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Friday, February 29, 2008

Just like that things can change. The Dow got clobbered today, off 315 points. Advance/declines were about 7 to 1 negative and the volume increased. I did not expect a sharp drop and had thought we would move higher. Things have changed, for whatever reasons. We are at the bottom of the consolidation rectangle and it appears we will break out to the downside. The summation index will be going down after todays action. It may be time for the OEX puts after all. Because if we do break down here, it will get ugly. Gold was higher to $975 and a new record. The dollar continues lower and there is a flight to safety on days like today. However the gold shares followed the overall market with the XAU down 6 1/4. ABX, GG and NEM were all off around 1 1/2 on average volume. I'll need to look at things over the weekend. GE lost 2/3 on good volume. That one may break down here as well. Mentally I'm feeling OK but concerned about todays action. There are a number of scenarios that can play out. Choosing the correct one is the challenge. Identifying opportunities and taking advantage of them is the name of the game. Was today an end of the month affair or something bigger? Monday should be interesting. At this point I'm considering getting short any strength. But we'll see. It's the weekend and time for a break in the action. All charts must be checked and we'll go from there.

Thursday, February 28, 2008

A down day after 4 days on the upside. The Dow lost 112 points on average volume. Advance/declines were 2 to 1 negative. The beginning of something big to the downside? Who knows but I don't think that's about to happen just yet. Big Ben was still yakking on the hill and mentioned some banks might fail but not the big ones. Perhaps we should have been down more with such dire language from the Fed. Plenty of time in the option cycle so there is no hurry at the moment to enter any OEX trades. I think we'll trend higher from here. After that, then the opportunities arrive in my opinion. Gold was up another $6 and continues higher in the after market. The XAU rose 5 points. ABX, GG and NEM all up over a buck on average volume. We are moving straight up in gold as the dollar moves straight down. It won't go on forever but there is no telling when it will end. The buy signal in gold was generated a few weeks ago and took longer then usual to manifest itself. I'll try to remember that next time around. GE was off a little on light volume. This stock is going nowhere fast. Great if you're an option writer there. Mentally I'm a bit tired, did not sleep well. So it's a waiting game for some type of signal or the levels I explained yesterday to arrive. It's not always easy to sit on the sidelines but you can't always be looking to force things. For now I'll have to be patient and get ready for the next move.

Wednesday, February 27, 2008

Big Ben was yapping today as the Dow managed a 9 point gain. Advance/declines were negative and the volume was average. The NASDAQ was up and the S&P 500 was down. A holding pattern. What more can Bernanke say? It's slow or no growth with higher inflation. The real story is the credit crisis with a bunch of bad loans around the world. But he can't say that. In my opinion the moment of truth comes when we hit 13000 on the Dow, 1420 on the S&P 500 and 660 on the OEX if we get there. I think that is when it will be a good time to get short. But what do I know? Gold was up $12 to a new high at $960. The dollar is hitting new lows. The XAU was up 4 3/4. GG, ABX and NEM were all up around a buck on decent volume. There is where the money could have been made recently. GE was up a touch on light volume. Nothing really going on there lately. INTC just hung around by the close also. I think I will stop monitoring that one. Mentally I doing OK. Slept good enough. We are getting overbought on the indices but my thinking is to wait before buying the puts. Also that strategy may not be the right one anyway. The summation index continues higher. However we are still in a rectangle for the major indices. A consolidation. We will have to break out to the upside of that to hit the targets I previously mentioned unless we just go sideways to the weekly down trend line. That's the thinking at this point. Time will tell.

Tuesday, February 26, 2008

The rally continues with the Dow gaining another 114 points on good volume. Advance/declines were over 2 to 1 positive. We are approaching the 50 day moving average. We are at the top of the consolidation area. The summation index is moving higher. All systems seem to point to higher prices. We are getting overbought. My thinking is that the next trade is a short from the weekly down trend line. I'll have to wait until we get there. But that could change. Gold continues higher as well, up another $8. The XAU tacked on 2 3/4 points. GG, ABX and NEM were all higher. 1 1/2, 1 and 3/4 respectively. GG continues the relative strength. Volume there slowed down a little. GE was off a 1/4 on average volume. Not sure if that will impact the overall up move. INTC had a good day, up about 3/4. Perhaps the selling is done for a while however I think Big Ben is giving a speech tomorrow. That could have an impact one way or the other. Mentally I'm doing OK. Thinking about getting into gold again but this move to the upside is long in the tooth. However there seems to be nothing stopping the up move at this point even though it is way overbought. Perhaps it can last the March option cycle. We'll see. Otherwise patience is warranted at the moment.

