Monday, June 18, 2018
Lower to begin the week for the Dow as it lost 103 points on light volume. The advance/declines were positive. The summation index is moving sideways. We started off lower for all the major stock indices today but there was buying throughout the session. Trade war talk over the weekend contributed to the selling in my mind. The NASDAQ made it all the way back to the black. The short term technical indicators have rolled over for the Dow but not the small stocks. RUT set another new all time high today. I'm still in favor of higher prices going forward for now. But we are way overdue for some type of sustained decline. GE dropped a dime on average volume. Gold was up a couple bucks as the US dollar finished little changed. The XAU and GDX had slight fractional moves on light volume. $1280 is an important level for gold. If we don't hold up here perhaps the 200 day moving average at $1235 will hold. But we haven't broken $1280 yet. Mentally I'm feeling OK. So where do we go from here? We've made it through the June option expiration. We've rolled into the July option cycle but the premiums are extremely high. I'm going to have to wait for a decent signal before attempting the next SPY trade. The overbought condition is keeping me from attempting the calls here. However I haven't been successful lately with the SPY puts. So on it goes. I'd expect the summer doldrums to turn up at any time as well. So for now I'm going to watch and wait. We've got the Fed head in a panel discussion on Wednesday so that may move things one way or the other. Not much on the economic data this week. Europe and Asia were both lower overnight. We'll keep an eye on what happens tonight.
Friday, June 15, 2018
Lower in general today although we did finish off of the lows for the session. The Dow fell 84 points on expiration heavy volume. The advance/declines were slightly negative. The summation index is heading sideways. Once again the overall market wasn't as weak as the Dow and that's a positive. The VIX closed below 12 despite some volatility today. The short term technical indicators for the major averages remain overbought. That sounds like a broken record lately. Over and over the technical condition remains the same. Along with the small stocks having the best relative strength. As long as this continues, the trend will be for higher prices going forward. This will eventually change. When, is the question that needs to be answered. GE was off about another 1/4 and volume picked up. Gold took a hit today, down $25. The US dollar finished little changed. The XAU fell 2 points, while GDX shed 3/8. Volume was very heavy. It is important for the $1280 level to hold for gold or we will probably be going a lot lower. Mentally I'm feeling OK. On to the July option cycle with an extra week in it and high premiums. It looks like I'll be watching and waiting now for a while before the next trade attempt. The market remains incredibly resilient. News one way or the other is not affecting things and all dips are being bought. My thinking is that the summer rally has already begun. Whether or not the S&P 500 sets new all time highs remains to be seen. However I will say that with RUT having already gotten there, perhaps my theory of the end of the bull market from 2009 is wrong. If the S&P sets a new all time high then the theory will be dead. But it hasn't happened yet. RUT is usually a leader both up and down though. For now we can look at the market that it is overbought and staying that way. That much we can agree on. I don't have any solid ideas for trades right now but I am still considering the longer term gold share calls. Todays drop doesn't change my mind about that but I will wait until we're oversold on the indicators there. That could take a couple of weeks or so. For now I'll try and remain patient. Europe and Asia were generally lower overnight to finish out the week. It's Friday afternoon and time for a break.
Thursday, June 14, 2018
More bouncing around today as the Dow dropped 25 points on average volume. The advance/declines were positive. The summation index has now turned sideways. The overall market was stronger than the Dow. As long as that is the situation I'm expecting higher prices going forward. The S&P 500 has basically moved sideways for the last week. We'll wait and see which way it breaks out. Odds favor moving up despite the chronic short term overbought condition. No matter the news, the market always seems to have buyers. Any selling is for a day or two at the most. Until that changes, the trend is up. GE was off 1/4 and volume picked up. GE did not make it up through its 50 day moving average. Gold rose about $5 on the futures despite the US dollar having a huge gain today. The ECB meeting today had a dovish tone and the Argentine currency is crashing. Perhaps we saw some flight to safety moves today. The XAU and GDX had fractional moves higher today on light volume. Mentally I'm feeling OK. The positive market bias was in full swing this week as the market had numerous reasons to sell off but did not. Some of the small stock indices set new all time highs today. Money continues to flow into US stocks. You cannot fight that. The VIX is around the 12 level. Volatility has shrunk and we about to roll into summer. It appears that the summer rally started in the beginning of June. How long it lasts, who knows? We are going to roll into the July option cycle on Monday. There is an extra week in that cycle so the premiums are expensive. I will probably remain on the sidelines until July but we'll see where the market takes us. Asia was lower and Europe higher in last nights trade. We'll keep an eye on the option expiration as we close out the week tomorrow.
Wednesday, June 13, 2018
Finally some downside today after the Fed as the Dow lost 119 points on good volume. The advance/declines were 2 to 1 negative. The summation index may start to head sideways here. We bounced around after the Fed announcement but sold off again in the final half hour. Could this be the beginning of some type of sustained decline? Maybe. We're still short term overbought on the major index technical indicators. I did not attempt the SPY June puts again today but I did think about it. There are some signs that things are getting just a little too bullish. The problem is that the July option cycle has an extra week so the premiums are pretty pricey right here. So I suppose I'll just have to remain on the sidelines for now. We'll get some noise from the ECB tomorrow. That could move things around as well. GE was off almost a dime on light volume. Gold finished up a few bucks as the US dollar was lower. The XAU and GDX were little changed on light volume. The gold shares have been consolidating for months. The prudent thing to do is wait for the break out and then jump on board. Mentally I'm feeling OK. 2 days to go in expiration week. Today the overall market was not as weak as the Dow. The small stocks continue to act better than the big caps and that has been an ongoing theme. That is bullish. As long as things remain this way the path of lest resistance remains up. The S&P 500 has yet to get back to its all time high set in January. So there is still some chance that my underlying theory of the completion of a 5 wave up pattern here is correct. But for now signs point to higher prices and my thesis for the S&P may prove to be wrong. If we get a summer rally that will probably be the case. The market is overdue for a pause in my opinion and now is a good a time as any. The VIX still remains low though and below my threshold of 15 for a breakout of volatility. I'll be simply watching and waiting for the time being. Asia was mixed and Europe as well overnight. We'll see if there is any downside follow through tomorrow.
