It was another up and down day as the Dow was up 150 early, then grinded all the way back into negative territory before a comeback in the final hour. We ended the day higher by 53 points. Volume was average. The advance/declines were 2 to 1 positive. The month of August we just completed was a wild one. Let's hope we don't see a repeat in September. We are short term overbought now and I would like to try the OEX puts for September. Perhaps tomorrow before the employment report as that was the original plan. We'll see. GE was up 1/8 on average volume. Not completely overbought here. I'm still looking out to January here. No hurry. Gold was flat on the day and dropped a touch in the aftermarket. The US dollar was higher today. The XAU was off 1/2. ABX down 1/8, GG fell 3/8 and NEM dropped 1/2. We were lower earlier in the day. I dumped the ABX calls. Overbought and staying there but I could not risk holding on any longer. It was a 65% profit and it should have been much more. There's still a chance that ABX moves higher here in the near term before a pullback. I would like to try the ABX calls again for October. Mentally I'm doing OK. Looking for some OEX puts tomorrow. Beginning of the month and possible positive money flows. Employment report on Friday. There will be plenty of data in the next two days and then a long weekend. The trading is never easy. I'm not sure that I have the same feel for things as I did a couple of weeks ago. However I'm going to move forward. If we get the expected drop in the stock indices here I'll have another chance for the ABX calls. If not there is nothing that I can do about it. I'll take the recent ABX trade as a positive and go from there.
Tuesday, August 30, 2011
It was an up and down session and the Dow ended higher by 20 points. The advance/declines were positive and the volume was lighter than lately. We were down over 100 points early but made it all the way back. I'm still considering the OEX puts before the employment report as we are getting short term overbought. There is the double bottom that is in place to consider also. Still 2 days before the report. GE was up a touch on light volume. No trades there yet for me. Gold had a stellar day, up $40 on the futures and another $10 in the aftermarket. The XAU rose 3 1/4. ABX up 2/3, GG higher by 3/4 and NEM gained a buck. Volume was better. Overbought here both short and medium term. My ABX calls are still in the black but I really need to consider exiting this trade. The gold shares won't remain overbought forever. Maybe I can squeeze another day or two out of this but it may be time to move on here. The US dollar rose today with gold for no apparent reason. Mentally I'm feeling OK. It's a tough call to continue holding on to the ABX trade when I'm looking at the OEX puts for a market decline. However I could also be wrong as the summation index continues to move higher. The employment report on Friday could hold the key. We'll see what happens tomorrow and go from there.
Monday, August 29, 2011
We started out the week with a bang as the Dow rose 254 points. The advance/declines were 10 to 1 positive. Volume was light however. I do not trust light volume rallies but you can't argue with price. The summation index is now moving to the upside as well. If we continue higher into Wednesday I'll probably try the OEX puts before the employment report. We'll see. Approaching short term overbought on the stock indices. GE was up 1/2 on light volume. We had a gap to the upside here but I'm not completely sold that this is the beginning of something big or sustainable. I could be wrong and often am. I'll wait to purchase the January calls here. That is my next trade in GE. Gold fell today as the flight to safety trade waned. We lost $5 on the futures and a bit more in the aftermarket. That is misleading though since we rallied strong in the aftermarket on Friday. Taking that into account it was more like a $35 loss on the day. The US dollar didn't do much today. The XAU lost 2/3. ABX down 3/4, GG fell 3/8 and NEM was flat on the day. Volume light here as well. My ABX calls are somehow still showing a profit but this trade is really getting long in the tooth. I don't know if I can hold on until the employment report on Friday. Also if my OEX put scenario is correct, the gold shares will probably drop with the overall market. Mentally I'm doing OK, slept well enough. The stock indices have made a new recovery high from the recent sell off and closed near their highs for the day. We should see some follow through tomorrow. We do have the last day of the month and beginning of the month positive money flows coming up this week. So we'll see what happens. I get the feeling that gold is going to take a rest here and that won't bode well for the ABX calls. Less than 3 weeks to go there and one less day due to the Labor Day holiday. I'll be taking some extra time to consider this trade tonight.
