Monday, October 31, 2011
We closed the month with a pretty big loss as the Dow started the week down 276 points on average volume. The advance/declines were almost 5 to 1 negative. A money management firm went belly up in the US. That, along with locking in some gains from the recent run up in prices were the culprits for todays action in my opinion. But what do I know? I still think we will see higher prices going forward. We may be on our way back to retest the breakout from the congestion zone. That would be around the 1225 level on the S&P 500. We closed on the low for the day and that is short term negative. GE was off 1/2 on lighter volume. No trades here for now. Gold fell today as the US dollar had a very good day. The precious metal lost about $25 on the futures. The XAU fell 6 3/4. ABX down 1 1/3, GG lost 1 1/4 and NEM led the way lower by 1 2/3. The only saving grace was that the volume was lighter than lately. My ABX calls gave up some of the gains but they are still profitable. The weekly charts are still looking good but the daily charts are overbought and rolling over. The ideal situation would be sideways action before heading higher but the time decay of the options would still take effect. There are still 3 weeks left in the November cycle though. It's a tough call. I'm holding on to them for now but that could change at any time. Mentally I'm feeling OK. It was a rough start to the week if you're bullish but we had become extended to the upside. I don't think it's the beginning of some extended downside but you never know. We've got the Fed and the employment report coming up this week, so we could get some volatility. ABX had gone up in a straight line, so some consolidation is expected. However if we have a reversal there and a decline starts my ABX calls will be losers. Stay tuned.
Friday, October 28, 2011
It was a day of rest for the markets as the Dow gained 22 points on average volume. The advance/declines were about even. It was a sideways market all day as we digested the huge gain of the previous day. It was quite a good week for the stock indices. The summation index continues higher. I think it's now obvious to everyone that the trend is up. We'll see how long it can last and I expect that it will for a while. GE lost 1/8 on average volume. No trades here for now. I still might try the January calls but I'd have to see the price drop first. Gold fell $3 today as we are digesting the weeks gains here as well. The XAU rose 4 2/3 as the gold shares are outperforming gold itself. That is usually bullish going forward. The US dollar was a bit higher today. ABX and GG both up 1 7/8, while NEM tacked on 2 3/8. Volume was good. Prices are moving higher with volume on the gold shares. That's a positive sign. My ABX calls are now solidly in the black. ABX had its best week to the upside since 2009. The question now becomes when to sell them. The entry on this trade wasn't that good. I'll try to do the exit better. Volume and open interest expanded on some ABX options over the past week as well. That usually implies higher prices. Mentally I'm feeling OK, slept well. The stock indices are in rally mode and the weekly charts suggest higher prices yet to come. Short term we are overbought and staying there. We've got the Fed next week and we may be on hold until then. We also have the end of the month on Monday followed by the usually bullish beginning of the next month. Not to mention the employment report on Friday. So there will be plenty to sift through next week. I have some price targets in mind for the ABX trade but I don't want to get too greedy. However I also don't want to leave too much money on the table either. Things can also turn on a dime in this game. That's something to remember. For now it's a fall Friday afternoon and time for a break.
Thursday, October 27, 2011
We got a deal in Europe and the markets responded with the Dow rocketing higher by 340 points on heavy volume. The advance/declines were almost 8 to 1 positive. We were up over 400 before selling came in late in the day. Overbought here now but the trend is up regardless. Summation index moving higher. Declines can still be bought. We have broken through the 200 day moving average convincingly on some of the stock indices. That is bullish. More will follow. You can get long and stay long. GE was up a buck on very heavy volume. The January call trade here that I had in mind has been missed at this point. Maybe I could try it if we get some pullback before the end of the year. But that remains to be seen. If GE is still a proxy for the overall market, than we've got more to go on the upside. I'm a believer in that. Gold was up about 20 bucks as the US dollar got smashed. The European deal led everyone of of the dollar and into the foreign currencies. The XAU rose 5 3/4. ABX up 1 1/8, GG gained 3/4 and NEM tacked on 1/4. The volume in ABX was heavy, just average for GG and NEM. ABX had stellar earnings and my ABX calls are solidly in the black. Overbought here and I probably should have sold them today but the weekly charts look very constructive to the upside. I still may take the profit tomorrow and try to buy them back cheaper next week. But price and volume are moving higher and that is bullish. Mentally I'm a bit tired, did not sleep enough. The stock indices are moving higher post Europe. The question now is what will be the next catalyst to propel us higher? I would expect the indices to take a rest here due to the fact that we are seeing a buying feeding frenzy. We'll see. The ABX trade is one that still has 3 weeks to go but we are pretty overbought right now. I may exit on follow through if we get any tomorrow. We are at the convergence of the 50 and 200 day moving averages here. A pause is to be expected. However if I do exit this trade there are no guarantees that I'll be able to buy the options again cheaper before expiration. Profit or loss, there are no easy trades in the game. We'll wrap up the week tomorrow and the month on Monday.
