Friday, February 28, 2014
A volatile end to the month as we were up over 100, then turned negative and finally finished the session with a gain of 49 points on good volume. The advance/declines were positive. Interesting price action to be sure. The small stocks were lower today and that is not a positive. There are also some possible negative divergences being set up on some of the indicators. The McClellan oscillator to name one. However as long as price keeps moving higher, I have to remain in the camp for more upside. We are still overbought on the short term technicals on the stock indices. A roll over there will be the warning that lower prices lie ahead. Hasn't happened yet. GE was little changed and the volume was light. No trades for me there. Gold fell $10 on the futures despite a big drop in the US dollar. Not sure about what to make of that. The XAU was off 1/2. Once again ABX, GG and NEM had fractional losses on light volume. The short term technicals have started to roll over here. That is what I'd like to see to set up the next trade for the April or May option cycle. Patience is required. Mentally I'm feeling OK. Volatility today and that sometimes is a warning of a change in trend. We'll have to see how that plays itself out in the coming days. I'm still in the bull camp for the stock indexes for now. Gold is taking a well needed rest and that should continue into the month of March. The large drop in the US dollar today did nothing for gold and that is not the usual inverse relationship that we've seen here lately. The gold shares did hold up pretty good today. I'll most likely be getting some gold share calls in March. Plenty of charts to go over this weekend and perhaps a game plan for the March option cycle. For now it's Friday afternoon and time for a rest.
Thursday, February 27, 2014
Trying to get some upside going as the Dow gained 74 points on average volume. The advance/declines were 2 to 1 positive. The summation index continues higher. The new Fed head, Janet Yellen, spoke but didn't say anything. Sounds like she is perfect for the job as were her predecessors. Still overbought and still moving up for the stock indices. Sounds like a broken record but you cannot ignore the price action. It appears the last couple of days were a pause before moving higher. GE rose almost 1/4 however the volume was light. Still below the 50 day moving average. Gold was up a few bucks on the futures, while the US dollar was off a bit. The XAU drifted lower by 1/8. ABX, GG and NEM were all little changed on light volume. A waiting game now for the next gold share call trade. Mentally I'm feeling OK. It feels like the stock indexes are poised to move higher now. We closed near the highs for the session and that's bullish. The small stocks continue to lead the way. One day left in the week and the month. Perhaps the beginning of next week and month will see some positive money flows. Like I have already stated, unless we get a dramatic turnaround the trend is up. Gold needs a rest and perhaps this is the beginning of it. March is not a good month for the price of gold historically. The ideal scenario is getting long some gold share calls at some point in March. That is my theory at the moment. We'll see if the foreign markets follow the Dows lead upwards overnight and close out the trading week tomorrow.
Wednesday, February 26, 2014
Still in a wait and see mode for the stock indices. The Dow rose 18 points on good volume. The advance/declines were positive. The summation index continues higher. We are in the same situation as yesterday and waiting for the market to decide which way it is going to go. I'm still a believer in higher prices despite the overbought condition. GE didn't do much and the volume was light. Thought about getting some calls here a few days ago but will probably not do that trade. Gold dropped today as the futures fell about $15. The US dollar had a good session for a change. The XAU lost 1 1/3. ABX, GG and NEM all had 1/4 or so losses on light volume. These issues are still due for rest. ABX and GG are in solid up trends for now. Mentally I'm feeling OK. Not much to report really. The stock indexes remain overbought. The small stocks have broken out and that is bullish. The Dow is the laggard here. Gold took a much needed breather here but is still overbought. The gold shares are due for a rest as well. I'll be looking at the gold share calls for April or May to be purchased next month. Patience is required. I may or may not have a decent trade set up for the March option cycle. We'll see what tomorrow brings.
