Tuesday, July 29, 2014
Once again a mixed picture as the Dow fell 70 points on better volume. The advance/declines were negative but not as much as a down 70 market would indicate. The NASDAQ only dropped 2 points. Tomorrow should be interesting as we get GDP and the Fed. The summation index is still moving lower and until that turns around we won't see any sustained rallies. The Dow closed on its low for the day and that isn't bullish. The TRAN has been in decline the past five days as well. Perhaps this is the start of a long awaited correction for the stock market. GE was off another 1/8 and has been in decline for a couple of weeks. Oversold here and below the 200 day moving average. Those are not bullish signs. Gold was off five bucks on the futures as the US dollar continues higher. If the dollar can break through the 81.50 level, there would be no more upside resistance. That would not be supportive for the price of gold. It also would not be good news for stocks in general. The XAU was off 1/3. ABX, GG and NEM all had fractional losses on light volume. I canceled the open order for the October ABX calls. NEM reports after the bell and that should influence what happens tomorrow morning for the major gold shares. Toss in the GDP report and the Fed rate announcement and you've got the recipe for an interesting trading session. Then we get the earnings for ABX and GG on Thursday. So depending on what happens in the morning tomorrow, that will determine if I get the gold share calls before the earnings announcement. Mentally I'm feeling OK. The Bollinger bands on the major stock indices are contracting. This action implies a big move is coming up soon. It doesn't predict the direction of the move though. We should know soon enough. Volatility has picked up. It is probably prudent to be cautious at the moment. I still think things could go either way. Despite the recent rise in the US dollar, gold has still held above its 50 day moving average and the $1290 level on a closing basis. If we violate this area, it could spell trouble for the bulls. The technicals here are short term oversold. The gold share technicals are still mid-range. If we get a strong GDP number and some hawkish tone out of the Fed, it will not be a good day for gold. But we will have to wait and see what the numbers are. I'm still a believer in the October gold share calls. Timing of the purchase is the question that needs a correct answer. We'll keep an eye on the overnight action. Tomorrow will be interesting and that much I'm sure of.
Monday, July 28, 2014
A mixed bag again to start the week as the Dow gained 22 points on light volume. The advance/declines were negative. The NASDAQ was lower and the S&P 500 barely managed a slight gain. The summation index continues lower. Plenty of economic data out this week including 2nd quarter GDP and the employment report. Plus we have a Fed announcement on Wednesday. I guess just about anything can happen. What will happen, I don't know. I do know that as long as the summation index is heading lower, it will be hard for the market to have an extended rally. GE was off almost 1/4 and the volume was pretty good for the summer. With GE in a decline it is a surprise to see the overall market holding up here. Gold was flat on the day as was the US dollar. The XAU was up over 1/2. ABX was flat, GG up 1/4 and NEM rose 1/2. Volume was light. NEM will report its earnings after the bell tomorrow. I did place an order for some October ABX calls today. It wasn't filled and I have left it open overnight. I think that I am going to try and get some ABX or GG calls before the earnings come out on Thursday. That is the plan at the moment. Mentally I'm feeling a bit tired. Tough call on the stock market right here in my opinion. I'm going to sit on the sidelines with regards to the OEX for now. The technicals for the major stock indices are about mid-range. The October gold share calls will be the next trade. I should be purchasing some calls tomorrow or Wednesday if all goes to plan. This is one of those trades that I will know pretty quickly whether or not its going to work. The short term technicals for ABX are more oversold than overbought. I'm sticking with the idea of the month of October option series. So we'll see what happens.
Friday, July 25, 2014
To the downside to end the week as the Dow fell 123 points on light volume. The advance/declines were 2 to 1 negative. Are we about to really head lower here? The summation index continues to the downside and has not been able to turn around. The McClellan oscillator could not make it back above the zero line. The stock indices are overbought on a short and medium term basis. However, no uptrend lines have been violated. But we are in the seasonally weak time period. I am not sure exactly what to make of things but I'm going to lean back towards the negative side going forward. GE was off 1/8 and is now below its 200 day moving average. If GE is the leader, then we know which way stocks are headed. Gold bounced $12 on the futures and more in the aftermarket despite a rise in the US dollar. The XAU gained 3 points. ABX and NEM rose 1/3, while GG added a point. Volume was OK for the summer. It looks like yesterday could have been the day to get the gold share calls. I don't know if todays strength was just positioning for the weekend or the start of something bigger. Considering we are coming off an oversold short term technical condition here, this could be the time to purchase the calls. Earnings due next week as well, which makes things interesting. Patience may not be the proper course of action now. Mentally I'm feeling OK. Things did pick up a bit today for the stock market as far as volatility goes. But we are in a tricky time period as the slowness of the summer can rear its head at any time. I have to take into consideration the decline in the summation index, which is usually pretty reliable. Perhaps the OEX puts are the right idea at the moment. Gold was able to hold its 50 day moving average and the gold shares had a nice bounce. After the big decline last week we haven't seen any follow through to the downside. Maybe its time for the gold share calls. I really have a lot to think about over the weekend. There are plenty of charts to go over and decisions to be made. The trading is never easy. For now it's Friday afternoon and time for a rest.
