Thursday, April 18, 2019
We finished the trading week with a gain of 110 points for the Dow on about average volume. The advance/declines were about even. The summation index is heading sideways. The overall market was much weaker than the Dow with the small stocks barely moving. We're still short term overbought. The market has basically been moving sideways for the past couple of weeks. The VIX remains low. I think the market is trying to figure out if it's going to roll over or burst out to new all time highs for the S&P. I'm in the latter camp as the seasonality favors more gains. Not to mention that we've had plenty of chances to drop in the past couple of weeks but it just hasn't happened. GE was up 1/4 on light volume. Gold was flat but the US dollar had a pretty good gain on the day. The XAU fell another point, while GDX dropped 1/3. Volume remains a bit above average to the downside. My GDX May calls are losers and that was figured out soon after I bought them. Oversold here still and no moving up and that's bearish. I do still like this idea though and will move to a lower strike price and try again next week. That is the game plan at the moment. We did break the 21.5 support today for GDX. However there is major support at the 21 level from the 50 and 200 day moving averages combined with the up trend lines from the middle of last year on a closing and intra-day basis. Now if we simply bust through 21, all bets are off and the decline will be much lower. I'm willing to take another shot at the calls at 21. Mentally I'm feeling a bit distracted with outside of the market events taking up space in my mind. Nothing serious but still some distractions. So I'm in another losing trade but there isn't much money in it so it isn't that painful. But it's looking like a loss anyway. Perhaps the gold shares are not where I should be looking but the technicals do say to take a look at the long side here. We'll have to see how things go next week. The technical indicators have rolled over for RUT and that could be a problem for the overall market because RUT is usually a leader. But things could turn around there too. The market always goes where it wants to. There's an extra day off this weekend and I think I'll take a break from things for a couple of days and then decide what to do next week. Earnings really haven't moved things yet but that could change. The noise out of Washington today was a non market event again. Asia was lower and Europe was higher overnight. It's Thursday afternoon and time to take a break.
Wednesday, April 17, 2019
Another day of just milling around as the Dow lost 3 points on average volume. The advance/declines were negative. The summation index is trending sideways. A lackluster expiration week so far and tomorrow should be no exception. Traders will probably be leaving early for a long holiday weekend. RUT was lower today and could potentially have a double top in place. All the major stock indices remain short term overbought. I did expect some type of rally this week but all we've gotten is a light volume sideways affair. Perhaps everyone is already on vacation. GE was off a couple cents on light volume. Gold was flat on the day and the US dollar finished little changed as well. The XAU and GDX had fractional losses on average volume. My GDX May calls are in the red as my entry time wasn't good. Today GDX hit 21.5 and that is the line in the sand for the sideways consolidation. Today would have been a better day to purchase the calls. We are now short term oversold on GDX. If we do break 21.5, the next support is at 21. I may have to sell this trade and take the loss now because if we go down to 21 the trade will not make it back. It looks like I'm early here and the 21 level would be the next logical spot to take a chance on the calls. However if the sideways consolidation holds up, then the trade has a chance to work. It is all probabilities and timing. Mentally I'm feeling OK. We'll get some noise out of Washington tomorrow, not sure how or if it will affect stocks. I'm now of the opinion that it's been a pretty muted option expiration week with no fireworks this time around. Let's just get through tomorrow and then be back at it next week. Europe and Asia were generally higher overnight. We'll keep an eye on the overnight developments.
Tuesday, April 16, 2019
A day of bouncing around for the major stock averages as the Dow finished with a gain of 68 points on light volume. The advance/declines were slightly positive. The summation index is starting to track sideways. We had a gap up at the open, then spent the rest of the day selling off before a pop up in the final half hour. I'm not sure what to make of todays price action as we are not seeing the usual positive expiration week bias. Perhaps the short trading week has something to do with that. However we are still short term overbought and remain in that technical condition. With only two days left in the April option cycle, there won't be any SPY trades for me here. GE was up over 1/8 on average volume. Gold sold off today as the futures lost $13 and closed below the important level of $1280. The US dollar was slightly higher. The XAU dropped 1 1/3, while GDX shed 3/8. Volume was shy of average. I did place an order for the GDX May calls overnight. I canceled it this morning but then replaced it and it got filled. I think that may have been a mistake because I could be early on this trade. We did get back below 22 on GDX but we may have to get down to 21.5 before support kicks in. Tomorrow may tell the story here because if we do continue lower my fears will be realized. However if we stay in the channel that is in place at the moment, GDX should rise tomorrow. But the break below $1280 on gold could be telling although silver did not follow lower. Mentally I'm feeling OK. So I'm in the next trade and there's plenty of time for it to work if the timing is correct. That's a big if as usual. The stock indices continue to trend sideways for the past few trading sessions. My thesis of new all time highs for the S&P 500 has been put on hold for now. The VIX continues lower and the risk of a huge sell off here is minimal in my view. It appears that this week is a yawner and things should pick up after the holiday weekend. Of course that could all change tomorrow but the trading appears muted at best here. Europe and Asia markets were both higher overnight as money continues to flow in to stocks around the globe. We'll see how things go tomorrow.
