Tuesday, April 30, 2013
A late move to the upside led the Dow to a 21 point gain today on average volume. The advance/declines were 2 to 1 positive. The overall market was stronger than the Dow which is bullish going forward. Todays action doesn't bode well for my OEX puts. A strong upside follow through tomorrow will probably doom them. Hasn't happened yet. We'll get the Fed and the market reaction to the announcement tomorrow. It's also the beginning of a new month so we should see some positive money flows. So we'll see. Most foreign stock exchanges will be closed tomorrow. GE was flat on the day and the volume was light. No trades in mind for GE at the moment. Gold was up only $4 on the futures as the US dollar took a decent drop today. Gold will not go up in a straight line forever. I would expect some type of backing and filling soon. The XAU gained 1 1/2. ABX up 1/2, GG gained 3/4 and NEM fell 1 2/3 on its earnings report. Volume in the gold shares was good. My October ABX calls are still in the black. Mentally I'm feeling OK. Positive action for stocks today as we push on to new highs for some of the indices. My idea for the OEX puts here could be the wrong one. Tomorrow will tell a lot about that. Overbought on the short term technicals though so all hope is not lost yet for that trade. Gold is not completely overbought here but a pause in the up move is overdue since the crash of a couple of weeks ago. The gold share technicals are neutral at the moment. Perhaps the worst is over there for now. We'll see what tomorrow brings.
Monday, April 29, 2013
Starting the week to the upside as the Dow gained 106 points on light volume. The advance/declines were almost 3 to 1 positive. The summation index continues higher. Short term overbought here. That condition could persist. I'm still a believer of a top being put in place for the stock indices but as always I could be wrong. However a light volume rally was what I was looking for. I purchased some OEX puts today. Unless we have some kind of high volume breakout in the next day or so, I'll be holding the puts until Friday. The options are still break even at this point. GE was little changed on average volume. No trades there for now. Gold futures rose $13 today with the US dollar a bit weaker. The XAU managed a 1 1/2 point gain. ABX and NEM were up fractionally, while GG was flat on the day. Volume remains heavy for ABX, light on the other two. NEM announces earnings today after the bell. We'll have to wait and see the reaction on that. My October ABX calls are still in the black. Mentally I'm feeling OK. A nice start to the week for the stock indexes to the upside. There is a lot of economic data and the Fed to deal with this week. We've got the end of the month tomorrow as well. So anything could happen. I've taken my position with the OEX puts. Gold has had a pretty solid move up from the crash low of 2 weeks ago. It should be due for a rest. The gold shares continue to under perform the precious metal itself but at least they have stopped going straight down. We'll keep an eye on the overseas markets and take it from there.
Friday, April 26, 2013
It was a mixed market to close out the week. The Dow was up 11 points on light volume. The advance/declines were negative. The NASDAQ and the S&P 500 were lower. The short term technicals are still more overbought than oversold for the stock indices. I still believe that we are building a top. Only a high volume upside breakout would negate that idea. Hasn't happened yet. GDP was a bit weaker than expected but wasn't really a market mover. Plenty of economic data out next week along with a Fed meeting and an ECB meeting. I'll be looking for a spot to buy some OEX puts before the employment report. GE was up 1/4 on good volume. Perhaps the recent decline there is over but it is too early to tell I think. The 200 day moving average provided support. Gold fell on the futures today, off 8 bucks despite a weaker US dollar. The XAU lost 3 2/3. ABX down 1/2, GG lower by a buck and NEM fell 7/8. Volume remains overly robust here. My October ABX calls are still in the black. I'm still a believer in this trade but don't know how long that I will be holding it. The daily technicals for the XAU remain weak and the last 3 day candlestick pattern is bearish. NEM reports earnings on Monday. Mentally I'm feeling OK. Are we heading up to new highs on the stock indexes? Perhaps. The weekly chart technicals look like they are trying to turn back up. Overbought here short term though. We'll have to let the market again tell us what to do. If we get a light volume rally at the beginning of next week, I'll be inclined to buy the OEX puts. Any other scenario will likely have me on the sidelines. Gold has had a very nice comeback after the crash of last Monday. Some backing and filling here would not be unexpected. Ditto for the gold shares. Plenty of charts to focus on over the weekend in preparation of a game plan for next week. For now it's Friday afternoon and time for a break.
