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Monday, October 20, 2014

The Dow rising only 19 points today does not tell the story as the overall market was much higher.  The advance/declines were almost 3 to 1 positive and the volume was average.  The small stocks and the S&P 500 were considerably higher.  The summation index has turned back to the upside.  Do we try and trade a move back to test the lows?  What if there is no retest and this is a V bottom?  Plenty of questions as usual.  I think that if we get to short term overbought on the technical indicators later this week, I'll try the November OEX puts.  If not, then I will look to buy the November calls at some point during this option cycle.  That is the game plan at the moment.  GE was up almost 1/4 on average volume.  I still like the March calls here and will look to pick some up on a pullback.  Gold rose $5 on the futures today.  The US dollar Was lower on the session.  The XAU gained 1 1/2.  ABX, GG and NEM all had fractional gains on lighter volume.  Gold itself is short term overbought here and the gold shares did not go along for the ride.  No trades here for now.  Mentally I'm feeling OK.  The Dow was held back today by a huge loss in IBM.  The other major stock indices are bouncing nicely.  Waiting for the next set up here basically.  Perhaps by the end of the week.  The ideal scenario is to keep moving higher on light volume to set up the OEX puts.  Gold has had a nice bounce but the fundamentals there are still negative and could be for a while.  No such rally in the gold shares but they did stop moving lower.  Patience could be the best idea there.  we'll see what happens in the overseas markets tonight and take it from there.  

Friday, October 17, 2014

A very positive expiration bias as the Dow zoomed 263 points on heavy volume.  The advance/declines were about 2 to 1 positive.  This should turn the summation index back to the upside.  But it doesn't necessarily mean that we will be going straight back up.  It looks like the next trade could now be the November OEX puts when we get back to the new down trend line.  It could be sooner than that but we will have to see what the stock indices do from here.  Option premiums for November are high.  GE had a gap to the upside and gained 1/2 on good volume after the earnings announcement.  We did come off of the highs for the day though.  I still like the idea for the March calls here and will be looking to get them on weakness.  Gold was off a couple bucks on the futures as the US dollar was higher on the day.  The XAU was off 2 1/4.  ABX and NEM were lower by 1/3 and GG fell almost a buck.  Volume was average.  The gold shares look poised to go even lower here.  Maybe we'll see one last shake out for the gold shares here when the earnings come out.  That's a guess as usual.  No trades here for now.  Mentally I'm feeling OK.  That was quite a week for the stock indexes.  The small stocks performed better than the big caps.  We will probably test the lows made this week at some point but the decline is done in my opinion.  The short term technicals have turned back up.  The fear level shot up and we did get a high volume washout on Wednesday.  That doesn't mean the market can't go lower as it always goes where it wants to.  It simply means the odds favor higher prices going forward according to the technicals.  My trading tactics this week left much to be desired.  That said, at least I had a winning trade.  After last months blow out, over-leveraged losses to the downside, it was good to see something positive.  My timing for that idea was unfortunately off by a month.  However I can tell you two things that remain true in the game.  You have to believe in yourself and you can never give up.  Gold continued higher this week but the gold shares certainly did not follow.  That usually isn't bullish and probably isn't in this case either.  So it is probably best to remain on the sidelines here.  Plenty of charts to ponder over the weekend as I try and come up with the next trading idea.  For now it's Friday afternoon and time for a break. 

Thursday, October 16, 2014

Not as volatile today as the Dow fell 24 points on heavy volume.  The advance/declines were over 2 to 1 positive though, as the overall market was stronger than the Dow.  Trying to find a bottom for now in my opinion.  The summation index may start to turn back up here.  The short term technicals are trying to turn around as well.  I'm looking at the November OEX calls now for the next trade.  The other choice is to wait for a return to the newly formed down trend line and then buy some puts.  Not exactly sure which to do.  We'll let the expiration happen tomorrow and go from there.  GE was flat on the session and the volume was heavy.  The earnings out tomorrow will be the driver perhaps for the overall market as well.  No idea what to expect there.  Gold was off a few bucks on the futures as the US dollar finished the day basically unchanged.  The XAU was flat as well.  ABX and GG were up 1/4, while NEM was flat.  Volume was average.  The gold shares haven't moved up with gold and that isn't bullish.  No trades here for now.  Mentally I'm still kicking myself for yesterdays lousy trade execution.  But it doesn't matter now.  You've got to keep moving forward in this game.  It isn't always easy to do.  The battle is always against yourself.  I'll try and do better the next trade.  The markets really don't care about you.  But you have to care about yourself.  I'm expecting some near term upside once we get through the expiration tomorrow.  The technicals point to that.  However the option premiums for November are high due to the recent volatility and the extra week in the cycle.  So I'll probably tread lightly.  Gold has found mild interest here but not the gold shares.  Earnings due there at the end of this month.  I can't think that there will be any good news there but who knows?  We'll see if the overseas markets can put a halt to their free fall tonight and brace for option expiration tomorrow.

