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Thursday, December 18, 2014

I don't know what to say after todays price action.  The Dow soared 421 points on heavy volume.  The advance/declines were 4 to 1 positive.  That is about 700 or so Dow points in just two days.  You cannot plan for such events.  Volatility has returned but this is ridiculous.  The past two days of gains would normally have taken at least two weeks and that would be in good bull market.  It does not appear that we will get a chance to purchase some OEX January calls but who knows?  The trend has turned back up and new all time highs are on the way for the major stock indices.  The game plan for me now will be to wait and see if we pull back before the new year begins.  GE was up almost 3/4 on heavy volume.  The GE March calls that I own are getting back to break even.  I still like this trade and in due time I think that it will work out fine.  Gold was up just a touch on the futures after being higher earlier.  The US dollar had a slight gain.  The XAU was higher by 3 points, once again following stocks.  ABX was up 1/3, while GG and NEM gained 7/8.  Volume was good.  GDX gained 3/4 and it looks like the January call trade here is not going to happen for me.  We've already moved up too much.  Unless we see some near term weakness in the gold shares, I'll have to find something else.  USO moved back down today and appears poised to head lower.  We'll see.  Mentally I'm feeling OK.  Quite a move today in the major stock indices and the reverse head and shoulders patterns have come back into play.  Just take a look at the daily candlestick charts of COMPQ, INDU, NYA, OEX, QQQ, RUT, SPX or TRAN.  These charts imply much higher prices coming on the break out from these patterns.  I believe that it will happen at the beginning of the new year.  Any decline can be bought.  The summation index is still heading lower but should turn back up next week.  The gold shares have shown a little life here but gold itself isn't doing much.  I'm not sure if I am going to continue to pursue a trade here.  Perhaps the USO February calls will be my next attempt.  Or not.  We'll see if the overseas markets follow todays US stock market move tonight.  I'm also thinking that perhaps the major players in the game are getting all of their trading done before taking off next week for the holidays.  We'll keep an eye on things and close out the week tomorrow.

Wednesday, December 17, 2014

We witnessed a huge bounce today as the Dow soared 288 points on very heavy volume.  The advance/declines were 8 to 1 positive.  We were overbought and overdue for some upside but this was quite a bump.  The market also liked what the Fed had to say and that helped extend the rally.  The decline is over in my humble opinion.  I did place an order last night for some OEX January calls but it was not filled.  I am leaving in an open order for this trade because now is the time.  Some of my technical indicators are at the levels they were when we rallied in October.  If we are lucky perhaps the market will drift back and the calls will be filled.  If not we will have to adjust because I'm still a believer that the beginning of next year will be positive.  GE was up over 1/8 on extremely heavy volume.  It appears that we have put in a bottom here as well, looking at the daily candlestick chart.  My GE March calls are still in the red.  Gold was flat on the session but dropped a bit in the aftermarket.  The US dollar had a very strong session.  It was a surprise that gold did not fall further.  The XAU was up 3 1/3, following the overall market.  ABX, GG and NEM all had fractional gains under a dollar on good volume.  I was stopped out from my ABX January call trade yesterday for a 45% loss.  I don't think that I will try ABX again here but may attempt the index GDX on the long side.  But I'm not sure that gold will rally here.  Gold itself remains more overbought than oversold at the moment.  Mentally I'm feeling OK.  Oil has held up the past couple of days and that has provided some relief for the stock markets.  The extreme oversold short term condition of the stock indices was due to be relieved as well.  The question will be if this is a real bounce or not but I believe that it is.  Declines can once again be purchased.  I don't know if the market will give us a chance though.  I'm looking at the OEX January calls.  USO has stabilized for the past two days on very heavy volume.  Something is trying to keep this issue from falling any further.  We'll see if it works.  Oil is pretty blown out to the downside.  The gold shares outperformed gold today and that is bullish.  But one day doesn't make a trend.  The fundamentals for gold are still negative.  However I cannot rule out a short term rally as the year turns for the gold shares.  I'm thinking that there could be some bottom fishing by money managers to start 2015.  I could be wrong.  We'll watch to see if the foreign markets follow the US lead overnight.  Volatility has returned.

