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Sunday, February 27, 2011

Just a quick update from last week. The stock indices sold off but it doesn't look like there was any major damage. GE held its uptrend line that has been in place for weeks. Gold is at a breakout point to the upside at resistance, however the resistance could hold. NEM sold off sharply last week but GG continued higher. The US dollar is back to around the important number of 77. If it breaks down, gold should move through the resistance. We'll see.

Tuesday, February 22, 2011

The stock indices finally took a hit today as the Dow lost 178 points on average volume. Advance/declines were over 6 to 1 negative. It was the biggest one day loss in quite a while. Now I ask you, what was different today than from last Friday? The Middle East uprisings have been going on for weeks. We've been overbought for weeks. Then why wait for today to have a sell off? Oh, Friday was the expiration of the February options. Gotta make those calls good for everybody that held them. So now we are into the March option cycle. Interesting? Do yourself a favor and don't ever forget the kind of game that you're playing here. GE fell around 60 cents on good volume. Almost back to the uptrend line from the end of November. I have to sit it out here though. Gold on the futures was off $6 after being up $20 yesterday. The XAU fell 3 1/4. ABX, GG and NEM had fractional moves one way or the other on average volume. I'd look to the April option cycle there for the calls. But that's a guess as usual. Mentally I'm spent as I'm dealing with issues far away from the markets. Can't say when the next post will be.

Friday, February 18, 2011

Rally is all this market knows as the Dow gained 73 points on expiration Friday. Advance/declines were positive and the volume was average. The overall market was not as strong as the Dow. It's been a great run since the lows of last September with the S&P 500 up about 30%. I could continue on about how overbought we are but I've just about beaten that to death. You just have to find ways to get long and stay with it. Until something changes, that is the game plan. GE lost a touch on light volume again. Nothing doing there. Gold was up a few bucks and the XAU dropped an 1/8. ABX was up 3/4, GG up 1/3 while NEM fell 1/2. Volume picked up a bit here today. The dollar was weaker by about 1/3. 77 is the key level to watch in the US dollar. If we fall through there with volume than the dollar will have broken a key yearly uptrend line. That would propel gold to new highs in my opinion. There's no doubt that the gold shares are overbought here. But as we've seen with the stock indices, things can remain overbought for quite some time. Another factor for gold here is that the month of March is a seasonal weak period for the precious metal. I may look to get some April gold share calls if we see some weakness in the next few weeks. But that may not happen. Mentally I'm doing OK. Actually my mind hasn't been as focused as it needs to be to be successful trading. That is why I have shied away from making any trades recently. I have a family emergency that I must attend to next week and thereafter. I will not be watching the market every day like I normally do. I will also be without Internet access at times as I travel away from my trading base. The daily blog posts will not be as detailed and there will be days where there are no posts at all. The game is hard enough when you can give it the proper attention. It can become virtually impossible if you can't. Thankfully this is something that I've already learned. If you cannot devote the time and effort needed to be successful in the game it is better to stay on the sidelines. That goes double when you are dealing with extreme emotional issues involving loved ones. These situations do not happen often but they do occur. And it works both ways. You can be in such euphoria that it will affect your trading outlook and just as well be depressed with the same trading consequences. Your mental outlook needs to be on an even keel. Your emotions need to be in check. Your trading results depend on your ability to think in a clear rational manner. That probably won't be possible for me in the near term. I'll write the blog when I get a chance but I can't really say how often that will be. One thing for sure is that the markets certainly don't care about me or my situation. It helps to actually know that. The game will always be available when you're ready to give it the needed attention. But for now it's a Friday afternoon before an extended holiday weekend. Time for a break.

Thursday, February 17, 2011

Onward and upward as the Dow gained another 30 points today on light volume. Advance/declines were around 2 to 1 positive. The song remains the same. Overbought, staying there and no changes in sight. It is a market on a tear and has been for quite some time. The technicals don't work in an environment like this. Enjoy the ride if you're long. GE was up a dime on light volume. Nothing doing there. Gold gained another $10 today and the XAU rose 1 1/8. The dollar was lower again today. ABX and NEM each gained about a buck, while GG tacked on 3/8. Volume was nothing special here. The earnings for ABX were excellent and there was a trade that I'm sorry that I missed. But what can you do? I've read that missed money is better than lost money but it doesn't make me feel any better. I'll look to try the gold shares again when they get oversold. If that even happens. We could just power higher like the stock indices have been doing. GG and NEM report their earnings in a week. However we will be moving into the March option cycle and premiums will be pricey. Mentally I'm doing OK. The rally continues but the volume has been pretty mediocre lately. That is about the only fly in the ointment that I can see. There certainly hasn't been any sustained selling anywhere. You cannot argue with price. Expiration Friday is upon us and then a long holiday weekend. I don't expect any surprises tomorrow.

