Wednesday, April 23, 2014
A pause today as the Dow fell 12 points on light volume. The advance/declines were slightly negative. As expected the stock indices need to take some kind of rest here to work off the short term overbought condition. How deep the drop goes will give us a good indication of the condition of the market. The shorter the drop, the more bullish things will be. So we'll see. GE was off 1/8 or so. Comfortably above the 50 day moving average here. Not much doing in the gold futures or the US dollar today. Both finished the session little changed. Interesting though is that the XAU found some buyers and rose 1 3/4. Perhaps the gold shares here will indeed lead the price of the yellow metal. ABX and GG gained 1/4, while NEM rose 7/8. Volume was light however. My May ABX calls are still showing a small profit. Mentally I am tired as I was in meetings all day and not in my usual routine. The post will be shorter today due to that. It was a quiet session in most markets today and I would expect that to continue for the rest of the week barring some unforeseen developments. I'm going to leave it at that for today. We'll keep an eye on the overnight session and go from there.
Tuesday, April 22, 2014
Overbought and staying there as the Dow gained 65 points on light volume. The advance/declines were almost 3 to 1 positive. The summation index continues higher and we will once again take our cues from there. Although a pull back or consolidation should occur imminently, I would have to say that we are in some kind of next leg up type of move. I am still not overly bullish here but you cannot argue with price. New highs look like they are coming for some of the major stock indices. The TRAN managed that today. However the lack of the small stock indices not making new highs cannot be overlooked. If the Dow does indeed make a new all time high soon, I'll be looking for some May or June puts. GE was flat on the session and the volume was light. No trades here for now. Gold was off $7 on the futures and the US dollar was slightly weaker as well. Still trying to hold the $1280 level in gold. The XAU was up 1 1/8 though. Perhaps the gold shares are ready to take the lead here or maybe that is simply wishful thinking on my part. ABX and GG had slight fractional gains, while NEM was flat. Volume remained above average here for the gold shares. The May ABX calls that I purchased yesterday have a slight profit. It will be a waiting game here for the earnings next week. Mentally I'm feeling OK. I'm expecting some kind of pause for the stock indexes in the next couple of days. The short term technicals are overbought as I mentioned yesterday. The overall market atmosphere has the feeling of wanting to go higher here but I would not chase this rally. I think this will eventually set up for a trade in the OEX puts. Gold is at the recent $1280 support level and it will need to hold on here for the bullish cause. I don't know if it will or not. However over the weekend all the press that I read was very bearish on the price of gold. This type of media hype is usually the sign that things will be going the other way. It's often a contrary indicator. But we'll have to see how things play out from here. We'll keep an eye on the overseas market action tonight and see what tomorrow brings.
Monday, April 21, 2014
An upwards drift today as the Dow gained 40 points today on very light volume. The advance/declines were positive. Some of the foreign markets were on holiday today. Short term overbought on the stock indices now and a pull back is expected near term. That's my best guess at the moment. Whether or not that begins another leg down is up for discussion. The TRAN is close to a new all time high but the volume for the up move has been light. I still advise caution when it involves light volume rallies. GE was little changed and the volume was light. GE has held up good here and that is a positive for the bulls. Gold fell about 3 bucks on the futures but was lower early on. The US dollar was just slightly higher today. The XAU was off 1/4 and finished off of its lows as well. ABX lost 3/4, GG was up 1/2 and NEM gained 1 1/2. Volume was heavy for the gold shares as there was stock specific news for the big three. GG has withdrawn its bid for a mine. A proposed merger between ABX and NEM has been called off again. I did purchase the May ABX calls today. We are oversold here on different time frames. The major support here is at $17. If that doesn't hold this trade will not work. ABX closed around 17 1/4. I may have been a day early here. Earnings due next week and that should get the stock moving one way or the other. Mentally I'm feeling OK. We've had a bounce in the stock indexes and the volume has been light. That, in my mind, is not a positive sign. I expect some selling this week and we will have to see where that takes us. Of course I could be wrong and the market breaks out to new all time highs. But I am not bullish on the stock indexes here. I believe that there is more downside than upside going forward. Gold is trying to hold on to the support at $1280. Whether or not it can will say a lot about where the gold shares are going. The XAU broke below the 90 level today and almost made it all the way back. That is something to keep an eye on as well. ABX broke it s near term support today and the volume was heavy. That is not bullish by any means. Why buy the calls then? If my prognosis is correct, then today or tomorrow would be the time to buy. If my analysis is wrong, that should show up rather quickly as well. We will have to wait and see how tomorrow turns out when all the worldwide players have returned. We'll keep an eye on the overnight action and go from there.
Thursday, April 17, 2014
Another bounce around session as the Dow lost 16 points on average volume. The advance/declines were positive. A pre-holiday expiration with no real direction. The summation index is now moving higher again. The overall market was stronger than the Dow. I'm still not convinced we are on the verge of a major rally here. We are getting back to short term overbought for the stock indices so we will have to see if that brings another wave of selling. If things are more positive than I presume, the market will shrug off the overbought condition and move higher. We'll see. GE had a positive reaction to its earning but finished off of the highs for the session. GE gained about 1/2 on heavy volume. Obviously in retrospect buying the April calls in the beginning of the week was the correct play. Gold was down almost $10 in the futures market. The US dollar had a slight gain and did finish off of its lows. The XAU fell 2/3. ABX, GG and NEM all had fractional losses on light volume. My open order for the May ABX calls wasn't filled after I adjusted the price lower. I do believe that I am going to do this trade next week and probably on Monday. I'll check everything out over the weekend and decide what I'm willing to pay. ABX earnings are due in a week and a half. Mentally I'm feeling tired, did not sleep well. It appears that the decline is over now that we've had four positive sessions in a row. I'm still advising caution. The small stocks continue to lag and that is not a bullish sign. We are also entering a seasonally weak period for stocks. I don't have any OEX trades in mind for the near term. Gold had a down week and there does not appear to be any buying interest for the precious metal despite continued unrest in the Ukraine. The gold shares were weak as well and closed on their lows. We will roll into the May option cycle on Monday. I'm pretty sure that I am going to buy some calls on weakness if we see any in ABX next week. That is the game plan at the moment. A long holiday weekend is upon us. That gives me plenty of time to check the charts and the indicators before attempting the next trade. It's Thursday afternoon and time for a break.
