Friday, June 29, 2012
We got another headline event today but this time it was to the upside. The Dow soared 277 points on good volume. The advance/declines were 6 to 1 positive. Europes problems are solved for now according to todays headlines. The summit meeting has produced an agreement that the markets like. It doesn't matter today if it actually works or not. The summer rally lives on. The stock indices are breaking through short term resistance lines and higher prices are still on the horizon. You can't argue with price and volume. Purchasing calls is the way to go here. GE was up 2/3 on heavy volume and we have broken through the longer term resistance here going back a year and a half. The short term technicals are overbought and have been for weeks. Any pullback here can be bought. The action in GE is bullish for the overall market also. Gold soared today as well when the US dollar got clobbered on the European headlines. The futures gained over $50. The XAU only rose 5 points though as the gold shares have once again underperformed the metal lately. That usually isn't bullish going forward for the gold shares. ABX, GG and NEM were all higher by at least 1 1/3. The volume was nothing special. The ABX calls I have are in the black. I also noticed some extremely high volume in some of the ABX call options. Not exactly sure what that means. Mentally I'm feeling OK. Some of my ideas have panned out lately but I haven't cashed in on them. That is really all that matters in this game. However I did think that things would slow down here and they certainly haven't done that. The stock indexes are going to go higher here, my guess is at least for the next 3 weeks before the July option expiration. Declines can be bought. The daily gold share charts look like there is plenty of room to move to the upside as the technicals are closer to the oversold side. But anything can and will happen. I'm not sure how long I will hold on the the ABX call trade. I will have to check the charts over the weekend. For now it's Friday afternoon and time for a rest.
Thursday, June 28, 2012
We got the Supreme courts ruling on healthcare today and the market initially sold off. However the Dow made a huge comeback in the final hour to finish the day with just a loss of 25 points. We were down 175 during the session. Volume was average and the advance/declines were positive. This now feels like a market that wants to go higher. The summation index is heading to the upside. The short term technicals for the stock indices are now oversold. I am expecting the summer rally to kick back into gear here with the short holiday week coming up. I could be wrong. There's always a chance for some bad news from Europe. GE managed a slight gain today and the volume continues to be good. We are once again on the cusp of breaking the resistance at 20.25. Calls are recommended if we get through that level but they probably should already have been purchased. If 20.25 is breached to the upside on good volume it will also bode well for the stock indices. Who knows? Maybe I'll still try some July calls there. Gold had a rough day as the US dollar was stronger. The precious metal fell $28 on the futures. The XAU dropped 3 points. ABX down 1/3, GG lost 1 1/3 and NEM off a buck. Volume was about average. I dumped the ABX August calls that I had for a 60% loss. I already didn't like the timing on the entry and decided to simply get out. Plenty of time left but I did not want to stay. I do still believe in that idea so I repurchased the ABX August calls at a lower strike price. They are slightly in the black. I could have held on to the first purchase and tried to cut the loss but then I would have had more money tied up in this idea than I wanted. There would have been too much risk and the trade is risky enough as it is. Mentally I'm feeling tired, did not sleep well. The stock indexes made a good comeback today and we'll see if they can follow through tomorrow. I suspect that they will. Volume should be slow in the markets for the next week due to the July 4th holiday next Wednesday. I took another trading loss today and I am almost back to breakeven for the first half of the year. My trading has been horrible so far in 2012 to say the least. I will have to do better in the second half of the year. I don't expect any headlines out from Europe overnight but you never know. We'll close out June tomorrow.
Wednesday, June 27, 2012
It's a 2 day rally now as the Dow gained 92 points on light volume. The advance/declines were 4 to 1 positive. The market breadth implies higher prices are coming. The problem here is the volume is light and I don't trust light volume rallies. We now have lows above lows and also highs below highs in the S&P 500. So the market is still trying to figure out which way to go. I'm back to leaning towards the bullish cause. GE is one of the reasons why as it gained 1/3 on average volume. On the daily chart, GE broke its downtrend line since March, snapped back to that line last week and has now resumed its uptrend. It appears that the resistance at 20.25 will soon be taken out. The July calls were the correct trade. But that could all change on the next headline out of Europe. Gold was up a couple of bucks today on the futures. The US dollar was a bit higher as well. The XAU was off 1/8. ABX, GG and NEM had fractional moves one way or the other on light volume. My August ABX calls are in the red and I do not like the way this trade has started out. The technicals for ABX are oversold though so we should at least see some type of bounce here soon. Mentally I'm feeling OK. Waiting on the European summit and some economic data out tomorrow. End of the month, quarter and first half of the year on Friday. The summation index continues higher. I'm already not feeling too good about this ABX August call trade. The entry timing was off. There has been nothing but bad news for ABX lately. Perhaps I'll just simply exit the trade before the weekend. Next week should be slow with the July 4th holiday on Wednesday. Perhaps I should have simply stayed on the sidelines a bit longer. We'll see what tomorrow brings.
