Friday, June 28, 2013
Selling to close out the month and the quarter as the Dow fell 114 points on good volume. The advance/declines were barely positive. This isn't the start of the decline that I'd like to short in the near term. The overall market was stronger than the Dow. At some point next week I'll try the OEX puts if we continue higher in the stock indices. The ideal scenario is for the market averages to make it back up to their declining tops lines. We'll see. GE was off 1/8 and the volume was light. We remain above the 50 day moving average here and that's a positive. I'm still considering the July calls for GE. Gold got a bounce today as the futures rose $12 and half that again in the aftermarket. I'm thinking that the decline in gold has run its course. Around the $1200 level should hold is my guess for now. The technicals are completely blown out to the downside on whatever time frame you choose. The $1200 level is also a Fibonacci number retracement from the high at around $1920. Many are calling for a bottom in gold at the $1000 level. Perhaps that will be the case but my guess is that we hold up here at least for now. The XAU is now showing signs of life as well as it gained 5 3/4 today. ABX rose 7/8, GG up 1 7/8 and NEM jumped 2 1/8. Volume was heavy and that is a positive. I still have the open order in for some October ABX calls. However ABX remains a laggard here and perhaps I should switch to GG or NEM. It is something to consider over the weekend. Mentally I'm feeling OK. The stock indices stopped going down this week. I don't think it is the beginning of a new major up trend. The trading will be tricky next week because we have the July 4th holiday on Thursday and the employment report the day after that. Traders will be taking a long weekend and the reaction to the employment report could be skewed. I'd like to see a light volume rally going into Wednesday to try the July OEX puts. But as usual the market will go where it wants and it usually doesn't give you the obvious set ups. Perhaps there will be some beginning of the month money flows to get things headed to the upside. Gold bounced today but one day doesn't make a rally. That said, I'm still saying that the bottom for gold is here at around $1200. I think that the decline in the gold shares has ended as well. The weekly candlestick chart for the XAU now has a hammer formation to go along with the blown out to the downside technicals. I'll be trying to get some calls on any weakness in the gold shares next week. I could be wrong and have been often when it comes to the precious metals. However the bearishness for gold is so rampant right now that I am inclined to take the other side. My first half of the year trading has been dismal, with more losers than winners. I'll be trying to turn that around in the second half of the year. My guess is that the summer will have its share of the doldrums before volatility picks up in the autumn. That would give the stock indices some time to perhaps build even a larger top before dropping once again. But I'll try and listen to what the market says and take my cues from there. For now it's Friday afternoon in the summer and time for a break.
Thursday, June 27, 2013
Sticking with the trend for higher prices today as the Dow gained 114 points on light volume. The advance/declines were about 6 to 1 positive. Todays breadth will move the McClellan oscillator back into positive territory. This should also halt the decline in the summation index. I think you can say the worst is over for now in the stock indices. That doesn't mean that it's off to the races from here. I still like the OEX put trade when we reach the declining tops line. That could occur sometime next week. That would be a short term trade for the July option cycle. As long as the volume stays light here, that idea has a good chance at working. GE was up a few cents and the volume was light. I'm still considering the July calls here ahead of the earnings report on July 19th. Still above the 50 day moving average here. Gold got bashed again, off $20 on the futures and another $10 in the aftermarket. This happened despite a flat day in the US dollar. It has been an incredible rout for the precious metal with no end in sight. However the gold shares didn't follow today despite the big sell off in gold itself. The XAU was up 2 points. This is the first positive divergence in quite a while. ABX, GG and NEM all had fractional gains on good to heavy volume. I've once again placed an open order for the October ABX calls. If the order gets filled and eventually shows a profit I won't be holding on to it this time. Mentally I'm feeling OK. We are getting the preferred market action here. A light volume rally to test the declining tops line and snap back to the broken up trend line for the major stock indexes. Next week will be a shortened holiday affair with July 4th falling on Thursday. The ideal area to get short would be around 1635-1640 on the S&P 500 and about 735-740 on the OEX. I'll try to be patient and wait for those levels. If we do see a decline from there, that could be the chance to pick up the July GE calls. It's all just wishful thinking at this point. Anything can and will happen in this game. I do not think that we are heading to new highs in the stock indices anytime soon. I could be wrong. Gold is in a panic free fall and has been all month it seems. I'm willing to take another chance on the gold shares here and I haven't gotten this trade correct since last autumn. I'm keeping that in mind as well. We'll keep an eye on the foreign markets overnight and close out the month of June tomorrow.
