Thursday, October 31, 2013
We turned around in the last hour today as the Dow fell 73 points on good volume. The advance/declines were negative. The summation index has turned lower today. Just end of the month profit taking in my mind. However the small stocks are leading the way lower here and the short term technicals have rolled over. I still don't think that this is the beginning of a big move down. The extreme overbought condition of the market is being worked off. GE was off 1/4 on good volume. If we ever get back down to the breakout price, I'll be looking at the calls. Gold was off $25 on the futures as the US dollar had a very good day. The XAU fell 4 points. ABX dropped 1 1/8, GG lost 7/8 and NEM shed 3/4. Volume was above average for ABX, average for the others. I simply should have dumped the ABX calls in the morning but I didn't. ABX was holding up well during the day but got clobbered near the nd, like the overall market. My November ABX calls are still showing a profit. However gold has now rolled over. I have once again held onto a trade for too long. Mentally I'm doing OK. Beginning of the month tomorrow. I'd expect some money inflows. Not much on the economic data front. After the bell ABX announced a plan to offer 3 billion worth of common stock at $18.35 to pay off debt. That will kill my ABX call trade. The deal closes on November 14th which is a day before the November options expire. Unforeseen announcements are just one of the risks in trading single equities. But it works both ways. If you owned the puts right now you are smiling. It has been a horrible trading year for me but you've got to keep moving on. We'll see what happens overnight and go from there.
Wednesday, October 30, 2013
Volatility returned today with the Fed. The Dow fell 61 points on good volume. The advance/declines were 2 to 1 negative. Nothing new from the Fed but it was an excuse to take profits I'd imagine. The economic data remains status quo. No GDP report today as it is now delayed due to the government shutdown. We hit a new intra-day high on the Dow today. Perhaps this is the beginning of working off the extreme overbought condition of the stock indices. Regardless, the trend is still up for stocks. GE was up another 1/8 and the volume remains good. I can't see any major market decline in the works with a strong showing in GE. I could be wrong but probably not with regards to this theory. Gold got bounced around on the Fed as well. The yellow futures were up around $3 on the session but sold off $20 in the aftermarket before coming back a bit. The US dollar was higher today as well. The XAU sold off after the Fed as well but came back to end the day with a gain of 1 1/2. Not exactly sure what to make of that action but it appears to be bullish. ABX was up 3/4, GG added 1/8and NEM rose 3/8. Volume was pretty good for the gold shares, especially for ABX. It looks like somebody knows something here about the earnings due tomorrow. It looks like the same price action we saw with GE the day before its earnings announcement. But we all know anything can happen in this game. Mentally I'm feeling OK. The small stocks have begun to under perform recently and that is not a positive for the stock indexes. No trend line damage for now. Also one day doesn't mean it's a turnaround. But it is something to keep an eye on. Gold really had a whipsaw session today. The recent stronger US dollar is not a positive sign for gold. My November ABX call trade is back to showing a nice profit. How this trade goes will most likely be determined by the earnings report tomorrow. If todays price action is any indication, the report will be viewed as a positive. We'll see how the foreign markets react to todays US market developments and go from there.
Tuesday, October 29, 2013
Higher and higher we climb. The Dow gained 111 points on average volume. The advance/declines were positive. The summation index continues higher. The economic data reported today came in about where expected. We'll get GDP and the Fed tomorrow. Overbought, staying that way and I certainly don't know how long this can last. The Dow will probably hit a new all time higher tomorrow. The small stocks are not in the lead now and that means we should be near the end of this run that has been in effect since the second week of this month. It is getting to be almost parabolic and that never ends well. We'll enjoy it while it lasts. GE was up 1/8 and the volume was average. No trading ideas here at the moment. Gold dropped around $7 on the futures as the US dollar showed a bit of strength today. The XAU fell 2 1/2. ABX off 1/2, GG down 7/8 and NEM lost 3/8. Volume was light. The gold shares needed a breather and that is what we are seeing now. My November ABX calls are still showing a profit but not as much as last week. The earnings on Thursday will determine the outcome of this trade. Mentally I'm feeling OK. I doubt that we will see any surprises out of the Fed tomorrow. Perhaps we'll get some selling on the announcement due to the extreme overbought condition of the stock indexes. But that's a guess as usual. There's really nothing in the way of higher stock prices looking out into the future. Gold is hanging around its 50 day moving average line. A move above there would be a positive. I'd like to see the gold shares bounce back tomorrow but that could be wishful thinking. We'll keep an eye out on the overnight action and go from there.
