Tuesday, August 30, 2016
Lower today in a listless market as the Dow fell 48 points on light volume. The advance/declines were slightly negative. The summation index grinds lower. The Bollinger bands on the S&P 500 are contracting again and that implies a big move coming. I do think that we will see a positive resolution to the 2 month long sideways congestion but that's a guess on my part. End of the month tomorrow and the employment report on Friday are on the horizon. I may try the SPY September calls if we continue to drift lower into Friday. GE was flat on the day and the volume light. Gold was off $13 on the futures as the US dollar continued higher. The XAU dropped over 5 points and GDX shed 1 1 /3. Volume was heavy. Liquidation in the gold shares needs to run its course here shortly or it could turn into more of a rout than it already is. We've worked off what overbought conditions there were and are now stuck in oversold mode. The combination of a stronger dollar and potential rise in interest rates in the US has ended the gold rally. Mentally I'm feeling OK. A bit more volatility lately but it's nothing like we've seen before. I think we'll probably be on hold until Friday. Any September option cycle trade should probably be put on before then. The market will most likely take our cues form the jobs report. The favored scenario here would be a drift lower into the close of Thursday to set up the SPY calls. The market rarely cooperates though. Europe and Asia were mixed overnight. Traders there are also awaiting the employment report. We'll keep an eye on the overnight developments.
Monday, August 29, 2016
We started the week off with a pop to the upside as the Dow gained 107 points on very light volume. The advance/declines were almost 3 to 1 positive. The summation index will be trying to turn around once again. No sellers today but we can never trust a light volume rally. We were short term oversold on the S&P 500 and that has now been relieved. The small stocks were under performers for a change and that is something to keep an eye on. It is probably too late for the SPY September calls on the short term basis. If we had early week weakness we could have tried the calls. But todays price action probably negates that. GE was up 1/8 and the volume was light. Gold was little changed today as was the US dollar. The XAU gained 1 1/8, while GDX was flat. Volume was about average. Oversold for gold and the gold shares. Mentally I'm feeling OK. Although I'd probably like to wait until after Labor day for the next trade, we do have the jobs report on Friday. That will most likely be a market mover. You will want to have your position on before the release. I suppose that I'll wait to see how the rest of the week plays out before deciding what to do. If we continue higher on low volume the rest of the week it may pay to go the other way. But we'll just have to wait and see. Europe and Asia were mixed overnight with the exception of the NIKK that rallied sharply. It is the last week of summer and things may get even slower than they were today.
Friday, August 26, 2016
Volatility returned as we got a one day reversal to the downside. We opened up over 100 points and then fell down over 100 points. The Dow finished the session with a loss of 53 points on light volume. The advance/declines were negative. The summation index is still trending lower. Yellen did her blabbering and the market viewed it as negative. However we all know that a lot can change between now and the middle of September. The small stocks continue to show strength and as long as that occurs there will be no major decline in my opinion. I'm now looking at the SPY September calls. Right now I think we're setting up for a rally in the beginning of September. That's my guess today. GE remains flat. GE can be traded but you really have to pick your spots. It can go directionless for quite a while sometimes. Gold came from well off of its highs to finish little changed on the day. The US dollar rallied on Yellens comments. The XAU and GDX had fractional losses and the volume was good. It was interesting how gold and the gold shares this week telegraphed the comments from the Fed today. I suppose the markets are always speaking if you know how to listen. But we also know that the next time around just the opposite could happen. It's the nature of the game. Mentally I'm feeling OK. So we got a reversal in the S&P. Does that mean we're in for a hefty decline? I don't think so. My leaning right now is that we are setting up for some upside here soon. Oversold on the S&P 500 and overbought on the VIX. The seasonal tendency is for a decline in stocks here but I'm thinking that the beginning of September will go higher. I've seen it happen before. I could be wrong but I'm going to look to buy weakness next week. That is the game plan as of the moment. That could change after the review of the charts this weekend. Perhaps some players will return to action next week ahead of Labor day as the employment report will be out on Friday. Plenty of economic data before then as well. Plus we'll have the beginning and end of the months to deal with. So maybe things will finally start to pick up and the summer doldrums will come to a close. For now it's a late summer Friday afternoon and time for a break.
