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Monday, May 04, 2015

Trying to push higher as the Dow added 46 points on light volume.  The advance/declines were positive.  We did come off the highs of the session.  The summation index is still heading lower.  I don't have a good grasp on what is going on right now.  The small stocks did lead the way up and perhaps now they are leading the way down.  I do not have any SPY trades in mind for right now.  I wish there was a clear signal on what to do but there isn't.  GE was off a few cents and closed below its high as well.  Volume was light.  I'm looking out to the June or July calls.  Gold was up $12 on the futures and the US dollar was higher today as well.  However the XAU and GDX only had slight fractional gains.  Volume was very light.  Gold and the gold shares have not correlated well lately.  Mentally I'm feeling OK.  Not a lot of time left in the May option cycle.  I suppose if there is a set up in front of the employment report, I may be able to do a trade.  But that remains to be seen.  I am not sure if the light volume rally we've seen since Thursday is a chance to get your puts or something else.  So I'll have to sit on the sidelines for now.  Sometimes you simply have to be patient but we'll see how things shape up before Friday.  The volume in gold has tapered off so perhaps the interest that we saw has waned.  That's a guess as usual.  We'll follow the overnight developments and go from there. 

Friday, May 01, 2015

The market stormed back to the upside today as the Dow gained 183 points on lighter volume.  The advance/declines were positive but not as much as an up 183 market would suggest.  Beginning of the month money flows perhaps?  Do we begin another assault on new all time highs from here or was today a bounce for you to get short?  That is the question and at this time I don't have an answer.  You can make a case either way.  The summation index is heading lower, so I don't think that the weakness is over.  The small stocks are not leading the way here as well.  But it could be that the big caps will lead the way higher, which happens towards the end of extended rallies.  Obviously I don't have a clear idea of what is occurring at the moment.  GE was up 1/4 but the volume was lighter.  I'm still constructive on GE but I need to time the next trade properly.  I'll try and wait for an oversold condition.  Not there yet.  Gold was off about $8 on the futures as the US dollar had a bounce.  The gold shares continue their out performance as both the XAU and GDX had small fractional gains.  Volume was light.  I'll wait for a decline here before trying any trades in the gold shares.  We are still in a seasonally weak period for gold.  The gold shares have bucked that trend.  Mentally I'm feeling OK.  The month of May has started out on a positive note for the major stock indices.  The TRAN had a very good day and that could bode well going forward.  We'll have to see if there is any follow through on Monday.  I do not have any SPY trade ideas right now.  Perhaps the weekend chart studying will turn something up.  The continued strength in the gold shares despite the drop in the precious metal is confusing.  However the market always knows more than we do.  It's something to keep an eye on.  The market had plenty to digest this week and we'll get more data coming up including the employment report in a week.  I'll be looking for a technical signal to initiate a position but I don't see one now.  Plenty to ponder over the weekend.  For now it's Friday afternoon and time for a break.

Thursday, April 30, 2015

To the downside on heavy volume to close out the month of April.  The Dow fell 195 points and was negative all day long.  The advance/declines were 3 to 1 negative.  This will turn the summation index lower.  The TRAN and the small stocks got whacked.  It looks like lower prices are in the near future.  The small stocks have broken the uptrend line from last October.  I'd expect the larger cap issues to follow.  So look for more selling.  GE only lost a penny on good volume.  That is excellent relative strength.  I still like the June calls or perhaps July if we move down to $26-$26.50.  No hurry with a defensive overall market.  Gold got clobbered and fell over $25 on the futures despite a drop in the US dollar.  I do not understand the disconnect with these two markets at the moment.  The XAU dropped 1 7/8, while GDX shed about 2/3.  Volume was good.  The gold shares have once again held up rather well despite the drop in gold.  We'll see how we close out the week here tomorrow.  Mentally I'm feeling OK.  It appears a decent decline is starting and it looks like I missed it.  Perhaps I was too focused on ABX.  More likely my prognosis for higher prices was just wrong.  No money lost at least.  Two weeks to go in the May option cycle after tomorrow.  Perhaps if we get short term oversold, I could try a bounce trade.  However it looks like the trend has changed.  GLD and SLV had gaps to the downside.  That doesn't bode well for the precious metals.  GG came out with earnings and they disappointed.  So trading the long side in the gold shares right now probably isn't a good idea.  The European markets stopped going down yesterday.  We'll see how they react to todays US decline overnight.  We'll close out the trading week tomorrow.

