Thursday, October 30, 2014
A huge upside move for the Dow today as it gained 221 points on good volume. The advance/declines were about 2 to 1 positive. The Dow outperformed the overall market. The summation index continues higher. I cannot explain this huge rebound but you cannot argue with price. I got stopped out on November OEX puts but not without drama. The ticket should have been filled earlier in the session but the price action was strange. I may need to switch to the SPY options because they have much more liquidity. Anyway the loss was 30% and my entry here was poor. The overbought condition was not relieved with a decent decline and that wasn't the best trading idea for me. I prefer the OEX because it moves slower but if the options trade like they did today I may have to seek more liquid options. GE was basically unchanged but did move around a lot today as volatility returned. I still like the March call idea here. Gold continued lower today as the futures fell over $25 with the losses from yesterdays aftermarket thrown in. The XAU got clobbered and shed almost 5 points. We are reaching levels not seen since the financial meltdown in 2008. The dollar was a bit higher today as well. The earnings came out for ABX and GG but nobody liked them. ABX and NEM lost 1/2, while GG dropped almost 3. Volume exploded to the downside. This should be the final washout, with the volume expanding so much. I did place an order for the January ABX calls but it wasn't filled. I will probably try this trade again tomorrow. This is really an incredible decline for the gold shares. Perhaps getting long is the wrong idea again but there will not be a lot of money involved. Mentally I'm feeling OK. Another losing trade but there wasn't much capital involved and the stop loss came through eventually. It looks like the V bottom is in place for the major stock indices. The trend is up and declines, if they occur, can be bought. Three weeks left in the November option cycle. The market remains overbought but the rise continues. End of the month tomorrow. Gold lower. Silver lower. The gold shares decimated. The old saying says the time to buy is when there's blood in the streets. It's a tidal wave of blood for gold right now. I'll probably try the January gold share calls tomorrow. However this trade will not have a lot of money involved. We'll see. We'll see what happens overseas tonight and go from there.
Wednesday, October 29, 2014
We bounced around today and the Dow finished with a loss of 31 points on good volume. The advance/declines were negative. We did sell off after the Fed but came back for the rest of the session. The summation index continues higher. My November OEX puts are in the red. The stock indices are still overbought but it hasn't led to any type of sustained decline. The trend is up and I need to exit this trade. The entry point was early and I doubt it will get back to the buy price. We'll get the GDP report tomorrow, perhaps that will provide some movement. GE was off about 1/4 on average volume. Hanging around the 50 and 200 day moving averages here. Gold fell about $20 on the futures with the aftermarket loss thrown in. The US dollar had a strong session once again. The fundamentals for gold remain bearish. The XAU fell almost three points. ABX off 2/3, while GG and NEM fell around a buck. Volume was above average to the downside. When you think that the gold shares can't go any lower, they still do. Earnings due in the next couple of trading sessions but I doubt now that it will matter. I guess I'm lucky that I didn't try the gold share calls again. Mentally I'm feeling OK. A small spike in the VIX today but it didn't end up amounting to anything by the close. You just get the feeling that the market will now churn its way higher from here. No retest of the recent lows from what I can tell. End of the month coming up on Friday. I'll have to consider selling my OEX November puts before they get stopped out. The strategy was to wait until the Fed today. That passed without ant meaningful decline. Unless we sell off tomorrow, there won't be much reason to hold on. The gold shares are getting down to levels that I did not believe were possible. My thought is that they could even go lower. I'll eventually try the January calls though. When is the question. We'll keep an eye on the foreign markets tonight and go from there.
Tuesday, October 28, 2014
Powering higher as the Dow gained 187 points on good volume. The advance/declines were 5 to 1 positive. The summation index continues higher. The stock indices continue their straight line move up from the lows. I got stopped out on the November OEX put trade for a 45% loss. I then preceded to move to a closer to the money strike price for the November OEX puts and purchased them. This was a mistake as the market simply continued to move higher. I have the stop loss order in and it will probably be hit tomorrow at this pace. I think that I have fallen in love with the idea to be short for the Fed announcement and that isn't the way you need to trade to be successful. We are short term overbought but it hasn't led to any type of decline. The trend is up and calls are what you should be buying. GE was up 1/3 on better volume. Perhaps the time to get the March GE calls has passed. Gold was flat on the session and the US dollar was off a bit. The XAU gained 1 1/4 as the gold shares finally rose when gold did not. ABX, GG and NEM all had fractional gains on light volume. Perhaps the gold share calls before the earnings was the better trade here. But it doesn't matter now. I'm in what I'm in. Mentally I'm not happy with todays trade. I really should have just moved to the sidelines and waited for a better technical set up. The trade won't lose a lot of money but the inability to do what is necessary is the problem. I think also I was anxious just to have another trade going and that is a recipe for disaster. The battle usually lies within oneself and I lost that battle today. The TRAN hit an all time high today so overall higher prices are coming. The small stocks are acting great here as well. There is nothing near term to derail this rally. Perhaps the Fed won't mean anything at all tomorrow. Waiting on the gold share earnings but the trend is down and the fundamentals are lousy. We'll see what happens tomorrow.
