Friday, May 27, 2016
Still moving up as the Dow gained 45 points on light volume. The advance/declines were 2 to 1 positive. The summation index is heading higher. Nothing in the way for higher prices as the sellers have left the field for now. Short term overbought and staying there. At this rate, new all time highs are in the cards. The only problem is the volume and that is a recurring theme. Yellen came and went without any meaningful market reaction. There has been no snap back to the broken downtrend line. It appears that I have missed another trading opportunity again. GE was up a few cents and the volume was very light. Gold was off $10 on the futures as the US dollar had a strong session. The XAU fell 2 3/4, while GDX dropped 2/3. Volume was good even though it was a getaway Friday. The uptrend in the gold shares has ended. Higher rates in the US and the rise in the dollar will put a lid on gold. Mentally I'm feeling OK. I'm not sure what the next move for me will be. It is too late to join the rally in my opinion unless we see some decline. I'm also not sure that we will blast off if we hit new highs because the volume just isn't there. Perhaps the next trade will be the SPY June puts when we get to 2125 on the S&P 500. But at this point I just don't know. Missing this rally has me in not such a good mental spot. There is still plenty of time in the June option cycle to do something. However getting the market to cooperate is another story. I'll have to check all the charts and regroup over the long weekend. There is not doubt that we are heading higher. It is a matter of how much and how long. We could set nominal new highs in June. But if we don't see a pick up in volume, any breakout would be suspect. Of course none of this has happened yet and the market will as always do what it wants. Plenty to ponder. For now it's Friday afternoon and time for a break.
Thursday, May 26, 2016
A quiet and mixed market today as the Dow fell 23 points on very light volume. The advance/declines were slightly positive. The summation index is heading back up. Waiting to hear from Yellen tomorrow was the market mood for today. The very light volume is a concern and tomorrow is a Friday ahead of a long holiday weekend. I'd expect players to head out early after the Fed chiefs speech. I'm still leaning towards getting some SPY calls on a pull back. But the lackluster volume makes all trades suspect. To break the overhead resistance will take a decent push. I don't see that happening in this environment. GE was off a few cents and the volume was light. Gold dropped $4 on the futures and the US dollar lost ground as well. The XAU and GDX had slight fractional losses on very light volume. Light volume all the way around continues to be the theme. Mentally I'm feeling OK. I'll most likely let tomorrow pass as there is no reason to attempt anything before the weekend. The short term technicals for the major indices remain overbought. There is no reason to try and guess what will happen next. I will simply once again have to be patient and await a decent signal. We are in a seasonally positive spot for stocks but it doesn't last too long. Perhaps waiting to try the June SPY puts later in this option cycle will be the next trade. We'll have to see where things go from here. We do have the employment report and a Fed meeting still to go in the June option cycle. So volatility will return as well as opportunities for profit. Hopefully I'll be up to the task. For now it is watch and wait. Foreign markets were generally slightly higher or little changed overnight. We'll close out the week tomorrow.
Wednesday, May 25, 2016
Continuing higher as the Dow climbed 145 points on light volume. The advance/declines were 2 to 1 positive. The summation index is now heading higher. We're heading higher from here in my mind and SPY calls can be purchased if we get a pullback. Perhaps we'll see new all time highs soon. The perfect head and shoulders top on the S&P 500 failed to live up to expectations and that pattern is now negated. The market will always do what is least expected and frustrates the most participants. That is the nature of the game. GE was up 1/4 and the volume remains light. Still below the 50 day moving average here. Gold was off $5 and the US dollar was a bit lower as well. The XAU gained 2 points, while GDX added 1/2. Volume was average. Trying to hold the 50 day moving average in the gold shares. Mentally I'm feeling OK. 2 days remain in this week and it precedes a holiday weekend. I'd like to see some kind of snap back to the short term downtrend line that was just broken in the major averages. But at this juncture it appears that we will simply head higher. We are approaching short term overbought on some of the technical indicators. But remember that in up trends the market can remain overbought for quite a while. We've got Yellen from the Fed speaking on Friday and that could be a market mover. The small stocks didn't have the leadership that we've seen lately so perhaps some near term weakness is near. That's a guess as usual. The best time for getting long the June option cycle has passed. However we may get another opportunity if the market cooperates. Time will tell on that. Stocks around the globe were higher as money is now flowing into those assets. The only caveat here is volume as it certainly has been anything but robust. Light volume rallies are not to be trusted. But as long as price heads higher we'll have to give it the benefit of the doubt. For now. We'll watch the overnight action and go from there.