Thursday, April 25, 2013
The Dow managed a gain of 24 points today on good volume. We were about 70 points higher than that on the day but once again faded in the final hour. That really isn't bullish action. The advance/declines were about 2 to 1 positive again though. So breadth says we are going higher. The summation index continues higher as well. We'll get the 1st quarter GDP report tomorrow and that should set the tone for the session. I did not purchase any OEX puts today. If we begin to drop tomorrow it will probably be too late. We have yet to take out the recent highs in the S&P 500. If the market meanders around for the next few days, I'll try the OEX puts before next weeks employment report. GE opened higher and closed lower but finished the day little changed. Volume was good. No trade here for now. Gold continued its recent run to the upside following last weeks crash. The precious metal futures rose almost 40 bucks. The US dollar was a bit weaker in todays trading session. Gold has made quite a comeback following last weeks negative action. The XAU did not follow the metal and only rose 1 1/8. ABX and NEM finished the day little changed after being much higher, while GG gained 3/8. Volume remains very heavy for this group. My October ABX calls are in the black but fell back quite a bit from where they traded today. This will be an interesting trade to manage. Mentally I'm feeling a bit tired, did not sleep well. Stocks kind of ran out of gas today and tomorrows session will probably give important clues about what will be happening in the near future. The stock indexes are now short term overbought. A move higher tomorrow implies that the recent highs will be challenged. A move lower could mean the end of the rally or more of the building of a top here. Gold has had an incredible move higher since the crash last week. I think that it's more than just a bounce at this point. But it won't last forever. The gold shares are still very oversold on the medium term charts. I'm guessing that there will be more upside to come there going forward. We'll see what happens tomorrow.
Wednesday, April 24, 2013
The Dow lost ground in the final hour today and finished with a loss of 43 points on average volume. The advance/declines were almost 2 to 1 positive. The overall market was stronger than the Dow which is bullish going forward. The summation index is now heading higher as well. I am still considering purchasing some OEX puts. Either tomorrow before the GDP report or sometime next week. I could be wrong. I'm expecting weaker than expected GDP numbers on Friday. But who knows? Maybe we'll rally on that. Technically we'll be short term overbought soon if we keep moving higher. GE had a nice move today, up almost 1/2 on good volume. The 200 day moving average is holding for now. Gold went back to the upside by $15 on the futures. The US dollar was little changed on the day. The XAU actually showed some signs of life by moving up 6 1/2. ABX up 1 1/3, GG rose 1 2/3 and NEM climbed 1 7/8. Volume remains strong here and still extremely heavy for ABX. ABX reported better than anticipated earnings today and that was the excuse for the upside. My October ABX calls have moved back to a profit. Hopefully ABX is sold out here and the technicals say we're still oversold. However rarely does gold crash as it did and then a new rally immediately emerge. Mentally I'm feeling a bit tired, did not feel well last night. The major indices gave up their gains at the end of the day but smaller stocks held up better. That should be bullish going forward. I'm still considering the price action to be of the topping variety. Unless we break out to new highs on good volume, the OEX puts remain on my radar. Gold itself has acted very well since the crash this past Monday. Today even the gold shares found some life. We'll see if this is the beginning of a trend or just another head fake for the gold shares. They've been laggards for months. We'll keep an eye on the action in the foreign exchanges and take it from there.
Tuesday, April 23, 2013
The market roared to the upside today as the Dow gained 152 points on average volume. This was despite a mini flash crash halfway through the session. The advance/declines were 4 to 1 positive which should move the summation index back to the upside. I did not expect this type of strong move here. Perhaps my negative thesis on the stock indices is wrong. I'm sticking with it for now. We'll see how the market reacts if we get to the previous highs. We are definitely within striking distance. The short term technicals for the stock indices are turning back up. GE was up 1/8 and the volume continues very heavy. There is a huge downside gap on the daily chart here and it looks anything but positive. We're hovering at the 200 day moving average. Gold was off $7 on the futures and more in the aftermarket as the US dollar had a strong day. The XAU fell 2 points. ABX off 3/8, GG dropped 3/4 and NEM lost a buck. Volume remains heavier than normal here. Earnings out tomorrow morning for ABX. My October ABX calls have moved into the red. Anything is possible tomorrow and this issue remains deeply oversold on all the technicals. Mentally I'm feeling OK. The stock indexes had a mini crash today that lasted about a couple of minutes. This is the trading environment we now live in. It is a computer driven game. That is the reality and there is no getting around it. The positive performance of the stock indices today was impressive. However until all the indices break out to new highs I would advise caution about getting too bullish now. Gold had a nice bounce after the crash but it is probably due to retest the recent lows. What occurs there will be the key for the direction of the precious metal. The reaction to the ABX earnings will be my main focus for tomorrow.