Wednesday, June 26, 2013
Continuing the snap back today as the Dow gained 150 points on average volume. The advance/declines were 3 to 1 positive. Trying to hold in here for the stock averages and they just might do it. Getting back to the zero line on the McClellan oscillator. We failed to get through on the first attempt and we really need to make it this time. This is not to be confused with the zero line on the summation index. A drop through the summation zero line would lead to an unraveling of stock prices that would be severe. I think we may hold off on that for now but that's a guess as usual. The price action at the moment would help lead to the return to the recent broken trend line. That would set us up for the OEX put trade next week or so. Patience is required at the moment. GE fell off of its opening highs for the day and managed a gain of 1/8. Volume was lighter. I'll still consider the July calls but not right now. The earnings report for GE arrives on expiration Friday in July. That is a fact to remember as well. Gold continues its free fall. The precious metal futures dropped $45 to levels not seen for a few years. The US dollar was a bit higher today. The XAU was off 4 7/8. For gold and the gold shares, it's a blood bath. ABX down 1 1/3, GG off 1 1/8, while NEM fell 1 3/4. Volume was very heavy once again. We ask how low can these stocks go and the answer is always lower than you think. I'm still going to try the ABX October calls again at some point. Maybe tomorrow, maybe next week. Mentally I'm feeling OK. A couple of plus days for the stock indices but I'm still not convinced that the decline is over. We have broken up trend lines and now some declining tops in place. If we make it back to the declining tops line, I'm going to purchase some OEX puts. Especially if the volume is light on the way up. There's still a chance to collapse here but with the upside in the past 2 days, that threat has less potential. But the market will go where it wants. Gold is about as blown out to the downside as you'll ever see it. The time to buy is when there is blood in the streets according to one famous investor. Call me crazy but I'll be getting some ABX calls here at some point. 2 days left in the month and first half of the year. The Shanghai index held up yesterday and I'd still keep an eye on that near term. We'll see what happens tomorrow.
Tuesday, June 25, 2013
A bounce today as the Dow gained 100 points on average volume. The advance/declines were 4 to 1 positive. Some type of positive action was expected but the question is for how long? We are in a precarious position right now for the stock indices. There is still a chance that things could simply unravel here, due to the close proximity to the zero line on the summation index. We have broken the up trend line in the S&P 500 that had been in effect since November. The next technical expectation is a snap back to that line. That would be the preferred pattern here. If we make it back to the broken trend line, it would be an opportunity to purchase some OEX puts. The other scenario would be to simply continue the recent downside and with a vengeance. The jury is still out. GE was up 18 cents and is holding at its 50 day moving average. I'm still considering the July calls here. If GE moves sideways I may purchase the calls. But we are in a very unknown situation right now. Caution remains the safest attitude in my opinion. Gold was off a couple bucks on the futures and the US dollar was a bit higher. The XAU was off 1/8. ABX, GG and NEM all had fractional losses on average volume. I am once again looking at the October ABX calls. The gold shares are blown out to the downside but if the overall market continues to drop, the gold shares will follow. Mentally I'm still feeling a bit tired. The Dow transports had a good day and perhaps it is a sign that we may stabilize here. It's possible but so is the other alternative. Even if we do start to move higher here, it won't be the beginning of any kind of huge rally in my opinion. We'll be heading lower either right now or later in the summer for the stock indexes. Gold remains unloved and in a bear market. The gold shares remain oversold with no rallies of any consequence. My trading ideas at the moment are buying OEX puts if we rally back to the broken up trend line, July GE calls if GE moves sideways here and October ABX calls again if ABX drops further here. Perhaps if we get to $15 or lower on ABX. The Shanghai stock market is one to watch tonight as the daily candlestick chart there formed a hammer yesterday after a huge move down. If that hammer holds it could be a key as to what the US market is going to do near term. We'll keep an eye on that and the other foreign markets tonight and go from there.
Monday, June 24, 2013
A negative start to the week as the Dow fell 140 points on heavy volume. The advance/declines were over 6 to 1 negative. It could have been worse as we were off around 250 during the session. Short term oversold and a bounce it certainly due. However in this type of environment, anything could happen. The McClellan oscillator is blown out to the downside again. We could not make it through the zero line when attempted a few days ago. The summation index is heading for the zero line and unless we get some kind of turnaround in a hurry, things will definitely get worse. Caution is the preferred mode here and now for me. Are there any reasons to buy stocks now in the middle of this mess? Who knows? We need to hold 1550 on the S&P 500 near term or we will go to 1500 in a hurry. GE was off 3/8 on good volume. I canceled my open order for the July calls here. GE is trying to hold at its 50 day moving average. I still may try this trade later in the week but probably shouldn't. We'll see. Gold was off $14 on the futures as the US dollar bounced around and ended the day a bit higher. The XAU dropped 4 points. ABX fell 1/3, while both GG and NEM lost a buck. The gold shares are so beaten down that they really can't possibly drop much further in my mind. After this weekends review, I'm probably going to try the ABX October calls again. Or I may go out to January. I have certainly been way off with my gold trades this year and that is something to consider going forward as well. Not to mention that gold is in a bear market and the preferred trades would be short. Plus if we really get a dramatic blow off drop in the stock indices, the gold shares will go along for the ride. Plenty to ponder. Mentally I'm feeling tired, did not sleep well. The stock indexes are certainly due for a bounce here. The trouble is that it may not be much more than that. A break from the downside is expected here at some point. But we are in a dangerous zone and that shouldn't be taken lightly. As was noted earlier when the stock indexes were just plowing higher, momentum runs never end well. We are witnessing that now. Gold is still heading lower. It is oversold and staying there. The yellow metal isn't being viewed as a safe haven and the fundamentals are negative. If ever there were a contrarian trade, this would be it. We'll see how the trading goes overseas and take it from there.