Tuesday, May 24, 2016
The Dow took off to the upside today as it gained 213 points on light volume. The advance/declines were 3 to 1 positive. The summation index is still moving down but after today it may stop its decline. We got a signal yesterday in the McClellan oscillator that predicted a big move within 2 days. We got it today. It is possible that this is a second shoulder on the S&P 500 head and shoulders pattern but I doubt it. Whenever everybody recognizes something in this game, like the widely advertised head and shoulders top pattern, it never fails to not work. What we have instead is what looks like a rectangle consolidation. I think we're heading to 2100 now for the S&P. I will still be looking to purchase some SPY June calls on a pullback. GE was up 1/3 on light volume. No trades here for now. Gold fell over $20 on the futures as the US dollar was higher. Gold is taking a much needed rest. The XAU lost 5 points and GDX dropped 1 1/3. Volume was heavy. The inverse relationship between gold and the dollar is intact for now. Support for gold is at $1200. Mentally I'm feeling a bit disappointed about not already being in the June SPY calls. However there wasn't exactly a clear buy signal there. Sometimes in bear markets rallies pop up out of nowhere. It is a result of short covering with some actual buying once the move gets going. This isn't a bear market at the moment. That is why I think this is an initiation move to higher prices for equities. The leadership of the small stocks is also a clue that we are headed up. Perhaps all the way into the June expiration. That's a guess as usual. We have also just broken through a short term downtrend line in some of the major averages. Perhaps a pullback to that line will offer the chance at some calls. Of course we could always just simply head up with no retreat. We'll see. European markets were very strong overnight mimicking the Dow. Asian markets were generally weak. That should change tonight. We'll see if there is any upside follow through tomorrow for the Dow.
Monday, May 23, 2016
A quiet day of trading until we dropped in the final hour. The Dow fell 8 points on very light volume. The advance/declines were about even. The overall market was weaker than the Dow. The summation index continues lower. The S&P 500 has a near perfect symmetrical head and shoulders top formation. That is something that you don't see that often. A high volume downside breakdown would trigger this formation. That is definitely a possibility. I'm still waiting for some kind of valid signal one way or the other. Some of the short term technical indicators are now mid-range, while others are oversold. GE was off a few cents on again very light volume. Oversold on the technical indicators here. Gold was off a few bucks on the futures, while the US dollar was little changed. The XAU and GDX had fractional losses on very light volume. As you notice, the common theme for the markets is the lack of interest. Mentally I'm feeling OK. Light volume in the game is never a good sign. Lack of participation or interest is not a positive sign. We haven't seen a collapse but if we break the head and shoulders neckline, things will deteriorate in a hurry. Hasn't happened yet. Plenty of time in the June option cycle. The Bollinger bands are starting to contract on the NASDAQ. So perhaps things will sort themselves sooner rather than later. The summation index has continued to move lower and the decline has been orderly up until now. If we continue to be weak the next couple of days, I might try the SPY June calls. However if we break sharply lower, I'll probably have to remain on the sidelines. Sideways trading ranges make for tough trading. Foreign markets were generally lower overnight but nothing drastic. We'll see what tomorrow brings.
Friday, May 20, 2016
We got the bounce that was due as the Dow rose 65 points on very light volume. The advance/declines were 4 to 1 positive. The overall market was stronger than the Dow. The summation index is still heading down. Once again the light volume rise is a concern. The potential for a head and shoulders top that has taken 2 months to build is still there for the S&P 500. However there is also the possibility that we are simply moving in a sideways channel and are due to head back up to the upper range. The volume just isn't there for whatever reason. I am looking at the SPY June calls and purchasing them perhaps at the beginning of next week. But I will consider this idea more closely over the weekend. GE was up almost 20 cents on light volume. Still oversold on the short term technical indicators here. Gold was slightly lower and the US dollar slightly higher on todays trading session. The XAU and GDX had minor gains on average volume. This area took a breather today. Mentally I'm feeling OK. It's still a tough trading environment as we are at the moment of truth for the major averages. We are either going to break down hard or get some type of at least short term rally. The small stocks are acting better here and that has me leaning towards a positive resolution. The breadth is also improving, which is another plus. But the volume has been pretty light lately and the summation index is still heading down. We haven't seen a solid break of the 2040 level on the S&P but if that occurs we're heading lower. I suppose that the jury is still out on the near term direction of the major indices. I'll take a look at all the angles over the weekend and try to come up with a game plan for next week. Most foreign markets were higher overnight. There will be a lot to try and sort out over the next 2 days. For now it's Friday afternoon and time for a break.
Thursday, May 19, 2016
Lower today as the Dow fell 91 points on light volume. The advance/declines were over 2 to 1 negative. The summation index continues lower. The S&P 500 closed right at the 2040 level. The McClellan oscillator has gotten very negative and I would expect some kind of bounce. I am thinking about getting some SPY June calls. We are at a point on the oscillator where the market should be dropping quite hard and it is not. I do not have an explanation. The decline we have seen has been quite orderly. Of course that could change at a moments notice. So I can't exactly say that I know what is going on here. The technical indicators for the short term remain oversold. GE had a gap lower and closed off 1/4 on good volume. If GE is a precursor perhaps the market is about to let loose to the downside. Gold was off over $15 on the futures but much of that was factored in after the futures close yesterday. The US dollar was slightly higher. The XAU rose 1 2/3, while GDX was up 3/8. Positive divergence there. Volume was average. Mentally I'm feeling OK. Perhaps some volatility tomorrow as it will be option expiration. Probably the best course of action would be to let tomorrow pass and try to figure things out over the weekend. We're due for a bounce according to the McClellan oscillator but what happens after that is anyones guess. Maybe we are simply in a general market malaise. The neckline of the head and shoulders top pattern on the S&P was broken today but we climbed back up to it. That may be a fake out as well. Time will tell on that. I've been patient up to now so I suppose there is no reason to change that. Foreign markets were weak across the board overnight. We'll close out the week tomorrow.