Thursday, March 26, 2015
Continuing to the downside although we did close above the lows of the day. The Dow fell 40 points on average volume. The advance/declines were negative. The summation index is heading lower. The S&P 500 is now below the 50 day moving average. Another negative session and we'll be short term oversold. We will have to see how the market finishes the week tomorrow to determine if a SPY April call trade is the right choice. I do not have a good feel for what is going on at the moment. GE was off 1/8 on light volume. Short term oversold here so I didn't sell the GE April calls today, expecting some kind of bounce in the next couple of days. This trade will probably be a loser though. It is now a matter of cutting the loss. Gold was up $7 on the futures in a flight to safety. The US dollar rallied on that same premise. Gold was up much higher in the session and closed well off of the highs. The gold shares lagged as the XAU fell 1 1/8 and GDX shed 1/3. Volume picked up a bit. ABX lost a few cents and was off of its highs as well. I sold the ABX April calls that I had for a 65% gain. Todays price action was negative and there is a chance that I will buy these back at a lower price in the days ahead. Maybe. Mentally I'm feeling OK. Perhaps the stock indexes can hang in here or perhaps not. That is the situation that we find ourselves in at this juncture. If the Dow and S&P 500 can hold these levels, there will be a chance that the SPY April calls will work. I think I will be waiting until next week to try anything though. If we drop hard again tomorrow, then this idea is off the table. The weekly chart for GE looks negative here. It's possible that I'll just dump that trade tomorrow as well. They can't all be winners. Gold had an interesting day as the volume picked up but it couldn't hold onto all the gains. The fact that the gold shares under performed isn't a positive. The dollar looks like it's putting in a short term bottom as well. Maybe I sold The ABX calls too soon but it really doesn't matter now. The market moves on. We'll close out the week tomorrow.
Wednesday, March 25, 2015
Heading lower and picking up steam as the Dow fell 292 points on average volume. The advance/declines were about 3 to 1 negative. I must admit that I don't have a handle on what's going on here. We are already at the level on the S&P 500 that I thought would hold. But it doesn't look like that is going to happen. The short term technical indicators have rolled over for the major stock indices. They are not oversold yet. We also closed on the low for the day and that is bearish. The small stocks got crushed as well. The summation index should now be heading lower. So we'll see what happens but my bullish stance looking for new highs is in question. GE took a hit as well. It lost 1/3 on average volume. I considered selling my GE April calls for a loss today. Maybe I'll have to do that tomorrow. Unless we see a complete turnaround tomorrow, this trade is dead. Gold was up $5 on the futures as the US dollar fell again. The XAU lost a point and GDX fell 1/4 as the gold shares followed stocks lower. ABX was flat on the session and the volume was average. This trade is still showing a profit. Mentally I'm feeling OK. What I think that I'm seeing here is a lack of buying. There is no catalyst to own stocks after the push from the Fed announcement. The action in TRAN looks bearish as it approaches its 200 day moving average. If that doesn't hold then the look of things would change significantly. Both the Dow and the S&P 500 are at the uptrend lines that began last October. A break tomorrow would not be a good sign. So things need to be watched closely here. The GE April call trade probably needs to be sold tomorrow. I cannot afford to spend the mental capital on a slow moving, losing trade. It should have been sold today. Gold has had a nice bounce. But with the gold shares showing poor relative strength the past couple of days, it isn't exactly a bullish scenario. ABX held up today but tomorrow, who knows? We'll see if the overseas markets tank tonight as well. Tomorrow will be an important session.