Tuesday, June 26, 2012
We bounced around today as the Dow finished with a gain of 32 points on light volume. The advance/declines were positive. The summation index continues higher but that appears to be a bit misleading considering we've just had a couple of triple digit down days. I think the market is trying to make up its mind here on which direction to take. No headline event today. Getting short term oversold on the stock indices. GE had a nice move to the upside, gaining 1/3 on good volume. Perhaps this stock will be the leader for the overall market. The relative strength for GE lately has been pretty good. Maybe I should have stuck with the original plan for the GE July calls. We still need to take out the overhead resistance at around 20.25. Gold fell back down today as the futures were off about $15. The US dollar was a touch weaker today. The XAU fell 2. ABX dropped 1 1/3, GG lost 1/2 and NEM shed 7/8. Volume was light to average. My open order for the ABX August calls was filled in the morning. It's already in the red. I could have gotten a better fill if I had waited a while longer but hindsight always has a better fill it seems. Plenty of time for this trade but I would like to see some upside from here. Oversold on the gold shares now. One thing that I don't think is in my favor is the lack of relative strength lately in ABX. It has been a laggard. Mentally I'm feeling OK. I'm in the next trade now and I thought I might take a break from the game but today looked like an opportunity for me. We'll see what happens. The stock indexes have started to move lower after the nice run up ealier this month. Anything could happen really due to the uncertainty in Europe. Perhaps we'll get more clarity on the direction of things after this weeks European summit. Or not. That in itself shows the type of problems that we face in this kind of trading environment. We'll watch what happens overseas tonight and go from there.
Monday, June 25, 2012
We started off the last week of June with a triple digit loss as the Dow fell 138 points on light volume. The advance/declines were 3 to 1 negative. I suppose I can't call it a summer rally anymore when we've lost roughly 350 points in the last 3 days. I expected the stock indices to hold up here and clearly they haven't. More rumblings out of Europe today as there is yet another important meeting at the end of this week. Elections, meetings and summits occur yet nothing is really being done to help solve the problems over there. That is the problem in itself. Nothing short of default can fix things in the credit markets there really. Perhaps the markets are finally figuring that out and factoring it in. I don't know. GE dropped about 1/3 on light volume. I'm not considering the July calls here anymore. I'm starting to get the feeling that the market is in trouble. Gold was up $20 on the futures today as the US dollar showed strength as well. The flight to safety trade came back on today. The XAU was only up 1 1/4 though. ABX up 1/3, GG gained a buck and NEM rose 7/8. Volume was OK. I looked at the gold share charts over the weekend and have determined that this will be my next trade. I probably should have purchased something today. I did place an open order for some August ABX calls and I am leaving it in overnight. Mentally I'm doing OK. As I have already mentioned more than once, we are at the mercy of the latest headline from wherever. Be it from China, Europe or Washington. For some reason this is the enviornment at the moment more so than usual. Technically the stock indexes are mid-range the indicators and moving down. The reported economic data is taking a back seat right now. We've got the end of the month coming up. The hoped for summer doldrums in the market are not happening once again. I suppose I could always just wait things out on the sidelines. However the technicals on the gold shares have moved back down to oversold on a short term basis.. The ongoing uncertainty should be a positive for gold. I'm probably going to take another shot there. We'll see what happens.