Monday, October 28, 2013
A Monday in waiting for the stock averages as the Dow fell a point on light to average volume. The advance/declines were negative. Working off the overbought condition here in my opinion. Some economic data but no real market moving event. The small stocks had relative under performance. Plenty of economic data out tomorrow including retail sales and inflation. Then it's on to the Fed for Wednesday. We are over extended here and due for at least a pause. GE was up about 1/4 on average volume. Still consolidating the recent gains here. Gold was flat on the session with a slightly higher US dollar. The XAU added 1/2. ABX, GG and NEM had fractional gains on light volume. Overbought for these issues as well. Earnings due Thursday for ABX and NEM. My November ABX calls are still showing decent gains. Mentally I'm feeling a bit tired, did not sleep well. The major stock indexes continue to seek new highs day after day. At some point this will stop and we are probably pretty close to that point. We'll have to see the markets reaction to the Fed on Wednesday and what type of tone that sets. The dollar is due for some type of bounce I would think due to its oversold condition. Gold may need a rest or consolidation near term as well. The precious metal has continued higher on lighter volume. I suppose I'll wait for the earnings for ABX on Thursday and then decide about exiting the ABX call trade. A break above 21.50 on good volume would be a huge positive but anything can happen. We'll see what transpires in the next couple of days leading up to the earnings announcement. I'll keep an eye on the overnight action and go from there.
Friday, October 25, 2013
The rally continues as the Dow climbed another 61 points today. The advance/declines were positive but the volume was light. The bigger stocks led the way higher on the session. There is nothing to suggest that the rally can't continue. The summation index is moving higher. I'd still like to see some consolidation before going up again but the market will do what it wants. New all time highs are being made in the major indices and there is no overhead resistance. We're overbought for the stock indices on a short and medium term basis. This condition won't last forever. GE was off a few cents on light volume. Still waiting on a pull back to get some GE calls. However this week may just have been a consolidation before moving higher. Gold was up a couple bucks on the futures as the US dollar didn't do much today. The XAU edged higher by 2/3. ABX, GG and NEM all had minimal fractional gains on average volume. Still short term overbought for the gold shares. It's been a nice couple of weeks for the gold bulls. Plenty of potential market moving data out next week. Probably the most important for myself will be the ABX earnings due on Halloween. Definitely a trick or treat affair. Mentally I'm feeling OK. The stock indexes continue to the upside with the easy money policy firmly in place. There is a Fed meeting coming up next week and I don't see any changes taking place that would derail the stock buying binge. Money needs a place to go. There's plenty of economic data due out as well. I'd expect more record highs to come. Gold has been moving along with the overall market. A weaker dollar has helped things along here in my opinion. We are getting close to major dollar support at the 79 level though. I'd expect that level to contain the dollars decline since we are short and medium term overbought on the greenback. That may put a ceiling on golds advance for the near term. Just a guess but it does have some technical reasons behind it. The reverse head and shoulders pattern on the weekly ABX candlestick chart is still in place. If ABX can break the neckline at 21 with good volume, that pattern would be valid. It measures out to $28 eventually. Hasn't happened yet but the possibility is still there. It's the last Friday afternoon in October and time for a break.
Thursday, October 24, 2013
The Dow climbed 95 points today on once again good volume. The advance/declines were positive. The pick up in volume is interesting as we had seen lower than normal volume in the marketplace for months. It makes me a believer in higher prices yet to come. The summation index continues higher. TRAN continues to be a strong performer as well. The only caveat from today was that the Dow led things to the upside and that isn't always positive. We also remain pretty overbought on a short term basis, so some sideways price action would be welcome. GE bounced back 1/4 today but the volume was lighter. Very overbought here as well. Gold had a positive session. The precious metal futures were up $16. The US dollar was off just a bit. The XAU rose 3 2/3, hovering around the 50 day moving average. ABX up 2/3, GG rose a buck and NEM added 1/3. Volume was good, especially for NEM. The price action for NEM here isn't as positive as the other 2 and I don't know why. It's something to keep an eye on. Gold has had a nice couple of weeks so far but we'll have to see if it can build on that. Mentally I'm feeling OK. Everything looks OK for higher prices moving forward. Overbought and staying that way. This condition can last a while as it has before. You can't fight the trend and the trend is up. Gold and the gold shares have picked up the past 2 weeks. GG reported earnings today and it was viewed as positive. Perhaps we'll get similar results from ABX and NEM next week. Time will tell on that. My November ABX calls are still solidly in the black for now. We'll keep an eye on overnight developments and close out the week tomorrow.