Wednesday, October 26, 2011
Back to the upside as the Dow gained 162 points on average volume. The advance/declines were about 4 to 1 positive. The Dow was stronger than the overall market today. Still waiting for Europe to announce something about the debt deal. The market was back and forth today, higher, lower, higher. I still think we will be going higher. But as I stated before, some consolidation would not be a bad thing. GE was up an 1/8 on average volume. Still waiting here for an entry point for the January calls. Gold continued higher, up about $20 on the futures. The US dollar was up a bit as well. The XAU gained 2 points. ABX was up 2/3, GG lost a fraction and NEM was up a buck. Volume was good here again. GG announces earnings after the bell and ABX before the bell tomorrow. My ABX calls are still in the black. I will probably sell them tomorrow on the earnings news. Or not. Gold has shown some life here this week and I may hold on a bit longer to the calls. We'll see. Getting overbought on the gold shares but there still may be some room to the upside. Mentally I'm feeling OK, slept well. We'll wait to see what happens in Europe tonight and we have the GDP report coming out tomorrow. So I would expect to see some more movement in the stock indices again tomorrow. It certainly isn't a quiet market at the moment. ABX will announce its earnings and I suppose that will be the key for this trade one way or the other. I am also thinking of just selling the calls tomorrow regardless and then trying to buy them again before the November expiration. The weekly ABX chart is beginning to look constructive to the upside. We'll see what happens tomorrow morning and take it from there.
Tuesday, October 25, 2011
Back to the downside as the Dow fell 207 points on average volume. The advance/declines were almost 5 to 1 negative. Some consolidation can be expected here as we have been moving higher for 3 weeks or so. I do not think it's the beginning of something big to the downside. I could be wrong and often am. But this time, I believe that today is a pause in a continuing uptrend. The summation index continues higher. Still waiting on European news tomorrow. GE fell 1/4 on average volume. It's just a waiting game here for me. The January calls are the plan and the purchase time is when this issue gets oversold. Not there yet. Gold was the story of the day as it surged about $50 on the futures despite the dollar being higher as well. The XAU gained 2 3/4 but was higher before losing ground at the end of the day, following the overall market. ABX gained 7/8, GG up 1 3/8 and NEM rose a buck. Volume picked up which supports the bullish cause here. These issues were higher on the day as well but fell off late. My ABX calls have made it into the black. However ABX is lagging both GG and NEM here and that isn't positive. I'm still holding out for the earnings on Thursday morning. That could be the time to dump them for whatever they're worth. We'll see. We're not overbought here yet and I may hold onto them longer than I expected. Mentally I'm a bit tired, did not sleep enough. We had a big day in the price of gold but the gold shares didn't move as much as I'd like. We'll see how that plays out going forward. The stock indices are waiting on Europe. What happens when that's over? I still believe that we're heading higher regardless. We'll see what the news is tomorrow and the markets reaction to it.
Monday, October 24, 2011
The market continues higher as the Dow gained 104 points on average volume. The advance/declines were over 4 to 1 higher. This won't go on forever as we are overbought and now overdue for a pause. But the trend is up and there is no denying that fact. Now Europe will report something about fixing their problems on Wednesday. I don't know how that will pan out but whatever the reaction, prices are going higher eventually. Declines can be bought in my opinion. GE was up 1/8 om average volume. We got through the earnings. Now it is a matter of waiting for GE to reach oversold levels. If and when that occurs, I'm still looking at getting some January calls there. Gold was higher today as the US dollar fell. The yellow metal was up $18 on the futures and the XAU gained 8 points. ABX and GG rose 1 2/3, while NEM was up 1 1/4. Volume was light. My ABX calls are almost back to break even. The poor timing on the entry obviously is costing me whatever profit that could have been gained from todays nice up move. I'm still in favor of waiting for the earnings report on Thursday to possibly exit this trade. At least now there is a chance it won't be a loser but that could all change going forward. Mentally I'm feeling OK. The stock indices are overbought and staying there. That in itself is bullish. However we do need to see some type of pause in this straight up kind of action to ensure that the rally has staying power. That's how I see things at the moment. We may be in a holding pattern, waiting on Europe. The ABX trade has taken a turn for the better with todays price action but the volume was weak. I'm going to wait for the earnings later this week to decide what to do. So it's a waiting game there until Thursday. Nothing else on the radar screen at the moment.