Monday, February 25, 2008

The Dow continued the rally as we rose 189 points on light to average volume. Advance/declines were 3 to 1 positive. Is it possible that we have put in a base and will break the sideways action to the upside? Or is this another rally in the ongoing consolidation that has gone nowhere in the past month or so? Time will tell. The summation index should be heading back to the upside with todays action. There is no rush to trade here as we still have plenty of time in the March options. Gold lost $7 in todays trading, however the XAU was up a touch. GG remains the relative strength there. My thinking is that we could go either way here with gold. It is overbought but has had the tendency lately to stay that way. GE was up 2/3 on average volume and that should bode well for the overall market. INTC didn't do much. Mentally I am feeling OK. Trying to remain patient and wait for a decent signal. If I had to guess I'd say we're going higher here. But I don't have the conviction to throw any money at it. Sometimes you just have to wait and see. I really think the trade is buying OEX puts if we rally back to the weekly down trend line. But that is a long way off. For now it's the sidelines and we'll wait for something solid to develop.

Friday, February 22, 2008

We were down most of the day. 100 points or more at times. However in the last half hour we got a powerful rally and the Dow closed up 97 points. Advance/declines were positive after being negative most of the day. The volume was light to average. It's a one day reversal to the upside. My guess is short covering. There wasn't any news to cause it. We were right at the precipice of falling to new closing lows but it didn't happen. Perhaps this will launch us into a decent rally. Time will tell. I'm as confused as the market is here. Sidelines foe the OEX. Gold was off a couple bucks and the XAU dropped about 1/2. The gold shares mimicked the overall market, making a comeback in the last half hour as well. GG was up a touch as it kept its relative strength here. ABX and NEM were both down about 1/2. Volume was nothing special. GE ended down a dime on average volume. It is at its recent lows as is the overall market. INTC lost a 1/2 on expanding volume to the downside. Mentally I'm feeling OK, slept good enough. If we had closed down today we would have been short term oversold. As it stands there is no clear signal one way or the other. We almost broke down today but held on for now. We are moving sideways. Once we get a breakout one way or another, then there will be a chance to attempt a trade. Patience isn't always the choice but it's what must be done now. The weekend is here. Time for a check of the charts and a game plan going forward. The option cycle is now 4 weeks.

Thursday, February 21, 2008

Finally got the expected weakness today with the Dow off 143 point on average volume. Advance/declines were about 3 to 1 negative. It's been an up and down week so far. However we have basically moved sideways and are still searching for some type of trend or direction. No trades in the OEX for now. Gold hit another record high today, up $10. The gold shares were higher early on the earnings but sold off later. The XAU gained a point. GG held up the best on heavy volume, up 1 1/4. ABX was barely higher and NEM was down 1/2. NEM had a loss for the 4th quarter but GG and ABX had great earnings. With gold at a record high and the earnings announced, what is left to move the gold shares higher? The GG calls I was looking at yesterday doubled. GE was down 1/3 on good volume. We are back to the recent low for GE. It needs to hold in here or it will forbode trouble for the overall market in my opinion. INTC opened higher and closed lower. That needs to hang in here also. Mentally I feel OK, got a good nights sleep. I am a bit troubled by not taking the GG trade yesterday. I just didn't have the guts. It's one thing to lose money. That's going to happen. But to not have confidence to take the trade when you see the opportunity is not a good thing. Sure the earnings could have been bad and the stock could have dropped but it didn't. So that's something that I'll have to work on. No data out tomorrow so we'll see where we go. It's possible the summation index turned around to the downside today but it has been trending higher. It's been a tough game lately.