Tuesday, March 24, 2015
A drift lower today as the Dow fell 105 points on light volume. The advance/declines were negative. There is no catalyst for higher prices at the moment. I don't think that this is the start of any sustained downside but I've been wrong before. Perhaps if we get back to the 50 day moving average, the SPY April calls will be worth the risk. However for now I'd advise a patient approach. We've just started the April option cycle and there isn't any good signal one way or the other yet. GE fell almost 1/4 on very light volume. My GE April calls are losers and if GE keeps going down, this trade will not work. GE also closed on the low for the day and that's not a good sign for the bulls. Gold had a slight gain on the futures as did the US dollar. The XAU and GDX had slight fractional losses. ABX was off a few cents on light volume as well. There's a chance that the recent rally in the gold shares is stalling here. Whether it's a consolidation before heading higher or the end remains to be seen. Mentally I'm feeling OK. The daily candlestick chart for the S&P 500 has a bearish pattern at the moment. It implies lower prices in the near term. The 50 day moving average and the uptrend line from last autumn at 2065-2060 should provide support. If we get there, that will be the place to try the SPY April calls. That's my hypothesis at the moment. If the market does fall now, the GE trade will be a loser. Gold probably needs a pause here and a snap back to the recent broken downtrend line would be the next technical expectation. The question is whether to hold onto the ABX calls or not. Something to ponder tonight. We'll keep an eye on the overseas markets tonight to see if they follow the US lower.
Monday, March 23, 2015
We begin the week with a one day reversal to the downside as the Dow opened higher and closed lower. It wasn't much though as the Dow fell 11 points on light volume. The advance/declines were positive. The market dropped in the last half hour to turn negative on the day. The summation index should still be moving up. I am looking at SPY April calls. Timing of the purchase will be key as always. Not a lot of data out this week. The short term technical indicators for the major stock indices are also overbought. So patience is probably a good idea at this point. GE was up 9 cents but finished well off of its highs. The daily candlestick chart isn't looking all that bullish. My GE April calls are slightly in the red. I think GE needs to get going this week or this trade will be looking like a loser. Gold was up a few bucks on the futures as the US dollar took another hit. The XAU gained 1 1/2, while GDX rose 1/3. Volume was light here. ABX was up 1/3 with little volume as well. The April calls I have here are in the black. The short term technicals here still have room to go higher. Perhaps this trade will work out. Mentally I'm feeling OK. It was really a ho-hum session today until the final half hour. No real news and the expiration hangover effect that sometimes occurs. I would not be surprised if we don't see much movement this week. That's a guess as usual. Looking forward, next week we get the employment on a day the market is closed. That should be interesting. End of the month next week as well. For now I'll have to sit tight and wait for the next signal to trade the SPY. GE is not getting any traction to the upside and that won't help my April options there. Gold is getting a bounce and we've gotten through the near term downtrend line on a daily basis. There should be a bit more room to the upside here. We'll keep an eye on the foreign markets overnight and see what tomorrow brings.
Friday, March 20, 2015
We closed out the week on a positive note as the Dow gained 168 points. The advance/declines were 4 to 1 positive and the volume was expiration heavy. Todays action should turn the summation index back to the upside. RUT is breaking out. If we can get TRAN to get above its recent highs, I think a decent rally will take place. But it hasn't happened yet. It was a good week for equities though and we'll see if we can build on it next week. Many of the major averages are on the cusp of new all time highs. GE was up a few cents on OK volume. My GE April calls are showing a slight loss. I'm not so sure that this trade was a good idea. Gold climbed $15 on the futures as the US dollar got whacked again. It was an interesting week for the dollar. Very volatile with wide swings. That sometimes happens at the end of a move. So perhaps the dollar rally will take a rest here. That could be supportive for gold. The XAU was up 2 points and GDX gained 2/3. Volume was light though. ABX was up 1/4 on average volume. One of the technical indicators here is overextended and says ABX is due for a rest. My ABX April calls have a small profit. I suppose I'll be holding them longer than expected. Mentally I'm feeling OK. Not a lot of economic data out next week and we have the Fed out of the way for now. I'm not sure what to expect next week but a grind higher would not be a bad thing. If the summation index can get moving to the upside, I'll become a lot more positive on the market. The short term technicals are getting close to overbought and the recent move higher has been very choppy. We'll keep an eye on things. GE needs to get going on the upside or my trade there will be a loser. Gold broke through a near term downtrend line today that has been in place since the start of the year. That is a positive. But it hasn't proved that this is the beginning of a multi-week rally yet. I did notice some volume coming into the gold shares. So perhaps there is a little interest for now. Follow through upside next week would be a good sign. Plenty of charts to look at over the weekend. For now it's Friday afternoon on the first day of spring. Time for a break.