Friday, August 26, 2011
Volatility was the main product from the Bernanke speech as the Dow closed higher by 134 points. We were down over 200 points early. The advance/declines were 5 to 1 positive and volume was good. The stock indices are deciding which way to go here. I get the feeling that higher prices are coming before we head back down again but I could be wrong and often am. Technically we're not overbought or oversold. A few more up days and we'll be short term overbought. The ideal scenario would be for the beginning of next week to be positive, setting up an OEX put trade for before the employment report on Friday. We'll see. That's the idea at the moment. GE was up a bit on average volume. Plenty of time for the January calls there. Gold was on the move again. The futures gained $35 and it was up another $30 in the aftermarket. The dollar was weaker today and that was without Bernanke saying anything about interest rates. The XAU gained 5 points. I would have liked to have seen more of a gain there. ABX was up a buck while GG and NEM both rose 1 1/3. Volume was lighter than lately again. My ABX calls are still in the black. 3 weeks left in the September option cycle. ABX is on its way to being overbought again. I'll need to consider dumping these calls next week. We could have some beginning of the month money flows at the end of next week and that could be supportive. However gold really had a crazy week and is still very overbought. There is a lot of volatility premium in the gold share options and any slowdown in price movement will rapidly diminish prices. Plenty to consider going forward here. Mentally I'm feeling OK. It was the first positive week in the stock indices in a month. So it looks like maybe a short term bottom has been put in place. We'll see. Gold was all over the place, including an over 100 point down day. I'll be checking the charts again over the weekend to decide which path to take next week. But for now it's Friday afternoon and time for a break.
Thursday, August 25, 2011
Some downside in the stock indices today as the Dow lost 170 points on good volume. The advance/declines were 3 to 1 negative. The summation index had turned higher yesterday but has taken on a sideways movement lately. Volatility picked up today in front of the Bernanke Jackson Hole speech. I don't know what the markets are looking for him to say but whatever happens in the market reaction is what to look for. Not really overbought or oversold here on a short term basis, so I guess we could go either way. It certainly hasn't been a slow summer. GE was down 1/4 on average volume. Still waiting for the right time to get the calls there. The gold futures ended up by $5 on the day after being lower early. Gained a bit more in the aftermarket. Not a bad showing considering yesterdays debacle. The XAU gained 3 1/2. ABX rose a buck, GG gained 1 1/8 and NEM tacked on 1/2. Volume was lighter than lately. The US dollar gained a bit today. My ABX calls are still in the black. I'm holding on for now but could exit anytime at this point. Yes there is plenty of time left for them but the tone of the gold market has changed with this weeks 100 point down day. We'll see what gold does after Bernanke. Mentally I'm feeling a bit tired. All eyes and ears are on the Jackson Hole speech tomorrow. There certainly is a lot of hype for this event and I don't think that it can possibly live up to it. We'll see. It's been a positive week for the stock indices so far and we'll see if they can hold onto the gains.
Wednesday, August 24, 2011
The Dow continued higher with some follow through to yesterdays gains. It gained 144 points on good volume. The advance/declines were 2 to 1 positive. It is looking more and more as if a double bottom is in place. However we could also just be forming a bear flag from the recent extensive decline. I'm still leaning towards trying the OEX puts, perhaps next week. We'll see what happens for the rest of the week. GE was up almost 1/4 on average volume. Looks like a possible double bottom in place here as well. No hurry for the January calls. Gold was the story of the day as it got relentlessly sold in the wake of the parabolic move upward. As usual, parabolic moves never end well. The gold futures lost just over 100 points. Yes, in one trading day. The gold shares took a hit but it wasn't as bad as the downward move in gold. The XAU fell 4 1/8 but was much lower during the day. ABX dropped 1 3/4, GG lost 1 7/8 and NEM fell a buck. Volume was heavy. The US dollar was up a touch today. Amazingly the ABX calls I own are still in the black. They've lost most of the profit since Monday but there is still a chance for this trade to work. There is still a lot of time left in them. How we close the week will be important. I'll need to see some strength going into the close on Friday. Mentally I'm feeling OK but feel a little groggy today for some reason. Perhaps it was the effect of the huge loss in gold. The stock indices are acting better here, waiting for Bernanke on Friday. I have no idea what he will say but we will have to keep an eye on the markets reaction. That will be the near term key.