Tuesday, February 25, 2014
Meandering around here as the Dow fell 27 points on average volume. The advance/declines were negative. I'm still anticipating higher stock prices going forward. The jury is still out though on whether yesterday was a short term exhaustion to the upside. The short term technicals remain overbought. I guess you could make a case for numerous double tops here in the stock indices if we roll over hard. I will note that the most recent low that was made on a number of indexes was the first time in quite a while where it was lower than the previous low. Whether or not that means anything remains to be seen. GE didn't do much today and the volume was average. Considering the calls here but in no rush to put a trade on. Gold rose around $5 on the futures and the US dollar was a little lower on the session. The XAU was off 1 2/3. The gold shares are overdue for a pause. ABX, GG and NEM had fractional moves one way or the other on light volume. Mentally I'm feeling OK. Not much out there to move the market this week. The Fed head will be speaking on Thursday. That could get things going. End of the month coming up on Friday as well. I don't think things are getting complacent here but what do I know? Bullishness is rising again though. Gold is overbought and needs a rest. The gold shares led the way up and they have stalled here while gold continues higher. Time for a pause? We'll watch what happens overnight and go from there.
Monday, February 24, 2014
New all time highs for the S&P 500 today as it broke above resistance. The Dow gained 103 points on good volume. The advance/declines were positive. We did finish well off of the highs for the session. However with the S&P breaking out on good volume, you have to consider it bullish. There is no overhead resistance. The summation index continues to the upside. All we need now is for the Dow to get to new highs to confirm the TRAN new high of a month ago. So it all looks like a continuing rally from the lows of February 1st. GE was up 1/3 and the volume was good. Perhaps the GE March calls of 25 or 26 should be the next trade attempt. Still below the 50 day moving average here but the short term technicals have turned up. Gold continued higher as well, up $14 on the futures. The US dollar finished the day little changed. The XAU was only up 1/3. The gold shares are overdue for a rest. ABX and NEM were up 1/4, while GG was flat. Volume was light. Mentally I'm feeling OK. We've rolled into the March option cycle and the premiums are high. I do not have any decent signals for a trade at the moment. Todays upside with the good volume could be an exhaustion move higher but I don't think that it is. We have to consider that possibility though because we came 50% off of the highs. The action in the coming days will tell the story. Gold and the gold shares are still very overbought here. I'll be waiting for some type of pullback before trying the calls again here. March is the historically poor month for the price of gold. Patience is required. We'll keep an eye on overseas developments ans take it from there.
Friday, February 21, 2014
A drift lower today as the Dow fell 30 points on light volume despite the option expiration. The advance /declines were positive. The summation index continues higher. The stock indices are still consolidating here to determine if we break out to new all time highs or roll over for a double top. I'm in the new high camp but will let the market tell me which way it's going to go. Rolling into the March option cycle now, so the premiums will be expensive. It is kind of a wait and see mode for now. GE was off 1/8 or so on light volume. GE began to fall ahead of the overall market in the previous decline. It has already begun to drop again. We'll see if that means anything this time around. Gold was up $6 on the futures as the US dollar was a touch lower. The XAU was off 1/2. ABX and GG were little changed, while NEM fell over a buck on good volume. The street did not like the earnings report. NEM is the under performer here. I still want to be long the gold shares at some point following a decline there. Mentally I'm feeling OK. Just a waiting game for now with regards to the stock indexes. The short term technicals remain overbought here. More sideways action followed by an upside breakout is the scenario that I'm anticipating. That's my best guess at the moment. The gold shares remain overbought as well but on both a short and medium term basis. I'm looking for some type of decline in March to set up the April or May calls. However the strength in the precious metal complex has been better than expected, so it could remain overbought for a while. Gold has attracted some media attention here though and that could signal at least a short term top. ABX just got a buy recommendation yesterday and we haven't seen that in quite some time. ABX is right up against some resistance that has been in effect for about a year. I do want to own some calls there on the breakout. I'll be going over the charts this weekend to try and come up with a near term game plan for the markets. It's Friday afternoon and time for a break.