Monday, April 22, 2013
We begin the week to the upside as the Dow gained 19 points on light volume. The advance/declines were positive. We'll see how the week plays out but I do not expect any huge rallies. Sideways to lower is my scenario going forward for the stock indices. 1st quarter GDP is the big economic report of the week on Friday. GE was off 3/8 and the volume was very heavy. This is a canary in the coal mine. GE is a huge multi-national company. It portends a global slowdown with its recent price action. Gold gained $25 on the futures as the US dollar was off a touch. Gold has made quite a comeback after last Mondays meltdown. The XAU has hardly come back though. It gained about a point and a half today. ABX off 1/8, GG up 2/3 and NEM rose 3/8. Volume was average with the exception of ABX which remains very heavy. Even a weekend article in Barron's couldn't get the gold shares really moving to the upside. The October ABX calls I own are barely in the black. Earnings are due for Barrick on Wednesday. That should get things moving good one way or the other. Mentally I'm feeling OK. It is a wait and see attitude with respect to the stock indexes for now. I'm looking at some OEX puts at some point in the May option cycle. I'm still a believer that we are in a topping process. Gold has made a nice bounce back from last weeks carnage but the gold shares haven't followed. Gold itself should head back down to retest the lows of last week. Just waiting for the ABX earnings at this point. We'll keep an eye on the overseas action tonight and go from there.
Friday, April 19, 2013
Expiration Friday is behind us as the Dow gained 10 points on average volume. The advance/declines were almost 3 to 1 positive. The Dow was affected by the poor showings of IBM and GE on earnings reports. The overall market was much stronger than the Dow. However it also could have been expiration related. So we will have to see how things shake out next week. The S&P 500 is trying to hold on at its 50 day moving average. I'm still a believer that the rally that began in November is over. We're building or have built a top. I'll be looking for places to buy puts, most likely with the OEX. GE had a gap to the downside and fell 7/8 on very heavy volume. If GE is a bellwether for the overall market it would be bearish. The technicals on the weekly chart here have now rolled over. Some good support at the $20 level for GE. Gold was up $3 on the futures and a bit more in the aftermarket. The US dollar gained a bit today. The XAU rose 1 1/8. ABX, GG and NEM had slight fractional moves to the upside on heavy volume. The volume for ABX remains very heavy. Earnings for ABX due next week. The October ABX calls I have are still in the black. There was extreme volume for these options yesterday and the open interest expanded vastly. Mentally I'm feeling a bit tired, did not sleep well. The weekly chart technicals for most of the stock indices have rolled over. The weekly Dow candlestick chart shows a bearish belt hold pattern. That doesn't meant that we can't move higher from here but it does mean the odds favor more downside going forward. But that could all change next week. We're moving on to the May option cycle. The weekly gold and gold share charts show extreme carnage. That doesn't mean that we can't go lower though. I still think that going out to October on the ABX calls will be a winning trade. However I've been wrong on most of the ABX call trades for a year or so. I'll be going over the charts again this weekend. Not a lot of economic data out next week but we'll get the 1st quarter GDP on Friday. We'll also have the backdrop of the recent attack in Boston. For now it's Friday afternoon and time for a rest.
Thursday, April 18, 2013
Heading lower as the Dow fell 81 points on average volume. The advance/declines were negative. Up trend lines have been broken on some of the major stock indices. I'm sticking with a sideways or down scenario for the stock indexes going forward. The S&P 500 has yet to break its up trend line from November but that should come in time. Same for the Dow. I'll be looking at OEX puts on rallies for now. GE was off a touch on average volume. Heading lower here and we get the earnings out tomorrow. Gold was up $10 on the futures as the US dollar was off slightly. The XAU gained 2 7/8 for a change. ABX, GG and NEM all had fractional gains to the upside on good volume. The volume for ABX remains extreme. The October ABX calls I bought yesterday are in the black. Waiting for the snap back with the gold shares on this trade. Extremely oversold here. Mentally I'm feeling OK. Plenty of earnings still to come and the background environment remains uncertain in the US with the recent bombing. The reasons for buying stocks here do not outweigh the risks going forward at this time. That is my guess at the moment. Gold itself is trying to hold in here but I think lower prices are still in the near future. We'll get through the option expiration tomorrow and take it from there.
