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Monday, October 22, 2012

The Dow made quite a comeback today as we were down over 100 points and came back to finish up 2.  The advance/declines were slightly negative and the volume was light.  We rallied in the last hour and that is a positive going forward.  We'll see if we can follow through to the upside tomorrow.  I'm not completely sold on the idea that the recent decline is over though.  But it could be as we hover at the 50 day moving average on the Dow.  The summation index continues to the downside.  We've got the Fed to deal with this week and the GDP report on Friday.  GE fell 1/3 on heavy volume.  GE cut it's loss for the day more than half as well.  However the GE daily chart looks like it is breaking down.  If GE is a precursor for the overall market, we'll see lower overall stock prices ahead.  Gold gained a couple of bucks on the futures as the US dollar was pretty much flat on the day.  The XAU rose 2 1/4.  The gold shares continue to outperform.  ABX, GG and NEM all were higher by about 1/2 on light volume.  I'm leaving in the open order for the January ABX calls.  The open interest expanded on the strike prices that I observed on Friday and that's bullish.  I would ideally like to purchase some gold share calls this week on weakness.  May not get the chance but it's early in the week still.  Mentally I'm feeling OK.  It was a nice comeback for the stock indices today.  Follow through seems to me to be more important than usual considering where we are on many indexes.  The over the counter indexes have been weaker and that isn't a good sign for the bulls.  But if the major indices can hold up here, perhaps the decline is actually done.  I'm not exactly sure but my guess would be lower prices this week.  I could be wrong.  Gold is right on it's 50 day moving average.  The chart on the gold shares has been moving sideways for over a month.  I'll be looking for an upside breakout at some point.  Hence, I'd like to own some calls before that happens.  But the markets will do what they please, as always.  We'll see what transpires tomorrow.   

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