Thursday, February 20, 2014
Back to the upside today as the market tries to figure out what to do here. The Dow rose 92 points on OK volume. The advance/declines were 2 to 1 positive. The summation index continues higher. We are at an area in the S&P 00 where some type of hesitation, consolidation or decline would be logical. I am still a believer that we will see new all time highs in that index shortly. Expiration Friday tomorrow. GE was off a few cents and the volume was average. Gold was off a few bucks on the futures but gained in the aftermarket. The US dollar was a bit higher today. The XAU added almost 4 points and reversing yesterday negative action. The gold shares continue to outperform and that is bullish. ABX up 1 1/4, GG gained a buck and NEM higher by 2/3. Volume was average to good. I still am interested in the gold share calls but it is hard to chase them here. Overbought and staying there. ABX looks ready to break out but it is so overbought that I can't just go ahead and buy the calls here. However price and volume are a potent combination and ABX certainly has that going for it. Declines in the gold shares are being bought here but I cannot chase it. Mentally I'm feeling OK. It's basically a waiting game for me on the next trade. Maybe the March OEX calls are the next attempt for me. We'll have to see if we move sideways and for how long. There's also a chance that a double top is being put in place. I'm still leaning bullish though, with the summation index moving up. The gold shares have had a nice run recently but are overdue for a rest. I have no idea why gold is attracting capital. All we need to know is that it is and try to take advantage of it. I still feel that buying the calls for April or May will be my strategy. We'll see. We'll keep an eye on overnight developments and close out the week tomorrow.
Wednesday, February 19, 2014
Lower today and it wasn't completely unexpected. The Dow fell 90 points on good volume. The advance/declines were just shy of 2 to 1 negative. The market was higher during the session but fell in the last couple of hours. That isn't bullish. Perhaps the action yesterday in the TRAN was foretelling. Regardless, where we go from here is what matters. The summation index is still heading higher. We can make a case for either direction here but I do not have any trades in mind right now. I'll let the market decide what to do here. Today was the day if you wanted to try a short term OEX put trade in the February cycle. Only two days left and plenty of risk. GE was off 1/4 and the volume was average. Looks like a rollover here to the downside on the daily charts. Gold dropped $4 on the futures and $10 more in the aftermarket. The US dollar was higher today. The XAU shed 3 1/3. We were overbought on the gold shares so a decline was due. How far it goes and how long it lasts are the questions. ABX off 5/8, GG lost a buck or so and NEM fell 3/8. Volume was light and that is a plus. We have some up trend lines for the gold shares now and we will have to see if they hold or not. That would be the next logical spot to try the calls again. Mentally I'm feeling OK. We'll be looking for downside follow through tomorrow for the stock indices. I'm still in the camp that we hesitate here and then go on to new highs. But we will have to let the market tell us what it is going to do. The technicals are overbought and that condition needs to be relieved. Once that happens we should move higher. That's my guess at the moment. Gold is pretty much overbought on a short and medium term basis. A decline back to the $1280 level would take it back to the newly formed up trend line. That would also get rid of some of the recent bullishness. It would be a longer term positive in my view. I'm looking at the April and May gold share calls for the next possible trade. We'll watch tonight to see if the foreign markets follow the Dows lead lower.
Tuesday, February 18, 2014
The overall market continued higher but not the Dow, as it fell 24 points on average volume. The advance/declines were 2 to 1 positive. The summation index is still moving to the upside. Overbought for the stock indices here no matter how you look at it. I do believe we will see some downside this week but the question is when? The TRAN was weak today and perhaps that is a sign of things to come. Or maybe it is reflecting the recent surge in the price of oil. I'm not sure. I doubt that I will be attempting any OEX trades this week but you never know. GE was off about a dime and the volume was light. The daily candlestick chart here is bearish and we haven't been able to get back above the 50 day moving average. I still have no GE trades in mind. Gold was up $3 on the futures but off of the last sessions highs. The US dollar continued lower. Gold is overbought as well and due for a rest. Ditto for the gold shares. I'll be looking at the April and May gold share calls in the coming weeks. The XAU was up 7/8. ABX and GG were little changed, while NEM gained 1/3. Volume was light. I am especially keeping an eye on ABX because once it gets through the resistance at $21-$21.50, there is nothing holding it back from reaching the $27.50-$30 level. But like I said, the gold shares are overbought here. Patience is required. Mentally I'm feeling OK. Expiration week is here and the positive bias was present in the overall stock indexes today. I do think higher prices and new all time highs in the S&P 500 are coming soon. However as always I could be wrong. Perhaps a huge double top is being put in place on some of the major averages. Some of the smaller stock indices could be forming bearish megaphones. I do not think that this is the case but we must be aware of all of the possibilities. Gold is pretty overbought and a drop to the $1280 level of support would be favorable for the overall bull trend here. March is historically the worst month for gold so maybe waiting for then to purchase the next batch of calls is the way to go. We'll see. Three days to go in the February option cycle. The sidelines is maybe the safest place to be. Of course nobody makes any money without trades but you don't lose any either. We'll keep an eye on the overnight action and take it from there.