Tuesday, August 23, 2011
The Dow roared to the upside as it gained 322 points on good volume. The advance/declines were 6 to 1 positive. The daily charts look like a double bottom in the stock indices. We would have to break through 1200 on the S&P 500 with good volume for this to be valid. Hasn't happened yet. I'm still leaning towards the OEX puts if we rally for a few days. I don't think the summation index has turned back to the upside just yet. GE was up 1/3 on average volume. No hurry to trade there. Gold was the story of the day besides the earthquake on the east coast. It got hammered, down $30 on the futures and another $30 in the aftermarket. Could this be the end of the parabolic move to the upside that we've seen recently? Could be. The XAU fell 5 1/2. ABX down 1 1/3, GG lost 2 7/8 and NEM dropped 1 1/2. Volume was good. The dollar dropped a bit as well today as the flight to safety trade took a breather. My ABX calls are still in the black but they have lost a lot of their value today. I'm still a believer in holding on to this trade but if this weeks action continues negative for gold I'll have to reassess the situation. One day does not a trend make but it's only Tuesday. Mentally I'm feeling OK, could have slept better. It will be interesting to see if we get any follow through to the upside tomorrow or if this was just a one day wonder for the stock indices. Not much economic data out this week and we have Bernanke flapping his gums on Friday. I'm in a wait and see mode. As for the ABX trade, it's still showing a profit and there is plenty of time left before expiration. But if this is the start of a correction in gold, the trade will not turn out as planned. We'll see how it goes.
Monday, August 22, 2011
It wasn't a quiet summer Monday as the Dow gained 37 points on good volume. The advance/declines were negative. We were up over 150 points early but could not hold the gains. The summation index continues lower. We are short term oversold here but todays price action doesn't look like a precursor to higher prices. We'll see. I would like to see some type of rally to try the OEX puts again but we know I didn't get the rally before. No hurry as we just began the September option cycle today. GE was flat on the day after opening higher. Volume was good. I'm looking out to the January option cycle here. Again, no hurry as I expect lower prices eventually. Gold continues its parabolic run, up $40 on the futures to a new record high. The US dollar was flat today. I have no idea how long gold will continue to rise. Very overbought and staying there. I can tell you that when it ends, it will end badly. The drop will be as prolific as the rise. The XAU gained 6 2/3 today. ABX up 1 1/4, GG rose 2 1/2 and NEM led the way higher by 2 3/4. Volume was good here. Unfortunately for me, ABX was the laggard. The September calls I own are solidly in the black though. I'm still trying to figure out exactly how long I'm going to hold this trade. Mentally I'm doing OK, slept well. After a review of the charts over the weekend my ideal scenario for the S&P would be a rally near term as an opportunity to get short. The market rarely cooperates with your ideas though. I don't want to get too greedy with the ABX trade but I still feel we could go a little higher there. Plenty of time left. We'll see what transpires in the foreign markets overnight and take it from there.
Friday, August 19, 2011
It was a downer Friday and we closed at the lows for the week as the Dow lost 173 points. The advance/declines were 3 to 1 negative and the volume was good. The summation index has turned around and is heading lower. The Dow is trying to hold at its 200 week moving average. Some stock indices have already broken through to the downside. We're oversold here on a weekly and daily basis. However in severe declines being oversold doesn't lead to market rallies. We got a bounce and now are right back at the recent lows. If the transport are any indication of what's to come, we'll be heading lower next week. I have no OEX trades in mind right now but I'll ponder things over the weekend. GE was down 1/4 on good volume. Oversold here as well. I'm still looking out to the January options here but in no hurry. Gold continues to find money as it gained $30 on the futures. Traded another $30 higher in the aftermarket but gave all of those gains back. We're at record highs again. Parabolic and that never ends well. The US dollar lost some ground today. The XAU was up about 4 points but closed off the highs. ABX up 7/8, GG gained 1 3/4 and NEM rose 1 2/3. Volume was good to the upside. My ABX calls are still in the black. Overbought here now but staying there. 4 weeks to go in these options. It is getting harder for me to stay in this trade but I'm a believer in higher prices before they expire so I'll hold on for now. The Gold/XAU ratio is still off the charts in the buy zone. So we'll see. Mentally I'm doing OK. I'll have to check the charts again over the weekend to see I can figure out where we go from here. If the stock indices start to free fall again, it will probably take the gold shares with them. I have time left in the ABX call trade but I do not want to see the gains turn into a loss. It isn't easy winning or losing in this game. I'll think about it over the weekend and go from there. It's Friday afternoon in the summer. Time for a break.