Thursday, March 19, 2015
No upside follow through as the Dow fell 117 points on light volume. The advance/declines were 2 to 1 negative. The market has been alternating between up and down for the past week and a half. If that holds true, tomorrow will be an up day. However the lack of a positive day today is a negative. On the plus side the small stocks closed higher and the overall market dropped less than the Dow. But I think that I am starting to lose a handle on what is going on at the moment. GE was off 1/3 and the volume was good. I did place an order for some GE April calls overnight but did not expect it to get filled. It did and I now own them. However the daily chart for GE doesn't look all that bullish. And unless we close higher tomorrow, the weekly chart won't look all that good either. This has the feel of a mistake. But we'll see. Gold was up $17 on the futures but that was what we gained yesterday in the aftermarket. The dollar roared back to the upside and that is not bullish for the precious metal. The XAU and GDX had slight fractional losses on lighter volume. ABX was off 8 cents on light volume. My ABX April calls are still in the black. I'll decide whether to dump them after the price action tomorrow. Mentally I'm feeling OK. I was looking for new all times highs in the major stock indices but perhaps we will continue to see sideways action. You can make a case that we have been trending sideways since last December. The summation index did turn back yesterday but todays price action will probably turn it back down again. The market is making up its mind. Gold didn't have any follow through to the upside either and remains in the background. But we did see volume yesterday and that is a plus. I wouldn't be surprised for gold to do nothing in the near term either. There remains no interest here. My ABX call trade could be a mistake as well. We'll watch the foreign markets overnight and close out the week with option expiration tomorrow.
Wednesday, March 18, 2015
It was a one day reversal to the upside as the Dow opened lower and closed higher. The most watched index gained 227 points on heavy volume. The advance/declines were 5 to 1 positive. We were down well over 100 points during the session and then the Fed came to the rescue. We expected volatility and market movement after the Feds game of words and we got it. If I had any confidence I would have purchased some SPY calls during the morning. But that is just another opportunity lost. I'd expect to see some upside follow through tomorrow. Option expiration on Friday. GE went along for the ride and was up 1/3 on OK volume. I finally sold my GE March calls. I was lucky to get a 50% profit as this was another mismanaged trade. I may move to the GE April calls next because the weekly charts still show room to move higher. Gold rallied off of the Fed as well. The futures had a slight gain in the regular session but went up $15 in the aftermarket. The US dollar got crushed and continues to drop in the aftermarket as well. It lost almost 2 points. Parabolic moves never end well, if this is indeed the end. The XAU gained 3 1/8 and GDX rose 7/8. Volume was good. ABX gained 2/3 on good volume. My ABX April calls are in the black. Now the question becomes whether to hold on to this trade or simply get out as originally planned. The game is never easy. Mentally I'm feeling OK. Well the desired outcome appeared from the Fed and the markets responded as expected. But where do we go from here? My guess is that we are once again headed for new all time highs. April calls are in order I believe. The question is when do we purchase them? There will most likely be a slow holiday shortened week in the April cycle. But we will first have to see how far things run up into the Friday expiration. The technical indicators for the gold shares have just turned up. So there may be room for higher prices over a longer time period here. But the fundamentals for gold are still negative. However the way the volume came in for these issues today tells me that this may just be the beginning of a counter trend move higher. We'll see. I'm going to have to think about this tonight. We'll see if the overseas markets follow the Dow higher and if the bid for gold remains.