Wednesday, April 17, 2013
Back to the downside today as the Dow fell 138 points on good volume. The advance/declines were about 4 to 1 negative. Volatility here and that usually means a change in the underlying direction. I would guess now that a top is being put in or is already in for the stock indices. The summation index is back to heading lower. Seasonality dictates that the rally from November is coming to an end. We could be in a sideways environment for a while but the uptrend stops here in my opinion. I try to listen to the indexes. We'll let the market tell us what to expect. My interpretations are sometimes wrong though. GE was off 1/3 and the volume was good. More volume to the downside here which mirrors the overall market. Earnings on Friday, should be a mover. Gold lost about $5 on the futures today but then fell more in the aftermarket. The US dollar was very strong today. The XAU continues to get crushed, off 5 2/3. ABX fell 1 1/4, GG off 1/2 and NEM dropped 1 3/8. Volume was heavy and once again extremely heavy in ABX. My order was filled for the October ABX calls. I am expecting a decent snap back rally in the gold shares eventually. The question is from exactly what levels? We are still in a free fall for the gold shares. Gold itself is trying to put the brakes on here but I believe that the precious metal will be headed lower going forward as well. Then why make the trade? If you take a look at the huge drops in ABX from the past, there is always a big bounce from the very oversold levels. We are about as oversold as you can get there. There are no guarantees in the game but I think the odds are with this particular trade to be successful. Mentally I'm feeling OK. Plenty for the stock indexes to digest here with earnings and the recent events. I'm sticking with my thesis that the rally is done for now. A look at the daily charts shows a rollover for some and the potential of rollovers for others. It is a time to be cautious regrading the stock market at this time. Gold has broken down with the rest of the commodity markets. It probably has further to go on the downside. I do expect a relief rally at some point. The ultimate downside for gold in my opinion is $1200 at the long term up trend line. We'll keep an eye on the overseas action tonight and head on to Thursday.
Tuesday, April 16, 2013
The Dow made a nice comeback today, up 157 points on average volume. The advance/declines were about 5 to 1 positive. Still plenty of buyers on the dip. We'll see how long this snap back lasts or perhaps it is the start of another leg up. Some indices moved to new highs recently but the smaller stocks did not. That usually isn't a positive going forward. We are also heading into a seasonal period of under performance for stocks. So we'll see what happens. I still think it is a time to be cautious given the recent events. The threat of terrorism combined with a collapse in commodities cannot be considered bullish in my opinion. GE was up 1/4 on average volume. Earnings due on Friday. No trades there for now. Gold had a modest bounce, up $26 on the futures. This despite being very oversold and the US dollar was much weaker today. The precious metal began to drop again in the aftermarket. The XAU dropped 3/4. ABX off a buck, GG was flat and NEM was off 1/8. Volume remains very heavy for the gold shares. ABX continues to get hammered. I do have an open order here for some October ABX calls. This could simply be another mistake among the many that I have had in the past year trading the calls on this stock. However the collapse here is overblown in my mind and I believe that there will be a substantial bounce in the gold shares before October. Mentally I'm feeling OK. Expiration week is upon us and volatility is on the rise. The economic data is coming in mixed. So we'll see. If the market can recover here and move on to new highs, that would be very bullish. I do not think that is the upcoming scenario. But what do I know? Gold is in a free fall. I peg support at $1200 after viewing the longer term charts. Support for silver is at 20 bucks. If those levels doesn't hold then the bull market in precious metals is done in my humble opinion. We'll see what tomorrow brings.
Monday, April 15, 2013
Today we saw why this game we play is so unpredictable. We are seeing a worldwide liquidation of assets. I certainly do not know why. The Dow fell 265 points on heavy volume. The advance/declines were 8 to 1 negative. Bad numbers out of China, a commodity collapse and a couple of explosions at the Boston Marathon. Technical damage has been done to some of the stock index daily charts. The summation index should be turned around to the downside today. There will be follow through selling most likely tomorrow. I thought we would simply drift up into the expiration this week but all that has changed. It has turned into a time to be cautious when it comes to stocks. GE fell 2/3 on good volume. We've broken through the 50 day moving average to the downside. Earnings out later this week for GE. Gold is in crash mode. The precious metal futures lost $140. There was a huge percentage decline in silver as well. The US dollar was up just a bit. Gold is crashing as margin calls help expand the liquidation. We broke the $1550 level and the sellers have taken over. The XAU lost over 11 points. ABX down 2 7/8, GG fell 2 points and NEM shed 2 1/2. Volume remains off the charts to the downside. I'm looking at some longer term calls for ABX now because there will eventually be a violent snap back to the upside. From what level is the question. I'm looking at the October and January 2014 calls. Mentally I'm feeling OK. We will have to see what the fall out is from todays events. The bombing in Boston is still breaking news at this point. There should be more selling tomorrow in stocks. I'd also expect more liquidation in the commodities as well. Like I said before I do not know what is the cause of the liquidation but we can always be sure that the market knows more than us. It looks like support for silver comes in at around $20. For gold at around $1250 if it cannot hold in here. We'll have to see what happens in the foreign markets overnight. It is probably a time to be careful. Interesting times.