Wednesday, February 16, 2011

Higher we climb as the Dow gained 61 points on average volume. The advance/declines were almost 3 to 1 positive. Most of the major indices are setting new highs. There are no negative divergences. The news, economic or otherwise, doesn't seem to matter. Money is and has been moving into stocks. Until something occurs to derail this freight train, the trend is up. There is no fighting it. GE was flat today on light volume. The uptrend line comes in at around 20 1/2. We're about at 21 1/2 now. So if we somehow drop a point, the March calls might become the next trade. Gold was up a buck today and the XAU rose 1 1/2. ABX up 1/2, GG up 1/3 and NEM lost a touch. Volume was light. I did consider buying some ABX calls today ahead of the earnings announcement tomorrow but didn't. There was plenty of volume in the options though. Tomorrow will be interesting there. The dollar was lower today but the metal itself didn't rally. There were also more reports of instability in the Middle East. Gold and the gold shares are overbought but as we have seen lately with the stock indices it doesn't seem to matter. Mentally I'm feeling OK. The market continues its relentless climb. ABX earnings tomorrow.

Tuesday, February 15, 2011

Volume remained light as the Dow lost 41 points. Advance/declines were negative. The Dow actually down 2 days in a row? Who would of believed it? That's the kind of market we are in. I'm not saying that we are at the top but the bullishness is pretty high. We're still overbought but trying the OEX puts here is not advised. I'm staying on the sidelines. GE was flat today on light volume. March calls? Not exactly sure at this point. If we make it back to the uptrend line I may consider it. Gold was up about $10 today and the XAU gained 1 2/3. ABX and GG rose 2/3 and NEM advanced 7/8. Volume light here as well. The dollar didn't do much today. It looks like the ABX February calls would have worked if I could have found an entry point when I was trying to purchase them. I simply failed to make the necessary adjustments. As always it's easy to look back. With the earnings out before the bell on Thursday, do I dare buy some calls tomorrow? No. That is not my typical style of trading but there easily could be some more room to run on the upside. We'll see. Mentally I'm feeling OK. The risk of putting on a trade here with 3 days to go until expiration and no clear signals is untenable. I will simply have to wait things out and move on to the March option cycle. Not the preferred method of attack but probably the most prudent at this time.

Monday, February 14, 2011

The Dow started the week with a slight loss of 5 points on light volume. Advance/declines were positive. The overall market was much stronger than the Dow. That usually implies higher prices near term. Combine that with expiration weeks usual positive bias and I think we'll see more gains in the short run. The only trade that I have in mind here would be some OEX puts if we get some more run up tomorrow and Wednesday. We are both short and medium term very overbought. If we hold up for a couple more days, perhaps that is the trade. GE gained 17 cents on light volume. Nothing doing there for now. Gold rose $5 and the XAU gained 4 3/8. GG and NEM tacked on 1/3, while ABX rose a buck. It looks like it's too late for the ABX calls this week. Earnings on Thursday and we've already begun to rise. We'll see. The risk isn't worth it in my opinion but that could change tomorrow. The dollar rose a bit today but closed off its highs. I think maybe the prudent thing to do here is remain on the sidelines. Mentally I'm doing OK. 4 days left in expiration week and unless I try the OEX puts later this week I'm going to have to sit this cycle out. There are always other trades out there. The indices are so blown out to the upside that the technicals just aren't effective. We'll see what happens tomorrow.

Friday, February 11, 2011

There seems to be no stopping this rally as the Dow continued higher today by 44 points. Advance/declines were better than 2 to 1 positive and the volume was average. The situation in Egypt seems to have stabilized and that was todays excuse to move up. We are still very overbought. But even intra-day declines are bought up as money continues to flow into the indices. Enjoy the ride. GE was up a nickel on light volume. I'm still waiting to trade the March calls there. A pullback to the $20 area would set it up for me. Gold lost a couple bucks today and a bit more in the aftermarket. The XAU fell 3/4. ABX, GG and NEM had fractional moves one way or the other on light volume. I canceled the open order for the ABX February calls. No need to have anything open over the weekend. I will have to reconsider this trade over the weekend. The dollar was up again today and it looks like the 77 level has held there. That would not necessarily be bullish for gold. We do have the earnings for ABX on Thursday next week. A position ahead of that announcement would be the only attempt at this point. The technicals are mixed. Mentally I'm feeling OK. 5 days to go in the February option cycle. Any trade would be quick and risky. That is not my strength but that doesn't mean that I won't try something. The indices are so blown out to the upside that the usual technical sell signals just haven't worked. I'll check the charts over the weekend and try to come up with some sort of game plan for next week. But for now it's Friday afternoon and time for a rest.