Wednesday, February 20, 2008

A turnaround to the upside today as the Dow gained 90 points. Advance/declines were positive and the volume was average. We were lower early and turned it around. I am surprised as I expected weakness this week. Shows what I know. We are getting medium term overbought. That could last a while, it happens sometimes. I'm on ths sidelines for the OEX until I get a solid signal. Gold was up $8 and is rallying in the aftermarket another $10. The XAU gained 3 1/2. ABX, NEM and GG were all up fractionally on good volume. They all report earnings tomorrow. I almost bought some GG calls today. Gold is breaking out to new highs. I probably should have bought the calls today but I couldn't do it. The gold shares are already overbought and if earnings disappoint there will be weakness. That said they sometimes stay overbought for weeks. It's that kind of move at times. Oil just hit $100 so there is no reason gold can't get to $1000 in the next few weeks. The time to purchase the gold share calls was last Friday. It is always easy to look back. We'll see what happens tomorrow. GE was up a touch on light volume. It isn't doing much. I'm glad I don't have a position there, it would be a waste of effort. Mentally I'm doing as good as can be expected. Plenty of time on the March option cycle and there should be some trading opportunities. Today we got higher inflation data and the Fed minutes. The market moved higher. That may tell you something about where we are going. Or not. We'll see what the gold shares do on the earnings tomorrow. For those keeping track, this was the blogs 1000th post...

Tuesday, February 19, 2008

We started higher and closed lower today. The Dow was up over 100 points and ended the day down 11 points. Advance/declines were positive while volume was average. It isn't a positive when you can't hold the gains. My thinking is that tomorrow will be interesting. Oil closed over $100 today for the first time. We'll see what happens. Gold had a great day, up over $20. The XAU soared 8 3/4. ABX and NEM were both up 2 1/2. The volume wasn't that heavy but there were no sellers. The problem is that the options didn't move much with such big gains due to the time factor and expensive premiums. That said, with earnings on Thursday I still might pick up some calls. The buy signal that had been in effect for weeks is finally taking hold. If we get a little pullback tomorrow I might give it a shot. My thinking is that the overall market might show some weakness on the data out tomorrow and perhaps the gold shares will go with it. GE was flat on light volume. The chart there isn't looking good for the bullish cause. Mentally I'm feeling fine, got a good nights sleep. Again, with so much time left on the options for March, the premiums are very high. Even when the price of the underlying moves in the expected direction, the options don't gain as much as they would normally. You have to take that into consideration when entering the trade. I'm expecting weakness this week and so far we are getting it. So we'll see where we go from here.

Friday, February 15, 2008

Option expiration today as the Dow lost 29 points. Volume was light considering it was expiration. Advance/declines were negative. We were down much more and the overall market did better then the Dow. It's anybodys guess where we go from here. Today it seems like the market wants to go higher but I'm still looking for weakness next week. We'll see. Gold lost around $5 while the XAU was fractionally higher. ABX was up a few cents and NEM lost 60 cents. Volume was nothing special. The gold stocks are oversold and earnings are out next week. I will be looking at them over the long weekend. Perhaps it's time for the calls here. I'm not sure. But there still is the buy signal in effect that hasn't worked yet. GE was flat on average volume. INTC lost 30 cents. No trades there. Mentally I'm feeling OK. A long weekend ahead to prepare for the next week. The charts will need to be checked. I'm looking at the gold shares but again, with an extra week on the option cycle the premiums are high. So we'll see. For now it's time for a break and then back at it on Tuesday.

Thursday, February 14, 2008

It was a downer today as the Dow lost 175 points on light volume. Advance/declines were about 3 to 1 negative. Are the buyers done? Who knows? The expected rally may have come to an end. I would expect tomorrow to be higher but that's a guess for expiration. As I said before next week should be a downer. We'll see. Gold was little changed today and the XAU dropped 2 1/2. ABX was off over a buck on heavy volume again. It would seem people are bailing out of that issue at the moment. NEM was down as was HL. HL postponed the earnings release until next week. Interesting. Delaying the good news? Doubtful but I certainly don't know. There has been a buy signal for the gold shares for a few weeks. Eventually it will pan out. The question is when? Earlier, the buy signal could just be bought and it would work. That isn't happening this time. GE and INTC were both down on light volume. No trades there. Mentally I'm tired but the show must go on. If the market actually turns down here, it could get ugly. If the previous lows don't hold we will be in for trouble. There is an extra week on the March options, so the premiums are very high. There is nothing wrong with preserving your capital. When things are clear and there is a good signal, then you can put the money to work. Patience isn't always easy but it is always necessary.

