Thursday, April 17, 2014
Another bounce around session as the Dow lost 16 points on average volume. The advance/declines were positive. A pre-holiday expiration with no real direction. The summation index is now moving higher again. The overall market was stronger than the Dow. I'm still not convinced we are on the verge of a major rally here. We are getting back to short term overbought for the stock indices so we will have to see if that brings another wave of selling. If things are more positive than I presume, the market will shrug off the overbought condition and move higher. We'll see. GE had a positive reaction to its earning but finished off of the highs for the session. GE gained about 1/2 on heavy volume. Obviously in retrospect buying the April calls in the beginning of the week was the correct play. Gold was down almost $10 in the futures market. The US dollar had a slight gain and did finish off of its lows. The XAU fell 2/3. ABX, GG and NEM all had fractional losses on light volume. My open order for the May ABX calls wasn't filled after I adjusted the price lower. I do believe that I am going to do this trade next week and probably on Monday. I'll check everything out over the weekend and decide what I'm willing to pay. ABX earnings are due in a week and a half. Mentally I'm feeling tired, did not sleep well. It appears that the decline is over now that we've had four positive sessions in a row. I'm still advising caution. The small stocks continue to lag and that is not a bullish sign. We are also entering a seasonally weak period for stocks. I don't have any OEX trades in mind for the near term. Gold had a down week and there does not appear to be any buying interest for the precious metal despite continued unrest in the Ukraine. The gold shares were weak as well and closed on their lows. We will roll into the May option cycle on Monday. I'm pretty sure that I am going to buy some calls on weakness if we see any in ABX next week. That is the game plan at the moment. A long holiday weekend is upon us. That gives me plenty of time to check the charts and the indicators before attempting the next trade. It's Thursday afternoon and time for a break.
Wednesday, April 16, 2014
The bounce continues as the Dow gained 162 points on light volume. The advance/declines were 4 to 1 positive. Can we say that it's more than a bounce and the next rally has begun? Maybe. Todays action should turn the summation index back to the upside. The volume was light though and we cannot make it a habit to trust light volume rallies. While the snap back has been impressive for the big caps, the small caps are still way below their recent highs. So I would not be a buyer here as the upside would be limited even if we do continue higher near term. That's my best guess at the moment. GE was up almost 1/3 and the volume was a little better. Earnings due tomorrow, so that should get things going one way or the other. Gold was up a couple of bucks on the futures. The US dollar was little changed on the day. The XAU fell a buck. ABX, GG and NEM had fractional moves one way or the other. The volume was nothing special. I left in my open order for the May ABX calls. If it is not filled tomorrow I will cancel it over the long weekend. I am not exactly sure this is the right trade to do here but I'm willing to give it a shot. Mentally I'm feeling OK. It will be interesting to see where we go from here. A case could be made either way I suppose. However I would not be getting too bullish now. The sell in May crowd may just be getting started. Technically the stock indices were oversold and we have come off of that condition. Not overbought short term just yet. I will be looking for opportunities to buy OEX puts going forward. Gold and the gold shares are having a negative week. It is either the beginning of a new leg down or a chance to get long ahead of the next rise. There is also the possibility that we will simply move sideways. The technicals here are mixed at the moment. I am willing to try the May ABX calls here. Earnings are due at the end of the month. If my open order isn't filled tomorrow I will reconsider this idea over the weekend. We'll see what tomorrow brings.