Wednesday, October 15, 2014

It was an extremely volatile session in the stock market today.  We opened down over 200 points in the first ten minutes.  The market then made its way back to being less negative for an hour or so.  We then sold off hard and midway through the day were off 450 points.  The VIX climbed above 30.  But then the Dow made another comeback and finished the day off 173 points on extremely heavy volume.  The advance/declines were negative.  This is the blow off session that I was looking for.  Unfortunately I did not trade it well.  I did get rid of the October OEX puts but I did not get the best price that I could and should have.  My intra-day tactics were poor.  Once again I was not up to the task.  It is a humbling game at times.  The profit was 750% but it could have been better.  The low is now in.  That's my opinion.  GE was up over 1/8 and the volume was extremely heavy.  I'm still going to wait for the earnings report on Friday before I do anything here.  The March calls are the trading idea here.  Gold found a bid and the futures rose ten bucks as the US dollar got crushed.  The XAU was flat however.  ABX, GG and NEM all had slight fractional losses.  Volume was average.  With such a crazy day in the stock market, the gold shares didn't have any sustained interest.  That isn't bullish.  Especially with the dollar getting hammered.  Not sure of what to make of that.  No trades here for now.  Mentally I'm feeling pretty tired.  It has been a while since we've seen this kind of volatility.  The comeback today was impressive and for that reason along with the extended oversold technical condition, I feel confident that the low today will hold up going forward.  We may drift our way back down there over the rest of the month but it should hold.  That is around the 1820 level on the S&P 500.  The extreme volume constitutes a shake out to the downside in my opinion.  I simply did not take full advantage of it and I had my opportunities.  My entry for this trade was very good.  My exit was poor.  Even making whatever money that I did doesn't matter if the trading tactics can't be executed properly.  Perhaps I'll feel different about that tomorrow but I doubt it.  I should have had a better game plan for the day and written it down.  When the market gets crazy like today, that's probably a good idea.  But it doesn't matter now.  Still a couple of days in the October option cycle but I won't be making any more trades this week.  Perhaps some November index calls will be in order.  I do expect to back and fill for a while here though.  Gold found buyers but the gold shares remain stagnant.  That is not a positive.  Perhaps I will lay off trading gold for the rest of the year.  The stock indices had a downside blow off today and I think that the lows are in.  Notice todays chart of the RUT.  I'll be looking for November calls perhaps on a retest of todays lows.  We'll see how the foreign markets react to todays market activity overnight and see what happens tomorrow.

Tuesday, October 14, 2014

Another crazy session as the Dow was up well over 100 points but closed with a loss of 5 points on heavy volume.  The advance/declines were positive and the overall market was stronger than the Dow.  That's a positive.  The summation index continues lower though.  Option expiration week and only three days to go.  Plenty of earnings coming out and we've got some economic data due for the rest of the week.  We started out strong and continues to build on that but then faltered during the second half of the session.  I still have the October OEX puts but I really should sell them tomorrow.  They will be profitable.  GE was up 1/8 after being much higher early on.  Earnings out on Friday and I will let that get out of the way before thinking about taking a position.  Gold was up $4 on the futures despite a stronger US dollar.  Flight to safety money is my guess there.  The XAU gained 3/4.  ABX, GG and NEM all gained around 1/4 on average volume.  These issues also were higher during the session and then came back.  The gold shares seem to be following the overall market here.  No trades for now.  Mentally I'm feeling tired, not enough sleep.  The small stocks are starting to act better but it's all relative I suppose.  I'm not sure that we're out of the woods yet with respect to this decline.  I'd like to see a washout session to be sure and we haven't had that yet.  I don't know if we'll get it by expiration Friday, if at all.  We are no doubt overextended to the downside and have been in a waterfall type decline for a few days.  Oversold, staying there and through the zero line on the summation index.  I can only guess at downside targets from here.  Gold has found some buyers here but I don't know if it has staying power.  I'm in no rush for the January gold share calls yet.  I've got to stay focused on the OEX for now.  Retail sales, inflation data and the Feds beige book due tomorrow.  Volatility will no doubt be on the menu.  We'll keep an eye on the overseas markets tonight and go from there.