Tuesday, June 12, 2018
An up and down session of waiting around in my opinion as the Dow lost a point and a half on light volume. The advance/declines were even. The summation index continues higher. As usual the overall market was stronger than the Dow. That has been the pattern for quite some time, with the small stocks out performing again. The trend is up and there doesn't seem to be anything in the way of higher prices. The media buzz is bullish. The Singapore summit was viewed as positive even though it appeared to be more show than substance. We'll get the Fed announcement tomorrow. I'm looking at the SPY June puts but I'm in no hurry to purchase them. Perhaps if we get extremely oversold tomorrow on some of the indicators, I'll give them a try. But it does look like the powers that be are looking to run things up into the expiration on Friday. GE was flat and the volume was light. Just below the 50 day moving average here. Gold lost 3 bucks as the US dollar was a bit higher. The XAU and GDX had fractional moves on light volume. Mentally I'm feeling OK. So now we'll wait and see what the Fed has to say. Technically the market remains short term overbought. I've noticed that when some of the intra-day indicators roll over that the market really doesn't go down that much. That is bullish activity. the declines are shallow to sideways and the market recovers to move higher. RUT set a new all time high today. It has been the leader and the signal has been good. The signal for a big move from the McClellan oscillator on Friday did not pan out. TRAN has just broken out above the near term resistance. All signs point to higher prices for now. A move higher in NYA would further validate the rally. It is probably a good idea for me to simply watch and wait. Asia was higher with Europe mixed to lower overnight. We'll see what the Fed has in store for us tomorrow.
Monday, June 11, 2018
Barely higher today as we sold off in the final half hour. The Dow gained 5 points on light volume. The advance/declines were positive. The summation index continues higher. The overall market was a bit stronger than the Dow. The McClellan oscillator gave another signal for a big move on Friday within the next two sessions. We'll see if that comes to fruition tomorrow. I am still considering the SPY June puts but today may have been the time to get them. However with just 4 days left in the June option cycle I'm really not inclined to make another trade this month unless things line up just right. That may or may not happen. For now I'll simply sit back and wait for the Fed. We've got the meeting of the US and North Korea early tomorrow. Any news good or bad could move things in the short term. GE was up a nickel and the volume was light. Gold and the US dollar both finished the day little changed. The XAU and GDX had fractional gains on light volume. Mentally I'm feeling OK. The Dow has had a nice run but not to new all time highs as the small cap indices. We're short term overbought on the major stock indexes any way you look at it. We've been overbought for a little over a week and it hasn't mattered. There's plenty of news and data out this week. Perhaps volatility will pick up. With the trading losses that I took last week I'm a little gun shy at this point or I would have tried the SPY puts again today. It's probably best for me to just sit back and stay on the sidelines. Like I've already said, unless things really line up about perfectly, I'm not going to take another loss this week. We'll see what happens. Europe and Asia were both higher overnight. All eyes and ears will be on the Singapore summit tomorrow morning.
Friday, June 08, 2018
The market continues to climb as the Dow rose 75 points on light volume. The advance/declines were positive. The summation index continues higher. No news or data to really speak of but the sellers have vanished. I got stopped out of my SPY June put trade for a 35% loss. I didn't want to get stopped out before the weekend but the market goes where it wants. That makes it two losing trades this week as my ideas are going nowhere. Will I try this trade again next week? I'm not exactly sure at this point. It just isn't working as we have remained short term overbought for days. At the rate I'm going when it finally does work I'll be owning the SPY calls. My confidence obviously isn't where it needs to be. GE was up over 1/8 on average volume. No trades in mind here. Gold was flat and the US dollar edged a little higher. The XAU and GDX were little changed on very light volume. Mentally I'm feeling OK despite the loss. At least I get the management of the trade correct again by sticking with a stop loss after the fill. It's been a horrendous first half of the year so far for my in the trading department. Yet I'm still here thinking about trying the SPY June puts again if we get to 2800 on the S&P. However with the weekend upon us, I may simply have to take a step back and hit the sidelines next week. Julys option cycle has an extra month, so the premiums will be high. I am still considering the longer term gold share calls. Perhaps next week after the Fed will be the time to try that idea. But that's just a guess at this point. The small stocks are still leading the way here and as long as that's the case I suppose long is the only way to go. Why I haven't listened to that, I don't know. Some of the small stock technical indicators have been overbought for a month. So I do think that some type of drop is imminent. But will it be next week? It would have the positive expiration bias to fight for one thing. We've got the US/North Korea summit on the geo-political front to deal with. Also the Fed announcement on Wednesday. Inflation numbers and retail sales as well. So there will be opportunities for short term trading to be sure. Unfortunately for me, the short term trading is not where I do well. I've got that to deal with as well. So perhaps the sidelines is where I'm headed but you don't make any money there. But you don't lose any either. I'll consider the choices over the weekend. Europe and Asia were lower overnight as the discord of the weekends G-7 meetings took center stage overseas. The US market was able to ignore it after the futures sold off overnight. There are no sellers for now. It's Friday afternoon and time for a break.