Friday, June 22, 2012
We didn't see any follow through to the downside today as the Dow gained 67 points on good volume. The advance/declines were 2 to 1 positive. The summation index continues higher. I'd have to say that whoever wanted to sell did so yesterday. If this was the start of a bigger decline, I think we would have seen more liquidation today. I could be wrong. I'm not exactly sure what to expect next week but I'm still a believer that declines can be bought. We may chop around here for a while but I think that the summer rally is still alive. GE was up 1/4 on average volume. Perhaps I should have bought the July calls yesterday. We still need to break the resistance at around 20.25 on good volume for the all clear sign. I'll look this over again during the weekend. Gold didn't do much in the futures market but rose around $5 in the aftermarket. The US dollar was quiet today as well. The XAU dropped 3/4. ABX, GG and NEM moved fractionally one way or the other on light volume. We're not completely oversold technically on the gold shares just yet but I'm considering the August and October calls. This is another area that I'll have to study over the weekend. Mentally I'm doing OK. So we had the huge drop in the stock indices yesterday and today not much of anything. I don't exactly know what to make of it. Gold got clobbered yesterday as well and no follow through downside today either. We're still at the mercy of the next headline coming out of Europe. Or perhaps when the Supreme court rules on health care we'll get some more volatility. Plenty of economic data out next week as well. There's still 4 weeks to go in the July option cycle. The first week of July could be slow due to the holiday in the middle of the week. There are many things to consider before taking on the next trade. But for now it's a sunny summer Friday afternoon and time for a break.
Thursday, June 21, 2012
Is the summer rally over already? The Dow got clobbered today, losing 250 points on good volume. The advance/declines were almost 5 to 1 negative. The economic data was weak today but it has been for a while. It was simply a mass sell off of all assets. I don't know the reasons why. Oil broke the $80 level today which implies demand is even weaker than previously thought. Is there a worldwide economic contraction about to take place? Is Europe about to implode? Many questions come to the surface after a day like today. Especially since it came out of nowhere. Time will tell if it was a one day wonder or not. GE fell over 1/2 on good volume. We were on the cusp of breaking out from the resistance that has been in place since early 2011. We've now pulled back from there. I don't know what the next move is from here after todays debacle. I am no longer looking at the July calls here. Gold got hammered as the US dollar returned as a safe haven today. The precious metal fell $50 on the futures. The XAU dropped 9 1/8. ABX off by 2, GG lost 1 2/3 and NEM shed 2 1/2. Volume was light. I mentioned possibly getting some GDX puts 2 days ago but the option premiums didn't get to where I wanted. That was finally an idea that would have been the right move. However I'm still looking out 2 or 3 months for the gold share calls and todays drop in price will make those options look more attractive price wise. However I'm not exactly sure what is going on here with the markets so I'll be on the sidelines for now. Mentally I'm feeling a bit tired, did not sleep enough. Todays action was really a shot out of the blue. I don't think anybody saw a day like this coming out of nowhere. It will be important to see if there is any follow through tomorrow. Even with todays action the summation index will still be trending higher. Gold got clocked and we will have to see if it can find support at its recent lows. It will also be interesting to see what happens overseas tonight and tomorrow. I'll need to check the charts tonight and try to figure out what is going on. However a more in depth study of things will need to occur over the weekend.
Wednesday, June 20, 2012
We got the expected Fed announcement out of the way as the markets gyrated like a ping pong ball in a tornado. The Fed will continue operation twist until the end of the year. Ho hum really. The Dow ended the session with a loss of 13 points on light volume. The advance/declines were about even. We're still short term overbought but that doesn't mean we can't go higher. The summer rally isn't over yet in my opinion. The resistance on the S&P 500 comes in at between 1370 1nd 1380. The summation index continues higher. GE was up 1/8 on average volume and closed on the highs for the day. We are right at the downtrend line in effect since the beginning of 2011 on the weekly charts. If we can break through here on decent volume, GE will have no overhead resistance and higher it will go. Still short term overbought and staying there. Gold bounced all over the place today and finished down $7 on the futures and at least that much more in the aftermarket. The US dollar gyrated as well but finished the day relatively unchanged. The XAU fell 1 1/2. ABX was unchanged, while GG and NEM had fractional losses. Volume was good. The gold shares continue to outperform the precious metal. I'm looking at gold share calls going out a couple of months. I"ll still be waiting for some type of pullback first though. Mentally I'm feeling OK. So we got the Fed over with and now what? There's always the possibility of some type of headline out of Europe, either positive or negative. Event risk is still possible at any time. So it remains a time to be vigilant and to keep an eye on developments around the world. Although I am hoping that we get a case of the summer doldrums this year. We'll see how the overseas markets react to todays news and go from there.
