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Tuesday, February 18, 2020

A lower start to options expiration week as the Dow fell 165 points on good volume.  The advance/declines were negative.  The summation index continues to move sideways.  AAPL announced last night that it would miss its 1st quarter results due to the China virus.  This had markets sinking overnight but the US held up rather well considering.  The NASDAQ sold off but ended up with a slight gain by the close today.  The S&P was down but it wasn't as bad as it could have been.  the market is showing amazing strength despite the negative news.  I cannot explain it but it is worth paying attention to.  If you got short this morning it appears that you will get squeezed once again.  The major stock indices do remain short term overbought.  GE was off a few cents on average volume.  The technical indicators here have rolled over.  Gold took off to the upside as the futures gained twenty bucks.  The US dollar was up too in a flight to safety.  When I saw gold rising last night, I put in an order for the March GDX calls.  It wasn't filled.  The gold shares rallied as well.  The XAU was up almost four points, while GDX added 7/8.  Volume was heavy.  The gold shares are breaking out so I have placed another order for the GDX March calls at a higher strike price.  I do think that this is a move worth chasing.  I should have perhaps simply bought the calls today at the market but I didn't.  Maybe my lack of confidence played a role in my actions today.  I do think that the gold shares have just shown us which way the breakout will occur.  Mentally I'm feeling OK.  The VIX had a gap up at the open and has plenty of room to go higher.  Whether or not it does is the question.  We are still short term oversold there despite todays drop.  When the market is being hit with bad news form AAPL combined with more China virus fears and it holds up the way it did today tells me that it is most likely going to go higher in the near term.  It may just be options expiration related but it must be taken into consideration.  We'll see how the foreign markets digest todays US market action and go from there.  There still seems to be plenty of money that wants to gravitate to stocks in the US.  Europe and Asia were lower overnight.  We'll keep an eye on this evenings headlines.   

Friday, February 14, 2020

A mixed bag before a long weekend as the Dow lost 25 points on average volume.  The advance/declines were slightly positive.  The overall market was stronger than the Dow.  The summation index is basically moving sideways.  The market bounced around all day and then moved higher in the half hour or so.  The China virus is still in the news but the market isn't worried.  The technical picture for the S&P 500 remains short term overbought.  I don't exactly have a good handle on things here.  My best guess is that we'll just grind higher from here.  GE was off 1/8 on lighter volume.  Gold continued higher, the futures rose almost ten bucks.  The US dollar was slightly higher.  The gold shares are not keeping up though.  The XAU shed 1 1/8, while GDX lost a cent.  Volume was very light.  It certainly isn't bullish when gold rises and the gold shares don't follow along.  They are still hugging their 50 day moving average.  I'll be patient here for now.  Mentally I'm feeling OK.  The VIX continues lower and remains oversold.  It is forecasting higher equity prices going forward.  That along with the usual positive option expiration week bias has me thinking we'll be seeing new all time highs for the major averages again next week.  I'm not sure if it's worth trying some short term SPY calls but it may be.  I'll remain on the sidelines most likely as the loss this week has sapped my confidence for now.  The TRAN and IWM were both lower today but I'm not sure if that means anything or not.  I'll be taking a much needed break for the next 3 days.  Yes, I'll be checking the charts but I will also relax as well.  Europe and Asia were mixed to close out the week.  That seemed to be the theme around the world today.  It's Friday afternoon and time for a break.

Thursday, February 13, 2020

It was a back and forth session as the Dow lost 128 points on average volume.  The advance/declines were just about even.  The summation index is moving sideways.  The market was lower early but as has been the case buyers showed up and we rallied most of the day.  Some late selling put us negative on the day.  We are still short term overbought and overdue for some type of decline.  Might have to wait until after expiration for a drop.  Or if recent history prevails, the market will simply grind higher.  Just a week left in the February option cycle.  I'll try not to do anything stupid.  No guarantees.  GE lost 1/4 on average volume.  Gold was up $5 on the futures and the US dollar was slightly higher.  The XAU added a point, while GDX was up almost 1/4.  Volume was pretty light.  Waiting to see which way things go here as the XAU Bollinger bands imply.  Mentally I'm feeling OK.  The VIX is getting oversold now.  It can stay that way in up trends.  More noise form the China virus today but the effect was short lived for now.  I now get the feeling that we'll see 3400 on the S&P 500 and 30000 on the Dow in short order.  Sellers are met with buyers before the selling even gets started these days.  I guess I'll be on the sidelines until I can get things figured out again.  Europe and Asia were slightly lower last night.  We'll close out the trading week tomorrow ahead of a long weekend.

