Wednesday, February 29, 2012
Some downside today on the comments from Ben Bernanke as the Dow fell 53 points on better volume. The advance/declines were 2 to 1 negative. Summation index now falling to the downside. We also have a negative divergence on the RSI for the S&P 500. So perhaps this is the start of something more to the downside than we've seen since the rally started back in December. I'm not totally convinced of that but we'll see what transpires as we move forward. I am now looking at perhaps the OEX calls for March but not just yet. GE fell 1/8 on average volume. We've been moving sideways for two months now. I am no longer considering the March calls here. I will opt to try the OEX if we get an oversold signal on the overall market. Gold was really the story of the day as far as I'm concerned as it got clobbered on the Bernanke babble. The yellow metal fell about $75 on the futures and another $15 in the aftermarket. The US dollar rallied on the Fed chairmans comments. The XAU dropped 6 2/3. ABX down 1 3/4, GG fell 1 1/2 and NEM off by 2 1/2. Volume was heavy. I dumped the ABX calls that I had for a 25% loss. Interestingly enough they were still showing a profit in the first half hour. However I did not have a stop loss order in place and then hesitated to sell since we were so close to breaking out above $50. But the markets will go where they want and adjustments must be made. I was too slow today. Mentally I'm a bit tired, could have slept more. Another trade and another loss. Not good for the confidence level but you've got to keep moving on. Beginning of the month on tap tomorrow. With the negative RSI divergence on the stock indices, I'll most likely be on the sidelines until we get oversold. Which hasn't happened in quite some time. I will also have to let gold settle down before I place another trade there. With March being historically a poor month for the price of gold it seems to be the prudent course of action for now. I'm not happy with the result of the ABX call trade today but there isn't much you can do when you don't put forth the full effort. In retrospect I should have placed a stop loss order when the trade got profitable again yesterday. I also noticed too late this morning that the heavy volume yesterday on the ABX calls did not expand the open interest. In fact the open interest declined significantly. That was another clue that I picked up on when it was already past the point of no return. None of that matters now though. The next trade is what's important.
Tuesday, February 28, 2012
The grind higher continues as the Dow gained 23 points on light volume. The advances barely beat out the declines. The overall market was stronger than the Dow. The advance is really starting to look thin as the advance/declines are not strong. However the trend remains up until we get some type of meaningful decline. Hasn't happened yet but be aware that it could commence at any time. That's my guess of the situation at the moment. GE was up 1/8 on light volume. Moving sideways at a slightly higher level but no breakout as of yet. I'm not planning on buying the March calls anymore but I suppose that could change. Gold moved higher today as the US dollar was lower. The precious metals futures were up $13. The XAU was up 3 7/8. ABX up almost a buck, GG rose 1 2/3 and NEM gained 1/2. Volume was average. My ABX calls are back in the black. We are getting close to breaking through the resistance at $50 for both ABX and GG. GG is acting much better though and the option premiums reflect that. We will need to see good volume as we move above $50 on these 2 stocks to be sure that the breakout is valid. If it even happens. Mentally I'm feeling OK, slept well enough. Overall stock indices are overbought as they have been for weeks on end. I would not be surprised to see some near term weakness but I do expect higher prices into the March expiration. Gold is approaching the $1800 level and I would expect to see some hesitation or consolidation there. The US dollar is close to the 78 level and I see support there at 77. That level on the US dollar is a logical place to take the profits on gold in my opinion. That is where I'd like to dump the ABX calls, if I hold them that long. The weekly charts on the gold shares still look constructive to the upside. Of course this could all change tomorrow as the markets will go wherever they want. The Fed beige book and the end of the month are on tap.
