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Monday, October 05, 2015

The market took off to the upside today as the Dow gained 304 points on heavy volume.  The advance/declines were over 7 to 1 positive.  The summation index is moving higher.  A double bottom is in place for all the major stock indices.  Declines can be bought in my opinion.  The S&P 500 has broken through the downtrend line that began in August.  That doesn't mean that we will move straight up but it does mean that the tide has turned.  Short term overbought now for the stock indices but we could stay that way.  I would expect some weakness at some point this week but I think that buyers will be waiting.  That's a guess as usual.  I sold my SPY October calls this morning for a 65% gain.  Should have held them longer.  GE led the way higher as there was positive news on the stock.  It gained 1 1/3 on extremely heavy volume.  GE was a precursor for the overall market this time around.  The time for the November calls has passed and I missed it.  Perhaps if it gets oversold before the November expiration the calls can be purchased.  Gold was off just a bit on the futures as the US dollar was slightly higher on the session.  The gold shares were higher though, as the XAU rose 2 1/3 and GDX was up 2/3.  Volume was good again here.  The gold shares are showing better relative strength here and that's a positive.  Mentally I'm feeling OK.  Out of the SPY trade now.  Both the entry and exit were not good on that trade.  I really should have realized that today was going to be strong, given the change of direction in the summation index.  But you have to move on.  I may try the calls here again before expiration if we get some weakness into early next week.  The next technical expectation from here for the S&P 500 would be some type of move back towards the downtrend line that was just broken.  If that does occur, then trying to calls during expiration week may be worth the risk.  As usual, the market will go where it wants.  Barring some unforeseen catastrophe though, we're heading higher.  Gold remains in the background and uninteresting.  I think that the gold shares simply followed the overall market higher.  Time will tell if it's a sustained uptrend or not.  It is possible that a bottom is in place here though.  We'll see if the foreign markets follow the Dow higher overnight.

Friday, October 02, 2015

Today was a one day reversal to the upside as the Dow opened 250 points lower only to turn around and finish the day up 200.  Quite a ride.  The advance/declines were almost 3 to 1 positive and the volume was heavy.  Today should turn the summation index back up.  The employment report was weak, which was met with selling.  But things turned around and we closed on the high of the session.  That's bullish.  I'll go out on a limb and declare this decline over.  A double bottom is in place and declines can be bought.  The potential positive RSI divergence has panned out to be valid.  Now of course things can change on a dime in this game but the odds are we've seen the lows for this move.  My October SPY calls are now in the black.  GE turned around as well and gained 1/4 on good volume.  It appears that it is going to be too late to try the November calls there unless I move to a higher strike price.  Not sure that I want to do that.  Gold rallied on the weaker data as the futures here rose over twenty bucks.  The US dollar was slightly lower.  The XAU gained 3 7/8, while GDX rose over a point.  Volume was heavy.  Perhaps we'll see more upside for gold but there hasn't been a sustained rally here for months.  Mentally I'm feeling OK.  Getting short term overbought already on some daily indicators for the major stock indices.  Upside on Monday would take us there.  The S&P 500 is just getting through the daily chart downtrend line that began in August.  Although I would like to hold the SPY October calls that I have for a longer time, getting out on any strength Monday might be the prudent path.  I've held onto this trade longer than anticipated already.  But I am pretty sure the stock indexes are going only higher from here.  The weekly candlestick charts look bullish now as well, with plenty of room to the upside for the technical indicators.  Today was a pretty good short squeeze on the bears.  So there will be plenty to think about over the weekend.  Gold had a nice move higher but we haven't seen any rally hold up here for a while.  Until we get through the $1150 level on good volume, the yellow metal appears to be stuck in a trading range.  I'll be checking the charts out over the weekend to come up with some sort of game plan for next week.  For now it's Friday afternoon and time for a break.