Thursday, February 10, 2011

The Dow closed lower for a change but it was only off by 10 points. The broader market was higher. Advance/declines were even and the volume picked up a bit. The indices are very overbought and have been. All declines are bought and that hasn't changed. Every time I expect a decline it either is short lived or doesn't happen. So on it goes. GE didn't do much today on light volume. I'll try the March calls if we fall back to the uptrend line that began in December. Gold lost $3 and the XAU fell 1 3/4. ABX and GG each lost 1/3 and NEM fell 7/8. Volume was light. The gold shares were lower earlier. I still have the open order for the February ABX calls in but it doesn't look like it will get filled. Perhaps I'll put in a different order before the earnings next week. I'm not exactly sold on this trade anymore but would like to try something. So we'll see. The dollar was higher today and gold itself did not self off and stay there. Perhaps because of the problems in Egypt. That's all just a guess on my part. Mentally I'm feeling OK. 6 days in the February option cycle. A very overbought market and staying that way. The gold shares have bounced and I'm waiting for the next move there. It may be that there won't be a viable trade for this monthly option cycle. So it goes. We can always simply wait and move out to March. We'll see what happens tomorrow.

Wednesday, February 09, 2011

We traded lower for most of the day but the Dow rallied in the final hour to finish with a gain of 6 points. Advance/declines were negative and the volume was light. The overall market was weaker than the Dow. We're still overbought so I do believe some type of decline is imminent. If only because we've been short term overbought for a few days. This market continues to just simply move higher and that can't last forever. GE was flat on average volume. No trades there for now. Gold was flat today but the XAU lost 3 1/2. ABX and NEM had fractional losses on light volume, while GG gained 1/8 on good volume. GG had some positive news yesterday, which helped explain its good gain and heavy volume in the previous day. The dollar was weaker today. I again placed an order for the February ABX calls. I am not sure that I will do this trade because the technicals are not exactly where I want them. However, I do believe that it could work via the earnings announcement next Thursday. We'll see. Mentally I'm feeling a bit tired today, did not sleep enough. Nothing seems to derail this rally. All declines are being bought. The indices continue to grind higher, with todays downward price movement being an exception. But even today we closed well off the lows. So you can't fight it. I'll try the OEX February calls for next week if I get the chance.

Tuesday, February 08, 2011

Higher and higher we climb as the Dow tacked on another 71 points today on light volume. Advance/declines were positive. Overbought and staying there but that has been the case since this rally began. We've had some slight pauses along the way but that's about it. The trend remains up until further notice. GE gained 3/8 on average volume. It too has climbed and remained overbought for weeks on end. If we pull back to the daily up trend line then I may try the March calls. Otherwise it will have to be the sidelines there for now. Gold had a good day, up $15. The XAU gained 3 3/4. ABX rose 7/8, GG up 1 3/4 and NEM was higher by 1 1/8. Volume was light here but you cannot deny the price action. We're short term overbought now. I still might try the February ABX calls if we see some down to sideways action. However I'm not exactly sure it's the right way to go. Obviously yesterday was the time to try GG but it is always easy to look back and be correct. The dollar was weaker during the day but made a comeback. I'll need to keep an eye on it since we are near a critical point there. That could be the key as to what happens to the gold market here. The weekly gold share charts look bullish at the moment. That must be kept in mind as well. Mentally I'm feeling OK. Only 8 days to go for the February options. So the risk increases with each passing day. But like I've said before, if a decent signal comes up, I'll give something a try.

Monday, February 07, 2011

It was a positive Monday as the Dow gained 69 points on average volume. Advance/declines were 2 to 1 positive. Still moving higher but we do have a negative divergence on the RSI indicator. That could change if we have a strong up day tomorrow. However we are short term overbought and due for some pull back. We'll see. GE was up 1/3 on light volume. I'd still like the March calls if the opportunity presents itself. Gold was flat today and the XAU lost 1 1/4. ABX, GG and NEM had fractional moves one way or the other on light volume. The dollar was flat. It's getting late to try the February gold share calls but I still might give them a shot. The risk increases with each passing day though. I may have to go out to the March series. Mentally I'm a bit tired. I'd like to see the indices head lower here for a few days to give me a chance at the February OEX calls for next week. This would be a short term trade with a life of a few days. Not exactly what I normally do but if there's a decent signal I'm willing to give it a try. I would like to attempt some type of trade before the February options are gone. So we'll see what happens.