Monday, February 27, 2012
Some volatility returned today but at the close the Dow only lost a bit more than a point on light volume. The advance/declines were even. Still overbought and nothing has changed for the indices. The trend remains up. Some economic data out this week but no big numbers. But as usual anything can happen. Europe seems to be on the back burner for now. GE was off 1/8 on light volume. The technicals here look to be rolling over and that could present a problem for the overall market if GE is once again leading the market. However we haven't broken the support for GE which lies at around the $18.50 area. Gold was practically flat on the day but dropped $7 in the aftermarket. The US dollar was up a bit today. The XAU fell 1 3/4. ABX down 1/3, GG off 1/4 and NEM dropped a buck. Volume was light. My ABX calls are now in the red. This trade is more and more looking like a loser. I'll need to see a turnaround in ABX shortly or I'll just have to exit. The only positive is that the Gold/XAU ratio is almost at the buy point again. Mentally I'm feeling OK, could have slept better. End of the month coming up so we'll see what that brings for the stock indexes. I'm not exactly sure where we're headed here but it feels like lower could be the near term direction. Gold isn't acting well to start the week and that could doom my ABX calls. We'll see what tomorrow brings.
Friday, February 24, 2012
It seemed like a day of just marking time as the Dow finished lower by a point and two thirds. The advance/declines were about even and the volume was pretty light. The overall market was stronger than the Dow. We're still overbought both short and medium term on the stock indices. We're still grinding higher as well. GE was little changed once again on very light volume. I'm not exactly sure about a March option trade here now. We've had every opportunity to break out higher here and it hasn't happened. Perhaps if we drift back to the 50 day moving average on the daily charts, I'll try the calls. Gold was lower today, down around $10 on the futures. The US dollar was lower today as well so the non confirmation with the price of gold is troubling for the longs. And I'm one of the longs. The XAU fell 2 1/4 today. ABX was off 3/4, GG down 7/8 and NEM fell 1 1/4. Volume was light to average. My ABX calls are right back at where I purchased them. I expected some hesitation at the $50 level for ABX but I don't like the way the stock and gold acted today. The daily candlestick chart looks ominous as well unless we turn things around in a hurry at the beginning of next week. I'm not giving up on this trade just yet because this could just be a pause before we move higher. But if it isn't, this trade will be another loser. Mentally I'm feeling OK, slept well enough. It seems like we're still waiting for some type of market correction that never comes. It has been quite a long time since we've seen even a drop of 3 or 4 days. The trend remains up until further notice. Gold had a good week but we'll need to see some follow through next week to bolster the bullish cause. I'll be checking the charts over the weekend to come up with some type of game plan for next week. For now it's Friday afternoon and time for a break.
Thursday, February 23, 2012
A one day reversal to the upside as the Dow opened lower and closed higher. We gained 46 points on light volume. The advance/declines were over 2 to 1 positive. The over the counter stocks had a good day and that's usually bullish going forward. No real news to report and the economic data was relatively benign. We'll see if we can build on todays gains tomorrow. GE closed down a touch but was well off of the days lows. I still might try the March calls here with 3 weeks left in the option cycle. I will consider this trade over the weekend. Gold continued its run higher by gaining $15 on the futures but lost ground in the aftermarket. The US dollar had a decent drop today. The XAU was up a point. ABX gained 1/8, GG up 1/4 and NEM rose a buck. Volume was average. My ABX calls are still in the black but they finished well off of the days high. ABX and GG are running into short term resistance and I would expect a pause in the recent rally here. I expect that we will break through the resistance next week but that's a guess as usual. Anything can happen. Mentally I'm feeling OK, slept well enough. I'm looking for higher prices in the stock indices and expect the uptrend to continue into the March option expiration. I'm also thinking that gold will hit $1800 next week and we are already almost there. What happens when we get to $1800 will be the key. A break through that level will probably mean a run at the all time highs. However there is a possible negative RSI divergence on the daily gold chart. So the jury is still out there. I'll be keeping an eye on the ABX calls that I have but I anticipate holding them into next week at the least. We'll get through tomorrows trading session and reassess things from there.