Friday, April 12, 2013
After being down almost 75 points during the session, the Dow came all the way back to finish the day basically unchanged. The advance/declines were negative and the volume remains light. Money continues to flow into stocks as the buy the dip mentality persists. You can't argue with success. There is no resistance to the upside. I still think the stock indices will remain firm into the expiration next week. After that, who knows? GE was off 1/8 on very light volume. No trades here for now. Gold got absolutely crushed today as it took out the all important $1550 level. The precious metal futures were off over $60 and more in the aftermarket. The US dollar was little changed on the trading day. The XAU fell 6 points. ABX fell another 2 buck, GG slid 1 1/2 and NEM shed 2 1/4. Volume was huge once again. The market blew through my stop loss order on the ABX May calls, so I dumped them at the market. It turned out to be a 70% loss after all. I have been buying calls on ABX all the way down for the past year and have lost practically every time. This week I got sliced and diced on the catching falling knife attempt. Mentally I'm feeling as if whatever I'm trying to trade so far this year just isn't working out. With the exception of a couple of GE trades early, whatever I'm trading has been a loser. Commodities are dropping along with the precious metals. Either there is too much supply or the overall world economy is weaker than we are giving it credit for. The stock indices seem to be saying that there is too much supply. Money continues to find a home in stocks. The only caveat is that the volume has been light on this upside breakout. We'll see if the rally continues but there is nothing to stop it at the moment. Gold has now broken the support that it needed to hold. The trend is down. Perhaps the gold shares were foreshadowing this breakdown in gold. Obviously I was stuck on the long side here for the gold shares when the trend was down. That was a huge mistake. I still believe that ABX under $25 is a longer term winner. I will be looking at the volume and open interest on the October and January calls here to see if there was any accumulation today. I will also have to see where the ultimate long term support is for gold itself on a monthly and yearly chart. I'll need to find the up trend line from the 2000 lows to see where the support lies. I don't think that it has been broken yet. So there will be plenty of work to do over the weekend. For now it's Friday afternoon and time for a break.
Thursday, April 11, 2013
Continuing higher as the Dow gained 63 points on light volume. The advance/declines were positive. The overall market was slightly weaker than the Dow. We have broken out to the upside here but the volume has been lackluster. As a rule, light volume rallies are not to be trusted. That said, I still think we'll run things up into the expiration next week. The trend remains up. GE was flat on the day and the volume was light. No trade ideas here for now. Gold was up 6 bucks on the futures but fell back in the aftermarket. The US dollar was weaker again today. The XAU fell almost 2 points. ABX was up 1/4, while GG and NEM lost 1/3. Volume was huge again for ABX, light for the others. I mistakenly thought that my stop loss order for the May ABX calls was filled late yesterday. Checking back after posting the blog showed that the order wasn't filled. Once again the premium got to my price and nothing happened. So I still own the May ABX calls. I'm sure the stop loss order will be filled in the next day or so, barring a rally in ABX. More on ABX later. Mentally I'm feeling OK. The stock indices continue higher with no overhead resistance. Not short term overbought yet but another couple of up days will do that. Money continues to flow into the US stock market. Gold is trying to hold the $1550 level and the jury is still out on that. ABX is now blown out to the downside. The news at this point can't get any worse. The saying goes, buy bad news. ABX is not going to go out of business. The mining operations will get back online once again. Anything under $25 for this issue is a longer term buy. I even placed an open order for the June calls last night in case ABX dropped further, which it didn't. Purchasing ABX now will pay you a dividend of 3% while you wait. I could be wrong and have been a lot lately but this looks like an opportunity to me. We'll see how the markets close out the week tomorrow.