Friday, February 14, 2014
The rally lives on as the Dow climbed 126 points on light volume. The advance/declines were 2 to 1 positive. The S&P 500 is almost back at a new all time high. The summation index continues to the upside. Make no mistake about things here, we are very overbought. Some kind of pull back or consolidation is overdue. But expiration week is coming up and that usually has a positive bias. So maybe things will hold up here for another week. Two weeks ago it was the end of the world and the market shrugged that off pretty convincingly. The trend is up. GE was up almost 1/3 but the volume was light. I still don't see any trade here that I'd be interested in. Gold just continues to rally as well, the futures rose $18. The US dollar was lower once again today. That relationship is now working inversely as it has in the past. The XAU was up another 2 3/8. The gold shares are overbought as well. ABX, GG and NEM were up from 1/4 to 1/2 on good volume. Although these shares need a breather, they could simply continue higher as well. I sold the February ABX calls that I had for a 160% profit. This trade as well as the GDX call trade could have been much better. I was both a day early buying and selling them. The profit could have been another 100% on both. Or maybe more depending on if they keep rallying next week. It is a frustrating game. Mentally I'm feeling OK. We are now almost back to the old highs in the S&P 500. The small stocks have better leading lately but they were laggards today. I would expect some kind of consolidation here. The volume is getting lighter on the rally as well. Gold had a great week and is now above its 200 day moving average. The technicals short term are overbought. Medium term there is still room to run on the upside. Ditto for the gold shares. I'll be looking to try the gold shares again on any weakness but will probably go out to the April option cycle. The two trades just completed were profitable but a better job must be done by me. Money was left on the table. After yesterdays very strong move higher the expectation was for follow through today which we got. I should have held both positions overnight and exited this morning. That would have been the smarter play. I chose the cautious route by selling out one of the positions yesterday. It was the wrong choice. However those trades are now completed and all that matters is the next trade. Perhaps a short term OEX put attempt next week? I'll consider it over the long holiday weekend, For now it's Friday afternoon and time for a rest.