Friday, June 21, 2013
We stopped going down for now after the recent 2 day rout. The Dow gained 41 points today on expiration very heavy volume. The advance/declines were even. The short term technicals for the stock indices are oversold. However the summation index continues lower. We will need to turn this indicator around or things will get even more dicey. I'd be cautious going forward on the long side. Even if we do stem the decline here, it doesn't mean that later in the summer we won't flirt with the zero line in the summation index. Going through that line is a collapse event. It could happen sooner but I think it will be later. I doubt that we will see any decent, longer rallies for a while in the stock indexes. The seasonality factor comes into play here as well. Anything can and will happen in the markets. But with today being the first day of summer, the stock market will most likely slow down. The light volume before the recent collapse is probably a harbinger of things to come. That's my guess at the moment. GE was up 1/8 and the volume was pretty heavy. I'm leaving in my open order for the GE July calls. We'll need to see some decline for this order to be filled. I'm expecting GE to show relative strength vs. the S&P 500 in the near term. The technicals here aren't completely oversold as yet. I'll ponder this trade over the weekend. Gold bounced today but it wasn't much. The yellow metal futures rose 5 bucks. The US dollar had another strong session. That is to be expected with higher interest rates. The XAU was up 1 1/4. ABX, GG and NEM all had fractional gains on good volume. I'll be trying the gold share calls again at some point. But it will probably take a while for a good entry point. The technicals here are oversold but the fundamentals for gold just aren't there at the moment. The August/September time frame is generally positive for gold. Perhaps I'll take a position before then. Mentally I'm feeling OK. Quite a volatile week for the stock indexes. Definitely oversold but there are no good reasons to get long here. It could get quiet and sloppy going forward. We stemmed the negative tide today but we've got the end of the month coming up next week. Also there has been plenty of chart damage to the downside for the indices. The small stocks were relatively weaker today and that isn't bullish going forward as well. So it is probably a time to be careful if going long. That said, I'm still considering the July GE calls. We'll see. Gold has been hammered once again. Gold goes extreme both ways but it is going to eventually be like a rubber band. It is getting stretched to the downside and there will be a pretty good snap back. The question is when? Sometimes just when you think the move is over, it keeps on going. I'll be keeping an eye on it but I've been wrong about gold all year. Chalked up another losing trade this week and the first half of the year has been horrible for my trading. There is no getting around that fact. I will have to work harder and smarter in the second half to get my trading turned around. I'm in a confidence rut. The game is difficult in itself. There is no reason to make it any more challenging. I'll be checking the charts over the weekend. For now it's the first Friday of the summer and time for a break.
Thursday, June 20, 2013
Heading for the exits as the Dow and the markets got smashed today. The Dow fell 353 points on heavy volume. The easy money party is over. The advance/declines were 17 to 1 negative. A mini crash today. Could be more on the way eventually. The S&P 500 broke the line in the sand at 1600 during the session. The next chart support is at 1575 and then 1550. Trend line support at around 1500. We'll probably get there eventually. The summation index is heading lower. If we keep this pace of decline we'll be heading to the zero line in a hurry. Crossing that would be another disaster waiting to happen. I think we will but perhaps not until the autumn. June options expire tomorrow. I'd expect more downside near term but the market will have to turn around at one of the supports that I mentioned or it will get pretty ugly, pretty fast. And we've already done that. GE fell 1/2 on heavy volume. I did place an order for the July calls today but then canceled it. I placed another open order for overnight though. I may cancel it tomorrow. This is a trade that will work when we get the inevitable market snap back from the extreme downside that we are witnessing right now. The entry will be important. However if the stock indices simply collapse here, even the entry won't matter. Gold got absolutely crushed today as the precious metal futures fell almost $90. We broke the support at $1350. That was the key. The US dollar rose again today as the market continues to price in an end to the easy money Fed. The XAU lost 7 1/4. ABX shed 1 3/8, GG dropped 2 1/4 and NEM fell 2 1/8. Whatever I have thought about gold since the beginning of the year has been dead wrong. Gold is in a bear market and there haven't been any rallies of consequence since August/September of last year. There will be a bounce eventually here as well but when that happens obviously I don't have a clue. I dumped my October ABX calls for a loss of 75%. This was a trade that was profitable a couple of times but I continued to hold onto it. ABX will head back to the upside in due time but it's past due for me to exit that trade. The break of $1350 sealed the deal. Mentally I'm feeling a bit tired, did not sleep well. So it's a rout for the stock, bond, metals and commodity markets all in tandem. Another strategy here would be to simply step aside until things quiet down. You won't lose any money at least. The daily technicals for the stock indices haven't completely blown out to the downside yet. So there will be even lower prices ahead. How low is the question. I'm going to keep an eye on the summation index. If we go through the zero line it will not be pretty. Gold is collapsing and the gold shares are reaching levels not seen in some time. I'll probably try the gold share calls at some point over the summer but obviously now is not the time. The month of June has lived up to its reputation as the worst month for the price of the yellow metal. We'll see how bad it gets in the foreign markets tonight and finish up the week with the June expiration tomorrow. Should be interesting.