Tuesday, April 15, 2014
Another session of up, down, up. We finished the day with the Dow gaining 89 points on good volume. The advance/declines were positive. We are back to a level where resistance should come in for the S&P 500. The small stocks continue to under perform but perhaps a short term bottom is in place. That's a guess as usual. Volatility has picked up but that is obvious to everyone at this point. Perhaps all we are seeing so far this week is the positive expiration bias. How the next couple of days play out will be key. GE was up 1/8 and the volume was light. Still above the 50 day moving average here. Gold took a drop today as the futures fell over $25. The US dollar was slightly higher. The XAU lost 2 points but was down more early on. The gold shares followed the overall market back from its lows. ABX off 1/3, while GG and NEM shed about 1/2. Volume picked up to the downside and the short term technicals rolled over. I did place an open order for some May ABX calls but it will only be filled if we see some more weakness there. The gold shares did better that the metal itself today and that is a good sign if you're bullish. Mentally I'm not feeling 100%. Nobody expects a rally here for the stock indices. However looking at the charts there is a potential that the decline will take a rest here. A weak, light volume rally now would also set up possible head and shoulder tops for some of the indexes. This is all speculation on my part. The market will tell us what it is going to do with the price action in the coming days. The summation index is still moving down. We should take our cues from there. I have no explanation why gold would all of a sudden drop today. The unrest in the Ukraine is escalating which should be supportive for gold. Trying to hold the $1300 level. The preceding rally had been weak. It is now a question of will the previous lows hold. Time will tell. We've got the Feds beige book out tomorrow. Might be a market mover. We'll keep an eye on the overnight action and see if the overseas markets follow the US stock indexes higher.
Monday, April 14, 2014
We bounced around today as the Dow was up around 150, came all the way back to almost break even and then zoomed back up in the final hour. We finished the day up 146 points on light volume. The advance/declines were 2 to 1 positive. The small stocks are still under performing but at least things held up for today. Short term we may stabilize here since we are oversold but that's a guess. The market is still skittish but we are oversold. Expiration week usually has a positive bias and that may be the case for this week as well. A short week though as Friday is a holiday. GE was up 1/4 and the volume was light. Attempting to hold the 50 day moving average here. Gold rose on the tensions in the Ukraine resurfacing. The yellow futures were up $8. The US dollar was higher today as well. The XAU gained 1 1/4. ABX, GG and NEM were all higher by around 20 cents. Volume was light to average. Not a lot of interest for the gold shares despite the unrest overseas. I'm still considering the May ABX calls but may switch to GG. But who knows? The technicals for the gold shares here are mixed. Mentally I'm feeling OK. 3 days left for the April option cycle. I do not think I will be making any trades short term here. My guess is that we will be heading lower at some time this week for the stock indices. The summation index is still trending down. Gold has had a slow steady climb for the past two weeks. Overbought on the short term for gold itself. The technicals for the XAU are mid range. The more bullish scenario would have the gold shares in the lead. Perhaps patience is the proper course of action here. The gold share earnings will be reported in the May option cycle. We'll follow the overnight action and take it from there.
Friday, April 11, 2014
Weakness persists as the Dow fell 143 points on good volume. The advance/declines were almost 3 to 1 negative. The tone for the stock indices has changed. Rallies can be opportunities to purchase puts in my opinion. The summation index is heading lower. Weekly technicals for the stock indices have all rolled over now as well. I'm not sure how far we will go down but the 50 week moving averages would be the first stop I figure. Next week is expiration week and a short week as well. We should continue lower as the reasons to buy have dried up for now. GE was off 1/8 on average volume. The daily chart looks weak and the weekly looks like it is ready to break lower from a long consolidation. Gold continues to outperform or at least not go down. The precious metal futures were off a buck or so. The US dollar had a flat, quiet session. The XAU was off 1 2/3 and the daily technicals are rolling over here. ABX lost 1/8, while GG and NEM shed about 1/2. Volume was light. I'll be tempted to try the May ABX calls if we see weakness in the gold shares next week. The gold shares are following the weakness in the overall market. This is either an opportunity or a precursor to lower prices for gold itself. Mentally I'm doing OK but now starting to feel regret over not getting any OEX puts Thursday morning. My trading so far this year has been overly cautious and not good enough. But the game goes on. We closed near the lows of the week but we are not completely oversold just yet. The NASDAQ continues to lead the way down and that is bearish. I'm still looking for some kind of short term support at around the 1800 level in the S&P 500. If not there, then the 200 day moving average would be next. Gold held up well this week but did not rally that much compared to the weakness in the US dollar. If we break 79 on the US dollar that would be very supportive to gold, in theory. Hasn't happened yet. I think that the 90 level on the XAU will be the key area to watch. If we get down there that may be the time to try the gold share calls again. However if we break through lower with good volume, that idea probably won't work. Plenty of things to consider over the weekend. For now it's Friday afternoon and time for a break.
