Friday, August 22, 2014
A mixed bag to close out the week as the Dow shed 38 points on very light volume. The advance/declines were negative. The small stocks were up on the session and that's bullish going forward. The summation index continues to rise. All signs are still pointing to higher prices for stocks despite the overbought condition on the indices. I'm still over leveraged and holding on to the September OEX puts. Four weeks remaining for this trade and I've decided to give it another week. Unfortunately, the major players are still out until Labor day. This trade is showing a decent loss at the moment. GE was off 1/4 on light volume. One day doesn't make a trend. However there is a possibility that GE is rolling over here. That would bode well for the September OEX put trades that I have. The September GE puts that I own are pretty good losers. Gold was up about five bucks on the futures and made it back to $1280. It is on the precipice of major trouble though if this level is severely breached. The US dollar was higher today as well. The trend is clearly up for the greenback. The XAU was off 1/4. ABX, GG and NEM all dropped 1/4 on light volume. These shares are still in their consolidation channels but at the bottom of them. Next week could be the key and all signals appear to point to lower prices. My October ABX calls have lost half of their value. Mentally I'm feeling OK. One more week of summer and then I would expect volume to perk up along with volatility. But who knows? The past couple of years has seen the beginning of September with nice gains for the stock indexes. Perhaps it will be three years in a row. I've decided my course of action and it is to be positioned for a decline. It appears that this OEX put idea will either make or break my trading year. No one trade should determine that but it is what it is. The market will go where it wants. Overbought, staying there and very light volume any way you slice it. Gold is oversold as are the gold shares but not completely. I've commented at length on the favorable seasonal time period for gold. We are now in it and haven't seen any kind of sustained upside for gold. There is still time for that to happen but it certainly is late. As usual I'll be checking the charts out over the weekend. My thinking right now is that next week will be more of the same. Quiet, summer like trading with a bias to the upside. But anything can happen in this game. For now it's Friday afternoon and time for a break.
Thursday, August 21, 2014
Still moving basically straight up as the Dow gained 60 points on light volume. The advance/declines were positive. The summation index continues higher. The S&P 500 hit a new all time high today. Overbought and staying that way. I'm still over leveraged in the September OEX puts. This idea has done nothing but fail since I started taking positions. At the rate the market is going, it will be one of my biggest losers. There is nothing to suggest that the stock market is going to head lower. Still over four weeks left in this option cycle but the main players won't return until after Labor day. The things that I thought would cause lower prices are not happening. GE was up a few cents and the volume was light. The September puts that I have here are nearly worthless. Another failed trade for now. Gold finally got whacked as the futures fell about $20. We are now below the important $1280 level. We will have to see how the week closes out tomorrow. The US dollar was slightly lower today. The XAU was off 2 1/8. ABX shed 1/4, GG down 1/8 and NEM lost 7/8. Volume picked up to the downside and that is not a good sign for the bulls. The gold shares haven't broken down out of the nearly two month consolidation yet. But they do appear to be on the verge of doing so. I'm still holding on to the October ABX calls although they have lost half of what I paid for them. My thinking is that sooner or later the positive seasonal factors will kick in. Looks like later if at all. Mentally I'm feeling tired, not enough sleep and dental problems. Stocks are very overbought and I am leveraged to the downside. This is not a good place to be. My thinking has been atrocious and my trading tactics have been wrong. The market does not care. Perhaps I am just too stubborn in my attempts to trade here. With the summation index continuing to the upside, the only smart play is to be long. As always, I will pay for my errors. Gold broke down today and it appears poised to head even lower. The gold shares are out performing but in this environment it only means they aren't going down as far. There are still a couple of months for the ABX trade to work but at this rate it won't. When everything is going wrong perhaps it is best to take a step back. I'll consider this overnight. We'll close out the week tomorrow.