Wednesday, April 29, 2015

An interesting session as the Dow fell 74 points on heavy volume.  The advance/declines were 2 to 1 negative.  The GDP report was weak and the market responded with a sell off.  The Fed was viewed as slightly hawkish but we bounced around after that.  The TRAN and the small stocks remained weak and that isn't bullish.  Some of the foreign markets were very weak, so I guess we held up OK for today.  The technical indicators have rolled over for the small stocks and are just beginning to for the larger cap averages.  I suppose I'll have to change my bullish stance to cautious for now.  GE was off a few cents and the volume was average.  I'm still considering the June calls here when GE gets oversold.  Gold had an interesting day as well.  The futures were down a few bucks despite the US dollar getting crushed again.  That did not make sense to me.  The futures fell a bit more after the Fed but it wasn't a rout.  The gold shares fared much better as the XAU rose about 2/3 and GDX about 1/4.  Volume was good.  ABX added about 20 cents on good volume.  I sold my ABX calls after the Fed for a small 15% gain.  The timing was bad but at least it wasn't a loss.  ABX recovered for the rest of the session.  I do not usually do well with short term option trades and this was no exception.  Back to the drawing board.  Mentally I'm doing OK.  The Dow held up OK considering the drops we saw overseas.  I do not have any SPY trades in mind for now but if a decent signal appears before the May expiration, I may give it a try.  It appears that the market is trying to make up its mind which way to go here.  We haven't really had a sustained move one way or the other for a while.  I'm on the sidelines for now.  The action in the gold shares today ended up positive considering the decline in gold.  I may had sold the ABX May calls early.  Make no mistake.  You do not put in the time and the effort to trade options for a 15% gain.  You are really looking at 100% or more gains to take on the risk in that game.  I was late to try this trade and attempted to trade the break out.  It still looks like ABX has broken out but it hasn't been what I expected yet.  I'll simply have to wait for the next idea to come with the gold shares.  GG reports earnings tomorrow.  We'll keep an eye on the overnight developments and see if the Dow follows through to the downside to close out the month. 

Tuesday, April 28, 2015

Back to the upside today as the Dow rose 72 points on average volume.  The advance/declines were positive.  The summation index is heading sideways at this time.  We did sell off early and then come all the way back for a one day reversal to the upside.  The action was the opposite of yesterday.  Most major stock indices made a comeback today but the NASDAQ didn't make it into positive territory.  Tomorrow will be interesting with the 1st quarter GDP early and then the Fed later in the day.  I'm not sure which way we'll go but I still have to lean towards bullish outcomes for now.  GE was up 1/4 on average volume.  It looks as though we have put in a hammer here on the daily candlestick chart.  That bodes well for higher prices here.  Gold followed through to the upside on US dollar weakness.  The precious metal futures added another $10 to yesterdays stellar gains.  Could the traders here think that we'll get a weak GDP report followed by a dovish Fed?  Or is there something else behind the recent strength?  The XAU was up 2 3/8, while GDX gained 3/4.  Volume was good again showing that the gold shares are receiving some interest here.  The earnings for ABX were weaker than expected but it rallied anyway.  ABX gained 1/2 on good volume and closed above $13.  Some of the technical indicators for ABX are pretty extended in overbought territory.  My ABX May calls are showing a small profit.  I probably should get rid of them sooner rather than later.  Mentally I'm feeling OK.  Nothing to do now with respect to the stock market except wait to see the reaction to tomorrows developments.  The sideways summation index tells you that things can go either way.  The technicals are in the overbought zone but that doesn't mean it can't stay that way.  So we'll see.  Gold has had a couple of good days in a row and the indicators have roared back to the upside.  It's possible that gold is telling us what to expect tomorrow.  We'll know in less than 24 hours.  As usual we'll watch the overnight action and then see what tomorrow brings.

