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Tuesday, May 22, 2012

We were higher for most of the day but fell off in the final hour to basically finish the day unchanged.  The Dow fell a point and change on good volume.  The advance/declines were slightly positive.  Worries from Europe were the excuse for the fall from the earlier highs.  We got the bounce and now we'll see what happens.  The ideal scenario would be for a lower low in the indices and a higher McClellan oscillator.  However ideal scenarios rarely pan out.  So I'm not sure exactly what to expect but I'm going to be looking at calls since it seems the whole investing world is bearish at the moment.  I could be wrong and often am.  GE was actually up a touch on better volume.  Looking out to the July calls here.  No trade is imminent here though.  In fact there's a chance that we remain sideways for an extended period here and in the stock indexes as well.  But nobody can predict the future.  Gold fell $12 on the futures and more in the aftermarket as the US dollar had a very good day.  That in itself may be more telling of things to come.  Money is still seeking a safe dollar haven.  The XAU dropped 1 2/3.  ABX shed 1/2, GG lost 3/8 and NEM fell 1/8.  Volume was good.  So the gold shares held up pretty well for a change despite the drop in gold.  That is usually bullish for this group going forward.  I'm looking at the June ABX calls again.  However if GLD decisively breaks the 150 level and stays there, then all gold share call trades are off.  There is a potentially huge head and shoulders bottom in the US dollar on a weekly basis chart.  If this pattern is triggered by the dollar breaking out above 82 on good volume, gold should drop even further.  Hasn't happened yet but it could.  Mentally I'm feeling tired, did not sleep well.  Tomorrow should be interesting in the stock indexes because if we are going to head lower again, it should start to happen now.  We got the long overdue bounce and the key is what happens next.  I can only guess at what happens next but with so many calling for a crash, I doubt that's going to be the outcome.  We'll see.  I'm feeling better about making some kind of trade here and that's good for the confidence level going forward.  I may just try the ABX calls again.  Or not.  We'll follow the overseas markets for clues to tomorrow and take it from there. 

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