Wednesday, October 23, 2013
Slight downside movement today as the Dow fell 54 points on good volume. The advance/declines were negative. A pause was certainly due for the stock indices. We'll have to see if it develops into something more but I doubt that for now. The summation index continues higher. The overall market was weaker than the Dow for a change. More backing and filling is the prediction here. The trend remains up despite the short term overbought condition. GE was off 1/3 on average volume. If we make it back to roughly the $25 level, I'll be looking at the calls there. Gold was off 8 bucks on the futures as the US dollar didn't do much today. Gold is stalling at the 50 day moving average and that is not unexpected. Some sideways consolidation would be healthy for a continued move higher. The XAU fell 2 1/2. ABX and GG were off around 1/2, while NEM dropped over 1 1/8. The gold shares were technically expected to head back to the down trend line that was just broken. However the fall in NEM is worrisome for the bullish cause. The volume was lighter today on the drop. It will be something to keep an eye on. Mentally I'm feeling OK. Still overbought for the stock indexes. Plenty of economic data due in the next 2 days. I'd expect some more sideways activity but you never know. We still need to digest the recent run up. Gold will probably move sideways for a couple of days or so as well. The gold shares were a bit weaker compared to gold today and that isn't a positive. We'll keep an eye on the overnight action and see the reaction to the data tomorrow.
Tuesday, October 22, 2013
The song remains the same as the Dow gained 75 points on good volume. The advance/declines were almost 3 to 1 positive. The employment data was weak but that just means more easy money from the Fed. The liquidity flow lives on. The summation index is heading higher. The major stock indices continue to hit new all time highs. There is no overhead resistance. Both short and medium term overbought at this point. Seems like there is nothing out there to derail this freight train higher. We'll see how long it can go on. GE was off 1/8 and the volume was good. Short term overbought here as well and probably time for a breather. Any move back to the $25 level can be an entry point for calls in my opinion. Gold had a nice move higher on a weaker US dollar and weaker jobs number. The precious metal futures rose about $25. The XAU gained 4 points and is back to the 50 day moving average. ABX and NEM almost gained a buck, while GG added 1 1/4. Volume was good for the gold shares. ABX broke above the declining tops line from late August and that is a positive moving forward. My November ABX calls are now solidly in the black. Short term oversold now for the gold shares. Mentally I'm feeling OK. I'd expect some type of sideways price action for the stock indexes at this point. Perhaps some backing and filling before moving higher. We will not stay overbought forever. It seems like everything is going right for the stock market and that could be dangerous. But there is nothing out there at the moment to end the upside party. Gold is also back to its 50 day moving average as well. I expect some hesitation here as well. The US dollar is getting close to its longer term support at the 79 level. I would expect that level to contain prices near term. However if it doesn't that would certainly be bullish for gold. We'll have to see how things play out here. The gold shares have been acting better lately. But the weekly chart for gold itself is about to form the death cross of the 50 week moving average breaking down through the 200 day moving average. So I'm not exactly certain is will be clear sailing for the gold complex. We'll watch the developments overnight and go from there.
Monday, October 21, 2013
Digesting the recent gains or simply marking time until tomorrows employment numbers. The Dow lost 7 points on light volume. The advance/declines were slightly negative. The overall market is still performing better than the Dow but by not such a wide margin as before. The summation index continues higher. Still short term overbought for the stock indices. Money however needs a place to go. The trend remains up for the stock market. GE was up over 1/2 today on heavy volume for a nice follow through to the breakout on Friday. GE is telling us that the market has no worries for now. If we do get a pull back in GE, it will be an opportunity to buy some calls there in my opinion. I'm not sure that will happen though. Gold didn't move much today and neither did the US dollar. Waiting for the employment data perhaps. The XAU rose 1 3/4 though. ABX, GG and NEM were all up around 1/2 or so. The volume was pretty light here which isn't a positive. At least price is moving in the desired direction. My November ABX calls are in the black. Mentally I'm feeling a bit tired, did not sleep well. Not sure what to expect with the employment report and the data is relatively old. It could be perceived as stale numbers and perhaps will be not as market moving as usual. That's a guess and the important thing as always will be the market reaction to the numbers. We're short term overbought on the stock indexes and have been. A move lower would not be a surprise. Gold broke a daily down trend line last week and now we've had 2 days of slight movement with little volume. ABX is getting close to its daily down trend line since late August as well. A move through there with decent volume would be a positive. The weekly candlestick chart for ABX still shows a potential head and shoulders bottom. We would have to somehow break through the $21 level on good volume for that pattern to be valid. We'll watch the overseas market overnight and go from there.