Friday, October 21, 2011
We ended the week with a bang as the Dow gained 267 points on average volume. The advance/declines were better than 6 to 1 positive. The summation index continues higher. We are breaking out of the congestion zone to the upside. The trend is up until further notice. We'll get some kind of news from Europe over the weekend and that will be the catalyst one way or the other for Monday morning. Declines can be bought. GE lost 1/4 on good volume. The earnings were in line with expectations but it didn't matter. This could be a sign that the overall market will move sideways next week but that's a guess. GE did not participate in the rally. I still want to get some January calls before the end of the year. If and when we get oversold on GE may be the opportunity. I'll keep an eye on things. Gold had a good day, up $28 on the futures and sold off a bit in the aftermarket. The dollar took a hit today. The XAU gained 3 3/8. That didn't help the major gold stocks as ABX and GG were up only 1/4, while NEM gained a buck. Volume was light. My ABX calls are still in the red and it doesn't look like this trade is going to work out. If ABX can't rally on a day gold is up and the market rallies over 200 points, then the calls I own are in trouble. I'm still going to hold out for the earnings next week but that will be about it. At this rate I don't think this trade will get back to break even. ABX opened very strong and then sold off for the rest of the day. That isn't positive price action. We'll see about next week. Mentally I'm feeling OK, slept good enough. The stock indices had a strong rally today and appear to be breaking out. We'll see on Monday just how much of today was expiration related. I'm still a believer that the decline is over and higher prices are in the future. We'll see what transpires in Europe over the weekend and go from there. For now it's Friday afternoon and time for a break.
Thursday, October 20, 2011
An up and down day as the Dow finished ahead by 37 points on average volume. The advance/declines were positive. The market is being held hostage by the ongoing fiasco in Europe. Hopefully something gets resolved over the weekend. But that won't be the end of it as there are no quick fixes. Expiration Friday tomorrow. More overbought than oversold here. Summation index still moving higher. I'm a believer in a breakout to the upside from the congestion zone for the stock indices. GE was up 1/8 on average volume before the earnings report tomorrow. Tomorrow the market will key off of this report early in my opinion. I'm still looking out to January if and when we get oversold here. Gold fell again today as the US dollar showed a bit of strength. The precious metal lost over $30 and the XAU fell 1/4. ABX down 1/2, GG lost 1/8 and NEM off by 2/3. Volume was good. My ABX calls are in the red. I'll be lucky to get out alive at this point. I think that I was a day early on the purchase. I'm committed to holding on until the earnings are out next week. We did close pretty far from the low of the day which may portend higher prices tomorrow. Mentally I'm a bit tired, did not sleep well. GE earnings tomorrow should set the tone for the stock market and we'll go from there. Expiration Friday will add to the mix. Gold and the gold shares are having a tough week and we'll see how it closes out. No economic reports due out tomorrow but they are taking a back seat to Europe anyway. Let's finish up the trading week and see what happens over the weekend.
Wednesday, October 19, 2011
Back and forth so far this week as the Dow lost 72 points today on light volume. The advance/declines were about 3 to 1 negative. The overall market was much weaker than the Dow. Earnings disappointments and a weak read on the economy by the Fed were the culprits. Not to mention the overbought condition of the stock indices combined with the resistance at the top of the months long congestion zone. Some hesitation is expected here. GE was off 1/8 on lighter volume. The fact that GE held up rather well today tells me that there is no huge decline coming up for the market. At least that's my theory for today. Could all change with the earnings for GE out on Friday but I don't think so. Gold fell $5 on the futures and a bit more in the aftermarket. The dollar was weaker early but then came back. The XAU got slammed, down 10 1/2 points. ABX fell 2 1/3, GG dropped 2 1/2 and NEM down 3 1/8. Volume increased to the downside and that isn't bullish going forward. My order for the ABX November calls was filled and they are already in the red. Todays price action on the gold shares was very negative considering the price of gold didn't drop that much. No matter. The game plan was to get the November calls ahead of the earnings next week at the price that I felt was right. That much has been accomplished. We'll see where we go from here. Mentally I'm feeling OK. So the next trade has begun and I will have to try and do a better job of managing it than the last one. 2 days left in the October option cycle. Not sure what to think after todays negative action but I still think we are just pausing here before breaking out of the congestion zone. On to Thursday.