Wednesday, June 19, 2013
We erased the gains for the week as the Dow fell 206 points on average volume. The advance/declines were 5 to 1 negative. The Fed statement was the same as the last one but the market knows that the easy money is coming to an end. That will be a problem going forward. The summation index steadied yesterday but will be back to heading lower after today. The McClellan oscillator headed back to the zero line yesterday and now has been rebuffed. This is important for the fact that momentum is now heading lower instead of higher. Certainly things could turn around tomorrow but I don't see a catalyst for that. The overall picture is now muddy instead of clear. It makes for tougher trading in a tough trading world to begin with. GE was off 1/3 on good volume. We are getting a pull back from the break out yesterday but now there is the question of if it even matters or not. I still think that I'm going to try the July calls here and probably tomorrow as well. GE goes ex-dividend at the open so we should see a lower open and cheaper premiums for the July calls. I'll ponder this trade overnight and decide from there. Gold was up $7 on the futures but fell $25 in the aftermarket on the Fed and a stronger US dollar. The XAU dropped 2 7/8. Gold has now reached the all important $1350 level and the XAU is at its previous lows for the third time. It is the moment of truth for gold and the gold shares It really looks and feels as though a breakdown is inevitable. ABX and GG lost about a buck, while NEM fell 3/4. Volume was good to the downside. My October ABX calls are now solidly in the red and I may simply have to dump them if we break any lower here. That looks like the case here as well. Mentally I'm feeling a bit tired, did not sleep well. Volatility has picked up and we are now faced with the question of where do we go from here? The technicals for the stock indices will now roll back over after todays price action. I could make a case for rapidly lower prices form here but that is just a guess. It will be important to see where the rest of the week goes. One of the problems here is that the volume has been light until today. And today was to the downside. These developments are not bullish. It may be a time to just play it safe. Gold is at the moment of truth and it certainly doesn't look like it will hold up here. Tomorrow is important here as well. We'll most likely see downside follow through around the world and a lower US open tomorrow.
Tuesday, June 18, 2013
Continuing higher in front of the Fed as the Dow rose 138 points on light volume. The advance/declines were 2 to 1 positive. This should stop the summation index from moving lower. I thought we would be in a holding pattern ahead of Bernanke but the short term up trend continues. Are we heading to new highs again on the Dow? Perhaps. The small stocks look a lot better here and they are the leaders one way or the other usually. But anything goes after tomorrow. I'm still a believer that we are building a longer term top here. However the technicals are now moving higher on some of the major stock indices. Yesterday I mentioned there was a case for both the bulls and the bears and that is still in place. But we are seeing the positive short term tone of the market now. It will be interesting to see what happens if we get to the old highs. GE broke out today as it gained 1/2 on heavy volume. If GE is any indication of where the market is going then new highs will be coming. Obviously should have gotten the July calls here yesterday but if we get a pull back to the breakout there may be another chance. Unfortunately when you're stuck in a trade as I am with something else, that tends to get your attention. And when you can't give your full attention to what is going on in front of you, you miss things. That said, the breakout in GE is comfirmed by the volume. July calls are in order. Gold fell today as it looks like the gold market is anticipating some hawkish attitude from the Fed. The precious metal futures fell $15. The US dollar was little changed today. The XAU dropped 2 2/3. ABX, GG and NEM all had fractional losses of 1/2 or more on average volume. My October ABX calls have sunk into the red. I'm still holding onto this position unless gold breaks the former crash lows at $1350. That is a possibility going forward as despite the oversold condition for gold and the gold shares, no sustained rally has taken place. Mentally I'm feeling OK. The market is in rally mode before the Fed. The technicals have turned and it looks like we are going higher. But like I said before, anything can happen in this game. If we do see some weakness tomorrow, I'll be looking to purchase some GE July calls. Gold is still unloved and if we get a hawkish atmosphere from the Fed tomorrow it will only spell more trouble here. I certainly don't know what is going to happen tomorrow but we will have to keep a close eye on all the markets reactions. I expect the overseas markets to be on hold tonight. We'll see what happens.
