Thursday, March 23, 2017
Held hostage by Washington as the Dow fell 4 points on light volume. The advance/declines were almost 2 to 1 positive. The summation index is trying to turn around again. The market is fixated on the health care bill as if it was the only thing in the world that matters. We are once again in an environment of headline risk. The advance/declines were pretty good today, so perhaps the market will be able to weather the storm. It now appears that the vote on this bill has been postponed and that will be seen as a defeat for the current administration. We'll have to see how the futures react to this news overnight. I'm still in the camp of buying some SPY April calls. GE was up about a dime with volume average for lately. Gold was off $4 on the futures and the US dollar was just up slightly. The XAU and GDX had slight fractional losses on OK volume. Mentally I'm feeling OK. We're now at the mercy of what happens overnight and I can only guess at what the reaction will be. All pundits called for a decline if there was any delay for this legislation. So we'll see what happens. The S&P 500 is still oversold on the short term technical indicators. I'd like to see a run down to the 2300 level but that may be wishful thinking. If we do get a sell off tomorrow, there is usually follow through on Monday morning. That would be the time to purchase some calls if all goes to plan. But the market rarely cooperates and I may be able to make a case for purchase tomorrow. Or who knows? Maybe we'll rally tomorrow. Sticking with the technicals, the summation index is still heading lower and we're oversold. We did see a short bounce this week after Tuesdays decline but it didn't amount to much. So perhaps we'll go lower before we turn this thing back around. I don't exactly have a clear signal but I do have a target of 2300 on the downside. We'll just have to wait and see. Plenty of time in the April option cycle. Europe and Asia were higher last night but not by much. We'll finish up the trading week tomorrow.
Wednesday, March 22, 2017
A mixed bag today after yesterdays drop as the Dow shed 6 points on average volume. The S&P 500 and the NASDAQ were positive. The advance/declines were slightly positive. The summation index continues lower. I can make a case for a bounce here but for now I'm going to wait to purchase the SPY April calls. The short term technical indicators for the S&P are in the oversold zone. However I do think that after yesterdays debacle, lower prices will be seen in the coming days. Ideally we'd get to the 2300 level on the S&P 500 but the market rarely cooperates with plans. So we'll keep an eye on things and see what develops. GE was up 1/8 on average volume. Gold was up a couple bucks, while the US dollar was slightly lower. The XAU had a slight fractional gain and GDX was flat. Volume was average. Mentally I'm feeling OK. The small stocks performed better today and that's a positive. The oversold nature of things here is also in the bulls corner. There's also a potential positive divergence on the McClellan oscillator to watch. However there's some background headline noise to deal with. A terrorist attack in London combined with a vote on Trumps health care proposal. The attack has already been digested by the market in my opinion. But we'll have to see what happens tomorrow. Europe and Asia were lower overnight. 2 days left in the week but it doesn't appear that a decent opportunity will present itself. On to Thursday.
Tuesday, March 21, 2017
It looks like things have changed in a hurry as the Dow got clobbered today. The most watched index fell 237 points on good volume. The advance/declines were about 4 to 1 negative. The summation index tried to turn around but is now heading back lower. Trend lines have now been violated to the downside. We are not yet completely short term oversold, so there should be some more price erosion to come. The 50 day moving average for the S&P 500 is around 2325 but better support is at 2300. I'll look to those levels to try the SPY April calls. I still think that will be my next trade attempt unless this turns into an all out rout. GE shed 1/3 and volume was less than average. Gold found a bid on a lower US dollar. The yellow metal gained $10. The XAU rose 1 1/8, while GDX added 1/3. Volume was good. I still think that the fundamental backdrop for gold is negative. Mentally I'm feeling OK. Today was certainly a surprise to me but the market is due for a rest. Some may say overdue. The McClellan oscillator made it back through the zero line but has been turned away. What I will try to do is wait for the short term technical indicators on the S&P to get completely oversold and then purchase the April calls. It won't be easy. On the plus side there will be plenty of time for the trade to work itself out. If we simply continue lower here, perhaps on weakness Thursday I can try to take a position. But it is tough to try and pick a bottom. The VIX is already at the top of its recent range but the indicators aren't overbought yet. So there are plenty of crosscurrents along with questions after todays market action. What I suppose I'm trying to point out is that the game now has changed. I'm going to try and not be in too big of a hurry to do something. At least that's the thought for now. Asia was mixed and Europe lower overnight. We'll see what tomorrow brings.