Friday, October 18, 2013
More of the same as the Dow gained 28 points on good volume. The advance/declines were almost 3 to 1 positive. New all time highs for many of the major stock indices. The summation index is moving higher. The overall market today was once again much stronger than the Dow with the small stocks leading the way. This implies even higher prices moving forward. The Washington BS is done for now but will return at the beginning of next year. Earnings are coming out and look better for some than the lowered forecasts. Money needs somewhere to go and it is going into stocks. The Fed continues the easy money play. It will eventually end badly but that is not on the radar screen anytime soon. Technically remaining short term overbought for the stock indices. GE had a big up day on the earnings, gaining 7/8 on very heavy volume. A nice breakout above the previous resistance. If and when we fall back to the resistance in the coming weeks, it will be an opportunity to try the calls here. Gold fell $8 on the futures after yesterdays huge run up. No upside follow through here. The US dollar ended the session pretty much where it started. The XAU was off 1/2. ABX was flat, while GG and NEM had slight fractional losses. Volume was pretty light here and that is a good sign when prices are lower. Mentally I'm feeling OK. How much higher can we go here is the question considering the very overbought condition of the stock indexes. No doubt due for a breather. We are going to get plenty of old economic data next week including the employment report on Tuesday. Not sure what kind of effect the old news will have on things but regardless, the trend is up. Gold finally had a positive week and I would like to see that continue for my November ABX calls to have a chance at being profitable. Earnings for ABX due out on the 31st. I'll probably hold on for that unless we see some strong upside ahead of it. Not overbought yet for the gold shares. Of course we could simply resume the sideways to lower trend here as well. However gold itself did break a downtrend line on good volume this week. That should be bullish moving ahead. We'll see. It's Friday afternoon and time for a rest.
Thursday, October 17, 2013
The Dow fell 2 points today but the overall market was much stronger. Volume was good and the advance/declines were about 5 to 1 positive. New highs in some of the major indices including the S&P 500. The summation index is heading to the upside. Still short term overbought and staying there. No resistance to move higher and expiration week concludes tomorrow. Awaiting the postponed economic data now that Washington is out of the way. Earnings are coming out as well. Nothing to derail the upside at the moment. GE was up 1/3 and the volume was pretty good. Could somebody know something about the earnings report due tomorrow? It wouldn't be the first time but we'll find out tomorrow. Gold actually had a stellar session on a very weak US dollar. The precious metal futures gained $40. Today gold broke out above the down trend on a daily basis that has been in effect since late August. The volume was decent as well. That is a bullish development for gold. The XAU managed a 4 1/2 point gain. ABX and GG rose 7/8, while NEM was higher by 1 1/8. Volume was average. My November ABX calls are back in the black. Mentally I'm feeling OK. The stock indexes continue higher as we wait for economic data to trade off of. Nothing in the way of higher prices for now. We'll see what happens next week. Gold had a nice upside breakout today. I don't know where that came from but the bulls will take it. If the dollar continues lower, it will be supportive for gold. The gold shares should go along for the ride. However, one day doesn't make a trend. We'll have to see more upside for gold and the gold shares near term to turn things positive there. Hasn't happened yet. We'll see if the foreign markets follow the US indices overnight and go from there.
Wednesday, October 16, 2013
The expected last minute deal from Washington is now in place and the Dow rallied 205 points on good volume. The advance/declines were about 4 to 1 positive. Small stock indices hit new recent highs and that is bullish. The summation index is trending sideways but should start to move higher. Short term overbought for the stock indexes but that could last a couple of days with the option expiration on Friday. There is nothing in the way of higher prices going forward it seems at this point. We'll now get back to focusing on the economic data and earnings. GE was up an 1/8 or so and volume was light. Waiting for Friday here. Gold was up $9 on the futures with a slightly higher US dollar. The XAU did not follow and was off 1 1/8. ABX, GG and NEM all had fractional losses on light volume. Still no real interest in gold and the gold shares. Mentally I'm feeling a bit tired. With the budget/debt drama finally out of the way we'll have to pay attention to exactly when the tardy economic data is going to be released. Technically it looks like new all time highs are coming soon for the major stock indexes. There is no overhead resistance once we get past the previous highs and that should be soon. Gold has been in a down trend since late August and that down trend line remains in effect. There doesn't appear to be any catalyst to send prices higher. I don't know if I can hold on to the ABX November calls until the earnings report at this rate. We'll see. As usual we'll keep an eye on the overnight developments and go from there.