Tuesday, October 18, 2011
Back to the upside as the Dow gained 180 points on average volume. The advance/declines were 5 to 1 positive. We are attacking the top of the congestion area and I do think we will break above it. Expiration week usually has a positive bias and that may be enough to push us through. Calls and being long are the way to go until further notice. GE was up 1/2 on average volume. Waiting on the earnings report on Friday. Gold took a hit today, down around $25 on the futures. We were down lower than that early and made even more of a comeback in the aftermarket. The US dollar was just a bit lower today. The XAU dropped early on but closed higher by 1/3 on the day. ABX off 1/8, GG was flat and NEM fell 3/4. Volume picked up here. The gold shares sold off hard to start the day and followed the market higher for the rest of the day. My order for the ABX November calls wasn't filled. Today was probably the day to get them. It was kind of a reversal back to the upside for the gold shares today. I'm leaving the order in but may have to adjust it if we continue higher in ABX from here. Or I simply missed it. Time will tell. Mentally I'm doing OK. The stock indices feel like they want to go higher here. The summation index is still pointing to the upside. You cannot fight that. We're still overbought both short and medium term but Mondays action relieved some of that. We'll see what happens overnight in Europe and take it from there.
Monday, October 17, 2011
We started expiration off to the downside as the Dow lost 247 points on light volume. The advance/declines were about 5 to 1 negative. European worries surfaced once again. I do not think that this is the start of something big to the downside. We were both short and medium term overbought, so some type of pullback is expected here. I still believe that the trend has changed and we will eventually be heading higher. GE fell 1/3 on light volume. Earnings out on Friday. I'd still like the January calls there and will purchase them if the price gets into my range. Gold fell $6 as the US dollar was higher today. Probably due to the European fears being rekindled. The XAU dropped 5 points. ABX off a buck, GG down 1 1/3 and NEM lost 2/3. Volume light here as well. I placed an order for some ABX November calls and I'm leaving it in overnight. I'd like to be holding calls when the earnings are announced next week. We're overbought here so some decline is in order. We'll see. Mentally I'm feeling OK, slept good enough. A pretty good decline to start the week. The stock indices have risen up to the top of their congestion zones. Some hesitation is expected here but I do believe higher prices are in the offing. Declines can be bought in my opinion. I am frequently wrong though. The summation index is still heading higher even with todays decline. Plenty of economic data and earnings coming up this week. We'll see how it goes.
Friday, October 14, 2011
It's a grind higher before expiration week as the Dow gained 166 points on light volume. The advance/declines were 5 to 1 positive. The sellers have left the building. Short and medium term overbought now but the tone of the market has changed. We're going higher until further notice. The low for the year has been put in. How can I be so sure of this? The summation index is heading higher. Seasonality turns bullish from here until spring. The presidential cycle points to higher prices. Any declines can be bought. The market has started to ignore bad news. This rally hasn't had great volume but I don't think that it matters. I could be wrong but this time I doubt it. GE was up 1/3 on light volume. We are still at the top of the congestion range and probably will break out next week. Earnings due out on Friday. I'll try my best to stay on the sidelines here before that. Gold continues higher with a gain of $15 on the futures. The US dollar was weaker today and it looks like the 2 month rally there is over. The XAU rose 6 1/3. The gold shares have been doing better than gold itself lately and that bodes well for the bullish cause going forward. ABX 1 1/4, GG gained 1 1/2 and NEM continues to lead the way higher, up 3 1/8. Volume was light however but nobody is selling. Declines in the gold shares are being bought. I would still like to try some gold share calls before the earnings coming out the final week of October. I would expect the gold shares to continue higher next week along with the market, pre-option expiration. Mentally I'm doing OK, slept well enough. The stock indices continue to roll along and there is really nothing to stop them now. Earnings season is upon us and the estimates are so low that even weak numbers will be cheered by the markets. That is the kind of game that this is. Know that and plan accordingly. The only way to play now is from the long side. I have a couple of ideas but getting in now after we've already rallied will not be easy. I'm going to try and not make some kind of short term trade next week but you never know. It really isn't my strong point but some would wonder if I have any strong points at all. No matter. The markets roll on. For now it's Friday afternoon and time for a break.