Thursday, April 10, 2014
Stocks got crushed today as the Dow fell 266 points on good volume. The advance/declines were 3 to 1 negative. No reasons for the sell off and that does not bode well for the future. The summation index has turned back down again. 1840 was the key level for the S&P 500 in my mind and we have now closed below it. Lower prices to come. I had thoughts of getting some OEX puts this morning but didn't do it. My hesitation and lack of trading skill appeared once again. You simply cannot stay on the sidelines forever. Yesterdays strong buying of equity calls was a clue that things got bullish too fast. 1800 is a nice round number for initial support on the S&P 500. The 200 day moving average would be next. GE was off 1/3 and the volume picked up. Heading lower from here probably as well. Gold held up well and the futures gained $12. The US dollar was yet lower again today. The XAU followed the broader market lower, off 1 1/2. ABX and NEM had fractional losses, while GG fell a buck on stock specific news. Bearish candlestick patterns now for the gold shares unless things turn around tomorrow. Volume was heavy for GG, average for the rest. Perhaps I'll try the May ABX calls after all but not until next week perhaps if I do. Mentally I'm feeling OK. We may just see this market get ugly, even after todays negative price action. Five days left until expiration and it's possible that things will run down into that. It is a time to be cautious in my humble opinion. Gold has moved up in the past two weeks but the move hasn't been dramatic. Volume for gold hasn't been heavy either. Same action in the gold shares. If the gold shares roll over here as well, I may try the May ABX calls. If not, I'll have to look for something else. Overall the trend in the stock market has rolled over and rallies should be looked at as a chance to purchase puts. We'll see if the foreign markets follow the Dow lower overnight. Then close out the trading week tomorrow.
Wednesday, April 09, 2014
Roaring back to the upside as the Dow gained 181 points on average volume. The advance/declines were almost 3 to 1 positive. The market liked what it saw in the Fed minutes and took off. Todays action should move the summation index back to the upside. My idea of the April OEX puts doesn't look like it is the right idea after today. However I still may give it a try after looking at all of todays numbers. We'll see. GE was up almost 1/4 but the volume was light. I don't think I'll be attempting any trades for GE near term. Gold did not rally as much as the overall market as the futures only rose a few bucks. The US dollar had another weak session though. My idea that gold would drop on the Fed minutes was wrong. That is what guessing will get you. Always stick with the technicals. The XAU rose 5/8, which wasn't much considering the drop in the dollar. ABX, GG and NEM had fractional gains on about average volume. It looks like the May ABX call trade has been missed. I am maybe thinking about chasing it here but that could be dangerous. Mentally I'm feeling a bit tired. So now the question is where do we go from here? New highs? Or do we roll over again? Only six days to go for the April option cycle. I would like to put on a trade but that may be only because I haven't made one in a while. That is a recipe for disaster as well. You sometimes have to be patient in the game but you also cannot sit on the sidelines forever. Perhaps if we get a light volume rally tomorrow, I'll try the OEX puts. The rally in gold and the gold shares has been steady but lackluster. I might chase things here but I could make a case for just sitting aside as well. The technicals here are pointing up and they have room to go higher. Silver did not follow gold to the upside today and a strong rally would have these two moving in tandem. I'm going to have to think about what to do overnight and see where that leads. We'll look to see if the foreign markets follow the Dow higher tonight.