Thursday, August 18, 2011
Back to the downside with a vengeance, as European worries spread to the US markets once again. The Dow fell 420 points on heavy volume. The declines swamped the advances by 20 to 1. Obviously the OEX puts were the way to go yesterday. We'll see how we get through option expiration Friday and go from there. It feels like we're ready to fall apart again but we'll have to wait for tomorrow. Any attempt at trying to decide which direction the market goes from here would be even more of a guessing game than usual. GE gapped lower and lost 3/4 on heavy volume. I am still looking at the January calls there but I'm in no rush to purchase. Gold was the safe haven play once again, up about $30 on the futures to a new all time high. The US dollar moved higher in the flight to safety as well. However the XAU followed the stock indices lower by 6 points. ABX down 1/2, GG lost 1 1/4 and NEM fell 5/8. Volume picked up to the downside and that isn't bullish. My ABX September calls are still in the black as the volatility premium got put back into the options with todays action. I'd certainly like to see some upside tomorrow here to close out the week but the way things are going these days who knows? 4 weeks to go here though. Mentally I'm still feeling tired, not sleeping good this week. The market is back in manic mode. No telling how long this will last. There are no quick or easy solutions to what the markets are focusing on. The best plan of attack will be to wait for overbought and oversold conditions and go from there. Staying on the sidelines won't lose you any money but it won't make you any either. Let's see how we get through Fridays expiration and take it from there.
Wednesday, August 17, 2011
It was an up and down kind of day as the Dow gained only 4 points. The advance/declines were positive. You could make a case for going either way here. With only 2 days to go in the August option cycle, I think the prudent course of action here would be inaction. There is no clear near term signal and the reward would not outweigh the risk. The summation index is still heading to the upside at the moment. I'm also seeing warnings in the media about more selling to come so you can expect the opposite. GE was flat on average volume. GE has basically the same chart pattern as the overall market. No trades there for now. Gold gained $8 on the futures and the XAU tacked on 2 1/4. We did fall back from the highs in the XAU. The US dollar was lower today. ABX, GG and NEM all had fractional gains on very light volume. Overbought here now. Nobody is selling right now but they're not really buying either. My ABX calls are still in the black but we really need to see some upwards movement in the underlying stock soon. Time decay will start to set in and any downward action will drop the premiums. I'll ponder things tonight. We are almost at new all time highs in gold itself. Mentally I'm feeling tired today, did not sleep enough or well. Just a couple of days left to trade this week and it seems relatively quiet when you consider what the markets went through last week. Another thing to consider with the ABX call trade is that the volatility premium will start to diminish as well with a quieter market. We are in the middle of August and if things get back to normal now, the market will slow down. So perhaps I won't hold the ABX trade as long as previously planned.
Tuesday, August 16, 2011
We were a bit weaker today as the Dow lost 77 points on average volume. The advance/declines were 3 to 1 negative. We moved off the oversold levels and now the question is where we go from here. The S&P 500 daily candlestick chart is showing a bearish belt hold pattern, implying lower prices near term. I am still considering the August OEX puts if the premiums are in my price range. The risk on this trade would be very high though. We'll see what happens tomorrow. GE was off 1/4 on light volume. No near term trades for me in GE. Still considering a longer term option trade here in the next few weeks. Gold had a good day, the futures were up $27. The XAU fell 2 1/8 though, following the overall market down. ABX, GG and NEM all had fractional losses on light volume. My ABX September calls are still in the black. We're getting overbought on ABX and I will have to think about exactly how long I'd like to stay in this trade. The weekly charts still have room to move to the upside in my opinion. The US dollar was up a touch today. Mentally I'm feeling OK. 3 days to go in the August options. The stock indices have worked off their oversold condition but are not overbought at the moment. We probably could go either way here but I'm leaning towards the downside. The summation index did move to the upside yesterday. So it's a mixed bag. We'll see what tomorrow brings.