Monday, June 17, 2013
Another volatile session as the Dow gained 109 points on light volume. The advance/declines were 2 to 1 positive. Waiting on the Fed. I did check the previous times the McClellan oscillator moved as it has in the past couple of weeks during this move lower. It is forecasting higher prices near term. However the technicals here are mixed for sure. Some are very bullish, while others are quite bearish. Interesting times to be sure. I'm going to lean towards higher prices going forward but nothing spectacular or as sustained as we have previously seen this year. I do believe that we are building a top for lower prices in the months ahead for the stock indices. I could be wrong. GE was up 1/4 and the volume was OK. I'm now looking at the GE July calls on the prognosis that we move past the $24 level here in the next 5 weeks. This strategy fits in with my overall assumption of higher equity prices near term. We'll see. Gold was off a few bucks on the futures and the US dollar was a bit lower as well. The XAU was up 1/2. ABX, GG and NEM had slight fractional moves one way or the other on light volume. My October ABX calls are now slightly in the red. Waiting on the Fed here as well but I don't know that what is said on Wednesday will propel gold any higher form here. It appears that we are simply in a base building period for now. Mentally I'm feeling OK. I'd expect tomorrow to be a light volume wait and see affair. I'm not sure what to expect on Wednesday. 4 days to go in the June option cycle. I'll be keeping an eye on GE for an entry point on the July options. Of course that idea could change depending on the market going forward as well. Gold is still going nowhere. We'll see if the foreign markets respond to todays positive US action and go from there.
Friday, June 14, 2013
No follow through to yesterdays gains as the Dow fell 105 points on light volume. The advance/declines were negative. The summation index continues lower. The Dow was weaker than the overall market. I think that we will head higher short term. However we are also in a waiting period on the Fed next week. One of the problems for stocks here is the light volume. There is no real conviction in the buying like there was before. As long as 1600 holds on the S&P 500, we'll be OK for now. But I do think that level will eventually break. The longer we stay above that level and move sideways, the bigger the top that will be in place. GE was off 1/4 on very light volume. The Bollinger bands on the daily chart are converging. This suggests a decent sized move one way or the other coming up. Gold was up about $10 on the futures. The US dollar finished the session little changed. The XAU is back to under performing the precious metal as it fell 1 2/3. ABX, GG and NEM all had fractional losses on light volume. The technicals for these stocks are mid-range. We could go either way from here short term. The inflation data today was higher than expected for the PPI but did nothing to help the gold shares. Could be a long summer for my October ABX calls. Mentally I'm feeling a bit tired, did not sleep well. One week to go in the June option cycle. I might try a trade in the OEX options. I'll be checking the charts here over the weekend. Todays breadth was much stronger for a market down over 100 points. I also expect the McClellan oscillator to move up from its current oversold reading. Perhaps the Fed will be the catalyst. Gold remains mired in an atmosphere of apathy and below its 50 day moving average. I'm still positive as long as the crash lows of $1350 hold. But we could be in an extended base building period. That would not bode well for my ABX calls as the time premium would be taken out of them. I'll be checking the technicals for the various markets over the weekend and try to come up with some type of game plan for next week. It's Friday afternoon and time for a break.
Thursday, June 13, 2013
Back to the upside with a huge gain as the Dow rose 180 points on average volume. The advance/declines were over 5 to 1 positive. A bounce was expected with the McClellan oscillator simply blown out to the downside again. We now have a double bottom in place there for the short term, which implies more gains going forward. The major indices also held their 50 day moving averages once again. The small cap stock index charts also look more positive than the big caps. So I would say that the decline is over for now but I expect that the next time we head down to the 50 day moving average, we'll be breaking it. That's my guess for now. GE was up fractionally today on light volume. In a sideways trend here for about 4 weeks. Gold was lower on the futures today, losing $14. The US dollar was lower today as well. The usual relationship between gold and the dollar continues to be out of sync. I don't know why. The XAU was up a point. ABX was flat on the day, while GG and NEM rose 1/3 or so. These stocks found buyers at the end of the day. Volume was light again. There's still no real interest in the gold shares. Mentally I'm feeling OK. Obviously should have tried the OEX calls this morning but did not. Retail sales came in better than expected. I don't think that was the reason for todays rise. The Japan stock market was clobbered last night but the Dow still managed a big gain today. Perhaps the world views the US stock market as a safer bet. However the words stock market and safe do not go together. We'll stick with the technicals and the signals were leaning towards a bounce. Perhaps the Dow will run up into the expiration, since there is usually a positive bias during expiration week. But who knows? Volatility has picked up, that much we know. Gold remains going nowhere fast. Ditto for the gold shares. It could be a long hot summer for gold. No volume and no real interest since the crash lows. My October ABX calls are at break even. We'll see if we can get a bounce in the overseas market and wrap things up for the week tomorrow.