Wednesday, April 10, 2013
The market has spoken as we broke out to the upside today. The Dow gained 128 points on average volume. The advance/declines were 3 to 1 positive. This should move the summation index back to the upside. The S&P 500 broke above the resistance at 1570 to close at 1587. The market had every opportunity to decline in the past couple of weeks but did not. Now we have broken out to all time highs and there is no resistance going forward. We'll see how high this rally can go. I'd expect it to last into the April expiration which ends on Friday of next week. GE was up 1/2 on average volume. The 50 day moving average acted as support and we are rallying from there. GE should take out the old recent higha at around $23.75. The gold futures fell over $25 on the Fed minutes. The US dollar was up a bit as well. The XAU was back to the downside by 4 3/8. GG was off 7/8 and NEM lost a buck both on good volume. But the story of the day was the carnage in ABX. It collapsed 2 1/4 on extremely heavy blow out volume. Apparently a court in Chile has stopped production on one of the mining projects that ABX has in that country. The mine is co-owned with GG but that stock did not go down like ABX. I do not know why. Last night I adjusted down my order for the May ABX calls and that was filled right away this morning. I placed a stop loss order for this trade and it was hit later in the day. That's something that I really haven't seen in a while. The loss was around 55%. Not a lot of money in this trade but it shows the risk in trading individual issues vs. the indexes. Of course that works both ways as there could have been some good news out of ABX and it would have out performed. I guess now we know why ABX has been such a laggard with respect to the other gold shares lately. This dramatic downside action should get all the rest of the sellers out but there could be an extended period of consolidation before it start to move higher again. Mentally I'm feeling OK. The stock indices have begun the next climb. The Dow transports haven't yet confirmed the move but they should in the coming days. Probably too late to get some OEX calls. I guess it's the sidelines for now. The sharp contraction of the Bollinger bands forewarned of a huge move coming. Take note of that for the next time. Perhaps buying both the puts and calls would work out for an overall profit. Another losing trade in the ABX calls. Knowing the underlying situation now certainly doesn't help. Perhaps I should have just listened to the technicals as this was the weakest issue for the mining shares. Of course hindsight is always correct. I don't know where I'll go from here with the gold shares. It's time to regroup. The earnings for these companies will be out later this month. They remain oversold. We'll see if the foreign markets follow the Dow higher tomorrow.
Tuesday, April 09, 2013
We are now back to the top of the trading range in the S&P 500. The Dow gained 60 points on light volume. The advance/declines were positive. The S&P 500 made it above the 1570 level and then fell back. I suppose we are at some kind of moment of truth for the stock indices. This could be the light volume levitation that allows us to get some OEX puts here. Or it could be the start of another upside momentum move if we blow through the 1570 level. The Russell 2000 and the Dow transports were both negative today which supports the bearish alternative. The summation index is still heading down as well. I personally do not have the same downside conviction that I had last week. I think it could go either way here now. GE was off 1/8 after being higher early. Hugging the 50 day moving average here. No trades in mind for now with respect to GE. Gold continued higher as the US dollar fell today. The precious metal futures rose $14. The XAU finally showed some life by gaining 5 points on the day. ABX up 1/3, GG and NEM rose a buck. Volume was good. ABX is the laggard here and has been for quite some time. Perhaps I should try the calls with another gold share issue. I still have the open order in for the May calls there. I'll ponder this tonight. Mentally I'm feeling OK. We've got the Fed minutes out tomorrow and they could be a market mover. Not exactly sure what to expect. Perhaps today was the time to purchase the OEX puts and perhaps not. When in doubt stay out goes the saying. I'll consider what to do about this possible trade tonight. Gold is having a good week so far. The gold shares finally showed some upside today as well. That doesn't mean that it's the start of something substantial but it could be. I'll consider keeping the open order for the ABX May calls or perhaps adjusting the buy price. Or maybe canceling the trade altogether. We'll see what happens overseas and go from there.
Monday, April 08, 2013
Back to the upside again today as the Dow gained 48 points on light volume. The advance/declines were 2 to 1 positive. This could be the light volume move back to around the 1570 level on the S&P 500 that will be an opportunity to get some April OEX puts. Or it could be the beginning of something else. The overall market was stronger than the Dow today. We've been moving sideways in the S&P 500 since the beginning of March. The top of the range is 1570 and the bottom is 1540. We're at 1563. I think we will have to let the market tell us what to do at this point. I was certain that we were on the cusp of some type of decline but now I am not so sure. GE was up 1/8 or so and the volume was light. No trades here for now. Gold fell $3 on the futures after being higher earlier. The US dollar was up a bit today. The XAU fell about 1 1/2. ABX, GG and NEM were all off 1/3 on average volume. My open order for the ABX May calls is still out there. It was touched today but wasn't filled. In my experience if the premium goes down to your price and it doesn't get filled, it's usually a sign that the trade is going to work. Market makers are not in business to lose money. Mentally I'm feeling OK. The stock indices are acting as though they want to move higher here. If the volume stays light, I may try the April OEX puts. Not a lot of economic data out this week but earnings season begins. 9 days to go in the April option cycle. I'll check the charts again tonight and go from there.