Tuesday, June 19, 2012
Short covering and buying before the Fed as the Dow rose 95 points on average volume. The advance/declines were 5 to 1 positive. We were up around 150 during the day. The summation index continues to the upside and we are in full blown summer rally mode. Even if the Fed does nothing and we drop tomorrow, the market wants to go higher. Overbought, staying there and what more can I say? GE was up 1/4 on average volume. It's pattern today mirrored the overall market, closing off of its high. Perhaps the July calls are to purchased on a pullback but it looks like the majority of the up move has occurred. That could change if we break through the resistance that we are knocking on at the moment. Gold fell a few dollars on the futures and a bit more in the aftermarket. This despite the US dollar getting clobbered today. Gold should be moving higher with a weaker US dollar. The XAU was up about 2/3. ABX, GG and NEM moved fractionally one way or the other on light volume. I'm considering getting some GDX puts before the Fed tomorrow. The gold shares are overbought and if the Fed does nothing tomorrow gold should drop. If a lower dollar isn't helping gold then perhaps the market is telling us something. Or not. Mentally I'm a bit tired, did not sleep well. So we'll get the Fed announcement and go from there. It is bound to be a market mover since the anticipation is even higher than normal. Everyone expects the Fed to do something now, so if it doesn't we should see some selling. Even so, declines can be purchased for now in my opinion. I'm expecting a drop in gold tomorrow and if the premiums are where I'd like to see them I may purchase some GDX July puts. We'll see. The overseas stock indexes rallied yesterday and I would expect some follow through tomorrow. As the world settles down the flight to safety trade is being unwound. That would help explain todays weakness in the US dollar and gold. We'll see what happens tomorrow.
Monday, June 18, 2012
A waiting game for now in my opinion as the Dow fell 25 points on light volume. The advance/declines were positive. The overall market was stronger than the Dow. The Greek vote is out of the way and there were no surprises. Greece remains in the euro for now. But anything can still happen. The next key market event will be the Fed announcement on Wednesday. Once we get through that I don't see much on the horizon. Perhaps this will be the summer of the doldrums finally. I've been looking for that the past 2 years and it hasn't happened. Technically the stock indices are still short term overbought. GE was off 1/4 on light volume. Overbought here as well. I'm still considering the July calls here but will have to see more of a pullback. Gold didn't do much today despite a higher US dollar. The XAU rose 3 points as the gold shares continue to outperform the metal itself. That is bullish for the gold shares going forward. ABX and NEM were both higher by more than 1/2 while GG was up 1/8. Volume was light. I'm looking at going out to October with the calls here, at least that is my thought for today. Subject to change of course. There is no rush for this trade. Mentally I'm feeling OK. Stocks are overbought, the summation index continues higher and the summer rally has begun. We could just simply grind our way higher here in the short term. There's always the surprise European headline factor but with all the hype that surrounded the Greek vote over and done with, I think things there will quiet down for now. It is all eyes on the Fed now as whatever comes out on Wednesday will be dissected and talked about to death. We will gauge the markets reaction to the announcement and go from there. 5 weeks on the July option cycle. Tuesday should be another non-event for the markets. There is also a G-20 summit but I don't expect anything concrete to come out of that blabber fest. We'll watch the overseas markets for clues about tomorrows market direction.