Tuesday, December 16, 2014

Once again the market failed to hold on to a decent intra-day gain.  The Dow was up well over 200 points during the session but finished the day with a loss of 112 points on very heavy volume.  The advance/declines were negative.  The summation index continues to head lower.  We finished near the lows of the day and that isn't bullish.  We are seeing a worldwide liquidation of assets.  I do not know the reason why.  My guess is heavy margin calls around the world due to leveraged assets related to oil and other commodities.  But that's just a guess.  My theory of how things would play out here was wrong.  The reverse head and shoulders patterns in the major stock indices are not taking place.  GE was off a dime and the volume was heavy again.  I still have the GE March calls but they are losing value and might be stopped out soon.  That will be the case if the overall market decline continues.  Gold was off over $10 on the futures but this was baked in yesterday in the aftermarket.  The US dollar got crushed today.  Gold not being able to rally on a very weak day for the US dollar is not at all bullish.  Once again I don't know why.  The XAU fell almost a point.  ABX, GG and NEM all had fractional losses on heavy volume.  My ABX January calls got to the stop price but I do not know if it was filled.  The market makers danced around my stop limit order.  I'll check back again later tonight but this is the second time this year where the mechanics of a trade haven't worked properly.  Everybody loves electronic trading though.  Until it doesn't work right.  Mentally I'm feeling OK and getting some strength back as well.  Not all the way back to normal yet.  We get the Fed announcement tomorrow.  I have no idea what the reaction to that might be.  It's probably best to be careful here and not make any huge decisions.  The market forces are pretty powerful at times and this seems to be one of those times.  I still believe that next year will be a good one for the stock market.  But the question now seems to be from what level will the year begin?  USO had an up session and the volume was massive.  Trying to hold things up here perhaps?  I guess I'm going to stay on the sidelines here, as I have never traded this issue before and the markets are in crazy mode.  Gold should have had a rally today on the weaker dollar and didn't.  I'm not sure what's next here either.  The gold shares are short term oversold.  I'll see if I was sold out of the ABX January call position and decide whether I'd like to try that again.  We'll see if the foreign markets can hold up overnight and take it from there.

Monday, December 15, 2014

The Dow fell another 100 points today on heavy volume.  The advance/declines were 3 to 1 negative.  The summation index continues lower.  Let me be the first to admit that I do not have a clue as to what is going on here.  I've been under the weather for a week but that is no excuse.  We are getting a worldwide liquidation of commodities for whatever reason.  Stocks are being sold to meet margin calls is my guess.  The major stock indices are oversold and staying that way.  If we don't hold up here my reverse head and shoulders hypothesis will be null and void.  GE dropped 1/3 and the volume was extremely heavy.  I might get stopped out of the GE March calls that I own as they are now in the red.  Again, not sure what is happening but everything is going down.  Gold fell $15 on the futures and that much again in the aftermarket.  The US dollar was slightly higher.  The XAU lost 4 1/2.  The gold shares had been weak and they are getting weaker.  ABX, GG and NEM all fell a point or more on good volume.  My ABX January calls are now losers and risk being stopped out as well.  This was a trade that once showed a very good profit.  Whatever is happening it looks like even more selling is on the way.  Mentally I'm feeling OK but still not 100%.  I guess it wasn't the best time to catch a cold/flu.  With what is going on at the moment, anything goes.  Today was a one day reversal to the downside as we opened higher and closed lower.  I did not expect the decline to go this far or last this long and I was wrong.  However if things turn around here quickly, then there is still a chance that my idea about the overall market was correct.  USO is still blown out to the downside and I do have the February calls on my radar.  Trying to figure out the bottom is a guessing game.  I still may try this trade but probably the best course of action would be to step aside.  We'll keep an eye on the overnight price action and see what the foreign markets do.  Tomorrow should be interesting as well.

Friday, December 12, 2014

It was another downer for the Dow today as it got clobbered and fell 315 points on once again heavy volume.  The advance/declines were 4 to 1 negative.  The summation index continues lower.  We closed on the lows of the day and that isn't bullish.  The S&P 500 is just about at 2000, where I believe support will kick in.  But perhaps I'm just off the mark here.  Maybe there is some disaster in the markets waiting to happen.  Technically, I just don't see it.  The small stocks are holding up relatively better.  The reverse head and shoulders patterns that I anticipate are still in place.  Granted, if we see another week as negative as this one next week, I'll have to change my tune.  But for now this decline to me is a breather on the way to higher prices and a good start to the new year.  We'll see.  GE was off 1/2 and the volume was heavy.  This drop occurred despite GE raising its dividend.  In a normal market with this kind of positive development, a nice price spike would occur.  But selling was the theme of the day.  The March GE calls that I own are now in the red.  If I do get stopped out of this trade I will probably try it again at a different strike price.  Hasn't happened yet.  Gold was off a few bucks on the futures and the US dollar was lower as well.  Disappointing to not see gold get a bid with the recent market turmoil.  It certainly isn't a positive.  The XAU slid another 1 1/4.  ABX off 1/3, with GG and NEM losing 1/2.  Volume was a little better today.  My ABX January calls are barely in the black.  This is a trade that should have been closed out weeks ago.  Five weeks to go in the January option cycle and two of those week will be holiday mode.  Mentally I'm feeling OK but still a bit under the weather physically.  Where do we go from here will be the question thought about over the weekend.  Support for the Dow is close at hand around 17200.  Previous tops and the 50 day moving average are around this level.  Will the support hold is now the question.  The summation index is still heading lower.  The McClellan oscillator is getting pretty oversold.  But that doesn't mean that it can't get more oversold.  I'm still looking for the stock indexes to stabilize next week though.  I could be wrong.  Gold is short term overbought right now, with the gold shares moving into oversold territory.  Not really a clear picture of what to expect there.  The USO trade that I am thinking about maybe just isn't a good idea.  This issue is in a free fall on heavy volume.  I suppose I have been fortunate enough to not have tried anything yet.  I suppose if it makes it all the way to $20, I'll consider it.  The snap back here will probably be pretty dramatic when it comes.  There will be a lot to consider over the weekend and hopefully my overall health will return back to normal.  I'll be the first to admit that my thinking has been rather slow this past week.  That won't cut it in this game or any other.  As always the market doesn't care and goes where it wants.  Plenty of research to be done over the weekend.  For now it's Friday afternoon and time for a rest.