Wednesday, February 22, 2012
Kind of a lackluster session today as the Dow fell 27 points on light volume. The advance/declines were negative. The summation index is heading lower. We do need to work off the overbought condition. I do not see any huge decline in the works and I would expect higher prices by the March expiration. GE was flat on light volume. Still trying to break out of the top of the range as we have just gotten above it. We'll need to see some volume to the upside to confirm. Gold had another good day, up $12 on the futures and another $8 in the aftermarket. The US dollar was a bit higher today. The XAU gained 3 points. ABX up a buck, GG rose 3/4 and NEM higher by 1 1/4. My ABX calls are in the black. However the GG option prices are increasing better than the ABX option prices, given the same price moves in the underlying stocks. The GG March calls at this point would have been a better choice. We're not overbought on the gold share calls yet. Mentally I'm feeling OK. Not a lot of economic data this week and it's a short week as well. I'm not expecting any huge moves one way or the other for the stock indices. Gold is acting well and I think the next target there is $1800. We'll see. February is usually a challenging month for the market but that hasn't happened yet. Still a week to go.
Tuesday, February 21, 2012
The big news today was the Greek bailout deal was approved, so perhaps that won't dominate the headlines for awhile. I doubt that the problem is really solved though. The Dow gained 15 points on light volume. The advance/declines were about even. The overall market was weaker than the Dow. Still overbought on the stock indices and still trying to move higher. GE was up 1/8 on light volume. We are breaking through the top of the trend channel today. However the volume wasn't all that great. I still am considering the GE March calls though. Gold was another story of the day as it gained over $30 on the futures. The US dollar was a bit lower. The XAU gained 5 1/3. ABX and GG up 1 3/8, while NEM rose 2 1/8. Volume was average. NEM is breaking above a declining tops line on the daily charts that has been in effect since November. That is a bullish sign. I'm a believer that gold will be moving higher in the short term. I bought some March ABX calls today. I am chasing the move here but I feel that in this case that it's warranted. I could be wrong. Mentally I'm feeling OK, slept well enough. I checked the charts over the weekend and thought that getting long the gold shares was the right idea for now. I do know that March is historically the worst month for the price of gold. I do not think that I'll be holding onto this trade until the March expiration. The gold share technicals have room to move to the upside and the Gold/XAU ratio signal was flashing a buy again this morning. So I decided to place the trade. We'll see what happens. The stock indexes continue to play the same tune. Higher prices despite being overbought on the technicals. Sooner or later they will need to take a much needed rest. I think that there will be buyers on any dips though. We'll see what happens overseas tonight and go from there.
Friday, February 17, 2012
The Dow closed out the week with a gain of 45 points on light volume. The advance/declines were positive. The overall market was weaker than the Dow though. I'm not exactly sure where we go from here but the trend is still up until proven otherwise. It's a long weekend with a Monday holiday. We'll have to see what kind of news comes out of Europe. GE was up 1/4 on good volume. We're back up to the top of the trend channel. Perhaps the action in GE today is a precursor for the stock indices next week. That's a guess, as usual. Gold fell a couple bucks on the futures as the US dollar finished the day little changed. The XAU fell almost 3 points. ABX down 1 1/8, GG off 1/3 and NEM dropped a buck. Volume was average. I am thinking about trying the gold share calls again, since we are just about at the Gold/XAU buy signal once again. We are also more oversold than overbought. I'll consider this trade over the weekend. Mentally I'm doing OK. I'm still getting past yesterdays debacle with the horrible ABX trade. But you've got to move on. We're on to the March option cycle. The stock indexes continue to move higher despite the ongoing backdrop of headline risk. There is also a possible negative divergence with the daily RSI. So we'll see what happens next week. For now it's Friday afternoon before a long weekend and time for a break.