Thursday, February 13, 2014
The market continued higher today as the Dow rose 63 points on light volume. The advance/declines were almost 3 to 1 positive. The day started out negative as we were down 100 points at the open. The retail sales number was softer than expected. But the decline didn't last long and it was off to higher prices. The summation index continues to the upside. Still short term overbought and staying there. The smaller stocks are showing better relative strength here and that is a positive. It still looks like we could see new all time highs in the major stock indices in the days to come. Expiration week is coming up and it usually has a positive bias. GE only gained a nickel and the volume was average. Still no trades in mind here for me. Gold was up another $5 to reach the $1300 level on the futures. The US dollar had a sharp drop today and the weaker retail sales data probably had something to do with that. The gold shares made an impressive comeback as the XAU rose 3 2/3, with GDX up 1 1/8. ABX added 1 1/8, GG higher by 7/8 and NEM up a buck. Volume was good for the gold shares and the price action negated yesterdays bearish candlestick pattern. ABX and GG had lousy earnings but rallied anyway. Earnings numbers can be viewed any way the market feels like it. The market reaction always means more than the numbers themselves. Pretty overbought for the gold shares here but technically higher prices are implied. I did sell the GDX February calls that I had even though they could go higher. The gain was 235%. That is why we trade options. You cannot beat the percentage gains in such short amounts of time. That trade lasted less than two weeks. I left open the February ABX call trade because it appears to just be breaking out of a congestion zone. However I may just get rid of that trade tomorrow as well. There are only five days left in the current option cycle and we are coming up on a holiday weekend. Mentally I'm feeling a lot better that I was yesterday. The first trade of the year has a nice profit and I am off on the right foot so far in 2014. The stock indexes are having an impressive rally and have squeezed out all of the shorts. The upside move probably has legs to go on but I would not be surprised by some near term weakness. I though that was going to happen today after we opened but money came in strong. We are back above the 50 day moving average in many of the major stock indices. Gold has made it to $1300. The 200 day moving average lies at $1310. That should provide some resistance. A continued weaker US dollar would be bullish for gold. The gold shares however are above their 200 day moving averages and closed on the highs of the day. We should see follow through upside tomorrow. I'm not exactly sure what I'll do with the remaining February ABX calls. There is a lot of work involved with trading but it is certainly worth your time when it pays off. It is not easy however. It is one of the toughest games in the world to play. The battle, as always, is with yourself. We'll see if the foreign markets follow the US lead higher and close out the week tomorrow.
Wednesday, February 12, 2014
We took a breather today from the recent rally as the Dow lost 30 points on light volume. The advance/declines were positive. Short term overbought and some more downside is expected in the next few days. Retail sales out tomorrow with the Fed head speaking again should be market movers. Although we may pull back some, I do not expect a retest of the recent lows. The rally has come too far for that in my humble opinion. GE was off a few cents and the volume was light. The 200 day moving average held here. Gold was up another 5 bucks on the futures but came back in the aftermarket. The US dollar finished little changed on the day. The gold shares took a hit though. The XAU fell 2 3/4, while GDX lost 7/8. There are now bearish engulfing pattern of the daily candlestick charts here. Plus gold rose while the gold shares fell and that isn't bullish. ABX and GG dropped around 2/3. NEM lost 1/3. Volume was good. My ABX February calls are now showing a loss. The GDX February calls are still showing a small profit. The ABX earnings will determine the gains or losses I suppose. Obviously I should have exited these trades yesterday. The RSI indicators were at the top of the channels. I guess I'll be out of these trades tomorrow unless ABX takes off to the upside. Mentally I'm feeling as though I've just made the same kind of mistake that characterized all of last year. The trades had a good profit and the technicals were overbought but here I am still holding them. The game is always battled within oneself. I need to get better, no doubt about that. No idea what to expect from tomorrow but I'd be guessing that the retail sales number will be weak. The market reaction is what to watch as usual. I'm looking for some near term weakness for the stock indexes but nothing like what we have recently seen. Gold has been acting well but todays action in the gold shares is not bullish. Unless we get a complete turnaround in the gold stock indices tomorrow, lower prices are in the offing. At the least a sideways consolidation. With only six days left in the February option cycle, the trades I'm holding don't have much time left. Tomorrow will most likely be the key. We'll see what transpires overnight and go from there.