Wednesday, August 20, 2014
And the beat goes on. The Dow rose 59 points today on light volume. The advance/declines were about even. The Dow was stronger than the overall market and that usually isn't bullish. However the way things have been going lately, that may not matter. It seems as though there are no sellers. The summation index continues to the upside. I did move up to a closer to the money strike price on the September OEX puts but I did not yet sell the other puts that I already own. This increases the leverage and the risk. I should sell the earlier position tomorrow to be on the safe side. If their is anything safe about trading options. The major stock indices appear poised to hit new all time highs. I'm still not a believer in light volume rallies but perhaps I am wrong. GE is leading the way and gained 1/3 today on OK volume. GE led the way down and is now leading the way back up. It is something to keep an eye on. Gold was off another couple of bucks on the futures but the US dollar had another strong session. The dollar has broken trough some long term resistance and the trend is up. The XAU was up 1/4. ABX, GG and NEM were all little changed on light volume. Considering the move in the dollar, the gold shares held up pretty good. Not exactly sure what to make of that. The October ABX calls that I have are still showing a loss. Mentally I'm feeling OK. All signs point to higher stock prices at this juncture. The Fed minutes today provided a temporary dip but it didn't last long. Declines can be bought. Then why try the OEX puts here? We are short term overbought. The second year of the presidents term usually has a decent decline at some point and we haven't seen anything like that yet. The rally from the recent lows is on very weak volume. There is plenty of time in the September option cycle for this trade to work. Gold is still going nowhere. It is a surprise that we haven't seen some kind of actual decline there. Perhaps the seasonal positive tendency will prevail. We'll see if the European markets can get headed back to the upside tonight.
Tuesday, August 19, 2014
Another strong day to the upside as the Dow gained 80 points on light volume. The advance/declines were shy of 2 to 1 positive. The summation index continues higher. The small stocks are doing good too. I tried to move to a closer strike price again on the September OEX puts but my order wasn't filled. I'm prepared to take yet another loss on the existing trade if I can get the closer to the money puts. I am still a believer in this idea because the volume on this rally has been pretty anemic. However that could just be a summer phenomena. Time will tell on that. GE was flat on the day, volume extremely light. This September put trade has lost about half of its value. It may be time to pull the plug. Gold lost a couple bucks on the futures today. The US dollar broke above its recent consolidation to the upside. This isn't bullish for gold but gold is somehow hanging in there without a decline. SO far that is. The XAU was off 7/8. ABX and GG had slight fractional losses, while NEM was flat. Volume was light once again. My October ABX calls are still showing a loss. Mentally I'm feeling a bit drained, had a tooth pulled today. It appears that the major stock indices are poised to hit new all time highs. My idea for the September puts has failed pretty badly so far. I'll probably try to get to a close strike price tomorrow and if that doesn't happen I'll simply stand pat with what I've got. Short term overbought now for the stock indexes. Gold is going nowhere fast and silver just keeps going down. With a rising US dollar, things are not looking good from the long side of the precious metal complex. Perhaps all my thinking is just wrong at the moment. It's possible. I'll consider what to do overnight. We'll see if the foreign markets follow the Dow higher and get ready for Wednesday.
Monday, August 18, 2014
The market screamed to the upside today as the Dow gained 175 points on light volume. The advance/declines were over 3 to 1 positive. The summation index is heading higher. Some small stock indices are hitting new recovery highs and that is bullish leading the market here. Getting short term overbought for the major stock indices. The trend is now up though. My September OEX puts are now losers. The question is whether or not to hold them for now or just take the loss. The stock indexes act like they want to go to new all time highs. I'll probably wait to see how the rest of the week shapes up. But this trade is not acting well. GE was up 3/8 on summer average volume. GE got above its 200 day moving average today. My September puts here are losers as well. Short term overbought here on the technicals. We closed on the high of the day as did some of the major averages. Gold fell around seven bucks on the futures as the US dollar was higher. The XAU managed a 1/2 point gain. ABX, GG and NEM all finished the day close to unchanged. The volume was very light. There is no interest in gold or the gold shares at the moment. My October ABX calls are showing a slight loss. I'll hold these as long as gold does not break below the trading range that it has traveled over the past two months. Mentally I'm feeling a bit tired. My idea for the September index puts is not looking good at the moment. With the small stocks leading the way here, we could be in for a decent rally. Not a lot of economic data out this week. It's possible we could find ourselves in the summer doldrums after todays huge upside move. But that's a guess as usual. The only thing that the September OEX put trade has going for it now is the extra week in the option cycle. Still waiting for the positive seasonal factors to kick in for gold. Over halfway through August now and we have yet to see any kind of sustained rally. The gold shares are holding up for now. We'll keep an eye on the overnight action and go from there.
