Monday, February 08, 2016
Just another crazy day in the markets as the Dow fell 178 points on very heavy volume. The advance/declines were 4 to 1 negative. This should turn the summation index back lower. It could have been worse as at one point we were off 400 points. Only a last hour comeback saved the day this time. We are short term oversold on some of the indicators but not all of them. I did place an order for some SPY February calls but later canceled it. I'm looking for a bounce trade here but probably missed it today. Obviously there is something going on under the surface that I am not privy to. GE was off just over 1/3 on lighter volume. Still in a trading range here. Gold soared during the session as the futures were up over $30, which also included the aftermarket rise on Friday. The US dollar was lower today. The XAU was up 1 1/2, while GDX added 3/8. Volume was good here again. However the gold shares finished well off of their highs and it looks like this run upwards is over. I could be wrong but the technical indicators are blown out to the upside and there is only one way to go from there. Mentally I'm feeling OK. I still may try a bounce trade this week if we head back down. My guess is that we got some short covering late today. My guess is the underlying problem here for the market lies in debt. The banks are getting crushed here and I believe that they are holding a lot of what will be worthless oil and gas paper. That's my theory for today. But that doesn't explain the drop in the small stocks and the tech shares. It could be a case of selling whatever you have to meet margin calls. This is all speculation on my part. The only real question is where is the market going and how can I make some profit from it. A bit more downside would put the short term technicals in a better spot to try something long. But there is no guarantee that we just don't keep going down here either. The game is never easy. Plus we have Yellen blabbering for a couple of days on capital hill. Perhaps simply sitting things out here is a more prudent course of action. However if we do get oversold this week before Friday, I am probably going to try the SPY February calls. The European markets plunged last night and I don't see any turnaround there tonight. Parts of Asia are closed this week for a holiday but we'll see how Japan reacts overnight. We'll see what tomorrow brings.
Friday, February 05, 2016
Still moving back and forth here as the Dow fell 211 points on good volume. The advance/declines were 3 to 1 negative. The summation index is still moving up though. The employment report headline number was lighter than anticipated but the market chose to focus on the stronger details. The reaction to the numbers is always more important than the numbers themselves. The overall market was weaker than the Dow and the small stocks got slammed. I expected higher prices today and we got just the opposite. Now I am not sure what to make of things. 1875 or thereabouts has held things for the S&P 500 lately. We are just about there now. The short term technical indicators have rolled over for the most major stock indexes. GE was off 2/3 on good volume. Right back into the trading channel for GE. Gold was up a bit on the futures but soared higher in the aftermarket. The US dollar bounced back today. The XAU rose 2 2/3, while GDX added 7/8. Volume was heavy again. Money is flowing into gold but there is plenty of resistance at 1175-1180. We are almost there. Not to mention a pretty solid down trend line on the weekly chart that spans 2 years at those levels. So the odds favor gold at least taking a breather soon. Mentally I'm feeling OK. 9 days to go in the February option cycle as expiration week is cut short by a day due to the presidents day holiday. The picture is now mixed in my mind for the overall stock market. I will have to check everything over the weekend to be sure. The action in most stocks today was negative and if we take out 1875 on the S&P 500, lower prices will follow. Whatever trades you make here have to be very short term due to the back and forth nature of the environment. I don't see a clear signal right now but that could change after some research in the next couple of days. It is a tougher than usual market to trade right now. Once again the sidelines isn't the worst place to be right now. But you don't make any money there. Perhaps 1875 will hold things up for the S&P but that would be a guess and not really supported by the technicals at the moment. There's plenty of work to do over the weekend. There isn't much economic data next week until retail sales on Friday. I'll try and relax for the next couple of days and be ready for next week. Right now it's time for a break.
Thursday, February 04, 2016
More bouncing around today as the Dow rose 80 points on good volume. The advance/declines were positive. The summation index continues higher. Oil is still a topic but it was lower and the stock market higher. However the Dow was stronger than the overall market and that is not a plus. But on the plus side, the TRAN soared and that could bode well for tomorrow. I don't have any idea how the employment report will be received or what it will say. The market reaction will be the key. I still think this market is going higher. GE was up 1/2 on good volume and is once again trying to break out of the top of its trading range. If GE is a precursor, then tomorrow should be an up session or stocks. Gold was up another $15 on the futures and is now above $1150. Another good drop in the US dollar today. Perhaps the dollar is telling us to look out for a weak jobs report tomorrow. The XAU was up 2 1/2, while GDX gained 3/4. Volume was heavy again. Price and volume tell the story and that means that the rise in the gold shares is for real. That said, the short term technical indicators here are extremely overbought and a pause is overdue. Mentally I'm feeling OK. The major stock indices are short term overbought but that doesn't mean that they can't continue that way for a while. I still do not have a decent signal to trade off of though. If we see some decline, I'd be willing to attempt the SPY February calls. But time is running out and there will be only 9 trading days left in the February option cycle after tomorrow. So we'll see. The signs today are pointing towards higher prices tomorrow but the market as usual will go where it wants. I've remained patient so far so there is no reason to rush into a trade here. Foreign markets were mixed overnight but leaning to the positive side. All eyes on the employment report tomorrow.
