Friday, April 20, 2018
Another downer to end the week as the Dow dropped 202 points on average volume. The advance/declines were once again 2 to 1 negative. This should move the summation index sideways. I'm a believer now that rallies can be shorted. There are potential bearish chart patterns all the way around and I think that they will be fulfilled. The weekly candlestick charts for the major stock indices have shooting stars. The only thing that would negate things in my mind would be a stiff rally next week with a close somewhere near this weeks highs. It could be that I've missed the chance to get the SPY May puts already. I'll be mostly hoping for some kind of light volume rally at some point next week to try this idea. May not happen. GE sprang to life on its earnings and rose 1/2 on very heavy volume. We've jumped the 50 day moving average and traded at the $15 level during the session. Gold fell $10 on the futures as the US dollar continued its recent ascent. The XAU and GDX had slight fractional losses on good volume. The gold shares are holding up rather well and that is a positive. I'm still thinking longer term calls there. Mentally I'm feeling OK. Two days of decline doesn't mean we're on the cusp of anything bigger but I do not think that we're on the verge of a major rally either. Perhaps we'll continue with the sideways channel that we're in just to frustrate both sides of the trade. The short term technical indicators have rolled over. Any bounce next week should probably be looked at as an opportunity to get short. Yes I could be wrong but we're also entering the seasonal period of less market strength. Earnings have been good so far but we haven't seen any rip roaring moves to the upside as we have in the past. I have to think at this point that the May puts will work. I just hope that I'm ready to manage whatever trade that I get into better than I have lately. We'll see. I'll go over everything again this weekend and be sure that I know exactly what I'd like to try and do next week. Asia was mostly lower and Europe mostly higher last night. It's Friday afternoon and time for a break.
Thursday, April 19, 2018
A bit of selling today as the Dow fell 83 points on light volume. The advance/declines were 2 to 1 negative. The summation index is heading higher. The overall market was weaker than the Dow. We are at a spot where things could turn around as the VIX got back to the 15 level. There are also potential negative chart patterns on numerous indices. But that's just it, there's potential. Nothing has actually happened yet. We could just as easily continue to head higher. But I'm not a believer in that. I'm sticking with my now long held position that the long bull market is over. I'm looking at the SPY May puts and I do want to buy some in the near future. The market may not wait for me though. I am going to let tomorrows expiration pass and go from there. GE gained 1/3 on good volume ahead of the earnings. We're right at the 50 day moving average and the $14 level. Tomorrows price action will tell a lot. Gold fell five bucks on the futures as the US dollar was a bit higher. The XAU and GDX had slight fractional gains on lighter volume. The gold shares have held up pretty good here. I'm considering the longer term calls here. Mentally I'm feeling OK. The VIX is now oversold and due to move up. The TRAN did not make it through the resistance at 10800. What I would like to see is the S&P 500 make it back up to the 2725 level and simply puts some puts there. I'm not sure if the market will cooperate. With the summation index moving higher the path of least resistance is up for now. But if we do drift up from here, I'm going to try the May puts. Asia was higher and Europe mixed last night. We'll close out the week with options expiration tomorrow.
Wednesday, April 18, 2018
We bounced around today and ended the session down 38 points on the Dow. Volume remains below average and the advance/declines were positive. The summation index continues to the upside. The overall market was stronger than the Dow. We remain short term overbought and the positive expiration bias seems to still be in effect. The TRAN got above resistance at 10800 but then pulled back. The VIX is back in the zone that recent sell offs have began. I'm still in favor of the SPY May puts. Some of the small stock indices have potential head and shoulder tops patterns, while RUT could be putting in a triple top. But none of that is etched in stone and there's always the possibility that we'll simply march on higher. But if my overall idea of the bull market being completed, we should see things turn lower here in a short amount of time. GE lost a dime and the volume was light. Approaching the 50 day moving average here. Gold and the US dollar both had slight gains. The XAU was up a buck and GDX had a slight fractional gain. Volume was good. I'm waiting for the technical indicators here to get oversold before attempting a longer term call trade in GDX. Mentally I'm feeling OK. Not much else to report here. Earnings are coming in and they've been decent so far. Two days to go in the April option cycle and we'll see where we go after that. We are still at the risk of any type of headline, positive or negative. Sellers seem to have gone into hiding but that can change on a dime. My ideal scenario would be the S&P 500 get to 2725 to attempt the May puts but the market rarely cooperates. I'll most likely be on the sidelines until next week. GE has earnings due Friday but I'm not going to try and guess that event. Europe and Asia were both positive last night. On to Thursday.
Tuesday, April 17, 2018
Moving higher as the Dow gained 213 points on light volume. The advance/declines were once again better than 2 to 1 positive. The summation index is moving higher. Most of the major stock indices have now moved above their 50 day moving averages. The overall market was stronger than the Dow. It appears that all signs point to higher prices going forward. Are we going to new all time highs? I may have to readjust my negative thesis here but it's too early to tell. However it looks and feels as if the market wants to go higher. We are short term overbought though and the VIX got below the 15 level today. That is my threshold for stopping any rally so we'll have to see what happens tomorrow. I did see a lot of bullishness in the media today and that is a contrary indicator. GE was up almost 1/2 on average volume. Plenty of resistance at the $14 level. Gold and the US dollar were little changed. Mentally I'm feeling OK. The small stocks were leaders today and that is a positive. The TRAN stalled and still has not gotten trough resistance at 10800. So there are some crosscurrents. The S&P hasn't broken above its down trend line at 2725 but the other major averages have gotten above the down trend line resistance. There is no reason to believe that the S&P 500 won't follow. RUT is acting well here and is often the leader. I'm keeping an eye on that because if it does break out to a new all time high, I will have to change my mind about where we are going. The game is never easy and there is never a clear road map as to where we are going. The option expiration positive bias does seem to be in place but what happens after this week is anybody's guess. I am looking at the SPY May puts. Asia was mostly lower and Europe higher in last nights trading. We'll see what tomorrow brings.