Thursday, February 16, 2012
The market rallied back today as the economic numbers looked to be better than expected. The Dow rose 123 points on average volume. The advance/declines were 3 to 1 positive. The market ignored possible European credit downgrades and the Greece situation. The stock indices have the feel of wanting to go higher. Throw in an expiration Friday and I think we'll see better prices again tomorrow. We worked off the recent short term overbought condition and we're off to new highs for the year. Had I not been preoccupied with the losing ABX trade, perhaps I would have tried the OEX calls. GE was up 1/4 on light volume. Still waiting for the breakout here. Gold was flat on the futures after selling off early. The US dollar was weaker today. The XAU had a good day, up 5 1/3. ABX gained 3/4, GG rose 2 1/8 and NEM was up 7/8. Volume was good. The earnings for ABX were below expectations and it sold off with gold early. My ABX call trade ended up worthless. A complete loss. I didn't listen to the technicals and paid the price. There is no excuse. I didn't have the discipline and it cost me. Had I chosen GG instead, it would have worked out. But my information there stated the earnings would be out on the 24th and they came out yesterday after the bell. The Gold/XAU ratio signal was valid as we rallied the gold shares today. Mentally it's a loss of confidence once again. That is just one of the problems with losing trades. They make me scale back the risk and potentially miss out on better trades. As was the case with the OEX today. It's something that I've worked on in the past but today sends me back to square one again regarding my mental trading state of mind. I'll need to put todays losing trade behind me and move forward as soon as possible. The battle is always waged within myself. The stock indices had a good day today and appear to be poised to move even higher. Gold also made a nice comeback after selling off at the open. I'm not sure what my next trade will be at this stage. We'll see how the expiration goes tomorrow and then try to enjoy the long holiday weekend.
Wednesday, February 15, 2012
A one day reversal to the downside as the Dow opened higher and closed lower. The main index lost 97 points on average volume. The advance/declines were negative. Worries over Europe took center stage again. I still expect some type of upside before the end of the week. I did not expect the negative action today though. So we'll see. GE fell 18 cents on light volume. We're still in the trading range but at the lower end of it. When we do break out, it should be a pretty good move. Gold gained $10 on the day as the US dollar was up a bit. The XAU fell 2/3. ABX and GG had fractional losses on light volume, while NEM was up over 3/4. My ABX calls are dead and I will be burying them tomorrow. I don't think that the earnings can save them now. The Gold/XAU ratio is still in the buy zone. Perhaps I'll go out to the March options. However March is historically the worst month for the price of gold. Mentally I'm feeling OK. My work says that if we do not see any upside through Friday that we will be very oversold both short and medium term. That is why I expect some upside in the stock indices prior to the end of the week. In retrospect the ABX trade was a mistake and I'll be taking the loss tomorrow. I should have simply listened to the technicals. It's not my first wrong move and it won't be the last. Losses are part of the game. We'll see what transpires overnight and check the ABX earnings report in the morning.
Tuesday, February 14, 2012
Down for much of the session, the Dow made a last half hour rebound and finished the day up 4 points on light volume. The advance/declines were negative. I'm still a believer in higher prices by the end of the week. The positive expiration bias seems to be in effect. After that, who knows? If I wasn't stuck in the ABX trade, I would perhaps attempt the OEX calls here. Today was probably the day to do that. Hindsight is rarely wrong. GE was off 1/8 on light volume. Still moving sideways here. The Bollinger bands on the daily chart here are very tight. That implies a huge move one way or the other as I stated a few days ago. It will happen, it's just a question of when. Gold lost $7 on the futures as the US dollar had a very good day. The XAU fell 2 7/8. ABX down 3/8, GG off 1/3 and NEM dropped 2/3. Volume was good. My ABX February calls, barring a miracle, are dead. Todays loss pretty much sealed that. The only chance would be a rally off the earnings report on Thursday morning. I think that was one of the problems for me on this particular trade. I placed too much emphasis on the earnings and did not listen to the technicals. However the Gold/XAU ratio buy signal is now in effect. Mentally I'm feeling OK. Todays action in the stock indices seems bullish to me, as we tried to sell off but didn't. We've got some Fed news tomorrow and plenty of economic data for the rest of the week. The summation index is starting to move sideways. We'll get through tomorrow and await the ABX earnings on Thursday.