Friday, June 15, 2012
No worries about Greece today as the Dow gained 115 points on good volume. The decent volume was probably Friday expiration related. The advance/declines were 2 to 1 positive. Summation index continues higher. The economic data reported today was weak in the US but it didn't matter. Perhaps the market is expecting the Fed to come up with QE3 next week. The stock indices are short term overbought and staying there. I don't think that there's any doubt now that the summer rally has begun. GE gained about 1/4 on good volume. I really should have been in the July GE call trade and I still think there is a chance to do it looking at the weekly charts. We are right up against the resistance line that has been in effect since the beginning of 2011. If we get some near term pullback The July 19 or 20 GE calls should be the next trade. There are 5 weeks in the July cycle and if we break out from resistance we'll get to 21 at the least. We'll see what happens. Gold was up $8 on the futures as the US dollar continued lower yet again. It seems like the flight to the US dollar has subsided for now. The XAU was up 3/8. ABX was up 1/2, while GG and NEM had fractional losses. Volume was very heavy in the gold shares today. Expiration related? I don't know. I'll probably try the gold shares on the call side again when the positive seasonality takes over in the middle of the summer. August and September are usually the strongest months for the price of gold. For now though I'll most likely be on the sidelines here. Mentally I'm feeling OK despite the recent losses in the ABX call trade. There's nothing that I can do about it now. The first half of the trading year has been terrible for me as far as confidence goes. If it wasn't for the huge gain to start the year, I'd be showing heavy capital losses. My trading win percentage is horrible. I've got to get my act together in the second half. I'm just going to have to focus better and work harder. The stock indexes appear to simply want to go higher here. The sellers have disappeared for now. So much has been said about this weekends Greek elections that it could turn out to be a non-event for the markets if the expected stay with the euro group wins. I'm starting to think that whatever happens with the Fed next week will actually be the big market moving event. We'll see. For now it's Friday afternoon and time for a rest.
Thursday, June 14, 2012
Back and forth we go as the stock market tries to figure out which direction it wants to go. The Dow gained 155 points today on light volume. The advance/declines were better than 2 to 1 positive. No worries about Europe today but that could change at any time. It is still a headline driven marketplace. It still has the feel of higher prices coming though to me. GE was up 1/3 on good volume. Overbought and staying there for GE. It is looking more and more as though GE is the proxy for the overall market at this point. Missing on the July calls cost me more than just a missed trade as I'll explain in a minute. Gold traded flat on the futures but rose in the aftermarket about $5. The US dollar was lower yet again today. The XAU gained 1 1/8. ABX, GG and NEM had fractional moves one way or the other on average volume. I dumped the ABX June Calls for a 95% loss. I did not even know it was expiration week until I received a notice from my brokerage about this trade this morning. I had been paying so much attention to the GE July calls that I thought the June options expired next Friday and not tomorrow. Call is absent minded, foolish or just plain stupid. That has never happened to me before in my entire trading life. Lack of focus on the trade at hand? Really? I'm planning my strategy for an extra week of option life that isn't even there. There wasn't a lot of money in the trade thankfully but that mistake was ridiculous. Yeah, it's an embarrassment but it happened and there is no excuse. Mentally I feel like an idiot. Am I really trading the already difficult options market and I don't know when the Friday expiration is? Maybe I need a break. So tomorrow is expiration Friday and then we have the Greek election that the whole world is so focused on. The summation index continues higher and I am going to guess that the summer rally began with the low on June 4th. I don't have any trades in mind at the moment. Perhaps I'll simply bury my head in the sand for the summer. Doubtful.
Wednesday, June 13, 2012
We hung around for most of the day but then dropped in the final couple of hours as the Dow fell 77 points on light volume. A last minute comeback saved a loss of over 100. The advance/declines were 2 to 1 negative. I'm not sure if we are consolidating the gains of last week or getting ready to head lower. The US economic data today was weak but it really wasn't a market mover. The Greek election is this weekend and I don't believe anybody seriously considers Greece is going to abandon the euro. We're in a wait and see mode for now as far as the stock indices are concerned. Still more short term overbought than oversold at this point. GE was off 1/8 on light volume. Short term overbought here as well. No trades there for now. Gold rose another $5 on the futures today as the US dollar dropped again. The XAU was flat after being higher for much of the day. ABX was flat as well. GG and NEM had fractional gains. Volume was average. My June ABX calls are just about dead and the relative strength of ABX here is abysmal. I think the next gold share trade for me will be with GDX. That is at least a basket of the gold shares with enough liquidity for decent option quotes. The extra risk of trading an individual gold share issue in this case wasn't worth it. It's something to ponder going forward. Mentally I'm feeling OK. The stock indexes are trying to make up their mind on which way to go here. You could make a case for either direction. 7 days left in the June option cycle. I think that we are going to move higher but that is just a guess. Gold has been acting well lately but it hasn't helped the gold shares. It would take a small miracle for me to have an acceptable loss in the June ABX call trade. Stranger things have happened. We'll see what tomorrow brings.