Thursday, August 25, 2016
Another day of the summer doldrums as the Dow fell 33 points on light volume. The advance/declines were slightly positive. The summation index continues lower. Waiting on the blabbing of Fed chairwoman Yellen tomorrow. I do think that we'll get a positive resolution to the recent price action despite the rollover of the short term technical indicators. There's no volume and no conviction to price action this summer. The TRAN was negative today but the small stocks continue to hold up rather well. As long as that is the case, there won't be any drastic downside moves in my mind. We'll see. GE was flat and the volume very light. Gold dropped another 5 bucks on the futures. The US dollar was little changed. The XAU was up 1 1/8, while GDX gained 1/3. Volume was average. The gold shares have rolled over and are short term oversold. Mentally I'm feeling OK. Thought about getting some SPY September calls today but did not pull the trigger. I'm still trying to wait for a decent signal or until after Labor day. The VIX is overbought short term at the moment. We'll get some Fed speak tomorrow and that will be the motivation for a day. But what about next week? This is why it is always best to stick to the technicals. They look like they could turn around to the upside for the S&P and at the same time roll back down for the VIX. But nothing is guaranteed. We could also get more oversold as well. I'm on the sidelines still for now. Europe and Asia were both negative overnight. We'll close out the week tomorrow.
Wednesday, August 24, 2016
Finally some price movement as the Dow fell 65 points on light volume. The advance/declines were 2 to 1 negative. The summation index has been trying to turn around but is heading back down again. The S&P 500 did form a coil yesterday on an intra-day basis. We've broken lower from there. The short term technical indicators have rolled over as well. We are also in a seasonally weak time period for stocks. Do I think this is the beginning of a significant downside move? No. GE was off a penny and the volume was light. Gold fell $18 on the futures and the US dollar was a bit higher. The gold shares got creamed as well. The XAU dropped 8 1/2, while GDX shed over 2 points. Volume was very heavy. We are now seeing a break in gold and the gold shares that was long overdue. It isn't the seasonal time of year to expect this but it is happening none the less. We'll see how far it goes. Mentally I'm feeling OK. One day doesn't make a trend so we will have to see where we go from here. Perhaps it is some front running selling ahead of whatever Yellen has to say on Friday. The drop in gold today also seems like an exit before the fact. Sometimes these things just build on themselves. Perhaps the inability to get above the zero line in the McClellan oscillator is more than I think. Time will tell. There is still plenty of time in the September option cycle for a trade. I may have to move over to the SPY calls if we get oversold on the short term. The volume is still very light right now and I do not think that any move can be trusted. I'm also still in the mode of waiting until after Labor Day to trade again as well. There's plenty to ponder. Europe was slightly higher and Asia mixed overnight. I'd expect Thursday to be a lightly traded affair.
Tuesday, August 23, 2016
We started out with a pop to the upside and then sold off for the rest of the session. The Dow finished with a gain of 17 points on light volume. The advance/declines were 2 to 1 positive. The summation index is trying to turn around once again. The overall market remains stronger than the Dow and there won't be any major decline as long as that remains the case. The small stocks also continue to outperform. I suppose the idea to wait to trade until after Labor Day is still in place for me. GE was off almost a dime and the volume picked up a bit. No trades here for now. Gold was little changed as was the US dollar. I suppose gold and the dollar are just waiting for the Yellen speech on Friday before the next move gets underway. Mentally I'm feeling OK. We had a chance for something decent to the upside when the day began but spent the day sputtering lower. This summertime price movement or lack thereof has been frustrating to say the least. It makes for even more difficult trading than usual. The sidelines hasn't been a bad place to be. I'm guessing we'll just wallow around until Friday. Europe was generally higher and Asia generally lower overnight. We'll see what tomorrow brings.
Monday, August 22, 2016
Back and for the was the theme of the day as the Dow fell 23 points on very light volume. The advance/declines were barely positive. The summation index is still grinding lower. We did see volatility pick up a little today but with the light volume, whipsaws are more likely. It is still summer doldrums activity and we may have to wait for after Labor Day to get things back to normal. More Fed watching than usual with Yellen blabbing on Friday. There is nothing else for the markets to go on for now. GE was up a few cents on light volume. Gold was down a few bucks on the futures and the US dollar was little changed. The XAU fell 2 points, while GDX lost 1/2. Volume was light. The talk of the Fed rising interest rates is putting a lid on gold for now. Mentally I'm feeling OK. The small stocks are still relatively stronger here so I expect a positive resolution to the recent market indecision. I'd like to see a move up to 2200 on the S&P 500 and then I would seriously consider the SPY September puts. At the moment we remain short term overbought for the S&P 500. For now I'll stay on the sidelines and wait for a signal one way or the other. Europe was generally lower and Asia was mixed overnight. We'll keep an eye on the action or lack of, overnight.