Wednesday, April 16, 2014
The bounce continues as the Dow gained 162 points on light volume. The advance/declines were 4 to 1 positive. Can we say that it's more than a bounce and the next rally has begun? Maybe. Todays action should turn the summation index back to the upside. The volume was light though and we cannot make it a habit to trust light volume rallies. While the snap back has been impressive for the big caps, the small caps are still way below their recent highs. So I would not be a buyer here as the upside would be limited even if we do continue higher near term. That's my best guess at the moment. GE was up almost 1/3 and the volume was a little better. Earnings due tomorrow, so that should get things going one way or the other. Gold was up a couple of bucks on the futures. The US dollar was little changed on the day. The XAU fell a buck. ABX, GG and NEM had fractional moves one way or the other. The volume was nothing special. I left in my open order for the May ABX calls. If it is not filled tomorrow I will cancel it over the long weekend. I am not exactly sure this is the right trade to do here but I'm willing to give it a shot. Mentally I'm feeling OK. It will be interesting to see where we go from here. A case could be made either way I suppose. However I would not be getting too bullish now. The sell in May crowd may just be getting started. Technically the stock indices were oversold and we have come off of that condition. Not overbought short term just yet. I will be looking for opportunities to buy OEX puts going forward. Gold and the gold shares are having a negative week. It is either the beginning of a new leg down or a chance to get long ahead of the next rise. There is also the possibility that we will simply move sideways. The technicals here are mixed at the moment. I am willing to try the May ABX calls here. Earnings are due at the end of the month. If my open order isn't filled tomorrow I will reconsider this idea over the weekend. We'll see what tomorrow brings.
Tuesday, April 15, 2014
Another session of up, down, up. We finished the day with the Dow gaining 89 points on good volume. The advance/declines were positive. We are back to a level where resistance should come in for the S&P 500. The small stocks continue to under perform but perhaps a short term bottom is in place. That's a guess as usual. Volatility has picked up but that is obvious to everyone at this point. Perhaps all we are seeing so far this week is the positive expiration bias. How the next couple of days play out will be key. GE was up 1/8 and the volume was light. Still above the 50 day moving average here. Gold took a drop today as the futures fell over $25. The US dollar was slightly higher. The XAU lost 2 points but was down more early on. The gold shares followed the overall market back from its lows. ABX off 1/3, while GG and NEM shed about 1/2. Volume picked up to the downside and the short term technicals rolled over. I did place an open order for some May ABX calls but it will only be filled if we see some more weakness there. The gold shares did better that the metal itself today and that is a good sign if you're bullish. Mentally I'm not feeling 100%. Nobody expects a rally here for the stock indices. However looking at the charts there is a potential that the decline will take a rest here. A weak, light volume rally now would also set up possible head and shoulder tops for some of the indexes. This is all speculation on my part. The market will tell us what it is going to do with the price action in the coming days. The summation index is still moving down. We should take our cues from there. I have no explanation why gold would all of a sudden drop today. The unrest in the Ukraine is escalating which should be supportive for gold. Trying to hold the $1300 level. The preceding rally had been weak. It is now a question of will the previous lows hold. Time will tell. We've got the Feds beige book out tomorrow. Might be a market mover. We'll keep an eye on the overnight action and see if the overseas markets follow the US stock indexes higher.
Monday, April 14, 2014
We bounced around today as the Dow was up around 150, came all the way back to almost break even and then zoomed back up in the final hour. We finished the day up 146 points on light volume. The advance/declines were 2 to 1 positive. The small stocks are still under performing but at least things held up for today. Short term we may stabilize here since we are oversold but that's a guess. The market is still skittish but we are oversold. Expiration week usually has a positive bias and that may be the case for this week as well. A short week though as Friday is a holiday. GE was up 1/4 and the volume was light. Attempting to hold the 50 day moving average here. Gold rose on the tensions in the Ukraine resurfacing. The yellow futures were up $8. The US dollar was higher today as well. The XAU gained 1 1/4. ABX, GG and NEM were all higher by around 20 cents. Volume was light to average. Not a lot of interest for the gold shares despite the unrest overseas. I'm still considering the May ABX calls but may switch to GG. But who knows? The technicals for the gold shares here are mixed. Mentally I'm feeling OK. 3 days left for the April option cycle. I do not think I will be making any trades short term here. My guess is that we will be heading lower at some time this week for the stock indices. The summation index is still trending down. Gold has had a slow steady climb for the past two weeks. Overbought on the short term for gold itself. The technicals for the XAU are mid range. The more bullish scenario would have the gold shares in the lead. Perhaps patience is the proper course of action here. The gold share earnings will be reported in the May option cycle. We'll follow the overnight action and take it from there.