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Thursday, September 12, 2013

Some weakness today as we can't expect 100+ point gains every day.  The Dow fell 26 points on light volume.  The advance/declines were 2 to 1 negative, reflecting a weaker overall market.  We were very overbought on some technical indicators for the short term.  The summation index is still heading higher though.  I may be early but I did purchase some October OEX puts today.  I'm a believer in the second half of September weakness theory.  I could be wrong and often am.  Retail sales should be the catalyst for whatever stock index movement we get tomorrow.  GE was off 1/4 on lighter volume today.  No trades in mind there for now.  Gold was the main story of the day as it broke the up trend line in effect since early July and dropped below the important level of $1350.  The precious metal futures fell over $30 and another $10 in the aftermarket.  The US dollar was little changed again.  The XAU dropped almost 5 points.  ABX off a buck, GG fell 1 3/4 and NEM lost 1 1/4.  Volume was good.  I had to get rid of my October ABX calls since gold itself did not hold up here.  The trade produced a profit of 70% but the gains were so much more during the holding period that it feels like a loss.  I may try to buy these options back in the next couple of weeks if they return to my original buy price.  However if we see a decline in the overall stock market that I'm looking for, the gold shares will follow.  I'll try and be patient for now.  Mentally I'm feeling tired, did not sleep well.  I'd like to see the stock indices build a top here before they decline but a case can certainly be made for a lot more upside as well.  The real price movement will probably occur on Wednesday with the Fed announcement.  That would give stocks time to work off the current overbought condition and then move higher.  I am looking for lower prices myself but we cannot rule out the possibility of an upside breakout for the stock indices.  However if we do turn around to the downside here, it has the potential to be a lot more than most expect.  That's my view at the moment.  Gold had a pretty negative session and the next near term support seems to be at around $1275.  Gold can get pretty volatile at times but that makes for good trading if you're on the right side of the moves.  In retrospect I should have taken the profit in the October ABX calls a lot sooner.  But retrospect always shows better profits and slimmer losses.  It means nothing going forward.  The next trade is what counts.  We'll see what happens overnight and go from there.

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