Tuesday, February 11, 2014
A blast to the upside as the Dow climbed 193 points on good volume. The advance/declines were over 3 to 1 positive. The summation index is heading higher. It looks as though there will be no retest of the recent lows. A V bottom appears to be in place. We are short term overbought now and due for a pause though. The new Fed chief sounded just like the old one and the market liked that. My guess now is that we will be reaching new all time highs for the S&P 500 at some point before spring. I could be wrong. GE was up 3/8 on average volume. No trades in mind for me here. Gold continued higher as the futures rose $15. The US dollar finished the session little changed. The XAU was up 3 2/3 and broke above its 200 day moving average. GDX gained almost a point and is now above its 200 day moving average as well. ABX up 1/3, while GG and NEM added 3/4. Volume for the gold shares was good as we have convincingly moved out of the recent congestion zone to the upside. We are short term extended here and a pause is due here as well. My February GDX calls are showing a nice profit. The February ABX calls have a slight gain. ABX earnings are out Thursday morning. They will make or break that trade. As for GDX, I may exit it tomorrow if we get some more upside. Mentally I'm feeling OK. The S&P 500 has broken through all of the Fibanocci retracements from the recent low. That tells me that the decline is over and higher prices are still in the near future. The small stocks are acting better here as well and that is bullish. We will have to wait for the next bearish set up and rolling over of the summation index to try the index puts. Gold got through $1280 with good volume. It looks like we are heading up to the $1300 level. The gold shares are overbought but could have more room to run. ABX earnings on Thursday could be a catalyst one way or the other along with the retail sales data. The gold shares have risen about 10% in 3 days and that is a lot in a short amount of time. The technicals are pretty overbought as well. Plenty to think about overnight. We'll see if the foreign markets follow the US lead and if there is any upside follow through to the gold rally.
Monday, February 10, 2014
A quiet start to the week as the Dow added 7 points on light volume. The advance/declines were positive. The overall market was stronger than the Dow. Short term overbought here for the stock indices. The summation index has turned around. Not a lot of economic data out this week, with retail sales on Thursday as the number with the most market moving potential. Janet Yellen, the new Fed head, will be speaking tomorrow and Thursday. The market will be looking for a reason to move off of that most likely. I'm still hearing a lot of bear chatter so perhaps it's time to look for higher prices. I was expecting a retest of the recent lows but sometimes that just doesn't happen. GE was off 1/8 on average volume. A pretty bearish candlestick on todays daily chart. If GE is still the leader, it's saying lower prices are coming. Gold found a bid today as the futures rose over 10 bucks. The US dollar was a bit weaker. The XAU gained 2 7/8 and is at its 200 day moving average. GDX was up 3/4. ABX ahead by 3/8, GG gained 1/2 and NEM rose 2/3. Volume was nothing special here. My ABX and GDX February calls are now showing a slight profit. I'm pretty sure I will be exiting these trades this week. It looks like I'll be waiting for the ABX earnings on Thursday morning. Unless we get some sort of surprise between now and then. If gold can get above $1280 perhaps we can make a run at $1300. Hasn't happened yet. The stock indexes have had a nice bounce. Is it the beginning of the next leg higher or simply a snap back to the recent broken up trend line? That is the question that needs to be answered. The TRAN was negative today and that isn't bullish. However not all the major indexes broke their up trend lines from last year. It's not a clear picture for me of what to expect next in the stock market. Gold started out the week in good shape for the bulls. Ditto for the gold shares. Plenty of time left in the week though. The short term technicals have moved back to the upside but we are close to being overbought again. Needless to say I'd like to exit the current trades with a profit. We'll keep an eye on the overnight action and wait to see what the new Fed head says tomorrow.
Friday, February 07, 2014
The employment numbers came out weak but the market didn't care as the Dow rose 165 points on average volume. The advance/declines were 3 to 1 positive. Is the decline over? It sure looks like it after today. However I still think the recent lows will be tested at some point in the next couple of weeks but I could be wrong. Yesterdays positive action in the stock indices was a precursor for todays action after all. I guess the lesson there is the market always knows more than we do. The summation index should turn around after todays numbers. It looks like we have already gained back half of the decline. Resistance is at the 50 day moving average for the S&P 500. Around the 1810 level. GE was up 1/4 and the volume was lighter than it has been recently. The 200 day moving average has held for now. Gold was only up $5 on the futures and a little more in the aftermarket. The US dollar was lower after todays jobs report. The XAU gained 2 3/4. ABX added 3/8, GG up 2/3 and NEM rose 1/2. Volume was average. GDX was up 3/4 as well. My positions in the February ABX and GDX calls are back at break even. The gold shares were a bit better performers than gold itself today and that is a minor positive. Looks like I may hold on for the ABX earnings report next week after all. The technicals for the gold shares short term have turned back up. Mentally I'm feeling OK. Well it looks like all the shorts have been squeezed out of this market for now. The negative tone in the media hit a high point early in the week and that kind of activity must be payed attention to. We'll have to see how bullish things get over the weekend. More important will be if we get follow through to the upside next week. The new Fed boss will be speaking during the week and that will be the next prime mover in my opinion. I expect a dovish stance so that should be supportive to the stock market. We'll see. Gold held up OK today. The Bollinger bands on the daily charts are converging and that means a big move is coming here soon. Which way is the question. We'll probably find out pretty soon. The bands are getting closer on the gold share indexes as well. Yellens talk next week should move gold as well. Plus the ABX earnings report due Thursday will get things going in that stock as well. Plenty to look forward to. I'll be checking the charts over the weekend as usual. For now it's Friday afternoon and time for a break.