Thursday, October 13, 2011
A little bit of selling today as the Dow fell 40 points on light volume. The advance/declines were negative. The overall market was stronger than the Dow. Summation index is still heading higher. The trend has changed to the upside. Once we get past 1220 on the S&P 500, I expect the rise to accelerate. That's my best guess at the moment. GE dropped almost 1/4 on light volume. Overbought here but we could remain that way. I still want to own some January calls but I think I'll wait until after the earnings report next Friday. Gold fell $14 on the futures and the XAU lost 3 3/4. The US dollar was flat today. ABX down 1 1/8, GG fell a buck and NEM off 1/3. Volume was light. No trades in the gold shares for now. Mentally I'm doing OK but could have slept better. The recent OEX put trade loss was my biggest of the year. So it is no surprise that the confidence level is down and I'll tread lightly going forward. I will try not to make any short term trades in the last 6 days of the October option cycle but there are no guarantees. We'll get through Fridays trading and go from there.
Wednesday, October 12, 2011
The rally continued today as the Dow gained 102 points on average volume. The advance/declines were about 4 to 1 positive. We did however cut the days gain in half by the close. We could be in for a pause here but the trend remains up. Summation index moving higher. We reached 1220 on the S&P 500 and backed off. 1220 is the final area of resistance in the congestion zone that has been in place since August. I almost placed an overnight order for some OEX puts. The McClellan oscillator gave a signal for a significant move but I held off. The previous loss may have saved me there. There's also a tendency sometimes to try and get back what you've just lost. Luckily I recognized this and did not place the trade. It doesn't make up for this weeks OEX trade loss though. GE was up 1/4 on average volume. I took off the open order for the January calls here. I'll keep an eye on things but this trade may have been missed. Gold was up $20 on the futures today as the dollar got whacked again. The XAU was up 1 3/4. ABX and GG both gained 1/3, while NEM fell 1/3. Volume continues light here. I also took off the open order for the ABX November calls as well. I still may try and do something before the earnings report at the end of the month but we are now more overbought than oversold here. I'd prefer to see the gold shares build more of a base here but that may not occur. Mentally I'm feeling OK. Even if the stock indices pull back in the near term, the trend has changed to the upside. We are short term overbought now. I'll be looking for some calls on weakness. I won't be in a hurry to do anything after this weeks losing trade. 7 days to go on the October option cycle and I have not had success with short term trades. I will try and be patient. Retail sales on Friday is about the only economic indicator coming up for the remainder of the week besides jobless claims tomorrow. We'll see if the rally can continue.
Tuesday, October 11, 2011
We ended the day with a slight loss on the Dow as we lost 16 points. Volume was light and the advance/declines were positive. The overall market was stronger than the Dow. We are now short term overbought. That doesn't mean that we can't stay that way. I dumped the OEX puts for a 75% loss. I should have sold them yesterday as this was a trade that did not work at all. It happens. Today was probably a better day to purchase some puts. I have no other OEX trades in mind at the moment. GE was flat on light volume. I still have the open order in for the January GE calls. Gold lost $10 on the futures and the XAU dropped 1/3. The US dollar was flat today. ABX and GG had fractional losses and NEM fell 7/8. Volume remains very light here. The gold shares were lower early and came back. I think my next trade might be here but we'll see. Mentally I'm feeling OK. Not exactly pleased about taking the recent OEX loss but you've got to keep moving on in the game. 8 days left for the October option cycle. Short term overbought on the stock indices but the summation index is moving higher. I have no clear ideas at the moment. I do have the open orders in for GE and ABX but they are on a longer time frame. The market is news driven lately and we have a Senate vote on the jobs bill coming up along with a European bailout vote. We'll see how things go tomorrow.