Monday, October 27, 2014
A mixed bag today as the Dow gained 12 points on average volume. The advance/declines were negative though and the S&P 500 showed a loss. The small stock indices were mixed. The summation index continues higher. Waiting on the Fed seems to be the general theme but there isn't anything new expected there. My November OEX puts are losers. I should get rid of them this week, either getting stopped out or dumping them. I'm going to hold them until the Fed on Wednesday. Short term overbought on the stock indexes but we are not seeing any pullback. GE was off 1/8 and the volume was light. Holding off on the March calls for now. Gold was off a couple bucks on the futures and a bit more in the aftermarket. The US dollar was off a bit today but gold did not move up. The XAU fell 1/3. The gold shares are low and they just keep going lower. ABX, GG and NEM were all down 1/4 or more on light volume. Earnings due for these three starting after the close on Wednesday. As much as I'd like to try the near term calls for the gold shares here, I am going to try and fight myself to just not do anything. However these stocks are due for at least a bounce at some point. Oversold and staying there but a case can be made on the daily charts for a positive RSI divergence. Mentally I'm feeling OK. We had a nice bounce in the stock indexes and the Fibanocci retracement levels have all been taken out. The trend is up. There has been no pullback and no retest of the lows. It appears that a V bottom is in place. The weekly stock index candlestick charts are showing a bullish pattern. Declines, if they occur, can be purchased in my opinion. Gold continues to go nowhere and the gold shares are decimated. When the carnage ends is the question that hasn't been answered for months. It doesn't pay to try and guess in this game. The technical indicators stopped working here a while ago. I'll try my best to stay on the sidelines. The fundamentals remain bearish for gold. We'll keep an eye on the overnight action and see what happens on Tuesday.
Friday, October 24, 2014
Another good day for the Dow as it gained 127 points on lighter volume. The advance/declines were almost 2 to 1 positive. The summation index continues higher. Declines can be bought in my opinion. My November OEX calls are in the red. They will be sold next week as this trade will probably get stopped out. I'll probably try and wait for the Fed on Wednesday but the bottom is in and higher prices are coming for the future. Short term overbought and staying there for the stock indices. It is surprising how the tone has changed in such a short time. But like we already know, the market will go where it wants. GE was up about 20 cents but the volume was very light. I still like the March calls here if we ever see some pullback. Gold was up a couple bucks on the session as the US dollar was a bit weaker. The XAU was off 1/3. ABX, GG and NEM all had minor moves one way or the other on lighter volume. Earnings out next week for the big three and I'm tempted to try the November calls here now. However it is probably more prudent to let the announcements pass and forget about the gold shares for now. I'll think about it over the weekend. There are potentially positive daily RSI divergences in these stocks though. Mentally I'm doing OK. Holding a losing trade at the moment but because the volatility has picked up so much, the prices for the index options stay inflated. The extra week in the November cycle has helped keep the premiums up as well. I'll need to have some early week weakness for this trade to break even right now. I do not see any huge declines coming up for the stock indices. The trend has changed, we will not be retesting the recent lows and longs are suggested. Still no love for gold and the gold shares. The small rally we had in gold is now fading. The fundamentals for gold are still negative. I can maybe make a case for trying the gold share calls ahead of the earnings next week but there are probably better trades out there. I'll consider what to do over the weekend. I'll also try and not talk myself into doing something stupid. But you never know. For now it's Friday afternoon and time for a break.
Thursday, October 23, 2014
Zooming back to the upside as the Dow gained 216 points on good volume. The advance/declines were better than 3 to 1 positive. The summation index continues higher. Good earnings propelled the market today. We broke the recent down trend line in the S&P 500 today. It really looks like a V bottom has been put into place. My November OEX puts as now losers. The probability of this trade returning to profitability is not good. Although still short term overbought, todays action in the stock indices negates yesterdays decline. We'll have to see how the week closes out tomorrow. GE was up 1/4 on average volume but came well off of the highs for the session. Trying to get through the 50 and 200 day moving averages here. Gold was off $16 on the futures. The US dollar had a slight gain today. The XAU was up 1/3. ABX and GG were little changed, while NEM shed over 1/2. Volume was slightly above average here. Earnings due soon for the gold shares and I don't see anything positive coming from that. But who knows? They are overdue for some type of rally. Mentally I'm feeling OK. It's been quite a rally off of the lows from last week. It doesn't look or feel like a retest is in the cards this time around. Longs are favored. I'll probably hold the November OEX puts until the Fed meeting unless we see a sharp decline before that. Doubt it. Gold is stalling at the 50 day moving average. The gold shares remain oversold. I'm still considering the January gold share calls but would like to wait until after the earnings are reported. We'll keep an eye on the overnight developments and close out the week tomorrow.
Wednesday, October 22, 2014
Back to the downside today as the Dow fell 153 points on good volume. The advance/declines were 2 to 1 negative. We were positive early in the day and that created a short term overbought condition. I do not think this is the beginning of a downside move like the one we just saw. The summation index is now heading higher. We did get back to the declining tops line on the S&P 500 and have been turned away. I did get some November OEX puts this morning and they are in the black. However this should be a short term trade, probably around a week or so unless something major develops. I do not think that we are going to go all the way back down to test the recent lows. I could be wrong. GE was off 1/4 and the volume was average. I'm looking at the March calls here. Gold was down $6 on the futures and a bit more in the aftermarket. The US dollar was up on the session again. The XAU fell 2 3/4. ABX and NEM were off by about 1/4, while GG dropped 7/8. Volume was average. Perhaps this will be the final washout for the gold shares but that is a guess as usual. The trend remains down for the gold shares. Mentally I'm feeling OK. So the next trade has begun and the entry was good. We got some strength in the morning and I was able to get my order filled. The stop loss order is in place to contain the loss if we rally. I'll be keeping an eye on the technicals but this trade should not last long. I will be looking to switch back to the November OEX calls perhaps next week. The only caveat with this trade is that the option premiums have so much time left that the price movement on them is muted. The gains, if any, will certainly not be like the last trade. The overall market and the small stocks are acting better than the Dow so far. Gold is still unloved. The gold shares are being sold off again. This story never seems to change. Eventually it will. We'll see what kind of reaction to todays decline we see in the foreign markets and take it from there.