Monday, August 15, 2011
We started option expiration week to the upside as the Dow gained 213 points on lighter volume. The advance/declines were 10 to 1 positive. The summation index should turn to the upside with todays market action. I would like to try the OEX puts this week if we call rally up to the 50% retracement level on the S&P 500. That would be around 1225. If the volume continues light to the upside that is where I may attempt the next OEX trade. With only 4 days to go in the August options, obviously this would be a very short term trade. We'll see. GE was up 50 cents on lighter volume as well. No trades here. Keeping an eye on the January calls but will not look to purchase them until we see lower prices once again. Gold rose again, up $15 on the futures and a bit more in the aftermarket. The US dollar was weaker today. The XAU gained 5 7/8. ABX up 1 1/8, GG higher by 1 1/4 and NEM up 1 1/2. Volume was light today and that could be a problem going forward. I do not trust light volume rallies. My ABX calls continue to be in the black but we are reaching overbought status. However the weekly charts still look like they have room to run. If todays drop in the dollar is the beginning of something bigger, then I'll continue to hold the calls. That would support the price of gold here. It also looks like the gold shares are starting to outperform the metal itself and that's a positive going forward. Mentally I'm a bit tired, did not sleep all that well. I will be getting back to my normal market schedule next week which should bode well for trading. I would like to try the OEX put trade but my schedule for this week may not permit it. We'll have to see how it goes. It's risky, yes. But the opportunity may be well worth the risk.
Friday, August 12, 2011
The Dow closed the week with a gain of 125 points on good volume. The advance/declines were about 2 to 1 positive. We were up for most of the day but after such huge point swings this week it seemed like a drift. The overall market was weaker than the Dow. The McClellan oscillator is making its way back to positive territory in a hurry. The summation index is trying to turn around here. The weekly S&P 500 candlestick chart looks like it may have put in a bullish hammer. It managed to close the week above the 2oo week moving average. However the jury is still out on what happens from here. I will have to check things out over the weekend and go from there. GE gained almost 1/4 on good volume. I'm going to let some kind of bottom form for GE and then I will purchase some January calls. That is the game plan for GE right now. Could change as we go forward. Gold fell again today, down 9 bucks on the futures. The XAU fell a couple of points. ABX lost 1/3, GG and NEM fell 7/8. Volume was lighter than lately. My ABX calls are still in the black but have lost some of the profit. 5 weeks to go but the weekly GLD candlestick chart looks like a blow off top. Again, I will have to check things out over the weekend and decide what to do next week. Mentally I'm feeling OK, slept well. It was quite a week and I really do not expect that type of volatility to continue. But who knows? I think at the least we will retest the lows of this week sometime in the next few weeks. But I'm often wrong. I don't think the long term problems in Europe and the US will all of a sudden be solved. But the focus of the markets could move on to something else. Another thing to consider is the presidential cycle and that implies much higher stock levels by the end of the year. So there is plenty to consider going forward. I will check the charts and the numbers over the weekend and go from there. Sometimes the hardest thing to do with a winning trade is to stick with it and not take the quick profit. That is what I'm facing with the ABX trade. I don't want it turning into a loser though either. Time will tell. For now it's Friday afternoon in August and time for a rest.
Thursday, August 11, 2011
Back to the upside as the Dow gained 423 points on heavy volume. The advance/declines were over 10 to 1 positive. We were up well over 500 points and dropped over 100 in the last half hour. We have traded several hundred point up and down days this week. At this pace we should be down 400 points tomorrow but who knows? This kind of volatility won't last forever. The stock indices are trying to put in a bottom here. It remains to be seen if they will be successful. The McClellan oscillator is working off its very oversold condition. You can really make a case for either way here at the moment. 6 days to go in the August option cycle. I have no OEX trades in mind here and you have to be careful. The premiums have so much volatility in them that as we get towards the end of next week option values will plummet. I'll make a trade if there is a decent set up but otherwise I'll sit things out. GE was up 60 cents on good volume. Oversold and a bounce is expected. I'm looking at the January calls there. If we head back down again, that is a trade that I'm willing to try. Gold got clobbered today as margin requirements to hold the precious metal were raised. The same thing happened when silver went parabolic and it marked the end of the rally. Can history be repeating itself? Gold was off over $30 on the futures. However the XAU was up 3 1/8. ABX and GG had fractional gains while NEM was up 2 1/2. Volume was good again. The gold shares put in a good performance despite the drop in gold. A 400 point rise in the stock market can take some of the credit. The US dollar bounced around today but ended up about unchanged. My ABX calls are still in profit mode. I'll hang on to them for now. Not overbought here yet. Mentally I'm feeling a bit tired, did not sleep well. It has been quite a week and we still have to get through Friday. The volatility has been off the charts. I don't see any short term trades here for me but that could change. Let's see what happens tomorrow and go from there.
