Friday, August 17, 2018
We got some upside follow through to yesterdays gains as the Dow added 110 points on light volume. The advance/declines were 2 to 1 positive. This should the summation index back up. The rally is mostly in the Dow for now. I'm keeping an eye on RUT as it hasn't broken out above 1700 with volume yet. The S&P 500 is once again challenging new all time highs. It may get there next week if the rally continues. The VIX is back below its 50 day moving average. The market made quite a comeback during a turbulent week. It seems to be saying that we're poised to move higher. I do still have my open order out there for the SPY September puts. I think that if RUT breaks out to the upside I will have to cancel that trade. GE was unchanged on light volume. Gold was up $6 as the US dollar was lower. The XAU rose 1 2/3, while GDX gained 1/2. Volume was pretty heavy. Most likely short covering in my opinion because I can't see any reason why anyone would be interested in gold after the beating it has taken. I don't know, maybe some bottom fishing but the fact remains that the seasonal strength has been nowhere to be found in gold. Mentally I'm feeling OK. We made it through option expiration today and we're on to the September cycle. An extra week thrown in there for September so the premiums are high. The market was resilient this week considering all the negative headline news. The S&P 500 seems poised to set a new all time high at some point next week. If it does start to break out here we'll need to see some volume to confirm the move up. But it hasn't happened yet and headlines from the weekend could turn things around back down again. There's plenty of questions without answers at the moment. It's been a busy summer and I suppose that won't change here in the last two weeks of August. I'll go over the charts as usual this weekend to try to decipher what I think is going on. I do believe that new highs in the S&P are coming up soon. After that, I just don't know. Asia was generally higher and Europe slightly lower to close out the week. It's Friday afternoon and time for a break.
Thursday, August 16, 2018
Quite a move higher today as the Dow soared 396 points on light volume. The advance/declines were 3 to 1 positive. The summation index is trying to turn back up. The overall market was higher but not as much as the Dow. Earnings drove things higher today but the underlying overseas issues remain. I still have my open order for the SPY September puts out there but we'll need to see more rally for it to get filled. Volatility has definitely increased this week as there are no summer doldrums to be found. I am thinking that yesterday was a temporary washout to the downside and now we will once again make an attempt at new all time highs for the S&P 500. That's my take on things at the moment. GE was up eight cents and the volume was average. Gold lost a few bucks on the futures and the US dollar was a bit lower as well. The XAU lost 1 3/4, while GDX dropped 3/8. Volume remains good here as the gold shares have been annihilated. Theses issues are so oversold it is as if they are going to zero. My GDX September call trade is dead. Mentally I'm feeling OK. One day left for option expiration week and it feels like this week has been two. But that's the way it feels when volatility rears its head. The bulls and bears are fighting it out here and I'm still in the camp that the bears will win out here. Ideally things will set up to get the SPY September puts at some point next week. I don't know why the gold shares are so weak here because the metal itself hasn't dropped as much. Yes, we've broken through $1200 on gold but the percentage move in the gold shares versus gold is out of whack. I'd like to see a bounce and I'm sure we'll get one but I certainly don't know when. Asia was a bit lower but Europe scored gains overnight. We'll close out a tumultuous week tomorrow.