Monday, April 27, 2015

A one day reversal to the downside as the Dow opened higher and closed lower.  The Dow fell 42 points on average volume.  The advance/declines were negative.  The overall market was weaker than the Dow.  The TRAN and the small stocks were weak today and that is not a positive.  The major stock indices have been short term overbought and weakness is overdue.  I don't think this is the beginning of some type of extended decline.  We've got GDP and the Fed on Wednesday and that should be an interesting day.  I would not be surprised if we see more downside this week.  GE was up slightly on average volume.  I'm still considering the June calls here but will wait for GE to get oversold before purchase.  Gold had a good day as the futures rose $28.  The US dollar was weaker as well.  Not sure where the above average strength in gold came from.  The XAU rose 1 3/4 and GDX added 3/8.  Volume was good for the gold shares but we finished well off of the highs for the session.  ABX broke above $13 on heavy volume so I put in an order for the May calls in case it pulled back.  It did and the order was filled.  Unfortunately for me, ABX kept moving lower.  It finished the day up 1/4 on heavy volume.  Perhaps it was a false break out.  The May calls I bought are already losers.  Earnings are out for ABX tomorrow morning.  That will probably make or break this trade.  Mentally I'm feeling OK.  One day doesn't make a trend but it wasn't a good start to the week for stocks.  We'll have to see how the summation index looks after todays price action.  If that rolls over, we could be in for more than a couple days of weakness.  I don't expect any surprises from the Fed.  Gold and silver moved up pretty good today.  Not even close to overbought for these two.  However it could just be a one day wonder.  Time will tell on that.  I may have made a mistake with this ABX May call trade.  It certainly looked like a valid break out to the upside.  Tomorrows earnings will tell the story there.  We'll keep an eye on the foreign markets overnight and see what happens tomorrow.

Friday, April 24, 2015

The drift higher continues as the Dow tacked on another 21 points on average volume.  The advance/declines were about even.  The NASDAQ is now setting new all time highs and the response is a yawn.  That is bullish.  The small stocks continue to out perform and things won't get all that bearish under these conditions in my view.  We are due for a rest though as the short term overbought condition for the major stock indices is getting long in the tooth.  I don't see any huge declines coming though.  GE was off a few cents and the volume was light.  Not oversold here yet.  The plan remains to get some GE June calls when it gets oversold.  Gold got walloped today and fell almost $20 on the futures.  The US dollar was lower as well.  The XAU only dropped 2/3 and GDX shed 3/8.  Volume was light.  The gold share indexes were helped by the positive earnings report from NEM.  FCX was higher today as well.  I'm now thinking that perhaps some ABX calls before its earnings report could be a trade.  NEM benefited from its cost cutting plan and ABX has a similar course of action.  Something to ponder over the weekend.  Mentally I'm feeling OK.  Declines can be bought in my opinion for the major stock indices.  I don't see anything near term to derail the upside.  The advance/decline line continues to make new highs.  we've got the Fed meeting next week but I don't see any surprises coming from that.  The first quarter GDP number will probably be the biggest market mover.  But that's a guess as usual.  The gold shares holding up in the face of the declining metal is a positive for them.  That kind of out performance usually leads to higher gold share prices.  However we are not completely oversold on the gold shares and I don't want to jump the gun.  This is also not a seasonally strong period for gold.  So there is plenty to consider before putting on a trade here.  It never gets easy.  I'll be checking the charts over the weekend and trying to come up with something that seems reasonable to attempt.  For now it's Friday afternoon and time for a break.