Monday, February 13, 2012
Back to the upside on the Greece bailout today as the Dow rose 72 points on light volume. The advance/declines were 3 to 1 positive. I'm not much of a believer in light volume rallies, especially on a Monday. However later this week, I'm looking for some positive market action in the stock indices. I'm also a believer in the positive expiration bias this week. Plenty of economic data to contend with this week so we'll see what happens. GE was up about 20 cents on light volume. No trades there for now. Gold was flat on the day as the US dollar lost a touch. The XAU fell 7/8. ABX, GG and NEM were all off an 1/8 or so on light volume. I'm still holding the February ABX calls and against my better judgement. Probably should have dumped them this morning. But with the earnings on Thursday there's still a chance that this trade could work out. Another factor for me is that the Gold/XAU ratio is practically at a buy signal again. That doesn't always mean a gold rally is imminent but the odds are better for some upside. So we'll see. I won't be surprised if it a loser though. Mentally I'm feeling tired, did not sleep well. So now Greece is out of the way until the next crisis there but I don't expect any this week. I think we worked off the short term overbought condition on Friday for the stock indices and I expect higher prices by the end of the week. The ABX trade could go either way but it isn't looking good for a profitable ending. But I could be wrong and often am. We'll see what tomorrow brings.
Friday, February 10, 2012
We finally got a bit of a pullback today on headline risk as the Dow fell 89 points on light volume. The advance/declines were 3 to 1 negative. This action should turn the summation index around as it was getting about as high as it could. Troubles in Greece resurfaced today but really, they never went away in the first place. But that was the focus of the markets today. The short term overbought condition has been relieved in my opinion. Expiration week coming up and all eyes will be on Europe over the weekend and that will set the tone for Monday morning. I have no idea how that will turn out. GE fell 1/4 on light volume and we had a gap lower as well. It isn't bullish. I'll have to rethink my stance on purchasing some March calls here. No trades for me in GE right now. Gold fell around $15 on the futures and a bit more in the aftermarket. The US dollar had a strong session due to the anxiety out of Europe. The XAU dropped 3 2/3. ABX and GG fell 7/8, while NEM lost a buck. Volume was average. My open order for the ABX calls was filled when we gapped down at the open. I therefore actually got a better price than my limit order. The trade remains at break even but it will probably be a loser if I continue to hold it into late next week. We had a gap down on most of the gold shares and that isn't bullish. Support did not hold. The only way this trade will work is if we get a complete reversal to the upside on Monday morning. That isn't very likely. Mentally I'm feeling a bit tired, could have slept more. We got some downside today in the stock indices but I really don't think that it is the beginning of some huge drop next week. We've got the positive bias of expiration week combined with what I believe is an already short term oversold condition. I could be wrong and often am. The ABX trade is on but I don't think it is going to work out as I desired. I'll have plenty to think about over the weekend and hopefully I'll make the proper decisions. We are back in headline risk mode and that is a tough way to trade. Virtually anything can happen at any time which is always the case when it comes to trading. But a news driven marketplace seems to magnify events one way or the other. It's possible that volatility will return and that makes for a trickier environment. So I'll keep an eye on things over the weekend and go from there. For now it's Friday afternoon and time for a break.
Thursday, February 09, 2012
Overbought, staying there and a slight gain today as the Dow gained 6 points today on average volume. The advance/declines were about even. The overall market was stronger than the Dow. The advancing grind continues. Day in and day out there is no concentrated selling. The trend is up and the rally continues. Summation index continues higher but we are just about as far as we can go. But who knows? GE was off 1/8 on light volume. A bearish candlestick pattern on the daily chart here as well as a negative divergence on the RSI. They imply lower prices for GE in the near term. Gold was up $10 in the futures market and fell by that amount in the aftermarket. The US dollar ended flat on the day. The XAU fell 2/3. ABX, GG and NEM all had fractional losses on light volume. I'm leaving in the open order for the February ABX calls but the risk is probably higher than I would normally take on. There are only 6 days left in the February option cycle. Todays action in gold itself wasn't bullish. However I've been a believer in this trade for some time now. So we'll see. I may cancel it tomorrow though. Mentally I'm feeling tired, did not sleep enough. I have expected the market to take a rest but it hasn't happened. Perhaps we will simply continue the upwards trend into expiration. That's a guess as usual. We'll see how gold closes out the week tomorrow. There are still the ABX earnings out next week as well. So we'll get through Friday and go from there.