Monday, October 10, 2011
The Dow took off to the upside today on good news from Europe as we gained 330 points on light volume. The advance/declines were 10 to 1 positive. It was a partial holiday for Columbus Day which probably explains the light volume. The summation index will now be trending higher. The decline is now over in my opinion. My OEX puts are dead. I'll be taking the loss tomorrow which I really should have done today. Declines can be bought from now on. GE rose 2/3 on lighter volume. We've made it through the 50 day moving average and are at the top of the congestion zone. We should break through to the upside shortly. Gold was up $35 on the futures and a bit more in the aftermarket. The US dollar got slammed today on the good news out of Europe. The XAU gained 6 1/3. ABX up 1 1/3, GG rose 1 1/4 and NEM led the way higher by 2 1/8. Volume was extremely light here. I'd still like to get some gold share calls for November on a pullback. Mentally I'm feeling OK. I still have to open orders in for the January GE calls and the November ABX calls. I'll be leaving them in for now. Not happy about the OEX put trade but you take your chances sometimes in the game. We will most likely simply be going higher from here. Fed beige book out tomorrow and that's about it for news. We'll see what kind of follow through we get tomorrow.
Friday, October 07, 2011
An up and down day as the Dow opened higher, sold off, came all the way back and higher only to sell off at the close. We ended the day with a loss of 20 points on average volume. The advance/declines were over 2 to 1 negative. The overall market was much weaker than the Dow. The employment report came out and was much better than expected. The market tried to rally but couldn't. That may or may not be telling going forward. My OEX puts are in the red as the timing wasn't as good on the entry as it good be but what can you do? That is the trouble sometimes with the stock index options. The timing has to be exact and nothing is exact in this game. The volatility and time premium in the options are already starting a rapid decay. I also had to lower the strike price which certainly doesn't help things. It's not a complete lost cause but I'm not counting on this to be a good trade. GE was flat on the day after trying to get through its 50 day moving average. Volume was average here. I'll be keeping an eye on things here as a proxy for the overall market. It seems to be working that way lately. Gold lost around $17 on the futures and the XAU fell 4 1/4. The US dollar ended little changed despite the good employment report. ABX, GG and NEM all dropped a buck on light volume. I think the gold share calls are the way to go if we retest the recent lows. I'm leaving in the open order for the November ABX calls. Mentally I'm feeling tired as I did not sleep well or long enough. The beginning of next week will be the key. We are at the levels on some of the technicals that have turned back any recent rally attempts. If that remains true, then the OEX puts I own will have a chance. If not, then I believe that the decline is over. That's my best guess at the moment. We didn't rally on good news and that may be telling. Monday is a partial holiday with Columbus day so that may skew things. Plenty to ponder over the weekend. For now it's Friday afternoon and time for a break.
Thursday, October 06, 2011
The rally continues and seems to be for real at this point. The Dow gained 183 points today on average volume. The advance/declines were 6 to 1 positive. Todays action will turn the summation index back to the upside. I went down to a lower strike price and purchased some OEX puts near the close. That was the game plan and I stuck to it but I wouldn't be surprised if it doesn't work based on the recent market action. However it will all depend on the markets reaction to tomorrows jobs report. We've worked off the oversold condition and some of the technicals are back at the levels that have begun the down moves. So we'll see what happens. GE rose 1/4 on average volume. Almost to the 50 day moving average line that has been resistance. I'm leaving in the order for the January calls. Gold gained over $10 on the futures as the US dollar was weaker again today. The XAU rose 4 3/4. ABX up 1 1/2, GG climbed 1 3/4 and NEM higher by a buck. Volume was average. It really looks like I missed out on a good opportunity here as both ABX and GG have risen well over 10% in the span of 3 days. I'm leaving in the open order for the November ABX calls but doubt it will get filled at the price that I want. My hope now is for some backing and filling in the gold shares to get long. May not happen. Mentally I'm feeling OK. Still 2 weeks to go in the October option cycle. All eyes will be on tomorrows employment report. So far it seems to me that we have had a huge snap back from the lows on Tuesday in the stock indices. If we continue to rally tomorrow, I'd say that the recent decline has run its course. If not, who knows? I'll be hoping that gold returns to its recent lows but hope is no way to trade. We'll see what the market reaction is to the employment news and take it from there.