Monday, April 16, 2018
We got a pretty good move higher today as the Dow rose 212 points on light volume. The advance/declines were over 2 to 1 positive. the summation index is moving higher. We were up over 300 during the session but could not hold it. We did get above the resistance at around 2675 for the S&P 500 but fell back. The volume here is lacking and we'll need to see a strong break of the near term resistance to start to believe in higher prices. The down trend line for the S&P comes in at 2725 and that would be the spot to try the SPY puts if you're so inclined. GE lost over 1/8 and the volume was average. Earnings due on Friday. Gold was flat today but the US dollar was lower. The XAU and GDX had slight fractional losses on about average volume. Mentally I'm feeling OK. Expiration week is upon us and so far the usual positive bias seems to be in effect. I've got two ideas in mind right now going forward. I'm looking at the SPY May puts if we get to the down trend line or reach 15 on the VIX. We are getting close to 15 on the VIX as we speak. That is the level that has stopped the rallies that we've seen since the extreme volatility in February. So if my prognosis that the rally from 2009 is really over, this is the level where volatility should pick up again. I do believe that this is the case so I will probably attempt a trade here if conditions warrant despite just booking a huge loss. You have to believe in something and believing in yourself is not a bad way to go. I'm also looking again at the longer term gold share calls going out to September. Right now I'm focusing on the GDX index of gold miners. The timing on this trade will have to wait for an oversold condition and that will probably take some time. But it is another idea that I'm thinking about pursuing. Looking back at today the TRAN broke above its 50 day moving average and that's a positive. The next resistance is at 10800. Most of the other major stock indices are right at their 50 day moving averages. You could get more positive on things if we see a high volume break above those levels. We had a shot today but fell back amid light volume. Perhaps tomorrow will be different. Asia was mixed and Europe lower last night. We'll keep an eye out on the overnight developments.
Friday, April 13, 2018
It was a one day reversal to the downside today as we opened higher and closed lower. The market bounced around and finished with a loss of 122 points on light volume. The advance/declines were negative. The summation index has been moving up but with no conviction. The McClellan oscillator gave a signal yesterday for a big move within the next two trading sessions. We'll see if that occurs on Monday. Really low volume lately and that's a sign of no interest. We do have a chance to break higher here and violate some down trend lines but it hasn't happened yet. I sold my SPY April calls for a 95% loss. What more can I say about that. Horrible trade all the way around. I had several chances to cut the loss but never took them. It's back to the drawing board. GE showed some life and was up 1/3 on average volume. Gold was up five bucks as the US dollar closed little changed. The XAU added 1 1/3, while GDX gained 3/8. Volume was good. The gold shares are out performing here and that is a plus. Mentally I'm feeling OK. The market continues to frustrate here as after the extreme volatility we've simply plodded around with not direction. That can happen in the April option cycle and that was the case this time around. We had some volatility in the beginning of the cycle but not like what we saw in February. I believe what we're doing now is setting up for the next major leg up or down. Either we're gonna head up and test the all time highs or we're gonna break the near term support and go lower. I'm leaning towards the latter scenario. May has a tendency to bring selling and if we continue to drift here without getting above the sown trend line in the S&P, I think we'll eventually head lower. We've got options expiration week coming up and the continued risk of a headline event. I do not anticipate making any trades in the near term. I may go back and take another look at gold here but it is getting short term overbought. However I just had one of my biggest losers to date and perhaps a step or two back would be the prudent path at this juncture. The market won't wait for me to be ready though as the game is unforgiving. I'll check things on the charts over the weekend and go from there. Asia was mixed and Europe higher last night although Europe did finish well off the best levels on the day. It's Friday afternoon and time for a break.
Thursday, April 12, 2018
The Dow was up 293 points today on light volume. The advance/declines were slightly positive. The summation index is trying to move higher. The overall market was weaker than the Dow. Once again we have challenged the resistance at 2670 on the S&P 500 and once again we were turned away. A break above there on good volume would leave no resistance all the way up to 2700. But it just doesn't happen. The NYA is right at its down trend line from the past two and a half months and can not get through. The VIX has rolled back down but we aren't seeing the type of gains that constitute a legitimate rally. On the plus side the TRAN had a good session and perhaps can break above its 50 day moving average. GE was up about twenty cents on average volume. Gold fell back over $20 on the futures as the US dollar was a bit higher. The XAU and GDX had fractional losses on lighter volume. Mentally I'm feeling a bit tired, did not sleep well. I will most likely be dumping my SPY April calls tomorrow unless we see some kind of rip roaring 500 point rally. I doubt that will happen. This trade will be a big loser regardless. Six days left in the April option cycle and I don't see myself making another trade in the next week or so. My guess is that the sideways price action will probably continue. We're still at the mercy of headline risk, so there is no need to put money to work immediately. Earnings are coming up and although they're expected to be good there's always the possibility that the market will be more concerned with the guidance going forward. The game is always a challenge. I suppose we'll finish out the week tomorrow and take it from there. Asia was lower and Europe higher in last nights trading action. We'll see how things go on Friday.