Wednesday, August 15, 2018
Turkey fears again today as the Dow lost 137 points on good volume. The advance/declines were 2 to 1 negative. The overall market was weaker than the Dow. Make no mistake that we're heading lower and that rallies can be shorted. We did finish up from the worst levels of the day but there should be no doubt which way the market is headed. The VIX jumped above 16 today before falling back to its 200 day moving average. I guess that I can still hope for a bounce at some point but we all know hope is not a trading strategy. It appears that I've missed the chance for the SPY September puts here. The media has yet to jump on the downside bandwagon. That alone tells me that there's more to come. GE was off another 1/8 on average volume. Gold got sold off again, the futures lost almost twenty bucks. The US dollar had a slight gain. The XAU fell 4 2/3, while GDX dropped 1 1/8. Volume was extremely heavy. It's a bloodbath for the gold shares. These issues are so oversold that you can expect a pretty good snap back rally soon. It won't amount to a change in trend but it may give me a chance to exit my GDX September call trade without a complete loss. The seasonality for gold didn't show up this year, in fact it was the exact opposite. Mentally I'm feeling OK. So where do we go from here. Sooner or later, down. The gold sell off could be the result of margin calls around the world in addition to the rise in the US dollar. I do not see the upward trend in the dollar turning around anytime soon. The safe haven factor there along with rising rates in the US make the dollar the place to be for now. A rising dollar is not good for US multinational companies, which would keep a lid on the stock market. Throw in the trade tariff factor and the fundamentals right now are not bullish for stocks. If these factors start to affect earnings, then you can see where all this is going. Technically the short term indicators have rolled over and are not all the way oversold yet. So I will simply have to wait to see if we get some kind of bounce to position myself in the September option period. But as I've said, it may already be too late. Europe and Asia were lower overnight. We'll see what tomorrow brings.
Tuesday, August 14, 2018
A bounce back up today as the Dow rose 112 points on light volume. The advance/declines were better than 2 to 1 positive. The summation index is still moving down. A pause in the decline or are we heading back to attempt new all time highs again? That is the question that will be answered in the coming days. There's still problems in Turkey so don't expect that issue to just disappear. The short term technical indicators for the major averages are trying to turn around. The VIX closed back below its 200 day moving average. I did leave my open order for the SPY September puts out there. RUT had a good day and I'm keeping an eye on that. If RUT breaks to a new all time high, I'll probably take off the SPY trade. RUT has had a two month consolidation and if it can significantly break above 1700 it would bode well for the overall market. Hasn't happened yet but it is something to watch. GE was off another dime on about average volume. Gold rose a couple bucks as the US dollar continues higher. The XAU fell 7/8, while GDX lost almost 1/4. Volume was average. The gold shares are completely washed out. The oversold readings have lasted for weeks. It is a bloodbath for these shares. My GDX September calls are dead. Mentally I'm feeling OK. Option expiration week is upon us and I would normally expect the usual positive bias but we do have the troubles in Turkey to contend with. The market is susceptible to headline risk at the moment even more so than usual. I suppose what I'd really like to do is let this week pass and go from there. There is an extra week in the September option cycle so the premiums remain high. Even if we did make a nominal new all time high in the S&P, I think that we are going to see some seasonal downside in the September period. Of course I also expected some seasonal upside for gold and we've seen how that worked out. Asia was mixed overnight while Europe was little changed. We'll keep an eye on the overnight trading headlines.
Monday, August 13, 2018
Continuing lower today as the Dow fell 125 points on light volume. The advance/declines were almost 2 to 1 negative. The summation index is heading lower. Rallies from here can and will be sold. It already looks like it's too late for the SPY puts. The VIX closed above its 200 day moving average and that's another sign of what I believe is to come. The overall market was not as low as the Dow but don't let that fool you. I'm not sure exactly how far we'll go down but it should be a lot lower than here. Next months puts are already pricey but I do think that they will work. GE lost 1/3 on average volume. It broke to new fresh lows. Gold got pummeled despite the trouble overseas. That is a sure sign of weakness. The futures lost $18 and closed at $1200. The US dollar finished little changed. The XAU fell 2 1/4, while GDX shed 5/8. Volume was extremely heavy. Perhaps this is the final blowout to the downside. Or maybe not. The positive seasonality for gold is nowhere to be found this year. My GDX September calls are dead. Mentally I'm feeling OK. The market is still focused on the problems in Turkey. This too will pass. The short term technical indicators for the major stock indexes have rolled over. We are seeing selling worldwide and that is to be expected. I don't know if we've gotten to the margin call stage yet. But we've definitely seen the flight to safety trade with the US dollar and US treasuries. Did not see it in gold though, just the opposite there. I do not know what that means except that when things start to head lower, as is the case with gold right now, they usually go further than you think. It will create opportunity but I have already taken my shot there and will now look for other trades. I'll still try the SPY September puts if I get the chance. Europe and Asia sold off last night. We'll see how things go tomorrow.