Thursday, February 06, 2014
The Dow climbed 188 points today on good volume. The advance/declines were 3 to 1 positive. Is this the start of the next leg up or simply short covering ahead of tomorrows employment report? That is the question. There is a chance that the decline has ended but we will have to wait and see what develops tomorrow. I'd like to say that I have a good feel for what is going to happen but I don't. The summation index is still heading lower but we are getting close to being back up to the zero line in the McClellan oscillator. Usually though, at some point the recent low will be tested. GE was up 3/8, the volume was OK and the 200 day moving average has held the decline in GE so far. GE led the way down and it appears a 5 wave move lower has been completed. No trades in mind here for GE yet. Gold was flat on the session after being higher intra day once again. The US dollar was a bit weaker today. The XAU and GDX were basically flat on the trading day. ABX, GG and NEM had slight fractional moves one way or the other on very light volume. A waiting game today for the gold shares. My GDX and ABX February calls are showing losses. Tomorrow will mean a lot for these trades but it may not be the end. We've got the new Fed head speaking next week and that should move things. Plus earnings due for ABX on Thursday. Technically the gold shares have worked off the recent overbought condition on a daily basis. Mentally I'm feeling OK. I thought today might be a waiting game for the stock market but we got a rally instead. Could the market know more than we do? It usually does. But we will still have to see what happens tomorrow. Gold has tried to rally the past 2 days and has been pushed back each time. That is not bullish action by any means. A move lower on Friday would not be a good sign for the February gold share calls that I own. However we will have to wait and see what transpires tomorrow. We'll keep an eye on the overseas action tonight as we await tomorrows all important employment report. Should be an interesting day.
Wednesday, February 05, 2014
Marking time today as the Dow fell 5 points today on good volume. The advance/declines were negative. The overall market was weaker than the Dow. The market did come back from an early sell-off though. Pretty oversold on some of the short term technical indicators but the tone remains negative. All eyes will be on Fridays employment report. We could go either way I guess. The market reaction, not the number itself will be the key. If the recent decline was what is called a measured move, it is probably for the most part over. If it is something more then there will be a trip down to the 200 day moving average which equates to 1710 on the S&P 500. GE was off a nickel and the volume was good. Still holding the 200 day moving average here. Gold was up 5 bucks on the futures, while the US dollar lost just a bit. The dollar did come off of its lows though. Gold fell off of its highs. The XAU fell almost 1 1/8. ABX dropped over 1/2, GG and NEM fell 1/3. Volume was lighter than it has been. GDX lost over 1/3 and my GDX February calls are showing a loss. I also got a buy signal on one of my indicators for ABX today and I purchased some February calls there as well. They are showing a loss too. Perhaps I am late for the recent gold run and that was a concern with the GDX trade. ABX does have earnings coming out next week but I probably don't want to wait that long. Mentally I'm feeling OK. I would expect tomorrow to be another day of indecision for the stock indexes. There is no reason to establish big trading positions before the employment report. The summation index continues lower and we should probably take our cues from there. I still may try the February OEX puts if we make it back to the 1775 level on the S&P 500. Although I'm not exactly sure that is the right move. Gold came off of its highs and the gold shares underperformed the metal itself. That is definitely not bullish action and I am holding gold share calls. Could simply be another trading mistake on my part. We'll see. Chinese players returning yesterday did not move gold. Once again I may be too focused on gold when there are better opportunities elsewhere. But I did receive a short term buy signal for ABX today so I had to follow it. We'll see what tomorrow brings.
