that line.  I have been bullish since the recent decline but the market may be saying otherwise.  Caution is now the word.  We are short term oversold on the S&P 500.  Some kind of bounce is due.  We'll have to pay attention to the quality of that bounce.  Today was a pretty negative day with volume and that is not a positive.  GE dropped 1/2 on average volume.  Not sure exactly what is going on here as well.  Perhaps the market knows things that we don't.  Gold found some buyers today as the futures ended up a few bucks after being lower early.  The US dollar was up a bit today and also came off of its highs.  The XAU rose 1  1/4, while GDX was up 1/2.  Volume was very heavy again here and it was a one day reversal to the upside for the gold shares.  Could the bottom finally be in for this group?  Time will tell.  ABX was up 18 cents on extremely heavy volume.  Maybe we had some flight to safety with todays decline and the weekend coming up.  Didn't do much to help my ABX October calls.  I'll need to see a sustained rally to cut the loss there.  Mentally I'm feeling OK.  Interesting times in the stock market so far this summer.  This summer has been the most volatile in this time period recently.  First it was Greece and right now I don't know what it is.  I would not be surprised to see things turn back around to the upside next week.  But with the summation index zero line in play, we have to consider the possibility of a dramatic drop as well.  I think that I'll be staying on the sidelines unless we get very oversold.  I'll consider the possibilities over the weekend.  ABX has bounced and it did not hit my price for buying the stock outright.  I may have to adjust that order up as well.  As I said before, on a longer term time frame the gold shares are at a very attractive level.  Nobody wants them and they have been blown out to the downside.  The fundamentals for gold are still negative though.  However the seasonally favorable time period of August/September is almost upon us.  Plenty to ponder in that area at the moment.  I'll be checking all the charts over the weekend to try and come up with a game plan for next week.  We've got the Fed next week along with the first look at the second quarter GDP.  Plus the end of the month.  So I'd expect the volatility to remain in place.  For now it's Friday afternoon and time for a break.

Thursday, July 23, 2015

Still lower as the Dow fell 119 points on good volume.  The advance/declines were 2 to 1 negative.  Better than average volume to the downside lately and that is interesting.  I still don't think that we are headed for an extended decline but what do I know lately?  The summation index will be heading lower after todays action.  The short term technical indicators for the major averages have now more than rolled over and are heading lower.  Not a good oversold reading here just yet.  The tech stocks have led the decline.  GE was off 1/3 today on light volume.  GE recently stalled at its 50 day moving average.  Gold fell about 5 bucks on the futures and the US dollar was lower today as well.  The gold shares continue to get crushed as the XAU dropped 2 1/3, while GDX fell 3/8.  Volume remains heavy here.  I believe that this is the final washout for the gold shares.  The end is probably near.  ABX shed almost 1/3 on still heavy volume today.  My ABX October calls are big losers.  Even the snap back rally that will eventually take place won't be enough to save them.  Mentally I'm feeling OK.  We'll have to see how the trading week ends as it has been weak so far.  With the exception of yesterday, the Dow has been leading us lower and that isn't the most bearish of scenarios.  However my ideas have been off lately and that is something to consider as well.  Commodities are getting throw out the window here.  If you have a longer term perspective it wouldn't be a bad idea to put some money to work in that area.  But we are here to trade and patience is a better course of action at the moment.  If the S&P 500 continues lower for the next couple of days, the SPY August calls will be the preferred vehicle.  So we'll see.  We'll watch the overnight action in the foreign markets and finish off the week tomorrow.