Tuesday, October 15, 2013
Downside action today as the Dow fell 133 points on average volume. The advance/declines were 3 to 1 negative. We were getting short term overbought so some negative price movement is not a surprise. Still waiting on Washington to announce some kind of deal. We've seen this type of drama before and it gets old after having it happen so many times. So a last minute deal will arrive this week and all will be saved. Perhaps then we can get back to the market basics and trading will not be held hostage to the next headline out of Congress/The President. Well we can hope. GE off almost 1/4 and the volume was light. Waiting on the Friday earnings report. Gold saw a bit of a bid in the aftermarket but the futures were off 3 bucks. The US dollar rose a bit. Slight flight to safety action after no deal out of DC in my opinion. The XAU managed to rise 2 points. ABX and GG were up 1/2, while NEM rose 1/3. Volume picked up to the upside. My November ABX calls are still slightly in the red. Mentally I'm feeling OK. It's still just a Washington waiting game for the stock indices. Technically still a bit short term overbought. 3 days left for the October option cycle. We will have to wait and see how the market reacts to whatever deal is coming from Congress. It still could be a sell the news event but that is a guess as usual. Gold remains off the trading and investment radar despite todays slight pick up. Technically oversold here on the short term and have been for quite a while. Medium term oversold on some indicators as well. We'll see if there is any upside follow through tomorrow for the gold shares. However the trend here has been lower and today doesn't change that. So once again we'll be waiting for something out of Congress overnight as we keep an eye on foreign developments as well. Maybe this will all be resolved by tomorrow.
Monday, October 14, 2013
The Dow continued higher as we wait for some kind of deal out of Washington. The most watched index gained 64 points on semi-holiday light volume. The advance/declines were positive. Getting to short term overbought technically. The summation index has moved back to the upside. Option expiration week as well. It's still a headline driven affair for now. Once we get past this drama, we can refocus on the economy. Or more likely move on to the Fed drama. I'd still be cautious here despite the huge run up recently. It might be a sell the deal market. Time will tell. GE was flat on the day and the volume was light. Earnings on Friday. Gold was up 8 bucks on the futures as the US dollar was slightly lower on the day. The XAU was up 1/2. ABX, GG and NEM had slight fractional moves one way or the other on light volume. Still no interest in the precious metals. My ABX November calls are in the red. Mentally I'm feeling OK. Today was quiet despite an early sell off. Some foreign markets were closed and it was Columbus Day here in the US. The markets are in stand by mode prior to whatever kind of deal is reached in Congress. This soap opera should be completed this week. Gold remains unloved. It looks like the ABX call trade was not the right idea for now. Earnings due there at the end of the month. We'll see if there is any news tonight on the budget/debt gridlock and go from there.
Friday, October 11, 2013
Good follow through to yesterdays extreme upside as the Dow gained 111 points on light volume. The advance/declines were around 3 to 1 positive. Still no debt or budget deal out of Washington but the market always knows more than the rest of us. Today should turn the summation index back to the upside as it was still lower even after yesterdays big gain. The trend has changed back to higher prices. Earnings season is underway but overall the stock indices should move higher. The small stocks continue to outperform and that is bullish. We've got option expiration week coming up and it usually has a bullish bias. The only thing that could derail things now is if there isn't a US debt deal but Thursday. A deal will get done. GE was up 1/8 or so and the volume was lighter. Earnings out here in a week. Technically not overbought just yet so there is probably more room to go on the upside. Gold fell again today as there is no interest in owning the precious metal. The futures fell over $25 despite a weaker US dollar. The XAU dropped another 1 3/4. ABX, GG and NEM all lost 2/3 on good volume. My November ABX calls are now in the red. Oversold and staying there for the gold shares and that isn't a good sign for the bulls. This already looks like another losing trade for me. Mentally I'm feeling OK. So the market has spoken and it appears the next stop will be new all time highs for the stock indexes. Unless we get some bad news out of Washington over the weekend. It is still a headline driven environment. However the technicals have now said there should be higher prices unless there's a surprise. We probably should listen to that. Gold continues lower with no buyers. It doesn't appear to have any news that will send it higher. The gold shares haven't dropped as much as gold lately but that just means that they are losing less. Perhaps I should just stop trading the gold shares since I have certainly lost more there than gained. It's something to consider. Plenty of charts to check out over the weekend. Plus an eye and ear on the doings in Washington. For now it's Friday afternoon and time for a break.