Wednesday, June 12, 2013
Another volatile session with a one day reversal to the downside. The Dow opened up over 100 points only to sell off for the remainder of the session and close with a loss of 126 points on light volume. The advance/declines were 4 to 1 negative. The summation index continues lower and the McClellan oscillator is extremely negative. The oscillator reading would imply some type of bounce due soon but it implied that yesterday as well. Hanging around the 50 day moving average in the major US stock indices. Retail sales should be the catalyst tomorrow morning. The small stocks appear to be holding up better than the large caps and that would be bullish moving forward. Not a lot of volume in the market though and that is not a good sign. GE was off a bit on light volume. No trades there for now. Gold came back a little today. The futures gained $15 but fell back in the aftermarket. The US dollar was slightly weaker on the day. The gold shares continue to lag as the XAU was up only 7/8. ABX, GG and NEM all had small fractional gains on light volume. Gold continues to be a non-event despite the recent weakness in the US dollar. June is historically a poor month for the precious metal. Perhaps sideways is the most we can expect for now. Mentally I'm feeling OK. I would not be surprised to see the decline in stocks turn around here soon. Oversold and staying there though, isn't a good thing for the bulls. But the momentum and breadth has been extremely negative lately, without a really huge move in points. The next couple of days could be key, with the 50 day moving average in play. We'll see. Gold remains above the crash lows but there is no rally in sight here. Perhaps building a longer base will mean the ensuing move will be large. That's a guess as usual and which way the move goes for the yellow metal is up for grabs at this point. My October ABX calls are almost back to break even. The continuing lack of price movement isn't helping things as the time decay on the options continues. We'll watch to see if the foreign markets follow the Dows lead overnight and keep an eye on the retail sales report tomorrow morning.
Tuesday, June 11, 2013
Well so much for the early summer doldrums as volatility returned today. The Dow went into free fall at the open and dropped over 150 points. We then climbed all the way back to positive territory only to roll over again. The most watched index fell 116 points on average volume. The advance/declines were 6 to 1 negative. The summation index continues lower. I'm not sure what to make of things here. Deeply oversold on the McClellan oscillator most likely after todays action. That would imply another bounce due sooner rather than later. But the breadth has been pretty negative in the last couple of weeks. The rally is most likely over in my opinion , as I stated here last week. I could be wrong and often am but maybe not this time. We'll see. GE was off 20 cents on lighter volume. We need to get solidly over $24 to be bullish here. Gold continues lower, the futures fell 9 bucks today despite a very weak US dollar. Gold and the dollar are not in sync and that is a problem for the gold bulls here. The gold shares are heading lower as well. The XAU dropped 3 1/3. ABX down 3/4, GG shed 7/8 and NEM lost over a buck. Volume remains light here. Gold is still above the crash lows and the gold shares are under performing. Not a positive picture for my October ABX calls as they remain just barely in the black. Mentally I'm feeling OK. It will be interesting to see where we go from here as a case could be made for either way. Today the dip was bought and then sold again. But we are oversold on some technicals as well. My idea for the OEX puts is now too late unless we get a decent set-up in the next week. Any trade has more risk now if it is in the June cycle with only 8 days to go. Gold remains unloved and not of interest to anybody at this time. The gold shares were turned around at their 50 day moving averages. They need to hold their most recent lows as well for the bullish cause. We'll see if the overseas markets follow the Dow lower and take it from there.