Friday, August 15, 2014
An interesting day to be sure as the Dow fell 50 points on a bit better volume. The advance/declines were about even. The overall market was much stronger than the Dow. The NASDAQ registered a gain on the day and that is bullish. The market had a gap to the upside to start the session but an hour or so later news from the Ukraine sent the stock indices lower. The rest of the day was spent recovering from that sell off. The summation index is moving higher and the stock market has all the signs of wanting to move higher. Volatility picked up today. My September OEX puts are about at what I paid for them. This trade has plenty of time to work but the market isn't acting bearish at the moment. It is acting quite bullish and perhaps this idea is simply wrong. GE fell 1/4 and volume picked up a little just like the overall market. The September puts that I own here are break even. The gold futures fell almost $10 today despite the trouble in the Ukraine. Silver got walloped as well and that is not good news for the precious metals complex if you are long. The US dollar was a bit weaker as well. The XAU was off by 2/3. ABX, GG and NEM all had fractional losses on light volume. The October ABX calls that I have are slightly positive. If gold can't rally on todays news, I don't know what it will take to get things going higher. The positive seasonal factors haven't taken hold yet. Mentally I'm feeling OK. A positive week for the major stock indexes but the volume was pretty light. Perhaps the next two weeks will be more of the same with regards to volume. The major players are still out for the summer. Maybe I was too quick in taking the September options positions. The market appears to want to go higher despite the loss for the Dow today. I guess a lot depends on what happens in the Ukraine over the weekend. The short term technicals have worked back up from the oversold condition but are not overbought yet. I think that gold really needs silver to stop going down to get any kind of sustained rally going. The silver chart looks ugly if you're bullish. The CRB has also been heading almost straight down for almost a month and a half. It appears obvious that despite all the money that has been thrown around, inflation is not a concern at the moment. That isn't bullish for gold. But as usual, anything can happen in this game. I'll be checking out the charts and the headlines over the weekend. For now it's Friday afternoon and time for a rest.
Thursday, August 14, 2014
The upward push of the market continues as the Dow gained 61 points on light volume. The advance/declines were 2 to 1 positive. The S&P 500 is right at the 1955 level and also poised at its 50 day moving average. The volume has been light all the way up and I think that this rally is not going to last. However, the September OEX puts I bought yesterday have already lost 35% of their value, so I sold them today and took the loss. I then repurchased some September OEX puts at a closer to the money strike price for less than what I paid for the options yesterday. If the trade does work as expected, the loss taken today will more than be made up due to the closer to the money strike price of todays option purchase. If the trade doesn't work, it will amount to about the same loss that holding onto the September puts that I sold for a loss today would have had. The stock indices closed at their highs today which is bullish. Plus the small stocks are leading the way. So perhaps my idea of getting some index puts is completely wrong. The summation index is heading higher now as well. GE was up a nickel and the volume was light. The September puts I own here are showing a small loss. Gold was flat on the session as was the US dollar. These markets are in a summer doldrums pattern for this week so far. The XAU fell 1 1/4. ABX and NEM were flat, while GG fell 1/4. Volume was pretty light. Nothing new to report here as we wait for the next catalyst. Mentally I'm feeling OK. We'll close out option expiration week tomorrow. We are in a light volume rally so far this week. Light volume rallies cannot be trusted. I do still believe that we will soon be rolling over and that we will also be taking out the recent lows in the major stock indices. I could be wrong and often am. The gold market is going nowhere at the moment. Patience is required but we are going to move pretty good one way or the other soon. The Bollinger bands on the daily chart are telegraphing that. So we'll see. As always we'll watch the overseas overnight action and take it from there.