Tuesday, June 12, 2012
Back to the upside today as the Dow gained 162 points on light volume. The advance/declines were about 4 to 1 positive. So today was basically the opposite of yesterday. The market seems to have the feel of wanting to go higher. The summation index continues to the upside. Perhaps we are in the beginning of the summer rally. However we are still in a headline driven market and today had no headlines. Retail sales should be a mover for tomorrow. GE was up about 1/3 on average volume and closed at the high for the day. I obviously should have gotten the July calls here instead of the June ABX calls. If GE is a proxy for the overall market then the stock indexes will be heading higher. Too late to try the calls here though at this point. Overbought in the short term on GE. Gold had a good day, up $17 on the futures as the US dollar was weaker. The XAU rose 3 1/8. ABX up 1/4, GG gained 3/4 and NEM tacked on a buck. Volume was average. My ABX calls are still very much in the red. Unfortunately ABX is now the laggard among the major gold stocks. This trade is on the way to being another loser. Mentally I'm feeling tired, did not sleep well. The stock indexes acted quite well today. There were no apparent reasons. Gold was up as well. I'm in another losing trade with 8 days to go in the June option cycle. ABX will have to have some type of strong move to the upside in order for me to exit with a smaller loss. I suppose anything can happen with the Greek election this weekend but I don't think that they will be abandoning the euro anytime soon. We'll watch the foreign markets tonight and go from there.
Monday, June 11, 2012
It was a one day reversal to the downside as the Dow opened higher and closed lower. The Dow lost 143 points on light volume. The advance/declines were about 4 to 1 negative. Spain is getting a bailout now and I suppose that can be the reason for todays action. We were short term overbought on the stock indices and some type of pullback was expected. Where we go from here is the question and I don't have the answers. My best guess is that we will be moving higher, not lower, going forward. I do not think that we will break the lows recently seen. Not yet at least. GE was off a bit on light volume. The relative strength here has been impressive, as GE was actually higher for most of the day. I'm still considering the July calls but perhaps the opportune time has passed. Gold was up $5 on the futures and the US dollar was up a touch as well. The XAU however followed the overall market lower, losing 2 2/3. ABX and NEM fell 3/4, while GG lost 1/2. Volume was about average. My ABX calls remain in the red. It looks like this trade will be a loser unless ABX makes a quick turnaround. That doesn't seem very likely but gold can be volatile and there are 9 days to go in the June option cycle. Mentally I'm feeling OK. Markets around the globe began with strong rallies when they opened only to sell off as the sessions progressed. Not exactly sure what that means going forward but it usually isn't bullish. We're still in a headline driven environment. Have to see if there is follow through downside tomorrow. Gold saw a bit of a bid today on the ongoing uncertainty but the gold shares did not follow. My recent ABX trade is not going well. We'll see what tomorrow brings.
Friday, June 08, 2012
We continued higher today as the Dow gained 93 points on light volume. The advance/declines were over 2 to 1 positive. The action was bullish today as we were able to overcome the late sell off of yesterday. The stock indices are short term overbought now but the trend is up. The summation index is heading higher. Declines can be purchased in my opinion as this is probably the start of the summer rally. Of course this could all change with some type of bad news out of Europe but I doubt it. We'll see some weakness at some point next week but I don't think it will last. GE was up 20 cents and the volume was really heavy once again. That makes 2 days in a row where the volume just zoomed at the end of the day. I don't know what is going on here but I will surely buy some calls if we get a pullback. In retrospect, I should have done this trade for the July calls early in the week. Gold was up $3 on the futures after being lower early. Not too bad considering the meltdown yesterday. The US dollar was higher as well. The XAU was up a point. ABX, GG and NEM had fractional moves one way or the other on light volume. My ABX June calls are still in the red. I'll have to see some strength in ABX next week for this trade to have a chance. It's possible since we're in a market with volatility and one that's driven by the most recent headline. 2 weeks left in the June option cycle. Mentally I'm feeling OK. It appears that last Fridays swoon on the employment report was the end of the decline. The weekly stock index candlestick charts now look bullish. The GE weekly chart is bullish as well. I'll be looking at July calls on any declines now. Gold did not have a good week and I think it could either way here. We'll have to see what happens over the weekend and take it from there. For now it's Friday afternoon and time for a break.