Wednesday, August 10, 2011
The decline got back in gear today as the Dow lost 520 points, wiping out yesterdays gains. The advance/declines were 3 to 1 negative with heavy volume once again. European worries once again, this time with France in the spotlight. We might actually get a short term buy signal soon if we make a lower low and the McClellan oscillator stays above its low set on Monday. But it hasn't happened yet. The market could do anything here but I think we are either trying to form a bottom here or we're heading much lower. The VIX is out of control and the last time that happened in 2008 the decline was severe. However the McClellan oscillator has already blown out to the downside so the decline may be about over for now. It's a coin flip and that isn't the way to go in this game. Tomorrow could be key. I don't have any OEX trades in mind here at the moment. We'll see. GE fell almost a buck on heavy volume. I'd keep an eye on GE for clues here as well. I'm still interested in the January calls but there is no hurry. GE is around $15 and there is no support below $14. Gold continues to defy gravity, up $40 on the futures to a new record high. The parabolic move continues. The XAU gained 4 1/3 but was higher during the day. ABX rose 1 7/8, GG up 2 3/8 while NEM only tacked on 3/8. Volume continues heavy here as well. My ABX September calls are now solidly in the black. The question turns into how long shall I hold them? Over 5 weeks left for these and we're not oversold on the gold shares yet. I like the fact that in a down 500 market the gold shares found buyers. Mentally I'm feeling OK, slept well. All eyes will continue to be on the stock markets action and reaction to the daily news events. The technicals do count for something but in this type of environment, anything goes. 2 days left in the week and it already seems like it's gone on forever. Multi-hundred point days up and down will do that to you. This summer has been anything but quiet. There will be opportunities in a market like this but you have to be careful. If I had to guess, I'd say we won't see the ultimate low in this move until sometime in October. We'll see what tomorrow brings.
Tuesday, August 09, 2011
The oversold bounce finally arrived after the Fed as the Dow soared 430 points on heavy volume. The advance/declines were over 10 to 1 positive. We gyrated a bit after the Fed but then came a powerful final hour rally. The Fed promised to keep rates low until the middle of 2013. Really? That must be some crystal ball they've got. But that doesn't really matter. What matters is what the markets say. We reached a new extreme negative on the McClellan oscillator and had to start moving higher. I placed an early order for some OEX calls but it wasn't filled. There is so much premium in the index options at this point that they are overpriced in both directions. I still think some money can be made though. I also don't think that the bottom of this rally will mark the low. We'll see. GE was up 1/2 on extreme volume. I'm still thinking of the January calls here but would like to see some base building. Plenty of time for this trade. Gold had a wild day. It reached a new all time high as it was up over $30 at one point. However it has fallen about $50 from there at the moment. The GLD daily chart shows a heavy volume reversal to the downside. Gold could be taking a rest here but we'll see. The US dollar fell on the Fed statement. The XAU followed the overall market higher by 8 1/2. ABX up 1 1/2, GG rose 1 2/3 and NEM gained 1 1/4. Volume was heavy here. My ABX calls are still showing a profit but that won't be the case if we see a sustained sell off in gold. There's still plenty of time for this trade to work but if the stock indices get choppy it could complicate things for the gold shares. Not to mention we will eventually head back down to test this recent low in the stock indices. Mentally I'm feeling OK. The expected bounce appeared. Looking back at previous extreme oversold readings shows that most likely there will be more downside to come. If we reach short term overbought before next Fridays expiration, I'll try the OEX puts. I'm not sure this rally has long legs. But it's only Tuesday. Gold certainly looks like it reversed to the downside today so I will have to reconsider this ABX trade as well. I'll ponder things tonight and try to come up with some sort of game plan going forward.