Thursday, October 10, 2013
The market exploded to the upside as a deal on the debt ceiling is in the works. Not the budget problem but the debt problem. The Dow soared 323 points on average volume. The advance/declines were 6 to 1 positive. We were short term oversold on the stock indices but this was quite a move higher in one day. It might be enough to turn the summation index back to neutral. I'd expect more follow through tomorrow. The next question will be if the decline is over. The answer is probably yes but we'll have to have the market confirm. The volatility during a headline driven environment is evident. But that is what we have to deal with for now. GE was up 2/3 and the volume was OK. Back above the 50 day moving average here. Gold fell $10 on the futures and another $10 in the aftermarket. The US dollar was slightly higher. The XAU was off 1/4 but should drop even more tomorrow with the negative action in the gold aftermarket. ABX had a fractional gain, while GG and NEM had fractional losses. Volume was average. The ABX calls that I purchased yesterday are still in the black but I don't expect that to last. With gold breaking the $1300 level it cannot be viewed as positive for the precious metal. So I will have to decide where to go on this trade. Mentally I'm feeling OK. Quite a day for stocks today. We knew there would be a bounce when some kind of deal was announced but this one was much bigger than I expected. And a deal hasn't actually even happened yet. So we'll see what happens in the stock market tomorrow. Gold remains unloved and heading lower. $1275 is the near term support but if that doesn't hold we'll be heading back down to $1200. The gold shares are hanging in there for now but it won't last if gold continues lower. I'll have to rethink the November ABX call trade tonight. We'll watch the foreign markets for more upside overnight and go from there.
Wednesday, October 09, 2013
The stock indices tried to rally today but it wasn't much.. The Dow rose 26 points on good volume. The advance/declines were slightly negative. The overall market was weaker than the Dow and the small stocks were lower. Not a bullish scenario. The summation index continues lower. We got the Fed minutes today and the market didn't have much of a reaction. Still waiting on Washington to sort out the budget mess. The trend remains down and I'd expect lower prices despite the current oversold technical condition. When we get a deal out of Congress we'll get a relief rally. Hasn't happened yet. GE lost 1/4 and volume was average. Probably heading lower here too. Gold fell today on a stronger US dollar. The precious metal futures were off $17. Gold seems to be going nowhere. The XAU was only off an 1/8 though. ABX was flat on the session, while GG and NEM had slight fractional gains. Volume was average. I purchased some November ABX calls today. They are slightly in the black. The gold shares remain short term oversold. Mentally I'm feeling OK. The Dow bounced off of its 200 day moving average today and if things can't hold up here it could get ugly. I'm thinking it can't be all that bad since until today the small stocks were holding up much better. We aren't near the zero line in the summation index, so a complete breakdown isn't a near term concern. Volume has picked up in the past 2 days which tells me something is going on beneath the surface. I'm trying the ABX calls again. Still oversold on the technicals for ABX and have been for a while. That condition will not last forever. I may be early on this position but there is also a chance that I'm right on time. We'll see about that in the coming days. The foreign markets are now showing much better relative strength vs. the US. We'll see how long that can keep up. Still waiting on some kind of deal out of Washington remains the market mantra. We'll keep an eye on any developments overnight and take it from there.