Monday, April 15, 2019
The market tried to sell off today but could not as the Dow fell 27 points on light volume. The advance/declines were slightly negative. The summation index is grinding higher. I still think that we're going higher here and may be tempted to try a very short term SPY April call trade if we get some weakness tomorrow. Overbought, staying that way and we've seen this all before. A short, holiday driven options expiration week. I think much of the action will take place in the next two days and then the traders will hit the road on Thursday. It's the beginning of earnings season and the numbers have been reduced so much that whatever is reported will probably look good. We'll see. GE lost a couple cents on average volume. Gold lost a few bucks and the US dollar was flat. The XAU and GDX climbed off of their lows back to about break even for the day. Volume was light. Not completely oversold here yet but I'm thinking of placing the order for the May GDX calls anyway. Mentally I'm a bit distracted as I have medical issues to deal with again. Nothing serious like the last time but a distraction none the less. The VIX is oversold but shows no signs of wanting to move higher. The small stocks have been overbought since the beginning of April but I don't see any let up there either. News due out of Washington on Thursday but I'm not sure if it will affect stocks. There's a case to made to sitting on the sidelines until next week as well. I'll figure out what I want to do tonight. Asia was mixed and Europe higher in last nights trade. We'll keep an eye on the overnight developments.
Friday, April 12, 2019
To the upside for the Dow as it gained 269 points on average volume. The advance/declines were almost 2 to 1 positive. The summation index is moving forward. The bank earnings were acceptable and today is the prelude for option expiration week. The Dow was stronger than the overall market as DIS jumped 10%. Volume picked up today from what its been and new all time highs for the S&P 500 could come as early as next week in my humble opinion. Of course the SPY April calls would make money as we thought they would. Perhaps I should have simply paid up for them yesterday. At least the ideas are heading in the right direction. GE was off 1/8 on average volume. Gold was up a couple bucks on the futures as the US dollar was lower. The XAU and GDX had slight fractional losses on very light volume. I'm looking at the GDX May calls now and hoping GDX trades back below 22 again. Mentally I'm feeling OK. Overbought, staying there and we've seen this picture before. I'm looking for some upside follow through on Monday and then we'll see what happens from there. Short trading week ahead as Friday is a holiday. I'm guessing most things for the week will be wrapped up by the close on Wednesday. There's nothing that doesn't say we can simply plod higher through expiration week. It now looks like my next trade will be in the gold shares. But I'll have to look thing over this weekend to be sure. Another trade missed this week but that seems to be the story so far this year. Perhaps last years losses are still weighing on the decision making. However the markets will keep moving and they certainly don't care. Europe and Asia were higher as money around the world is finding a home in stocks. It's Friday afternoon and time for a break.
Thursday, April 11, 2019
Another day of hanging around as the Dow fell 14 points on light volume. The advance/declines were slightly positive. The summation index is tracking sideways. I did have an order in for the SPY April calls but it wasn't filled. I decided not to chase it. If we have some weakness tomorrow morning I may give it another try. Otherwise I'll just have to wait for a better set up. Still short term overbought for the major stock indices. Running out of time in the April option cycle. I guess we'll take a look at the bank earnings and go from there. GE lost a few cents on light volume. Gold got drubbed and the futures fell almost twenty bucks. The US dollar was higher. The XAU shed another point, while GDX lost 1/3. Volume picked up to the downside and that is bearish for the gold shares. Perhaps the GDX May calls will be the next trade. Mentally I'm feeling OK. I would sure like to try the SPY calls here because like I've said before, we've seen this picture time and time again. Basically sideways for the S&P 500 the past three days as the market decides which way to go. With option expiration week almost upon us, we know the usual answer will be higher for prices in the near term. I perhaps should have chased things today but tomorrows open will tell the story. If it's higher I'll just have to sit things out. If it's lower, then I may have a chance at a trade. So we'll see. Nothing to do but wait for now. Asia was generally lower and Europe higher overnight. Brexit has now been postponed until Halloween. That whole situation is really a joke but at least it hasn't really affected the day to day market action. We'll close out the week tomorrow.
Wednesday, April 10, 2019
The Dow managed a gain of 6 points on light volume. The advance/declines were almost 3 to 1 positive. The summation index is now in a sideways trend. The advance/declines reversed themselves from yesterday. We are still short term overbought for the S&P 500. I wanted to see weakness going into the close tomorrow but today negated that. I am still considering the SPY April calls though because we've seen the same picture before over and over again approaching option expiration. The positive bias takes over and the market simply keeps going up despite the overbought technical conditions. The overall market was much stronger than the Dow again and the small stocks are leading the way. I'll be looking for some weakness tomorrow to purchase the SPY calls. GE was off a few cents on what now passes for average volume. Gold was up a couple of bucks on the futures as the US dollar was a bit lower. The XAU fell a point, while GDX lost about 1/4. Volume was light. Mentally I'm feeling OK. Light volume seems to be the tone of the market these days. It has the potential to be dangerous in both directions. Six days to go in the April option cycle as next week Friday is a holiday. Bank earnings due this Friday and I'd like to be positioned ahead of that. I'll be the first to admit that it's risky to try something here but I probably will on market weakness for the SPY calls. Like I already said, we've seen this picture some many times before that it's about time to cash in on it. So tomorrow has the potential to be a trading day. Asia was slightly lower and Europe slightly higher in last nights trade. We'll see what tomorrow brings.