Monday, August 08, 2011
It's just a free fall panic at this stage. When the US debt was downgraded after the close on Friday, you'd expect Monday to be pretty ugly. It didn't disappoint. The Dow lost 634 points on heavy volume. The advance/declines were blown out once again, over 10 to 1 negative. The market is so oversold right now, I don't know what to expect. We are so overdone on the downside that the snap back will be furious. Or maybe not. Some of the stock indices have broken through their 200 week moving averages, others have not. I'm going to check the McClellan oscillator later tonight and if we are below -400 I may try the OEX calls tomorrow. We'll see. This could also be a rerun of the fall of 2008 where we just head lower. Feels like it at the moment. GE fell over a buck on blow out volume. The same question of how long this goes on is in effect. I'm looking at the January calls here but I'm in no rush. Gold rose $60 today. That's not a typo. The flight to gold has now sent gold parabolic. We all know that it never ends well when anything heads straight up. However it could go on for a while as was the case with silver. Silver stopped at a nice round number of $50. Could gold go to $2000? The XAU fell 3 1/3. The gold shares moved fractionally one way or the other on extremely heavy volume. ABX, GG and NEM were all up over $2 at one point. The ABX September calls actually moved higher, although the stock didn't do much. The US dollar was a bit higher. I'm going to hold on to the ABX calls for a while. The stock indices will not go down forever and the gold share calls have 6 weeks left on them. Mentally I'm feeling OK, could have slept more. It's been quite a wipe out in the stock market. It's really anybodies guess where we go from here. Panic does create opportunity. The charts are moving straight down. I'll check the indicators tonight and go from there. There is nothing wrong with sitting it out on the sidelines as well. However if the McClellan oscillator is below -400, I will be seriously looking at the OEX calls.
Friday, August 05, 2011
That was quite a week as the major stock indices basically fell apart at the seams. In the middle of the summer no less. We closed the week with a gain of 60 points on the Dow. However the advance/declines were about 3 to 1 negative. Volume was heavy once again. The overall market was weaker than the Dow. The summation index continues to head lower in a hurry. We are still very oversold. The employment report was better than expected but it didn't even matter. The market is now moving simply on price. Nobody knows what next week will bring. I can say from past experience though that there will be at least one huge up day. A 3 or 4 hundred point oversold, short covering rally. Pinpointing the time is the problem. GE was flat today on very heavy volume again. Perhaps we are now sold out here. We'll find out next week. I'll mention the VIX today for a change, as it reached a level not seen since the spring of 2010. It may mean the worst is over for now, depending on what happens next week of course. That's just a guess as usual. Gold lost $7 on the futures but gained it back in the aftermarket. The dollar was lower today. The XAU lost a point but was much lower early. The gold shares were mixed on heavy volume. ABX fell 3/4 and my September calls are now in the red. I am now considering just dumping them next week if we see some rally in the markets. I'll think about it over the weekend. Mentally I'm feeling OK. There are a couple of trading scenarios for next week depending on how the week begins. I think shorting whatever rally appears may be the best course of action. I do not think we will see a rerun of this week. I could be wrong. We'll have to see what develops over the weekend. I will be checking my longer term charts to see what these type of conditions in the past have led to. Usually it's a snap back rally followed by a retest of the lows. We'll see. It's Friday afternoon and definitely time for a break.
Thursday, August 04, 2011
It was a market meltdown as the Dow plummeted 512 points on very heavy volume. The advance/declines were blown out to the downside. Summation index in free fall. Oversold, staying there and anything can happen at this point. Yesterdays attempt at a bottom failed drastically. I'd like to say that I know when this will all end but I certainly don't. The employment report is out tomorrow and I wouldn't expect any good news there. Perhaps we can get a blow-off move down and start to recover. There will be a short covering rally at some point but the timing is in question. Stock markets around the world collapsed overnight. Probably will see more of the same tonight. Maybe we could see some support at the Dows 200 day weekly moving average but it's still 500 points from here. Stay tuned. GE lost a buck on extreme volume as well. I'm looking at getting some GE calls for the longer term. Meaning next January or March. However in these market conditions I think that it would be better to let some type of bottom form in GE. That may take a few weeks or longer. I'll keep an eye on it and decide the best course of action over the weekend. Gold hit a new all time high before pulling back during the day. It fell by $6 and a bit more in the aftermarket. The US dollar was very strong today in the flight to safety. The XAU got clobbered, down 12 2/3. ABX off 2 7/8, GG lost 2 7/8 and NEM fell 2 2/3. Volume was very heavy here as well. I did purchase some ABX September calls. However if the market continues its free fall, the gold shares will follow suit. I could have canceled the order but I wanted to do this trade as a back-up to missing out on the OEX puts. ABX isn't extremely oversold here but it is enough for me to give it a try. I think once things settle down, gold will continue to attract capital as a flight to safety since the fear level is now elevated. My thinking is that perhaps gold and the dollar will rise in tandem as they did the last time we had a major market collapse. We'll see. Mentally I'm feeling OK but a bit tired. Could have slept more. Today was interesting but tomorrow could even be more so. Maybe we will see the panic low. There will be opportunities but it isn't easy trying to catch a falling knife. I still don't sense a gripping fear in the marketplace but that could change rapidly. We are very deeply oversold so when the bounce happens, it will be huge. Hasn't happened yet. We'll see what tomorrow brings but be ready for anything.