Thursday, July 24, 2014
Another mixed session as the Dow fell 2 points on better volume. The advance/declines were slightly negative. We bounced around a bit today in a narrow trading range. Waiting on the next catalyst one way or the other. The summer doldrums are in effect. The summation index is still heading lower. We are back to short term overbought on some of the major stock indices. I think that a wait and see approach is the proper call at this time. GE was flat and the volume was very light. Still hanging in there at the 200 day moving average. Gold fell today, the futures lost over ten bucks. The US dollar was slightly higher. The XAU dropped 1 3/4. ABX, GG and NEM all had fractional losses on better volume. These issues are now short term oversold. Perhaps it is time to consider the October calls here. However I am going to at least wait until next week to decide. Mentally I'm feeling OK. Sideways since the beginning of the month for the large cap indices. It seems as if everyone is still waiting for the next decline. It will occur when everybody is bullish. Earnings are the main driver for now. Gold has moved back to its 200 day moving average. The US dollar is in a rally and that is not bullish for gold. We also have a lot of geopolitical turmoil around the globe and gold isn't moving higher. These are not bullish signs for gold at the moment. Throw in the gold share earnings due next week and we are perhaps at a critical trading juncture. The October gold share calls remain on my radar. We'll close out the week tomorrow.
Wednesday, July 23, 2014
A mixed bag today as the Dow fell 26 points on light volume. The advance/declines were positive. Both the S&P 500 and the NASDAQ were higher today. The TRAN continues to make new all time highs. It just simply looks like higher stock prices are coming. The summation index hasn't turned around yet but it is on the verge of doing so. The week so far has the feel of the summer doldrums to it. It was bound to happen. More earnings on tap as we move forward. GE lost 1/8 and now rests on its 200 day moving average. GE is not participating here and that could spell trouble eventually. Gold and the US dollar were little changed on the session. The XAU was off 1/2. ABX, GG and NEM were all fractionally lower. Volume has dried up here. It appears that we are in a holding pattern for gold and the gold shares at the moment. Mentally I'm feeling OK. Light volume and not a lot of movement is the story for now with regards to the stock market. Barring any unforeseen event, I don't think that a grind higher is impossible. But I don't think there will be any type of explosion to the upside. Gold is lightly traded so far this week. Patience is the key idea here this week. Summertime has arrived for now. We'll keep an eye on the after the bell earnings along with the overnight foreign market action.
Tuesday, July 22, 2014
Back to the upside as the Dow gained 61 points on light volume. The advance/declines were 2 to 1 positive. You can make your case either way here for the stock indices but I now believe we are heading higher. The summation index is about to turn around. The TRAN continues to make new all time highs. I'm guessing that the earnings coming out will be viewed as positive. I'll probably wait for the September option cycle to try the OEX puts. GE was pretty much flat on the day as it tries to hold on to the 200 day moving average. No trades in GE for now. Gold lost $7 on the futures as the US dollar was higher on the day. The XAU was off 1 1/8. ABX and GG fell 1/4 or so, NEM was up a nickel. Volume was pretty light. No interest in buying the gold shares here but no real selling either. Earnings due next week. I'm still trying to remain patient with the gold shares for now. Mentally I'm feeling OK. Some tech bellwethers report after the close today and that will probably set the tone for tomorrows open. The big cap stock indices are short term overbought but the small caps (RUT) have room to move higher based on the technicals. I think that a drift higher for now is in order. If that does occur on light volume, we then may have a set up for the OEX puts. However when the summation index dropped recently and prices didn't follow, it leads me to believe that we have just completed a consolidation before moving higher once again. I could be wrong. Gold is in a holding pattern for now. We had a nice run higher. Then we had a couple of days that wiped out around 40% of the gains. It looks like things could go either way from here. Once again, patience is the key here. We'll watch the earnings in the aftermarket and see what happens overseas later tonight.
Monday, July 21, 2014
A weak start to the week as the Dow fell 48 points on light volume. The advance/declines were negative. The summation index continues lower. Plenty of earnings on tap as we get that season going in full swing. The technicals here are mixed for the major averages. I guess at this point you could make a case for either direction. However, as long as the summation index is heading down, I would not be all that bullish. GE was off 1/2 today and the volume was heavy. This is another reason not to fall in love with stocks at this juncture. GE is often the bellwether for the overall market. Gold was up $4 on the futures as the US dollar was flat. The XAU was flat as well but did come off of its lows. ABX, GG and NEM all had slight fractional losses on very light volume. Mixed technicals here as well. I'm still considering the October gold share calls. Mentally I'm feeling OK. Once again the summation index has headed lower and stocks have just moved sideways. It could set things up for higher prices but I don't think it would be a huge move forward. I was looking at the August OEX puts as a possible next trade. But I will need to see overbought technical conditions first. Volatility has picked up lately but the summer doldrums can return at any time. Patience is sometimes required in the game and that is what I think is needed right now for the gold shares. Plenty of time before October and that is the month that I've chosen for the calls here. Earnings due in less than 2 weeks. Unless something drastically changes here, I will probably wait on purchasing the options. We'll see what happens overnight and go from there.