Wednesday, February 13, 2008

The rally continues as the Dow gains 179 points. Advance/declines were almost 2 to 1 positive and the volume was average. No pullbacks for a chance to get long. And so it goes. Could we get 5 days up in a row? May happen but I will be expecting some weakness next week. That's my guess at the moment. What's next on the trading horizon? Nothing at the moment. Long weekend ahead and extra time on the March option cycle. Patience is required. Not always easy to do. Gold was about unchanged but the XAU was up 2 3/4 following the overall market for a change. Both ABX and NEM were fractionally higher. The volume in ABX expanded at the close, don't know what that's about. HL was upgraded by a firm and gained 5%. That reverses yesterdays action. Earnings tomorrow, should be interesting. INTC and GE were both up on light volume. Mentally I'm a bit tired, did not sleep well. 2 days left in the February option cycle and I'm still considering an OEX call trade if we get some weakness. But I probably will wait for next month to do something. Risk is something that cannot be ignored. There are no solid signals at the moment. It is not always easy to sit it out but that's what must be done sometimes. There is always another option cycle. That said, we'll see what happens.

Tuesday, February 12, 2008

We got the rally today with the Dow gaining 133 points. The advance/declines were positive and the volume was average. We were up over 200 at one point. The last hour we collapsed and then came back in the final 15 minutes. So it wasn't exactly a convincing rally. I was expecting weakness and that would have set up a good OEX call trade. Instead we've got todays action to work with. 3 days before expiration. If we pull back in the next day or so it might set up for an OEX trade. But it won't be easy. Still, I might give it a try but the risk may not be worth it. Gold got hammered today, off over $15. The XAU shed 5 1/2. ABX down 1 3/4 and NEM lost 2 1/4 on average volume. The gold shares were up briefly in the first 5 minutes of trading. When the market continued higher and the gold shares started to drop I was lucky enough to dump the ABX calls for a small profit. That was a trade I probably should of been out of yesterday. But it's easy to look back. HL was up pretty good again in the beginning of the day but closed down. I don't think the earnings will help now. INTC gained 1/4 but the volume is still light there. However perhaps the sellers are gone for now. GE was up 1/3 on light volume, was higher earlier. Mentally I'm a bit disappointed. I should have made more in the ABX trade but you do what you think is right at the time. What really was troubling was while watching that trade it took my attention away from the set up in the OEX. But what can you do? You gotta move on. I don't have any solid deas at the moment with the exception of a very short term OEX trade. We'll see.

Monday, February 11, 2008

We had a one day reversal to the upside today as the Dow was off over 100 points and came back to be up 58. Advance/declines were positive and the volume was Monday light. I'm looking at the OEX calls but they aren't cheap enough for me yet. My thinking is tomorrow could be a down day and that would give me a chance to purchase. Or perhaps the low was today for the near term. I am expecting some kind of rally this week, the timing is the issue. There is still an awful lot of premium in the OEX options with a mere 4 days to go. Gold was up $4 and the XAU gained about 3/4. ABX and NEM were both down fractionally. The ABX calls are still in the black but it's getting late technically. We are short term overbought here and almost at the short term down trend line in the XAU. We would need to break that line for this trade to work at the moment. I don't know if that will happen. And time is of the essence. I might just have to bail out there. Interesting that HL was up almost 5% today and I had given up on it. It has broken the near term down trend line. Earnings on Thursday. Another thing that I noticed today was massive volume on the ABX March 50 calls. The queston is were people buying or writing them? INTC was up 40 cents on light volume. GE was up a touch on light volume also. So really the question is was there enough volume to make this reversal day for real? Time will tell. Mentally I feel somewhat tired, did not sleep well. I'm also a bit apprehensive going into the expiration week. The risks are high and the time is dwindling. March has an extra week on the option cycle so the trading must be now but it can't be haphazard. Summation index still pointing higher. I do think we will get a rally but we need to get through tomorrow first. Whether or not gold comes along is up for debate at this point.