Tuesday, October 08, 2013
The decline continues as the Dow fell 159 points on good volume. The advance/declines were once again about 4 to 1 negative. The summation index is heading lower and we'll rightfully take our cues from there. It's still a time to be cautious regarding the stock indices. The small stocks have now joined the fray lower and that isn't a positive development. It's all a government made fiasco as the lack of a budget deal remains the focus of the markets. A deal will get done and we will get a rally. Now the question is from what levels on the S&P 500 will the decline finish and the rally ensue. Another problem is all that I'm hearing is buy on the dip. Usually when everybody is lined up with the same view, the opposite occurs. Time will tell. GE was off 1/4 on better volume. We just broke the 50 day moving average to the downside. Lower prices to come? Probably. Gold was flat today on the futures as the US dollar had just a bit of strength. The gold futures fell $5 in the aftermarket. The XAU dropped 2 7/8. ABX, GG and NEM all fell 2/3 or more. The volume was nothing special. I did place an order for the November ABX calls but it was not filled. I may try this trade again tomorrow. Or maybe this isn't the best idea out there. We are oversold on the gold shares and have remained that way. Mentally I'm feeling OK. The stock indexes remain held hostage by Congress. It looks like the longer the stalemate goes on, the lower we will go. The market is vulnerable to headline risk one way or the other. The trading environment is more risky than usual. Looks like the original October OEX put trade that I closed out with a loss would have been a winner. Hindsight is always a winner. Still no enthusiasm for gold despite the uncertainty going forward. The gold shares today had poor relative strength related to gold itself. That could just be a byproduct of the overall market decline. I'll think about the ABX call trade tonight and keep and eye on the overseas action. All eyes and ears will be tuned into any developments out of Washington. The markets do not like soap operas.
Monday, October 07, 2013
Starting the week off to the downside as the Dow fell 136 points on light volume. The advance/declines were about 4 to 1 negative. The summation index is heading lower after todays numbers. The lack of volume indicates no interest among the players and that is not a positive. No budget deal yet out of Washington. No economic numbers to trade off of as well. So we are in a wait and see mode. Earnings will begin in earnest this week so that will provide stock specific movement. I'd remain cautious for the time being. GE was down 1/8 on light volume. Still hanging on here at the 50 day moving average. Gold found some buyers as the futures rose $15. The US dollar was a bit weaker today. The XAU was up almost 1 1/2. ABX, GG and NEM all had slight fractional gains on light volume. I'm still considering the November ABX calls ahead of the earnings announcement at the end of this month. Mentally I'm feeling a bit tired, did not sleep well. It's pretty much a waiting game on Washington for the stock indices. The longer it drags on will probably not be a good thing for stocks. The small stocks continue to have good relative strength and that probably means we are not on the verge of some type of rout. Gold remains in the background despite the market uncertainty. Perhaps it will finally begin to shine again. But the lack of volume here as well isn't a positive. I'll try and remain patient before entering a trade here again if that is indeed the direction I decide to take. As usual we'll watch the overnight action and go from there.
Friday, October 04, 2013
Back to the upside to close out the week as the Dow gained 76 points on light volume. The advance/declines were 2 to 1 positive. Trying to hold the 50 day moving average for the S&P 500. Economic data is scarce with the US government shutdown. We're still technically oversold for the major stock indices, not so much so for the small caps. Waiting for the budget resolution and then we'll focus on the debt ceiling. That's the conventional wisdom for now. So it will probably not work out that way. Earnings season is starting next week as well. So it looks like there's plenty of catalysts coming near term. More volatility down the road for October? GE was off a few cents on average volume. Still now trades in mind for GE at the moment. Gold fell 7 bucks on the futures as the US dollar had a good day for a change. The XAU was off a fraction. ABX, GG and NEM all had fractional losses on light volume. The gold shares remain oversold and staying there. Not much interest there despite the overall turmoil. I'm still thinking about the November ABX calls. Mentally I'm feeling OK. The stock market remains held hostage by Washington. However sooner or later this will get resolved. I'd expect some type of rally once that occurs. After that, who knows? The summation index may trend sideways after todays action. Gold remains unloved. The gold shares are at their recent lows with respect to GDX and HUI. I'll probably try the calls again at some point before the end of the year. Booking yet another loss this week was not a step in the right direction. My trading this year had been awful with just the final quarter of the year left. Perhaps it's time to simply hit the sidelines and wait until next year. I'll think about that over the weekend. Plenty of charts to check as usual and keeping an eye on the news is paramount due to the Washington morass. For now it's Friday afternoon and time for a break.