Wednesday, October 05, 2011
Building on yesterdays one day reversal as the Dow gained 131 points on average volume. The advance/declines were almost 3 to 1 positive. Now we must ask if the recent lows are the end of the downtrend and is the 2 day rally for real? I don't have the answers. I would still like to own some OEX puts before Friday. However with bullish engulfing patterns on the stock indice daily candlestick charts, that may not be the proper trade here. The weekly charts now look bullish as well. That could all change with Fridays employment numbers though. So it will be a tough call as to what to do tomorrow. GE was up 3/8 on good volume. I did place an order for some January calls today. I'm leaving it open until it's filled or I decide to do something else with it. Gold rose $25 on the futures and the XAU gained 8 points. The US dollar was lower today. ABX up 1 2/3, GG higher by 2 points and NEM tacked on 1 3/4. Volume was average. I also placed an order for some ABX November calls but I may be too late here as well. Perhaps if we get some backing and filling here, the order will get filled. I do not want to chase things here as I still think there is a chance for more decline in the overall market. Mentally I'm doing OK, slept well. I'll really need to decide tonight what to do, if anything, before Fridays employment numbers. Yes, I could always just sit it out and wait for the markets reaction. But if we get a huge decline from the start, it will be too late for the OEX puts. There's always the possibility that the numbers aren't that bad and we continue to rally. The technicals are moving up from being very oversold. I'll mull things over tonight and decide what to do for tomorrow.
Tuesday, October 04, 2011
We had a one day reversal to the upside as the Dow opened lower and closed higher. We ended the day with a gain of 153 points on good volume. We were down almost 250 points in the morning. The advance/declines were positive. Is this the short covering rally that we're looking for in order to purchase some OEX puts? Could be. In bear markets we see strong rallies that spring up out of nowhere. Todays action qualifies under that criteria. Is today the end of the recent decline? Time will tell on that one but I'm inclined to think that we aren't done with the downside yet. I could be wrong and often am. GE was up 1/8 in reversal mode as well. Volume was heavy. I thought about putting in the order for the January calls but we are not yet at the price I'm looking for. We also have earnings coming out on October 21st which could complicate things. However I am going to get some calls at some point. Gold took it on the chin today, down over $40 on the futures. The XAU fell 6 1/4 but was lower during the session. ABX dropped about 1 1/2, GG down 1 3/4 and NEM lost 2 bucks. All had heavy volume and also cut their losses dramatically in the final hour of trading. I also considered putting in the orders for the November gold share calls as well. The daily candlestick charts are now looking positive for the gold shares. We are oversold and todays action looks like a bottom has been put in. That could all change tomorrow though in this volatile marketplace. That is just one of the problems here. You don't want to be too early. Mentally I'm doing OK. Fridays employment report still looms big at the end of this week. However a lot of the stock indice charts are now showing bullish candlestick reversals. I still might get some OEX puts before that report is released. Plenty of time left in the October cycle. Might be time for the gold shares as well but not if we get another down leg following Fridays employment report. Nothing is certain in this game as we well know. We'll see if we get any follow through to the upside tomorrow.
Monday, October 03, 2011
Starting October where we left off in September as the Dow lost 258 points on good volume. The advance/declines were almost 10 to 1 negative. Index puts are the place to be and I don't own any. The premiums are still very high on the options. We've broken the consolidation in the S&P 500 to the downside. Now it is simply a question of how low we go. We haven't even gotten to Fridays employment number yet. So we'll see what happens. I have a couple of ideas longer term involving GE and the gold shares. I suppose I'll be looking for entry points. GE helped lead the way down today, off 1/2 and closing on its low for the day. Volume was good. I still want to get some January calls here. Gold had a good day with the futures up $35. The US dollar was higher as well in the flight to safety. The XAU fell 2 points though. ABX dropped 3/8, GG was flat and NEM gained 1/3. Volume was light here. I'd like to get some gold share calls eventually. I'm looking to go out to November. Plenty of time there. The Gold/XAU ratio is off the charts to the buy side but that indicator hasn't been working lately. Mentally I'm doing OK. Trying not to get caught up in not owning any OEX puts as we fall here. Perhaps there will be a short covering rally this week before the employment report. Wishful thinking there. I have a couple of ideas with the longer term GE call options for January and the gold share calls for November. The summation index has turned down again but it's been in a range lately with no extended moves. We'll see what happens tomorrow.