Friday, February 08, 2008

We were lower for most of the day as the Dow lost 65 points on lighter then lately volume. Advance/declines were negative. Certainly a lack of buying interest. That said, we are short term oversold here. I would have liked to have the guts to get long today. Perhaps on Monday after a check of things over the weekend. However at this point there is only a week left on the options and I think Tuesday could be a downer. But it's all just a guess. Gold was up over $12 and well above $900. The XAU gained over 6 points. ABX was up over 1 3/4 while NEM tacked on a buck. The volume was average but not as good as we have seen before. The ABX calls are in the black. I'll have to pick a target over the weekend. I do think the overall market will have a rally at some point next week. Not sure if gold will go along for the ride. I could be wrong. GE lost 40 cents on average volume. GE needs to show some life if the market is going to get going to the upside. INTC gained a little and the volume was light. The NASDAQ was higher today and it could be a precursor for next week. Or not. Mentally I'm feeling OK, slept well. I do want to get some OEX calls next week but the price movement on the options isn't what I'd like. There is so much premium in them that movement in the OEX itself doesn't translate into the same movement in the price of the options. What you do see is a rapid time decay going on as the index moves up and down. So the timing both in and out has to be good or you'll lose money. I could just step aside and that is another possibility. For now it's the weekend and time for a break. Check the charts and get a game plan ready for Monday.

Thursday, February 07, 2008

We were down, up, down and up again. It is that kind of market. The Dow closed up 47 points today on good volume. Advance/declines were positive. I wouldn't mind having some OEX calls here but the premiums are really expensive. Plus this is a market that goes down 300 points out of nowhere. However it could go up 3oo points too. The previous lows are holding for now which is a positive sign for the bulls. Perhaps I'll get some OEX calls tomorrow. We'll see. Gold was up $5 today but the XAU was flat. Still getting a buy signal there. One of two things will happen. Either gold will start to fall or the XAU will start to rise to balance out the signal. Hopefully the XAU starts to rise since I bought some ABX calls today. ABX lost 1/3 on good volume today. NEM was up 1/3. We are oversold on ABX and there is a potetial double bottom in the XAU here. That could all be negated with downside action tomorrow. Gold was higher even with a stronger dollar today. Crosscurrents. However my thinking is that the market will get a rally here and take the gold shares with it. Or not. I had to adjust the order to get filled as nobody wanted to take my original offer. So we'll see. GE was flat on good volume. INTC didn't do much after being down early. Mentally I'm feeling OK, slept OK. I could have waited on the ABX trade but I felt the timing had to be today. The attention that must be given once in a trade is so much more then the preparation for it. It's the nature of the game. There are no short cuts and the work has to be done. Hence, so many failures. Not that preparation isn't important, it certainly is. But when the money is actually out there, as opposed to thinking about it being out there, the intensity picks up. That's why the stop loss orders are important. Don't trade without them.

Wednesday, February 06, 2008

Another 65 points down on the Dow today as we couldn't hold a 100 point early gain. Advance/declines were about 2 to 1 negative on average volume. Will the lows of a couple weeks ago hold? That's the question. I might get long weakness tomorrow or Friday for a short term pop. Gold had a good day, up $14. The XAU could only manage a 1 3/4 gain. It was higher earlier. ABX and NEM both came off their highs and finished positive at least. The volume wasn't strong there as it had been previously. I'd still like to get long the gold shares at some point. There is still a buy signal there but it hasn't worked this time. It will eventually. Perhaps before the earnings on the 21st. Or not. INTC lost about 20 cents. I still want to get some February calls here but the charts don't support it at the moment. Probably best to step aside but I still might give it a shot. GE was unchanged on average volume. No trades there, the weekly down trend line remains intact. Mentally I feel fine, got a good nights sleep. 7 days to go on the February options. Tough call. We could get a buy signal later this week and I think I'd give that a try. But the real trend is down for whatever reasons. Trades must be short term in the OEX to be successful at the moment in my opinion. We'll see what tomorrow brings.