Monday, June 10, 2013
A lackluster start to the trading week as the Dow fell 9 points on light volume. The advance/declines were negative. The summation index continues lower. Not much to say about todays trading except that I hope it's not the start of a trend. By that, I mean the summer doldrums arriving early. Light volume, low volatility trading sessions are common usually during the summer months. They are not welcome for those of us taking outright options positions. 9 days to go in the June option cycle. If we drift higher in the next couple of days, I might try the OEX puts. GE was off a bit on average volume. Still no trades in mind here. Gold was up a couple of bucks as the US dollar was off a bit as well. Quiet trading here. The XAU was up 1/8. ABX, GG and NEM all had slight fractional gains on light volume. My October ABX calls are still in the black but I will have to seriously consider getting rid of them before the summer begins. Directionless trading will eat away at the option premiums, including ABX. Perhaps I'll be able to buy them back later in the summer. Just a thought for today, we'll see what happens going forward. Mentally I'm feeling a bit tired, did not sleep well. We got the oversold bounce at the end of last week for the stock indices and kind of stalled out today. We'll see if the bounce continues tomorrow. Some economic data out this week. Probably the most watched will be the retail sales report on Thursday. Gold didn't do much today and it could be a week of sideways non movement but that's just a guess at this point. Gold hasn't moved in line with the US dollars recent decline and that isn't really positive. The crash lows have held up so far though. We'll keep an eye on things overnight and go from there.
Friday, June 07, 2013
A huge rally today on the jobs report as the Dow gained 207 points on light volume. The advance/declines were just over 2 to 1 positive. The bounce from 1600 on the S&P 500 has been pretty good and that was expected with such a negative oversold reading on the McClellan oscillator. The employment report really didn't have any positive surprises. But the market was so stretched out in one direction, it had to snap back in the other direction. Will we go on to new highs from here? I don't know but I don't think we will. The volume today was light, despite an over 200 point move higher. The market breadth wasn't all that great for such a huge move either. The one thing that confuses me is the depth of the recent momentum decline without a real substantial move down in price. I'll keep an eye on things going forward of course. GE was up 1/2 on average volume and looks like it wants to go to new highs for the year. Perhaps GE will provide some clues on the overall market direction. We'll see where it goes next week. Gold got clobbered today, off $32 on the futures and $5 more in the aftermarket. The US dollar was just slightly higher today, reflecting a muted reaction to the jobs report. The XAU sank 4 1/4. ABX and NEM were off 7/8, while GG fell 1 1/3. Volume was light. Not a good week for the gold shares and perhaps sideways is the most we can hope for in the coming weeks. There is not catalyst at the moment for higher prices. My October ABX calls are somehow still in the black. Mentally I'm feeling OK. So we got the employment report out of the way. The stock indexes were very oversold and we are now working off that condition. Could this be the start of a summer rally that takes us to new highs? Perhaps but I'm not sold on that idea yet. However the markets will go where they want. Gold had a very negative day. It needs to hold above the crash lows of about $1350 or so for the bullish cause. It has so far. Maybe we are building an extended base for a move higher in the next few months. That's a guess as usual. Technically gold got overbought when we moved above $1400 and we are now working off that condition. 2 weeks left in the June option cycle. I might try an OEX trade if a signal appears, even though I just missed the OEX call trade this week. I'll try the puts if we get short term overbought. Plenty of charts to study over the weekend. For now it's Friday afternoon and time for a rest.
Thursday, June 06, 2013
We got the overdue bounce today as the Dow gained 80 points on average volume. The advance/declines were about 4 to 1 positive. The McClellan oscillator was so blown out to the downside, it was reaching levels rarely seen. The S&P 500 made it down to the 50 day moving average and the important 1600 level. Yes, the decline could be over here but we don't know that just yet. I did place an overnight order for some OEX calls but canceled it when we broke 1600 on the S&P 500. The order would not have been filled if I left it open anyway because we started moving higher from there. My reasoning for the trade was that a bounce was severely overdue. I'm not sure what happens from here, with tomorrows employment report looming large. The 50 day moving average has held for now. GE came off of its lows on good volume and ended the day up a nickel. GE has been in a drift for 3 weeks. No trades in mind there. Gold rose $17 today and fell back a touch in the aftermarket. The price action in gold was not as positive as I would have liked to see, considering that the US dollar was absolutely crushed today. The greenback fell over a point. Perhaps we'll see a weak jobs number tomorrow. The XAU rose 1 3/8 which wasn't much of a reaction either. ABX, GG and NEM all had fractional gains to the upside on average volume. These issues are stalling at their 50 day moving averages. Tomorrow should be interesting here as well. Mentally I'm feeling OK. We will have to pay close attention to the stock indices reaction to the employment numbers. Perhaps there will still be a chance to play the bounce if we get a sell off early. That's simply a guess at this point. Anything could happen. However with the momentum clearly oversold to the extreme, some kind of upside is expected. I might try the OEX calls if the opportunity presents itself but it's risky. 2 weeks and a day left for the June option cycle. Gold should have moved higher today in my opinion with the sell off in the US dollar. Perhaps traders are waiting on the employment report or maybe there just isn't any interest in owning gold here. We are just getting through the down trend line that has been in effect since mid-April. Better price appreciation and volume will be needed to confirm a break through here. Maybe tomorrow. We'll see if the overseas markets follow our lead higher overnight while we wait for tomorrows numbers.