Thursday, October 03, 2013
Oversold and staying there as the Dow fell another 136 points on average volume. The advance/declines were about 4 to 1 negative. Remaining oversold without a bounce is not a bullish scenario. Todays action will turn the summation index down and that isn't positive either. So once again caution has to be advised. I did not think that the market would remain oversold but it has. I still say that the budget will be solved and the debt ceiling will be raised. The question is when? Yesterday I did not think that we had much more to go on the downside. However after today I am not so sure. We should have had a better bounce or attempt at a rally. It hasn't happened. GE was off 1/4 and the volume was better than yesterday. Still holding the 50 day moving average here. Perhaps I'll try some GE calls when things get back to normal. Gold fell a few bucks and the US dollar was lower as well. With all the turmoil it is a surprise that gold cannot find much of a bid. I don't know why. The XAU dropped 1 1/4. ABX, GG and NEM all had fractional losses of 1/4 or more on light volume. I dumped the October ABX calls for an 85% loss. No sense in hanging on anymore there. That trade was not going to come back in the remaining 2 weeks. I'm still looking at rolling out to the November ABX calls. Mentally I'm feeling OK. Volatility has picked up and that drives up the option premiums as it always does. So what can we look for next? I'd expect a rally once all the Washington BS is settled but the time frame is in question. I'm guessing it will all be resolved before option expiration. I'm not sure what my next trade will be with the OEX. Gold continues to go nowhere despite a lower US dollar and the ultimate in market uncertainty. So perhaps trading the gold shares from the long side is not the best idea. I'll ponder this in the days to come. Regardless, the markets are being held hostage by the stalemate in Washington. When this gets resolved it will be important to see what kind of rally ensues. I'll also be keeping an eye on the summation index. If it does keep heading lower there will certainly be more downside to come. As always we'll watch the overnight action and go from there.
Wednesday, October 02, 2013
We could not build on yesterdays gains as the Dow fell 58 points on light volume. The advance/declines were negative. The markets sold off hard in the morning and came back throughout the rest of the session. Still technically oversold for the major stock indices. The small stocks and the overall market once again were stronger than the Dow. I doubt that we will head much lower near term despite the US government shutdown. A deal will get done and then the market will focus on earnings. The debt ceiling deadline will be dealt with as well. The stock indexes are due for a better bounce than what we saw on Tuesday. GE was up 1/8 or so on average volume. I still have no pending trade ideas for GE at the moment. Gold bounced back as the precious metal futures rose over $30, which was about what we lost yesterday. The US dollar hit fresh recent lows. The XAU didn't reflect the nice gains in gold, only rising 3/8. ABX, GG and NEM all had fractional gains on OK volume. When the gold shares can't get a rally with a $30 rise in gold, that can hardly be considered bullish. I'm still interested in the ABX November calls though. The timing of the purchase will be important as usual. Maybe next week. Mentally I'm feeling OK. The stock indexes are being held hostage by Washington at the moment. Volatility is up as we wait for the next sound bite from Congress. Hardly the normal trading environment. My thinking remains that as long as the small stocks continue to lead to the upside, there is no catastrophe waiting in the wings. I could be wrong. Gold made a comeback today and it needed it to remain with a chance at some type of rally going forward. Unfortunately the gold shares did not follow. My October ABX calls remain big losers and I may dump them before this week ends. With only 12 trading days to go in the October option cycle, the odds are against ABX making it back up to my strike price. Once again we'll keep an eye on Washington and the overseas activity tonight.
Tuesday, October 01, 2013
The expected upside appeared today despite the US government shutdown as the Dow gained 62 points on OK volume. The advance/declines were over 2 to 1 positive. The overall market was stronger than the Dow and the small stocks continue to lead the way. That's all bullish going forward. The summation index will be back to heading higher after today. Another positive session tomorrow will have the technicals rolling back to the upside for the major stock indices. The market always knows more than us. Obviously the conventional wisdom of a government shutdown being bearish for stocks this time around is wrong. GE was up 1/4 on light volume. The 50 day moving average has held for now. Gold got clobbered today as the futures lost $40. I have no idea where that came from. The US dollar was slightly lower. If gold can't hold the $1275 level it will be heading back down to $1200. The XAU dropped 2 points which wasn't so bad considering the drop in gold itself. ABX, GG and NEM were all down around 2/3 or so on better volume. I'm still considering the November ABX calls. However after todays developments, I'm not so sure. My October ABX calls are almost dead. Mentally I'm feeling OK. I still expect to see higher prices near term for the stock indexes. Until we see the smaller stocks lead the way down, there probably won't be any major decline in stock prices. That's my best guess at the moment. Gold had a rough day. Of course you want to buy when everyone else is selling but you have to wait for the selling to end. I've been wrong on gold quite a lot this year. Perhaps gold from the long side is simply a dead trade from here on out. That's a guess as usual and I'm not sure if it's a good one. Technically gold is about to have the death cross of the 50 day moving average heading down through the 200 day moving average. The gold shares had this occur many months ago. The relative strength of the gold shares vs. gold has been positive lately. So perhaps the November ABX call trade could be profitable. We'll watch what happens overnight and go from there.