Wednesday, August 03, 2011
We finally got some type of bounce from an extremely oversold condition. The Dow gained 29 points on good volume. The advance/declines were about even. The daily candlestick chart on the S&P 500 looks like it has formed a hammer here. That could lead to some more near term gains. We still have the employment report on Friday to deal with. I think that the decline may be done for now but that doesn't mean that it's over. GE gained 1/4 on good volume. No trades here for now. Gold soared another $20 as the US dollar fell. The XAU gained 1 1/2. ABX and GG each rose about 1/2 while NEM gained a buck. Volume was good again. The money continues to flow into gold related assets. I placed an order for some September ABX calls. If we get some pullback then this order could get filled. Yesterday there was a lot of volume in the September ABX calls. Today the same options open interest expanded. The last time that I saw this, ABX had a nice rally. We'll see. Mentally I'm feeling OK. The summation index continues to decline at a rapid clip. We are in the danger zone for a crash unless we turn around quickly. However the McClellan oscillator is at a point where previous oversold rallies have started. It's a tough call either way. I'm still leaning towards getting some OEX puts on this bounce. Time will tell.
Tuesday, August 02, 2011
The Dow got clobbered today as it fell 265 points on heavy volume. The advance/declines were over 4 to 1 negative. Summation index gapping down. Very oversold and staying there. That's dangerous. Possible crash coming or we are in the middle of it. Debt deal is done and the markets don't care. I never did get a chance to get some OEX puts. I think it's too late now unless we see a 3 to 4 day rally. No hint of that coming. Everyone now fears the employment report on Friday. Might be a chance to go the other way but I wouldn't be betting on it. GE was down 3/4 on good volume. Support has been broken. GE led the way down and it is something to keep am eye on for when we eventually head back up. Gold had a great day, up $22 on the futures and almost that much again in the aftermarket. The XAU gained 1 1/4 in a really down market. ABX, GG and NEM all had fractional gains on OK volume. The dollar was a bit higher today. The Gold/XAU ratio is solidly on a buy and getting stronger. I think that I'm going to try the gold share calls again. That will have to be my back up plan after missing the OEX puts. We should probably see some downside follow through in the stock indices tomorrow and perhaps that will take the gold shares along for the ride. I'm looking at ABX again. We'll see. Mentally I'm a bit frustrated on the OEX puts. I don't think that I'll get another chance for them. I've got to forget about that and move on. However we could be on the brink of some type of market meltdown. Opportunities will present themselves if that happens. 8 days to the downside for the Dow. Should have seen some type of sustained bounce but haven't. Gold is soaring but the gold shares lag. This summer has been anything but quiet. I'm going to mull things over tonight and decide what to do in the morning.
Monday, August 01, 2011
A US debt deal is imminent but the Dow still can't rally. We lost 10 points today on good volume. The advance/declines were about even. The market opened much higher by over 100 points but could not hold on. We were also lower by 100 points during the day as well. Oversold and staying there. I still believe that we will see some type of bounce soon and that bounce can be shorted. I would like to own some OEX puts before Fridays employment report. We'll see. GE was flat today after some wild swings on good volume. It just about mirrored the overall market. No trades there. Gold lost about $10 on the futures while the US dollar gained some ground. The XAU was up 1 1/8 after being higher early. ABX up 1/2, GG higher by 1/8 and NEM lost 1/4. Volume was light. I may try the September ABX calls if we see a pullback in gold here. I would think that gold would lose some of its luster on a debt deal agreement. If the deal doesn't pass, we could see a pop to the upside on fear. I do however believe a deal will happen. Mentally I'm feeling OK. I'm thinking that today we may have set a near term low that will be broken later on in the August option cycle. We are very oversold and a relief rally should appear. I'll be keeping an eye on the OEX puts. That has been the story here for at least a week and it remains so. We'll see what tomorrow brings.