Tuesday, February 05, 2008

What a day as the Dow lost 370 points. Down volume swamped up volume and the advance/declines were 4 to 1 negative. I guess that relieves the overbought condition. Not sure what is going on at this point. I suppose this time we are going to retest the lows. That should be the next stop. Are we in a bear market? It looks like it when we have days like today. Let's face it, major up trend lines have been broken. Sideways is perhaps the best we can hope for at this point. Buying weakness is a short term proposition for now. Gold lost over $15 today and the XAU dropped 7 points. ABX and NEM were both down around a buck and a half. The buy signal for the gold shares remains but the prices are dropping. That is not a good sign. The dollar was pretty strong today and appears to be putting in a bottom. We do have earnings for a lot of the gold shares coming out on 2/21. That should be an interesting day. Forget HL and the earnings play for the February cycle. I looked at it, didn't do anything and now it has broken near term support. GE lost over a buck and the weekly down trend line remains in place. I think I'll leave it alone. INTC lost around 90 cents and I might try the calls here if they get cheap enough. Risky. Mentally I'm doing as well as can be expected. A lot of crosscurrents and of course the game is never easy. I'm going to try and wait for a decent signal in the OEX before placing the next trade. As always, ther is nothing wrong with preservation of capital.

Monday, February 04, 2008

It was a downer today on Wall Street with the Dow off 108 points on light volume. Advance/declines were negative. We were getting short term overbought and today will relieve some of that. I'm still thinking the trend is up but who knows? Summation index heading higher. I don't think that today is the beginning of a big down move. I could be wrong. Gold lost 4 bucks today and the XAU was off over 4 points. However it looks like we are getting close to another buy signal there. ABX down 1 1/2 and NEM down over 2 points. HL off a 1/4. I think we have more to go on the downside with these issues, even with a buy signal approaching. I am going to put buying HL calls before the earnings on the back burner for now. GE lost 80 cents on average volume. Not sure what to do there now. INTC down over 60 cents too. Indecision is where I am at the moment. It's not the place to be for trading. When I have an idea of what to do or get a decent signal, then it will be time to act. Less then 2 weeks on the February option cycle. Mentally I am hesitant here to do anything at the moment. I'm thinking perhaps a run up to a higher spot and then shorting the OEX. Or if we continue to sell off early this week perhaps try the calls. There is no rush to do anything right now. But that will change. Otherwise it's business as usual. On to tomorrow.

Friday, February 01, 2008

Even a bad employment report can't keep this market down as the Dow gains another 93 points on good volume. Advance/declines over 3 to 1 positive. The nation is losing jobs but the market is in bull mode. Which is why it's good to stick to the technicals. The news can be interpreted any way the market wants. We are getting overbought here but declines should be used to get long. However if we keep going straight up we will hit resistance soon and that would be a shorting opportunity. We'll see. Gold lost $15 today and the XAU fell 1 1/2 which wasn't too bad. ABX and NEM were both down on good volume. Have they turned down for now? Don't know. HL didn't do much. I'm thinking about the calls before the earnings in expiration week but I'm not completely sold on the idea anymore. It's possible that the dollar just might be putting in a short term bottom here. That's a guess but if correct it won't be bullish for gold. GE was up over 80 cents on good volume. I was thinking about getting some puts here on GE, short term. We are just about at longer term resisitance on a weekly basis. Will we continue higher and bust through the weekly down trend line? I would think we'd need a pause first since it has been straight up for days now. But I could be wrong. INTC up another 65 cents on OK volume. Just as GE has done, INTC is moving straight up. There hasn't been a chance to get the calls. Will these issues continue on a straight line up? That usually doesn't happen but it could. So caution is warranted at this time. However, if we are up in the beginning of next week, I'm going to look to go the other way. That's the thought at the moment. I'll have to check things out over the weekend. Mentally I'm feeling OK, slept well enough. The market would have been up even higher if MSFT had not put in a buyout for YHOO and lost 2 bucks. You get the feeling that all the sellers are out at the moment. There is no more selling the bad news. The high volume reversal last week remains valid. Time for the weekend and a break.