Monday, October 13, 2014

Continuing lower as the Dow fell 223 points on heavy volume.  The advance/declines were only 2 to 1 negative though.  The summation index is still moving lower.  We finished near the lows of the session again and that's not a positive.  But the small stocks held up relatively better.  My October OEX puts are showing good profits.  Only four days to go in the October option cycle.  I will have to sell them soon.  However the market is in free fall.  I think it could go on for a couple of more days but I could be wrong.  Oversold and staying that way for the stock indices and that is not bullish.  GE was off 1/3 and the volume was good.  GE helped lead the way lower.  Earnings due on Friday.  I'm looking at the March calls here.  Gold found buyers again as the futures rose $8.  The US dollar was lower today.  The XAU gained 1 1/4 but was higher early on.  ABX was flat, while GG and NEM were up 1/3.  All were higher during the trading day.  Volume was around average.  I'm looking at the January calls here, perhaps with NEM.  However it's possible I may just step aside and not do anything.  Mentally I'm feeling OK.  Volatility has shot up and that makes the trading tougher than usual.  The technicals are oversold on the major stock indexes.  It is really getting dicey.  Almost 100 S&P 500 points lower in three trading sessions.  I don't know how low this will go but we kind of need to see a blow out downside session to put an end to it.  Was that today?  Hard to tell with a moderately negative A/D line.  I'd still advise caution for now.  Gold may be trying to find a bottom here and the gold shares as well.  But the fundamentals for the precious metals really haven't changed and they aren't positive.  Earnings due out at the end of the month foe the gold shares.  But I suppose the focus is now on the stock indices and how much longer the decline will last.  The 200 day moving average was taken out today on the S&P 500.  A 10% correction here would take us to the 1800 level.  I don't know if that will happen.  We do seem to be going straight down at the moment.  It was a partial holiday today and all the world markets will be back at it tomorrow.  We'll keep an eye on the overseas action and see what happens tomorrow.

Friday, October 10, 2014

Downside continues as the Dow fell 115 points on heavy volume.  The advance/declines were better than 3 to 1 negative.  The negative reaction to the break of the zero line in the summation index continues.  The summation index also continues lower.  The small stocks got clobbered again and are still leading the way lower.  That is a negative.  I do not know how long that this decline will last but there are only five days left in the October option cycle.  My October OEX puts are solidly in the black.  When to sell them is the ongoing question.  GE was down 1/2, volume was heavy and we have taken out the recent low.  If GE is a precursor, it spells more trouble for the stock indices.  Solidly below the 50 week moving average here now.  I'm looking at the March calls but will wait to make a purchase.  Gold finished the session a bit lower on the futures as the US dollar had a strong session.  The XAU fell 1 3/4.  ABX, GG and NEM all had fractional losses after being higher earlier.  Volume was average.  The gold shares are following the overall stock market lower.  I'm not exactly sure what to do here so it would be wise just to stay out.  The gold shares are very cheap but who is to say that they can't get cheaper?  Mentally I'm feeling OK.  The market is indeed falling apart at this juncture.  How low will we go?  It is something to consider over the weekend.  We closed near the lows for the day and that isn't a good sign.  I'm guessing that next week should be pretty interesting.  Oversold on the short term and almost there medium term.  I still think it's a time to be cautious.  As I said yesterday we may not crash but falling apart every day is an option to that.  Plenty to consider over the weekend.  Gold held up this week but who can say if that will last?  The fundamentals of a stronger US dollar combined with the looming threat of higher rates isn't and hasn't been a positive for gold.  However, if the roughly $1200 level holds, then the gold shares might be a trade for the calls.  Hasn't happened yet.  The gold shares have been blown out to the downside for weeks and they keep going lower.  We are at an interesting point for the stock indexes.  The Dow has held up a lot better than most.  We're heading lower and the question is how far and how fast?  Keep an eye out for your longer term buys because this month will be the time to make them.  The timing, as usual is the hard part.  I'll be checking the charts over the weekend to hopefully be prepared for Monday morning.  Monday is a partial holiday in the US and some foreign markets will be closed.  For now it's Friday afternoon and time for a break.