Thursday, October 01, 2015

A mixed picture today as the Dow fell 12 points on good volume.  The advance/declines were barely negative.  The overall market was stronger than the Dow.  We did come off of lower levels during the day and that's a positive.  The summation index is still heading lower but not as strongly as before.  The positive divergences that we saw earlier in the week may be valid.  It will all depend on the market reaction to the employment report tomorrow.  I still have the SPY October calls and they are still showing a loss.  GE was off a few cents on good volume.  We came back from lower levels here as well.  Gold was off a couple bucks on the futures and the US dollar was slightly lower.  The XAU was off a point and GDX lost 1/3.  Volume was average.  No interest in gold and that has been the story there for a while.  Mentally I'm feeling OK.  There are potential double bottoms on the daily charts for the major stock indices.  If we are up tomorrow that would strengthen the double bottom scenario.  I certainly don't know which way we will go.  If we do move higher, resistance for the S&P 500 remains at the 1945 level.  That is where the downtrend line is from the end of August.  If we do get there, I should probably dump the SPY October calls for whatever they're worth.  I do not expect to get through that line on the first attempt.  Of course we could just roll over tomorrow and make new lows as well.  So tomorrow is another important day for the stock market.  I am however, encouraged by todays price action.  So we'll see.  The foreign markets were mixed last night.  We'll await Fridays jobs report and close out the week tomorrow.

Wednesday, September 30, 2015

The bounce appeared on schedule as the Dow rose 235 points on heavy volume.  The advance/declines were 3 to 1 positive.  The summation index is still heading lower.  There is a potential bullish candlestick pattern on the daily S&P 500 chart.  We have reached the short term downtrend line for the S&P 500.  I'd expect things to stall tomorrow ahead of the jobs report on Friday.  I didn't sell my SPY October calls.  I suppose that I'll wait for Friday and see what that brings.  If the potential bullish RSI divergences are real, then this trade has a chance to actually turn a profit.  It is still showing a loss.  GE was up 2/3 and the volume was good.  Hopefully GE is leading the way here.  Might be too late for the November calls though.  Gold fell another $7 today as the US dollar was higher.  The XAU and GDX were both higher today.  That's the first time in a while that we have seen the gold shares out perform the metal itself.  But that doesn't mean that it will continue.  Volume was average there.  Mentally I'm feeling OK.  So can the market move higher more than 2 days in a row?  That hasn't happened in over a month.  Like I said before, tomorrow should be a wait and see session.  With the summation index still moving down, caution is probably the best advice.  The potential for a bottom to be in place is there but it is potential and not fact.  If we can get through the short term downtrend line for the S&P, the next resistance is at 1945.  But things could head back down tomorrow and negate any positive action that we've seen.  That is the environment that we are in.  The trend is still down until proven otherwise.  I'm still holding the SPY October calls but I am trying not to let that affect my view of the market.  Not an easy thing for me to do.  We'll begin the 4th quarter and the month of October tomorrow.  The foreign markets were positive yesterday and we'll see if we get any upside follow through tonight.

Tuesday, September 29, 2015

Let me just say that the market is in dire straits here and has to hold on or it will fall apart.  The Dow came back in the last half hour and finished with a gain of 47 points on good volume.  The advance/declines were negative though and the small stocks continue lower.  The summation index is dropping as well.  We are short term oversold and the technical indicators pretty much guarantee a big up day tomorrow.  But there are no guarantees in this business.  I do think that we will see a triple digit move higher tomorrow.  After that, who knows?  The breakdown in the RUT is a very negative sign.  I should probably dump my SPY October calls tomorrow if we bounce and take the loss.  GE was up 1/4 on good volume.  Perhaps GE will once again be a precursor for the overall market.  Gold was off $5 on the futures and the US dollar was a bit lower as well.  The XAU and GDX had slight fractional gains on very light volume.  Still no interest in the gold shares.  Mentally I'm feeling OK.  The stock market has a decidedly bearish tone to it and just about anything can happen in the coming days.  The big cap averages are trying to hold the most recent lows but with the breakdown in the small stocks, it appears that lower prices overall are just a matter of time.  To me, tomorrow will be one of the most important sessions we've had in some time.  It is the end of the month, so some selling is to be expected.  But if we don't have the strong up session that I am anticipating, then watch out below.  There is a potential positive divergence in the RSI with regards to the daily charts of the major stock indices.  However is has yet to be seen if it is valid.  That is about the only hope for the bulls here.  My SPY October call trade will most likely be a loser.  So hold onto your seats as tomorrow will be an interesting day.  We'll watch the foreign markets tonight and go from there. 

