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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.   

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