Tuesday, February 04, 2014
A bounce today after yesterdays drubbing. The Dow gained 72 points on good volume. The advance/declines were over 2 to 1 positive. The summation index continues lower. I still think we are going to go lower here but I'm starting to hear everyone in the media turn bearish. So perhaps most of this part of the downside activity has already happened. Some of the technical indicators are blown out to the downside and rightfully so. Still plenty of time in the February option cycle and we do have the employment report on Friday. If we somehow make it back up to the 1775 level or so on the S&P 500, that would the spot to try the puts again. Yesterdays blow out volume may have been a short term exhaustion for the bears. GE was up 1/4 and the volume was good. Hovering at the 200 day moving average here. Watch GE for clues to the overall market direction. That idea has worked so far. Gold fell $8 on the futures as the US dollar was a bit higher. The XAU was up about 2/3. ABX, GG and NEM had slight fractional moves one way or the other on lighter volume. GDX turned around during the session and was up almost 1/3 on lighter volume as well. My February GDX calls are showing a slight loss. I'm looking at the April calls now for the gold shares. Mentally I'm feeling OK. Checking the stock index charts, the downside formation here could be a measured move. If that is the case it would be an ABC move and would be about over. It is possible but the future market action will tell us. I'm still leaning on getting some index puts if we get more near term upside. But the risk now is higher on the short side in my opinion and the volatility has spiked. Again, being nimble here is the preferred path. Gold might get moving again tomorrow with Chinas market opening back up. The recent 2 week price action in the XAU and GDX is possibly a bullish flag continuation from the recent move higher in January. We should find out soon. Not exactly sure how long I will hold the GDX call position. We'll keep an eye on the overnight action and take things from there.
Monday, February 03, 2014
The market started out the month getting slammed once again as the Dow fell 326 points on very heavy volume. The advance/declines were 6 to 1 negative. The summation index continues lower. There cannot be any doubt now that the trend is down. The question is how far will we go? The recent consolidation above 1770 on the S&P 500 was a flag and now we have broken that support. We are right at a daily up trend line that began last September. That probably won't hold but it could provide some near term support. Or not. A better chance for support is probably at the 200 day moving average around 1700. Of course owning the February OEX puts was the way to go here and I blew it. I wasn't fast enough and that is a problem that must be faced. GE got pounded and lost 3/4 on very heavy volume. It appears to be the last leg of a 5 wave down move for GE. GE is also at its 200 day moving average here. So there is a chance that the decline for GE is coming to its conclusion. We'll see. Gold found buyers again as the futures rose 20 bucks. The US dollar was weaker on the session. The XAU however lost 3/4. ABX was flat, GG lost 1/8 and NEM fell over 1/2. Volume was average. I did purchase some February GDX calls today. This trade already looks like a mistake. My theory is that GDX is consolidating its recent gains before moving higher above the 24 level. We are also right at the up trend line that began in early 2014 for GDX. So the gold shares will either bounce from here or the up trend there is over for now. But with gold moving higher and the gold shares moving lower it isn't looking like a bullish case near term. Mentally I'm definitely feeling frustrated for not taking advantage of a down trend that I saw was coming. That is why I'm afraid that todays GDX trade was done because of that. I think that maybe I just wanted to get something going and that it isn't really the best idea at the moment. The trading game is always fought within. Perhaps the GDX trade will work out but I will not be surprised if it doesn't. It will be interesting to see just how far we head down here for the stock indices. I would not advise trying to pick the bottom. Wait for the positive divergences first. We are a long way from that at the moment. Volatility is really ramped up right now. You really have to be nimble on any trades taken out there. The trading environment has changed. The time to get long the stock indexes will be when all you hear in the media is bearishness. We aren't there yet. We'll keep an eye on the foreign markets tonight and go from there.