Monday, September 28, 2015

The market got clobbered today for no apparent reason.  The Dow lost 312 points on heavy volume.  The advance/declines were 8 to 1 negative.  The summation index is heading lower.  The small stocks are leading the rout.  Once again there is something going on underneath the scenes that I have no knowledge of.  How low we go is again something that I do not know.  My work says that there will be a decent rise tomorrow or Wednesday.  But from what level?  Oversold and staying there for the major stock indices.  My SPY October calls are now solidly in the red.  This is now a cut the loss trade.  The gain that I had here on Friday evaporated rather quickly.  Even with plenty of time for these options, I think getting out sooner rather than later is a good idea.  GE was off almost 2/3 on good volume.  It looks like I'll get a chance to purchase some November calls here.  But now do I want them?  Gold fell about $12 on the futures and the US dollar was a bit lower as well.  No flight to safety for gold.  Nothing seems to be able to rally the precious metals.  Perhaps todays market action was another margin call around the world.  That's a guess as usual.  The XAU fell 2 2/3, while GDX dropped 2/3.  Volume was good.  No trades here for now.  Mentally I'm feeling OK.  Confused as to what's going on here.  The RUT has now made lower lows and it appears that things could completely fall apart here.  The summation index has turned around and did not make it though the zero line when it was heading up.  The poor seasonal time frame doesn't help things either.  I do see some type of bounce higher in the next 2 days.  If that were not to happen, things would really turn ugly.  There is something happening out there that reminds me of the trouble back in 2008.  Perhaps we'll find out in the days to come just what kind of bad news surprise is out there.  Until then we have to stick with the technical indicators and they say that we are oversold.  The problem is when there is some unknown factor out there driving things, the technical don't matter.  We'll have to see how the foreign markets hold up overnight and brace for whatever happens tomorrow.

Friday, September 25, 2015

A mixed session to be sure as the Dow gained 113 points on good volume.  The advance/declines were slightly negative.  The overall market was weaker, with the small stocks leading the way down.  That is not a good sign.  At one point the Dow was up 250 points but could not hold the gains.  Volatility returned and not in a good way for the bulls.  My SPY October calls had a 50% gain at one point but now are simply slightly higher.  It didn't look like a good rally with the NASDAQ under performing in the morning.  Perhaps I just wasn't nimble enough.  If we can get through Monday, I think we'll see some upside after that for a couple of days.  GE was flat on the session and the volume was good.  I still like the November calls here.  Gold shed $8 on the futures as the US dollar had a slight loss as well.  The XAU and GDX had slight fractional losses on light volume.  No trades here for now.  Mentally I'm feeling OK.  Yellens speech didn't yield much in the way of market moving content.  I'm sticking with the technicals as usual.  The summation index has rolled over again.  That is not a positive for calls.  The small stocks got clocked today and that isn't bullish either.  We are short term oversold for the major stock indices, which is one thing in the bulls camp.  But in down markets we can stay oversold.  Plus the negative seasonal factor for stocks is still in place.  I should probably be out of this SPY October call trade by Wednesday.  However it is Monday that will probably present a problem if we really start to head lower.  Plenty of nervousness out there for whatever reason.  I think that the most that I can hope for now is a short covering rally.  And good luck with that.  What looked like a bullish candlestick yesterday on the S&P 500 daily chart hasn't been negated yet.  But we'll need to see some sustained upside in a hurry for that to work out.  So there's plenty to think about when checking the charts out over the weekend.  For now it's Friday afternoon and time for a break.