Thursday, December 11, 2014

Volatility is back as the Dow gained 63 points on heavy volume.  The advance/declines were positive.  The summation index is still trending lower.  The Dow did have a 200 point gain at some time early in the session.  Can't say I know exactly what is taking place here.  But I'm sticking with the thesis that this sets things up for a rally into the new year.  I'm also a believer of the reverse head and shoulders patterns being formed on some of the major stock indices daily charts.  GE was up 1/8 and the volume was good.  The GE March calls that I own are back to break even.  Plenty of time for this trade to work itself out.  Gold was off $3 on the futures as the US dollar bounced back.  The XAU dropped another point.  ABX and GG had fractional losses, while NEM had a fractional gain.  Volume was light.  Sideways is the most that we can hope for the gold shares here.  The short term technical indicators are neither overbought or oversold.  Mentally I'm feeling tired.  Cannot shake this cold/flu.  Declines can still be purchased in my opinion.  I'm still looking for a good start to the new year for stocks.  Six days to go in the December option cycle.  I have no index option trades in mind for the S&P at the moment.  USO continues to drop.  I'm looking but not buying just yet.  Oversold and staying there for this issue and that is dangerous.  The CRB continues to drop as well.  Gold continues to hang in there for now.  But I don't see any huge rallies coming.  We'll watch the overnight action and finish out the week tomorrow.

Wednesday, December 10, 2014

Well, we got a decline today as the Dow fell 268 points on very heavy volume.  The advance/declines were 5 to 1 negative.  Markets around the world a beginning to drop.  The summation index is heading lower.  I still don't think this is the beginning of any sustained decline.  It would help if we can hold things up right around here.  Let me be the first to say that the look on the daily candlestick charts of some of the major averages to me is a reverse head and shoulder pattern.  That implies higher prices going out in time.  I do not think that we are going to retest the lows from October or anything even close to that.  But who knows?  The markets go where they want.  GE fell another 1/3 and the volume was heavy here as well.  The GE March calls that I purchased yesterday are slightly under water.  I still like this trade and think that in time it will prove to be a good move.  Gold fell a couple bucks on the futures despite a drop in the US dollar.  That isn't s good sign for the gold bulls.  The XAU fell 2 1/3 after trying to show some life early.  ABX shed 1/8, while GG and NEM fell over 1/2.  Volume was lighter here.  The gold shares basically ended up following the overall market.  Mentally and physically I'm tired, still not close to feeling 100%.  It affects the trading to be sure.  I should be OK by next week.  The markets don't care.  USO continues to plunge and the volume today was extremely heavy.  Maybe it's about time to step up to the plate here but I will have to wait until next week at least.  Oversold and staying there on a daily and weekly basis for this issue.  The snap back should be pretty violent if you can pick the bottom.  The major stock indexes are moving to short term oversold territory.  Not so much so on a weekly basis.  The summation index heading lower should be where we take our cues from.  Perhaps the S&P 500 can see some support at the 50 day moving average at around 2000.  That is my best guess at the moment.  Both gold and silver are now overbought.  Sideways is the most we can expect near term.  There was no flight to safety here despite a lower dollar and a decent decline in the stock market.  The gold shares continue to disappoint.  We'll have to watch the overseas markets tonight and see if they continue lower.  Once again, I don't think that this is anything to worry about.  Or perhaps since that's what I think you should.  But you could make those assumptions on any day about any thing.  We'll see what tomorrow brings.