Wednesday, February 08, 2012
A minor attempt at a sell off this morning but the Dow came back and ended the day with a gain of 5 points. The advance/declines were positive and the volume was average. The overall market was stronger than the Dow. No signs of a pullback although the short term technical picture is very overbought. The trend is up until further notice. GE had a fractional gain on light volume. No trades there for now. I'm still considering the March calls. Gold was down $17 on the futures but came back by $5 in the aftermarket. The US dollar was basically flat. The XAU fell 1/3. ABX, GG and NEM had fractional losses on light volume. I'm still leaving in the open order for the February ABX calls. Running out of time here and I usually don't do well with the short term trades. We'll see if the order gets filled tomorrow and go from there. Only 7 days left in the February option cycle. Mentally I'm feeling OK. Not a lot of data out this week and not a lot of news so far. There is really nothing new to report. The rally continues to have legs and there is nothing to stop it just yet. But we are very overbought and that condition won't last forever.
Tuesday, February 07, 2012
The upwards grind continues as the Dow gained 33 points on light volume. The advance/declines were positive. Nothing technically has changed. We continue to be overbought and moving higher. The song remains the same. Very overbought on a daily basis. I've been expecting a pullback in the stock indices for quite some time and it really hasn't happened. GE was up 1/8 on light volume. Still stuck in a trading range and awaiting the breakout one way or the other. Gold was up $23 on the futures today as the US dollar took a hit. The XAU fell a point though as it failed to follow the precious metal higher. Not exactly sure what that means going forward but it usually isn't bullish. ABX and GG had fractional gains, while NEM was flat. Volume was light. I am keeping the open order in for the February ABX calls. The open interest expanded a bit on the February 50 ABX calls from yesterdays volume. Todays volume on this option was huge as well. Time is running out here though but with the earnings report coming out next week, anything can happen. Mentally I'm feeling OK. There isn't much else to say as far as the stock market is concerned. Continuing higher along with the summation index. Gold had a nice snap back and we'll have to see if we can take out the recent highs there. If not, we may be setting up a short term top but I don't think that is the case. The recent dollar weakness is supportive to the price of gold and it looks like the dollar could fall a little further. We'll see.
Monday, February 06, 2012
We started the day off lower and tried to claw our way back as the Dow lost 17 points on very light volume. The advance/declines were negative. Conditions remain the same, overbought and staying there. The summation index continues higher. Not a lot of economic data out this week, so we could be at the mercy of the headline events. GE was flat today on light volume. Still in a trading range here as we have been from the beginning of the year. A breakout one way or the other should be coming soon. Gold lost $15 on the futures. The US dollar was higher early and then fell back. It finished the day little changed. The XAU was flat. ABX, GG and NEM had fractional changes one way or the other on very light volume. I placed another open order for some February ABX calls. However time is running out on these options and the trade has more risk than I would usually take. That said, I would still like to give it a shot. The open interest did not expand with the volume Friday for the ABX February 50 calls. That isn't exactly bullish. I will have to ponder this trade tonight and take it from there. Mentally I'm feeling OK, slept well enough. I'm not exactly sure what to expect from the stock indices this week. We've been overbought for so long that the technicals are out of whack. We'll see what happens tomorrow.