Thursday, June 07, 2012
The Dow continued higher today as it rose 46 points on average volume. The advance/declines were negative as the overall market was weaker than the Dow. Bernanke gave no hints of more QE but the markets were higher for most of the day. However the markets could not hold on to their gains. Tomorrow will be important for the near term direction of things. If we can rally again, that would really be a positive going forward. If not, we'll still be held hostage by the problems in Europe. Technically the stock indices broke through their down trend lines from May but have since returned to those lines. The indicators are mid-range. GE was up 1/8 on very heavy volume. I'm not sure what all the volume was about. I'll try the July calls here if we get some pullback. Gold got hammered today as the futures fell about $45. Bernankes testimony was the supposed culprit. The US dollar was only up a touch. The XAU fell 4 1/4, which wasn't that bad considering the drop in gold. ABX off 1 2/3, GG dropped 1 1/8 and NEM fell a buck. Volume was good. I put in an overnight order for some ABX June calls and it was filled in the morning. This trade is already in the red. ABX has fallen much more than I expected on the news of the CEOs firing, having lost 5 points in 2 days. There's still 2 weeks to go in the June option cycle and I plan on holding this trade into sometime next week. But it already isn't looking good. Mentally I'm feeling OK. We'll have to see what happens tomorrow before the weekend but I'm still thinking that the decline is over for the most part. I'm sticking with the theory that declines can now be bought. If the price of the July GE calls that I'm looking at come down enough, I'll be giving that trade a try. I do think that there is a possibility that things will slow down after the June expiration. The Greek election and the Fed meeting will be behind us by then. Volatility has returned for now and that should keep option premiums higher than usual. I'm in my next trade and it looks like I'm early. Gold is really moving around here but I think the worst is over there as well. We'll see what happens tonight and take it from there.
Wednesday, June 06, 2012
The stock market soared today as the Dow gained 286 points on good volume. The advance/declines were 8 to 1 positive. This is the type of short covering, explosive up move that you should expect after the market had gotten so very oversold. We haven't broken the down trend line on the major stock indices yet but I think we will in a matter of time. You've got the positive RSI divergence and what looks like the completion of an A-B-C-D-E move down on the daily charts. Todays action should move the summation index back up. The market knows things that we don't and we have to listen to it. Of course things could all change tomorrow if Europe implodes but I don't expect anything like that to happen. GE took off and it looks like the July call trade has been missed. GE rose 2/3 on average volume. If we are lucky enough to get some type of pullback here, I'd be willing to give the July calls a try. But I think the time has passed. Gold had an interesting day as it gained $17 on the futures but then began to sell off in the aftermarket when the Fed beige book was released. The dollar took a beating today and there was no real reason. Perhaps the market is telegraphing the end of the euro worries for now. The XAU was up 1/3 but was higher earlier in the day. ABX was the big loser of the day, down over 1 1/2 as it announced the dumping of its CEO. GG and NEM had small fractional gains. The gold shares are due a rest and now is as good a time as any. That's a guess as usual. I might try the ABX calls for June since they have really come of off the highs. Today was a one day reversal as ABX opened higher and closed lower. Also todays downside move in ABX was a news driven event and the problems in Europe haven't quite been solved just yet. Mentally I'm feeling OK. Today was an incredible move to the upside and I believe it to be real. However in bear markets sometimes rallies spring up from nowhere. Today certainly fits that description. But I think that there is enough technical evidence to declare the downside finished here for the stock indices. I'll be looking to get long on pullbacks. It looks like I've missed the GE call trade just as I missed the recent gold share call trade. This is a pattern that I need to break. I might try the gold shares to the long side here if we get some short term decline. Bernanke will be flapping his gums in front of Congress tomorrow and we should move off of that one way or the other. We should see some follow through rallies overseas tonight and go from there.