Wednesday, June 05, 2013
To the downside as the momentum run to the upside has run its course. Those higher momentum moves never end well and we are seeing that is the case now. The Dow fell 217 points on average volume. The advance/declines were about 5 to 1 negative. Oversold and staying there now for the stock indices. Overdue for a bounce and when it comes it will be a big one. But it won't matter much. The trend has changed. The market is speaking to us and we must listen. My guess is that whatever kind of decline the market has here, we are just at the beginning. It could take weeks and months. We are getting too oversold on the McClellan oscillator not to have a huge up day soon. Perhaps the employment report on Friday will be the catalyst. Regardless, the rally has ended in my opinion. GE was off 1/3 on good volume. No technical damage on the daily chart here. No trades in mind here either. Gold was only up a buck on the futures today despite some weakness in the US dollar. The XAU was up 1/4. ABX, GG and NEM all finished the trading session little changed. Volume was light. No interest in the gold shares today despite the overall market decline. Mentally I'm feeling OK. We are now seeing what was inevitable for the stock indices. It's an unwinding of the excesses of the momentum upside move. It will probably take a while to complete. The Fed easy money policy will be coming to an end sooner rather than later. Market participants are finally beginning to factor this in. We'll flip flop around from time to time to be sure. But I doubt we will see a return to constant higher stock prices anytime soon. We now have the prior top as upside resistance. Gold needs to make a stand here. I'd ideally like to see a solid upside week print out on the charts. However sideways may be the case for now because there doesn't seem to be much buying interest in anything at the moment. We'll have to see what happens in the next couple of days. We'll keep a close eye for downside reactions in the foreign markets tonight as we wait for tomorrows US session ahead of the employment numbers on Friday.
Tuesday, June 04, 2013
Back to the downside today as the Dow fell 76 points on lighter volume. The advance/declines were negative. We are oversold and not getting the expected bounce. This is troublesome. The McClellan oscillator is in the negative 200's. This doesn't happen very often and it usually comes in the midst of a huge decline. The decline we've seen thus far is anything but huge. So we are either on the verge of something big going lower or we are going to rally up to new highs as we come off of this oversold condition. That's my guess at the moment. The employment report on Friday could be the catalyst for a volatile session. It's all conjecture for now. I'm now undecided on which way to go. GE was flat on average volume. GE has held up rather well here compared to the overall stock market. Perhaps that is a clue in what to expect going forward. Gold headed back down today, off $15 on the futures as the US dollar was a bit higher today. The XAU dropped 2 points. ABX, GG and NEM were all off around 1/2. Volume was light. Overbought on the gold shares and I suppose sideways from here for a while is the best we can hope for. We should see some movement one way or the other here on Friday as well. Which way is the question. I'm still holding on to the October ABX calls and they are still showing a profit. Mentally I'm feeling OK. Pretty oversold on some of the stock indices technicals yet the price action has not been drastic to the downside. I'm not sure what to make of it. I may have to stay on the sidelines with regard to the OEX options. However there will be some kind of opportunity available I believe. I think gold is deciding which way to go here and as long as it stays above the crash lows I'll feel OK about the ABX call trade. But anything can happen in this game. June still has 2 1/2 weeks left in the option cycle. We'll see what tomorrow brings.
Monday, June 03, 2013
A bounce was due and perhaps even overdue as the Dow gained 138 points on good volume. The advance/declines were negative though, reflecting the overall market weaker than the Dow. The McClellan oscillator was blown out to the downside and positive price action was expected. We were also oversold on a short and medium term basis. I would still expect more near term upside. The question is what happens after that? The Dow being the leader here isn't bullish. The summation index is still heading lower. I'm inclined to look at the OEX puts before the release of the employment report. We will have to see how the market trades ahead of that. GE was up 1/3 on good volume. Strength in GE leads me to believe that the decline is nothing to worry about. So there are mixed signals for the stock indices going forward. No trades in GE for now. Gold had a good day on a very weak US dollar. The precious metal futures were up $18 today. The XAU rose 2 7/8. ABX and NEM had slight fractional gains, while GG was up 3/4. All of these issues finished off of the highs for the day. Volume was light to average. I would have liked to have seen better price action for these three. They are all hesitating at the 50 day moving average. Mentally I'm feeling OK. The stock indices held their own today. It's possible that we will make a run back to the old highs but I certainly don't know. Friday looms large for now. Perhaps if we head higher into Friday, I'll try the June OEX puts. Depends on the breadth of the advance if we go that way. Gold had a good day which erased the losses of this past Friday. Follow through to the upside is imperative for the bullish cause near term. If the dollar remains weak that would be supportive for gold prices. My October ABX calls are still in the black. We'll watch the action overnight and take it from there.