Friday, August 10, 2018
Headline risk reared its ugly head today and the Dow fell 196 points on light volume. The advance/declines were 2 to 1 negative. The summation index is now heading lower. Trouble in Turkey as its currency is losing its value rapidly. It is a repeat of the Greek fiasco from early last year. The trouble in Turkey had been on the market radar recently but today was the day the market decided to react. I don't know if this puts a cap on the stock market or if it is just a passing fad that will go away next week. We'll have to see how it all plays out. The short term technical indicators have now rolled over o it may be too late for the SPY puts. I am leaving my open order out there though. GE was off over 1/8 and volume picked up a little. Gold finished the day flat despite a huge run higher in the US dollar. The flight to safety is on for the dollar but not for gold. The XAU and GDX had fractional losses on average volume. Seasonality with its usual positive bias has yet to show up for gold. Mentally I'm feeling OK. The summer doldrums came to an abrupt halt today. They didn't last long anyway and have been hard to find this year. My idea of new all time highs before the expiration in a week seems to be out the window as well. The VIX has now spiked over 13. This tells me that the run we just had into the tens for the VIX will be short lived and is probably over. My hope is that the market sees some kind of final rally attempt next week before we roll over for good here. But that roll over process might have started today and the puts will remain pricey form here on out. I can't say for sure what will happen. The coming days will tell the story. If we just keep moving lower it's possible that my original thesis of the high being in place from January could prove correct. If we move back to new all time highs, then that thesis was wrong. If we somehow do make a nominal new all time high, there still could be a double top in place on the S&P and a rollover still might happen. Right now we'll just have to keep an eye on what happens over the weekend and see how the market reacts to events on Monday. I do not think that the problems in Turkey are going to bring the market down with it but I could be wrong. It may lead to bigger troubles down the road. I'll simply keep an eye on things and hope there will be a spot for me to get those SPY September puts. Europe and Asia were lower to close out the week. It's Friday afternoon and time for a break.
Thursday, August 09, 2018
We drifted around for much of the session and then fell towards the close. The Dow lost 74 points on light volume. The advance/declines were basically even. The overall market did not drop as much as the Dow. The summation index continues sideways. Today had the feel of the summer doldrums as has the week so far. I'm still looking for some upside into the expiration next week. We are working off the short term overbought condition of the market before we head higher is my prognosis at the moment. The small stocks are acting better than the big caps and the VIX remains low. I am keeping my open order out there for the SPY September puts. However I will probably adjust it as we move forward. The S&P 500 remains within striking distance of a new all time high. Hasn't happened yet and it's what comes after that if it does for the key to where we're heading. GE was off 1/8 and the volume remains light. Gold dropped a couple bucks on the futures as the US dollar moved higher. The XAU and GDX closed slightly lower but well off of the highs for the day. The dollar looks to be breaking out above its recent consolidation and that should spell more trouble for gold. Mentally I'm feeling a bit tired, did not sleep well. My GDX September call trade is a big loser. Without a stop loss order in place after the trade was filled was the mistake made here. I did not anticipate that the gold shares would simply remain oversold for weeks on end. But that does not excuse the lousy trading tactics of not using the stop loss. That is my fault alone. but it's been that kind of trading year for me so far. The stock market has been weaker at the end of the day for the past couple of sessions. To me that isn't a bullish sign. However I do think that we'll at least make another attempt at a new all time high in the S&P during the upcoming expiration week. That would give me the opportunity to try the September puts if all goes according to plan. The market rarely cooperates though. Europe and Asia were generally higher overnight. We'll close out the trading week tomorrow.