Friday, April 05, 2013
An interesting day on the street as the Dow sold off hard early on a weak jobs report but steadily made up ground for the rest of the day. The most watched index fell 170 points on the open but cut the closing loss to just 40 points on the session. The advance/declines were slightly negative and the volume was average. I'm not exactly sure what to make of todays trading but the buy the dip mentality was there for all to see. The short term technicals are now oversold, so some type of bounce is probably coming. If it is a light volume affair, then buying the OEX April puts will be in order. But if we get a strong rally from here my prognosis for an extended decline will be wrong. I think for now we will have to let the market tell us what to do. The summation index does continue lower. GE was off 1/8 and the volume was nothing special. No trades here for now. Gold found some life as the futures were up $23. The US dollar was a bit lower. The XAU was off 1/3 as the gold shares continue to lag. ABX, GG and NEM had fractional moves one way or the other on good volume. I left in the open order for the May ABX calls but I'll have to reconsider this trade over the weekend. The gold shares continue to be one of the only losers in the stock market despite being both short and medium term oversold. Mentally I'm feeling OK. The S&P 500 has been in a range of between 1570 and 1540 since the beginning of March. We reached 1540 today and rallied off of it. The daily Bollinger bands are the narrowest that they have been for quite some time. So it looks like some type of huge move will be in store here. A break above or below those 2 levels should tell the story. That's my best guess at the moment. I'll have to review everything over the weekend. Gold had a nice move today and there is a positive RSI divergence on the daily charts. The last 3 day candlestick pattern there looks bullish as well. I can't say anything looks bullish on the gold share charts though. Unless this week was the final high volume washout. But that's a guess as usual. I am considering the May ABX calls though if they hit my premium price. But this could just be another loser as well. I'm thinking to be long here before the earnings release that comes out later this month. But that could be a mistake also. Plenty of scenarios to consider over the weekend. For now it's Friday afternoon and time for a break.
Thursday, April 04, 2013
The back and forth continues as the Dow gained 55 points on light volume. The advance/declines were positive. The Dow hasn't yet broken down from the sideways consolidation but I think that is coming. The ideal scenario from here would be a light volume move higher for a few days as a chance to get some April OEX puts. The summation index is heading lower. We've got the employment report tomorrow. I don't know what to expect there but the markets reaction to it will be the key. GE was up just a touch on light volume. Still hanging on here at the 50 day moving average. Gold was flat on the futures after being lower early on. The US dollar was a bit lower today. Gold is trying to hold the all important $1550 level and I think that eventually it will. The XAU snapped back 3 1/4 today. ABX, GG and NEM all had fractional gains higher on heavy volume. These issues are trying to make a stand at these levels as well. I did place an overnight order for some May ABX calls again. It wasn't filled but I left it open. My thinking is that yesterday was the final downside blow-off for this issue. But I've thought that before and have been wrong every time. I'll re-evaluate this tonight. Mentally I'm feeling OK. We got a very oversold reading on the McClellan oscillator last night, below -150. So some type of snap back move higher in the stock indices should be seen. Perhaps today was the beginning of that. But that could all change with some type of surprise from the employment numbers. I'm still a believer that the top is in for the stock indexes here. Gold is either going to hold on right here and start to move higher in the coming weeks or it is going to fall dramatically. That is the point in time where we are at there in my opinion. I think that gold will hang on but I could be wrong and have been mistaken regarding gold a lot lately. So we'll see. All eyes on tomorrows economic data and where the stock market goes from here.