Friday, February 04, 2011

The employment numbers came out and the market trudges on. The Dow gained 30 points today on lighter volume. Advance/declines were negative. The indices tried to sell off but the uptrend remains intact. Don't fight the trend. We are short term overbought again though. GE lost 20 cents on light volume. Nothing to do but wait there. I'm still interested in the March calls there. Gold lost $4 today and the XAU was down 1 1/2. ABX, GG and NEM all had fractional losses on lighter volume. Not exactly sure which way to go here now. Getting overbought short term so the ABX calls will have to wait. The dollar showed a bit more strength today. We are at a key trend line for the US dollar longer term. We have a 3 year line of support that comes in at around the 77 level. If it holds the dollar will move higher. If not then a weaker dollar could and should be supportive of gold prices. The jury is still out on this one. But it is something to keep an eye on. Mentally I'm a bit tired, did not sleep enough. Plenty to ponder over the weekend with 2 weeks to go in the February option cycle. I'll be checking the charts and trying to come up with some type of game plan. For now it's Friday afternoon and time for a break.

Thursday, February 03, 2011

We were lower to flat for most of the day but rallied in the last hour to finished higher by 20 points on the Dow. Advance/declines were positive and the volume was average. Bernanke flapped his gums and the market ignored it. Awaiting tomorrows employment data. GE was flat today on light volume. It too was lower for most of the day. Perhaps I'll get a chance at the March calls eventually. Gold was the story of the day, up $20. The dollar had a strong rally as well. We are still seeing a disconnect here. I'm not sure what to make of it. The XAU was up 4 3/4. ABX rose 1 1/8, GG up a buck and NEM led the way higher by 1 2/3. Volume was average. It looks like the window of opportunity has passed for the February ABX calls. We aren't completely overbought yet, however we have moved pretty good from the recent lows. The options are pricey. There is a chance we could pull back next week but the risk to enter the trade would be pretty high. Gold took off during the day today and I can't say it was because of Bernanke or Egypt. So we will have to see where we go from here. I may switch to the GG calls, the option premiums there are more reasonable at this time. We'll see. Mentally I'm feeling OK. Not happy about not owning some gold share calls here if this really is a sustained move to the upside in the precious metal. But that remains to be seen and you've got to move on. We'll see what kind of reaction we get to the employment report.

Wednesday, February 02, 2011

Not much happened in the stock market today as the Dow ended the day with a gain of a point on average volume. Advance/declines were negative. The overall market was a bit weaker than the Dow. Waiting on the employment numbers for the markets next short term direction. Today was a pause to digest yesterdays gain in my opinion. GE lost 9 cents on light volume. It doesn't look like I'll be able to get the March calls at this rate unless we see some type of pullback. Hasn't happened yet. Gold lost $8 today but showed gains in the aftermarket. The XAU fell 2 1/4. ABX down 3/4, GG off 1/3 and NEM dropped 7/8. Volume was light on the decline. The dollar gained a touch today. I still would like to try the February ABX calls if the opportunity presents itself. I'll need to see some more decline though. Lighter volume on the decline could be a positive sign unless we are about to enter a sideways range. We'll see. Mentally I'm feeling OK, slept well. Two weeks and two days for the February option cycle. I'd like to try something but I am not about to push things. Bernanke speaks tomorrow and we'll see where we go from there.

Tuesday, February 01, 2011

Continuing higher with a vengeance as the Dow gained 148 points on average volume. Advance/declines were over 4 to 1 positive. Can we agree that the trend is up until further notice? Yes. It doesn't look like anything is in the way. Whatever the news, the market goes up. So stick with it. GE gained 2/3 on average volume. It doesn't look like I'll get a chance for the March calls there. This issue has had a great move since the end of November. Gold was up $5 and the XAU gained 6 1/3. ABX up 3/4, GG rose a buck and NEM led the way up 1 3/8. Volume was average. The gold shares have finally outperformed the metal itself. Perhaps the trend is going to change back to the upside here. The US dollar took another hit and was much lower. The economic data has been stronger, we have unrest in Egypt and rates in the US have moved higher. Yet the dollar continues to lose ground. The flight to safety trade is being unwound but it seems the fall in the dollar reflects more than that. Perhaps the economic recovery isn't as strong as being projected. Or maybe countries are diversifying out of the US dollar as the reserve currency. I can only guess. I canceled the open order for the February ABX calls. I'm hoping to try this trade again before expiration. Mentally I'm feeling OK. We're not overbought on the indices anymore, so there's room to move higher. Fridays action relieved the near term overbought condition. We'll see what tomorrow brings.