Wednesday, February 03, 2016
Up, down and all around as volatility ruled the day. The Dow finished up 183 points on heavy volume. The advance/declines were positive. The small stocks were lower on the day though. The summation index is still heading up. Not sure what to make of todays action except that is almost impossible to trade off of it. We were off almost 200 points early on and then bounced around before coming all the way back and then some. Perhaps this morning was the chance to get some SPY February calls but it was impossible to know that at the time. There is no clear technical signal at the moment. Oil made a comeback and that market is gyrating out of control as well. So the market atmosphere is turbulent to say the least. Fridays jobs report should provide some more excitement. GE was up 3/8 and the volume was average. Still in a trading range here. Gold found buyers as the futures here rose $15. The US dollar got crushed today for its worst session in quite some time. The XAU soared 3 3/4, while GDX gained over a point. Volume was very heavy. Oil and gold rose in tandem for a change. Overbought for gold and the gold shares now. Mentally I'm feeling a bit tired. Trying to figure out exactly what is going on here is a headache. Today could have been the day to buy the index calls but the short term technical indicators are still overbought. I am still trying to remain patient and wait for a decent signal. It seems the trading is becoming more compressed and is traveling at a speed that is not matching up with my techniques. Or perhaps I am simply not up to the task at the moment. The Dow was much stringer than the overall market today and that is not a plus. Oil and currencies are bouncing around violently. The environment is pretty tricky right here and now. There is nothing wrong with heading to the sidelines until things sort themselves out. We'll see how things go overnight and tomorrow as the markets set up for Fridays employment report.
Tuesday, February 02, 2016
Lower today as the Dow shed 295 points on average volume. The advance/declines were 4 to 1 negative. The summation index is still moving higher. We are right at the short term rising trend line for most major stock indices. What happens next will be the key as to if we will get a chance for a SPY February call trade. If the line doesn't hold we can wait for an oversold signal to get long. The short term technical indicators here have begun to roll over. I'm still a believer in the calls at some point here. But I don't want to be early. If the short term line holds then this idea is off. GE was off 3/8 and the volume was average for lately. Gold and the US dollar ended the day basically flat on the session. The XAU was down 1 1/8, while GDX dropped 1/3. Volume picked up to the downside. I think that the gold shares simply followed the overall market lower. Mentally I'm not 100% as I had to go to the dentist and have a tooth pulled today. Needless to say, that is a distraction. But as always, the market doesn't care. I don't think that today is the beginning of anything big to the downside. I am going to try and remain patient for a good signal to try the SPY calls. If for some reason things fall apart here, then my prognosis on things here is wrong. There is still plenty of time in the February option cycle for things to get short term oversold and a call trade to be put on. Obviously we did not see any beginning of the month money flows today. Foreign markets were generally lower yesterday. It seems as though oil is back on center stage for some reason. We'll see how long that lasts.
Monday, February 01, 2016
A day to digest the huge gains of Friday as the Dow was off 17 points on light volume. The advance/declines were barely negative. The summation index is moving higher. The trend is up. Any declines can be bought. If we get some weakness this week perhaps the SPY February calls will be back in play. The employment report on Friday will be the focus for the week. Plenty of time left in the February option cycle but we will have to wait for a solid set up. GE was down almost 1/2 on lighter volume. We're still in a range here of 28-29. Sideways for a while now and that is the problem sometimes when trading the GE options. Gold was up $13 on the futures as the US dollar fell back today. The XAU rose 1 3/8, while GDX gained around 1/3. Volume was light. Todays gains were probably a reflection of the weaker dollar. That's my guess at least because nothing has changed when it comes to gold. Mentally I'm feeling OK. I suppose that I'll keep an eye on things ahead of Friday to see if anything interesting develops. The short term technical indicators for the major indices are now overbought. But I don't think there is some big decline coming up. With the turnaround in the summation index, the market has the all clear for higher prices going forward. The weekly charts are looking bullish, with plenty of room to move up on the technicals. We will simply have to wait and see if we get enough pullback in order to get long before the February expiration. That is the idea at the moment. We'll keep an eye on the overnight developments and go from there.
Friday, January 29, 2016
Markets around the world rallied on a surprise easing move by the Japanese. The Dow took off like a rocket and did not look back. It climbed almost 400 points on very heavy volume. The advance/declines were 8 to 1 positive. The summation index has turned around. All signs point to higher prices. Todays GDP report was pushed into the background. There was no retest of the recent low and the SPY February calls were the right trade. Unfortunately the premiums never made it back to where I was comfortable to purchase them. Another missed opportunity. We still have three weeks in the February option cycle but the best time has passed. I do not think that we'll get another decent set up but you never know. Declines can be bought. GE rallied as well, up 7/8 on good volume. Just above $29 now as it tries to break through the $28-$29 channel that it has been in. Gold was up a couple bucks on the futures despite a huge rise in the US dollar. The XAU up another 1 1/4, while GDX added 1/3. Volume was lighter today. Mentally I'm feeling frustrated once again as I have missed out on this good move higher. The day we went down 600 intra-day was the opportunity to be aware of. Perhaps my busy schedule the prior week had me not at the top of my game. But there are no excuses in this endeavor. The market doesn't care as usual. The short term technical indicators are overbought but not by much. There is no overhead resistance until we get to 2000 on the S&P 500. So perhaps there will be a trade before expiration but the ideal time has passed. We should be positive early next week with beginning of the month money flows. Maybe a SPY put trade will present itself but it will be against the tide now. Plenty to think about over the weekend and I'll have to try and regroup. At least my ideas are back on the right track at the moment. I'll check all the charts and try and come up with something for next week. For now it's Friday afternoon and time for a break.