Tuesday, June 05, 2012
So we got somewhat of a bounce today as the Dow gained 26 points on light volume. The advance/declines were almost 3 to 1 positive. The overall market was stronger than the Dow. Still oversold on the stock indices. Lack of volume today and it is hard to trust light volume rallies. Seems like we're in a waiting mode on Europe and Bernanke. It's probably still a time to be careful. I would have expected a larger move to the upside today. Perhaps we'll get some type of short covering move to the upside later this week. GE was up about a dime on lighter volume. I'm considering the July GE calls again but there appears to be no technical support on the charts until another 75 cents down. So I'm on the sidelines but keeping an eye on things. Gold was up a couple of bucks today as the US dollar was higher as well. The flight to safety trade continues to attract capital. The XAU was up 3/4. ABX, GG and NEM had fractional moves in either direction. Volume was lighter than it has been. I'm leaving in the open order for the GG June call trade. We are overbought on the gold shares but I'm still a believer that they're going higher. I could be wrong. Mentally I'm feeling OK. The European markets will re-open tonight and we will probably take our cues from there. I'm still expecting higher prices in the short term for the stock indexes. But we are still in the headline risk environment. However the risk could also have a positive outcome if a European Greek rescue plan comes about. Or not. That is the problem in the type of trading atmosphere. Things could go either way. We'll keep an eye out on what transpires.
Monday, June 04, 2012
Kind of a mixed bag today as the Dow fell 17 points on average volume. The advance/declines were negative. The overall market was stronger than the Dow. We were much lower for most of the day but started to come back in the last 2 hours of the trading session. Short term oversold on the stock indices here with a possible positive divergence on the daily RSI indicator. The European markets are closed both today and tomorrow. We should see some type of bounce here tomorrow. GE fell 3/8 and has broken through the last near term support. Volume was good. Todays action would be considered a negative for the overall market going forward if GE is going to be a proxy for the stock indexes. I'm still looking at the July calls here but simply keep lowering the strike price. Perhaps today was the time to buy the calls but with no underlying support on the daily charts, I stayed on the sidelines. Gold fell $8 on the futures but came back in the aftermarket. The US dollar was weaker today. The XAU was lower early but came back to post a gain of almost 2 points. ABX and GG had fractional gains, while NEM rose 1 1/4. Volume was pretty good. I placed an order for some June GG calls. GG has yet to break its down trend line on the daily charts that goes back to the beginning of March. We are right on the cusp of doing so though. I'm leaving the order open but most likely I have simply missed the opportunity to profit from the current rise in the gold shares. The gold shares are short term overbought now. Mentally I'm doing OK. We did get some follow through to the downside today in the stock indices but began to fight our way back. I'm expecting higher prices tomorrow. I'll consider the July GE trade tonight. Money continues to flow into the gold shares and this is a trend that I expect to continue for a while. Declines, if we see any, can be bought. Not a lot of economic data out this week but we do have a meeting in Europe and Bernanke testifies before Congress on Thursday. We'll see what tomorrow brings.
Friday, June 01, 2012
Well, I could not have been more wrong. I felt that the level of bearishness was just too high and that stock prices would at least stabilize if not move higher. I thought that the time had already passed for a market collapse. That certainly isn't happening. The Dow fell 275 points today after a weaker than expected jobs report. The advance/declines were 6 to 1 negative and volume was good. Expect some follow through to the downside on Monday. We might get a McClellan oscillator divergence by then but it may not mean anything. Today did not have the climatic feel of a bottom but my take on things lately has been off anyway. European problems weren't highlighted today and they haven't gone away. I suppose the only plus for me here is that at least I'm not in any losing trades. GE was off 1/2 on good volume. I'm not so sure about the July calls here now. I may go down a strike price but I will probably just sit things out for now. Gold was the upside star of the day. The futures gained almost $60 today. The US dollar lost a bit of ground but not much considering the jobs number. The flight to safety trade is on in a big way. The XAU gained 8 7/8. ABX up 2 7/8, GG and NEM rose 3 1/8. Volume was extremely heavy. The gold shares are the place to be. My order for ABX June calls was never filled and I have once again missed a major move. I built a position in the May gold share calls when it should have been June. But what can you do? I may try the GG June calls because GG has lagged here and may play catch up. Mentally I'm feeling pretty frustrated over missing out on the gold share calls. Not to mention my read of the stock indexes here has been completely wrong. I'm in a bad trading rut. I am going to have to try and regroup over the weekend. I'll be checking the charts and trying to come up with something for next week. Money is moving into gold in a big way and that is now obvious. Any pullbacks can be purchased. The stock indices have broken down badly and we could be in the catch a falling knife phase. Plenty to ponder in the next 2 days. For now it's Friday afternoon and time for a break.