Wednesday, February 12, 2020

Another day another gain as the Dow climbed 274 points on good volume.  The advance/declines were positive.  The summation index is now barely moving higher.  The overall market wasn't as strong as the Dow but the gains were spread around.  New all time highs for many of the stock indexes.  I sold the SPY February puts for an 80% loss.  Unacceptable.  I did have a chance to break even when I canceled the stop loss order but I simply held on waiting for a decline that never appeared.  Don't cancel your stop loss orders when you've already placed them.  It's on to the next trade but I think that the sidelines will be the place for me now after this latest trading debacle.  GE was up 1/3 and the volume was good.  Gold was little changed as the US dollar was up again.  The XAU and GDX had fractional losses on light volume.  Both the XAU and GDX are trying to hang on to their 50 day moving averages.  I am still looking at the April calls for GDX.  mentally I'm feeling OK.  The VIX finally broke down through its 200 day moving average which signals higher prices yet to come.  Whatever ideas that I had for a market decline were wrong.  The usually reliable sell signal that I received did not have the magnitude that it has had in the past.  I also was trying the puts after the fact.  The decline, brief as it was, had already taken place.  My stubborn attitude when placing the next couple of trades was not the right move.  It now appears that we'll get the usual run up in the indices leading into the February option expiration.  For me I'll try and fight myself to not take on another trade here and wait for the next signal.  I still think that the contracting Bollinger bands for the XAU mean something but I will try and not guess which way things will go.  The S&P 500 remains short term overbought but in rallies it can stay that way longer than you think.  With no overhead resistance and new all time highs a daily occurrence, owning calls seems to be the only way to go.  Europe and Asia were higher as the worldwide push into stocks is in full force.  We'll keep an eye on the overnight developments. 

Tuesday, February 11, 2020

A day of running in place today as the Dow dropped half a point on good volume.  The advance/declines were 2 to 1 positive.  The summation index is trying to turn back up.  The overall market was stronger than the Dow.  Nothing new on the headline front.  The short term technical indicators for the S&P 500 remain overbought.  I am still holding on to the SPY February puts and they continue to show a loss.  This trade is running out of time and only a sharp substantial drop will do me any good.  I suppose that I'll wait and see how it goes tomorrow.  GE lost a few cents on average volume.  Gold fell six bucks and the US dollar was slightly lower.  The XAU and GDX were both little changed on very light volume.  The Bollinger bands for the XAU have contracted to the point of forecasting a big move coming there soon.  Perhaps the GDX call trade should be put on again.  For now I'm on the sidelines there.  Mentally I'm feeling OK.  The VIX continues to hover around its 200 day moving average.  This condition won't last forever.  The break one way or the other will tell a lot about the markets near term direction.  You can't really argue with the new all time highs that we're setting in some of the major averages though.  With the over the counter market leading the way here, the case for higher prices going forward is not out of the question.  The Fed spoke today and will finish tomorrow.  What was said today had no effect on the market.  The China virus doesn't seem to be a concern and trade tensions have disappeared for now.  As long a breadth remains positive the path of least resistance is higher.  Europe and Asia were up in last nights trade.  We'll see what tomorrow brings.    

Monday, February 10, 2020

The Dow started off the week with a gain of 174 points on average volume.  It was a one day reversal to the upside as we started lower and closed higher.  The advance/declines were positive.  The summation index is moving sideways.  The overall market was stronger than the Dow.  The market was looking at good gains for the day and then shot higher in the final half hour.  My SPY February puts are now big losers.  The stop loss order should not have been canceled.  Unless we get some kind of sharp turnaround lower, this trade will be another mismanaged loser.  We've got the Fed speaking on Wednesday but that will most likely be pretty dovish with the effects of the China virus not completely known as of yet.  New all time highs for some of the major stock indices as well.  It appears we've had all of the pause that we're going to get near term.  With only eight days to go in the February option cycle, it's conceivable that things will continue to run up into expiration.  GE was up a few cents but the volume was light.  Gold added another five bucks and the US dollar was higher again as well.  The XAU rose 1 1/2, while GDX gained 1/2.  Volume was light.  Mentally I'm feeling OK.  The VIX is right at its 200 day moving average.  Another day like today will send us through.  With plenty of stock indexes hitting new all time highs and now resistance above us it's easy to make the case for higher prices.  I should probably just take the loss I have and move on.  Perhaps I'll wait for the Fed.  Either way it's a rough start to the trading year for me.  Asia was lower and Europe mixed overnight.  We'll keep an eye on the overnight headlines.

Friday, February 07, 2020

Some selling to end the week as the Dow fell 277 points on good volume.  The advance/declines were negative.  The summation index was trying to turn back up but is now slightly moving lower.  The jobs report was better than expected but the market was down from the open.  We bounced around with a lower bias the rest of the session.  Fear from the China virus is starting to creep back into the market.  I'm still holding my SPY February puts and they are still showing a loss.  They are now back above my stop loss price and that's a plus.  I still see some more downside for Monday but after that it isn't as clear.  We are still short term overbought on the indicators for the S&P, even with todays drop.  The overall market did fare better than the Dow today.  GE was off 1/8 and the volume was good.  Gold rose almost five bucks on the futures and the US dollar was up yet again.  The XAU was down 2, while GDX shed 1/2.  Volume was light.  Dropping gold share prices with a rise in gold isn't bullish.  Mentally I'm feeling just slightly tired, almost done with the flu hopefully.  The VIX closed back above its 200 day moving average.  The short term technical indicators here are trying to turn back up.  If that occurs we'll see some more downside next week.  However I must admit that the NASDAQ is really holding up rather well here and we won't get a substantial decline unless the over the counter market begins to falter.  We will also have to see the summation index start to drop again for a decline to gather steam.  There is a potential negative RSI divergence for the S&P 500 on the daily chart.  I am thinking that we'll head lower on Monday according to my work but anything can happen over the weekend.  The powerful up move that we saw this week after the previous decline cannot be counted out.  So there will be plenty to ponder when going over the charts this weekend.  Europe and Asia were lower to close out the week.  It's Friday afternoon and time for a break.