Friday, February 03, 2012
It was up, up and away from the start as the Dow gained 156 points on the heels of a positive employment report. The advance/declines were almost 4 to 1 positive and the volume was good. We simply continue higher regardless of being overbought. That is how it works in bull markets. The summation index continues higher but we are getting pretty high here. There's some room left but I would expect a turn in this indicator at some point in February. It doesn't mean we have to see a big decline in the indices, sideways would also be an option. GE rose 1/4 on average volume. We're still in a sideways channel here but if the overall market is any indication of things to come, GE will break out to the upside. Hasn't happened yet. I'm still interested in the March calls. Gold finally started to pull back as it lost $20 in the futures and another $10 in the aftermarket. The US dollar finished the day relatively flat despite the better jobs numbers. The XAU fell about 2 1/2. ABX lost 3/4, GG dropped 1 1/8 and NEM shed 1 1/4. Volume was good here and that's a concern for the bullish case going forward. I again placed an order for some ABX February calls but canceled it near the end of the trading session. With only 2 weeks to go in the February option cycle, any option trade here will take on even more risk. The earnings report for ABX comes out the Thursday before expiration this month, adding to the risk as well. Once again there was very heavy volume in the February ABX 50 calls. We will have to see if it expanded the open interest there on Monday as was previously the case. I'm still considering the calls here. Mentally I'm feeling very tired, did not sleep well. The stock indexes continue higher and there is no end in sight. Of course when you start to make statements like that, the end is usually near. Very overbought on the technicals in the stock market. I think that something to the downside will happen this month or at the very least a sideways pause. The timing of such an event, if it occurs, is the question. I have no answers. Gold started to correct today and I'll be checking the charts to see if the February gold share calls are still the proper trade. I think they are. But we all know there are no guarantees in this game. It's Friday afternoon and time for a rest.
Thursday, February 02, 2012
The expected holding pattern before the employment report occurred today as the Dow fell 11 points on average volume. The advance/declines were positive. The overall market was stronger than the Dow. Still overbought on the stock indices. So we'll get tomorrows number and take it from there. GE was flat today on light volume. The Bollinger bands continue to tighten here, so expect a big move one way or the other in GE soon. I'm still interested in the March calls here but in no hurry. Gold continues to move higher, up about $10 on the futures and a touch more in the aftermarket. The US dollar was a bit higher today but really was in a holding pattern waiting for tomorrows employment report. The XAU was up 2 points. ABX gained 1/2, while GG and NEM each rose over a buck. Volume was light. I placed an order in for the ABX February calls again. Once again the volume on the February ABX 50 calls was heavy. The open interest there expanded again yesterday. I'd like to own some of these if the price is right because there is obviously something going on here. What? I don't know. Mentally I'm feeling OK. So we'll see what the employment report brings and the markets reaction to it. We've been overbought for so long on the stock indices that you'd just expect the markets to continue to churn higher regardless of what the employment report is. Gold is a mirror of the stock indexes overbought and staying there condition. We'll see what tomorrow brings.
Wednesday, February 01, 2012
February trading began to the upside as the Dow gained 83 points on average volume. The advance/declines were 5 to 1 positive. The rally from the October lows continues. The over the counter stocks continue to lead the way and that is bullish going forward. Summation index continues higher. We worked off some of the overbought conditions in the past week or so and now we are moving higher. Nothing seems to be in the way of higher prices. GE had a fractional gain after being higher earlier. Volume was average. I'm still looking for a decent move one way or the other in the near future. My thinking here is still for the GE March calls. Gold was up around $9 on the futures today. The US dollar took another drop today but the move in gold itself was muted. The XAU was off 1/4. ABX was flat, GG fell 3/4 and NEM dropped 1/3. Volume was light. Overbought on the gold shares and I canceled the open order for the ABX February calls. I once again noticed some extreme volume in the ABX February 50 calls. The last time that happened about a week ago the open interest expanded as well. We'll see tomorrow if that is again the case. Mentally I'm feeling tired, did not sleep enough. The stock indexes remain overbought and rallying. That has been and still is the case. You cannot fight that. I'm not sure what my next trade will be. I was leaning towards the gold share calls but we have yet to see a pullback in gold itself. I will have to consider exactly what to do later tonight. Perhaps I'll wait for the markets reaction to the employment report and go from there. A little more than 2 weeks left for the February option cycle. Tomorrow should be a holding pattern awaiting Friday.