Monday, March 20, 2017
Slightly lower to begin the week as the Dow fell 8 points on light volume. The advance/declines were negative. The summation index is still trying to turn around here. No clear technical signal one way or the other for the S&P 500 on the short term. The Bollinger bands are converging though, which implies some type of big move is coming. Which way is always the question. The VIX remains low. The QQQ and COMPQ remain very overbought and have been for quite some time. This condition cannot last forever. I'd like to purchase some SPY April calls at some point though. GE was off 1/8 on light volume. Gold rose four bucks and the US dollar was barely higher. The XAU added a point and GDX rose almost 1/4. Volume was pretty light. Mentally I'm feeling OK. At this point we're waiting for the next catalyst to move stocks. Not a lot of economic data due this week. So we wait. No clear buy or sell signal for the S&P at the moment. So we'll have to remain patient for now. We have plenty of time n the April option cycle for some kind of trade to develop. Ideally we would head lower to set up a call trade but the market rarely delivers what you want. Asia was mixed and Europe slightly lower in overnight trade. We'll be keeping an eye on things tonight.
Friday, March 17, 2017
The price movement was muted for the option expiration today as the Dow fell 20 points on expiration heavy volume. The advance/declines were positive. The summation index is still trying to turn around. We were up and down today but without a lot of volatility. I'm not sure exactly where we are going from here. A case can be made for both directions. The short term technical indicators for the S&P 500 are now mid-range. The medium term picture remains overbought. There isn't a clear signal for a set up right now. There's plenty of time in the April option cycle and we will wait for a valid opportunity if one presents itself. GE was up 1/8 and the volume was pretty good. Gold was slightly higher as was the US dollar. The XAU and GDX had fractional losses again on light volume. Mentally I'm feeling OK. Where we go from here is the question and at the moment I don't have an answer. Patience is required in the game and now is one of those times. I'll try and listen to what the market is saying. I'm still leaning towards the bullish side here and am looking for new all time highs. I could be wrong. Once again, there is no rush here to put on a position. The option premiums are high since we just rolled into the next cycle. I'll continue to check the charts over the weekend to try and clarify what I should be doing here. Asia was mixed and Europe higher overnight. However the price closes were slight once again. It's Friday afternoon and time for a break.
Thursday, March 16, 2017
Some digestion of the gains made yesterday as the Dow lost 15 points on light volume. The advance/declines were positive. The summation index is still attempting to turn back up here. Not a whole lot to report on todays market action. We spent much of the day in negative territory. We've got the expiration tomorrow to wrap up the week. Not any surprises in the economic data or from the Fed so we are just moving along sideways here in the bigger picture. I don't have any trades in mind at the moment. I am leaning towards the bullish side though. GE was pretty much flat and the volume was light. Gold finished the session up over $5 on the futures as the US dollar continued its drop. The XAU and GDX had fractional losses on average volume. Mentally I'm feeling OK. No rush at the moment for the next trade as we wind down expiration week. Aprils option cycle has an extra week and that will be reflected in higher premiums. My job here is to simply wait for the next decent signal and take it from there. At the moment I'm leaning towards new all time highs for the Dow and the S&P in the near future. We did work off the short term overbought condition in the indices but we never did reach fully oversold. We did however each some very low levels in the McClellan oscillator but without the significant decline expected. I'm not sure what that means but momentum lows were attained at least. All we can do it continue to monitor the situation and be patient. That's my best guess right now. Both Europe and Asia were higher in last nights trade. We'll close out expiration week tomorrow.
Wednesday, March 15, 2017
Expecting a rally today and we got it as the Dow rose 112 points on good volume. The advance/declines were 6 to 1 positive. The summation index is still heading lower but appears to be in the process of turning around. The Fed raised rates as expected and the market took off. We did finish off of the highs for the session though. I did sell the SPY March calls that I purchased yesterday but probably could have held on for more gain. But with only 2 days left in this option cycle, I got out. The gain was 150% but it could have been a bit better. Not sure what the next trade will be. GE was up almost 1/4 and the volume was a bit light. I don't see any trades here in the near term. Gold was up over $15 on the futures as the US dollar fell pretty good despite the rate hike. Evidently it was already baked into prices. It was not the reaction that I expected but I suppose traders were happy that there still may only be 2 more rate hikes this year. It's all really just a guessing game when it comes to the Fed. The XAU jumped 5 3/4, while GDX added 1 2/3. Volume was heavy. We'll see if this has legs or was just a one day wonder. Mentally I'm feeling OK. So that was a trade that worked and I expected it to. That is why you put in the time and effort every day and do the work. It is also why trading options can be a pretty lucrative game as opposed to the time involved trading stocks for similar capital appreciation. But it is riskier and certainly isn't an easy game. The technical expectations will come through for you more than not. That trade lined up in plenty of time before it happened. It isn't always that easy but the numbers don't lie. It's possible that we could see new all time highs before Fridays close but we could stall here just a bit as well. I didn't get greedy but maybe I should have. However there are no perfect trades. The short term technical indicators for the S&P 500 have now turned back up. A high volume breakout above 2400 would be the most bullish scenario. But if and when that happens is the question. I'll be looking out to the April option cycle now and there is an extra week for that time frame. Asia was generally mixed and Europe slightly higher. We'll see how they react to the Feds decision tonight.