Wednesday, April 03, 2013
Back to the downside today as the Dow fell 111 points on good volume. The advance/declines were about 4 to 1 negative. Rumblings from North Korea and some weak economic data are todays excuse for the decline. But we stick with the technicals. Up trend lines from November on the daily charts of some of the stock indices have been violated to the downside. I'm sticking with the thesis that the rally is over. The summation index is heading lower. Perhaps we will get a snap back to the violated lines on some of the indices. But I'm going with the trend is now lower going forward. GE was off 1/3 and the volume was good. A bearish engulfing pattern has appeared on the daily charts. We're right at the 50 day moving average. Gold fell again in what looks like a liquidation of assets. The futures were off $22 and the US dollar was a bit lower as well. Gold has to hold the $1550 level or we are going to go a lot lower. The XAU fell 5 1/2 as the gold stocks have been decimated. ABX lost 1 1/2, GG off 1 1/8 and NEM dropped 1 1/3. Volume was heavy. The gold shares have dropped much further than I thought they could go. There is opportunity here in my mind. But it could be the attempt to catch a falling knife and that usually ends badly. I sold the April ABX calls that I've had for a while at a 95% loss. Plus it was a bigger than usual loss because I had more contracts than usual. So it was a poor trade with horrible tactics and trade management. Actually there was no trade management and that was the problem. I might try the May calls next. Or not. Perhaps it's best to try and simply regroup here. Mentally I'm feeling OK. Trend lines have been violated for some of the stock indices but not the major ones such as the Dow and the S&P 500. However with the Dow transports, the Russell 2000 and the NYSE indexes all having broken their up trend lines, it's safe to say that the decline is underway in my opinion. We'll see how it plays out from here. The next market moving data should come in the form of the employment report on Friday. I'd expect tomorrow to be a wait and see affair. Gold looks like it is in a free fall and needs to hold the $1550 level or we will really start to see something. That's a guess as usual. My trading account for the year is now solidly in the red but there is plenty of time in 2013 to turn that around. It's only the beginning of April. However if my trading tactics don't improve, it will be another losing year. We'll see how the overseas markets react to the US sell-off and take it from there.
Tuesday, April 02, 2013
Back to the upside today as the Dow gained 89 points on light volume. The advance/declines were negative though. The Dow transports were down pretty good today. The NYSE composite and the Russell 2000 small caps were lower as well. So the Dow is masking what I believe is the beginning of the downside that I'm expecting to see here. I'm not sure what the catalyst lower will be but it should arrive shortly. Unless I am completely off in my prognosis. That is always a distinct possibility. GE rose 1/4 on light volume. No trades there for now. Gold took a hit today as the precious metal futures fell $25. The US dollar was up today. The XAU got clobbered, off 5 1/4. ABX down 3/4, GG lost a buck and NEM led the way down by 1 1/2. Volume was average. The gold shares are already very medium term oversold and they are still falling. Unless there is some kind of turnaround this week, the gold rally could be coming to an end. My April ABX calls are dead. I was certainly way off on this trade and should have dumped them much earlier in the trade. Mentally I'm feeling a bit tired. Money continues to pour in late in the trading day for the stock indices. That's usually a positive going forward. I'm still looking for a decent decline to start here any day now. Perhaps the employment report will be the catalyst. But who knows? If we continue higher everything that I have been thinking is wrong. Gold took a big drop today and I'd expect some follow through downside tomorrow. I don't think there is anything that can save my ABX trade. I'll chalk it up as another loser and regroup from here. We'll see what tomorrow brings.
Monday, April 01, 2013
A weaker start to the month of April as the Dow fell 5 points on light volume. The advance/declines were 2 to 1 negative as the overall market was much weaker than the Dow. The stock markets are still in holiday mode for today as some foreign markets remain closed. Still in a sideways rut for the stock indices. Todays action should turn the summation index lower. Perhaps we will be in a holding pattern until Fridays employment report. Or maybe todays overall stock weakness is the start of the decline that I've been looking for. I could continue on with other scenarios but the markets will go where they want. GE was basically flat on the day with light volume. We're at the 50 day moving average on the daily charts. No trades in mind here. Gold was up $3 on the futures and it should have been more considering todays drop in the US dollar. These two have not had the usual inverse correlation lately. Also when there has been a flight to safety there is more strength in the US dollar vs. the gold futures. Gold remains an under performer. The XAU fell 1 3/4. ABX, GG and NEM all had fractional losses on light volume. My April ABX calls are on their way into oblivion. Unless there is a dramatic turnaround, this trade will be another loser. Mentally I'm feeling OK. I still say we are on the verge of a drop for the stock indexes. The negative technical divergences remain in place. The Dow has been the leader lately and that is not a positive going forward. I could be wrong but I am sticking with a negative bias towards the stock market for now. Gold is dead money but at least we are done with the historically worst month of March for the precious metal. The gold shares remain big laggards. We'll keep an eye on things overnight and take it from there.