Wednesday, April 30, 2014
Still pushing higher as the Dow gained 45 points on good volume. The advance/declines were 2 to 1 positive. The Fed had no surprises and the GDP report came out weaker than expected. We opened lower and finished higher and that is a plus. The summation index should be moving back to the upside after todays action. Overbought and staying there on the short term technicals. If the employment report is in line, I expect that we will hit a new all time high for the Dow. Start of the month tomorrow and perhaps we will see some positive money flows. GE was up 1/8 and the volume was light here as well. Gold was flat on the futures and dropped $5 in the aftermarket. This, despite a weak day for the US dollar. The fact that gold could not rally with a weak dollar is not good news for the bulls. The XAU was off 2/3. ABX, GG and NEM all had fractional losses on light volume. The earnings for ABX did not result in much movement for the stock. My May ABX calls are now in the red. This trade is beginning to take on the traits of a loser. ABX needs a catalyst to move and if the earnings can't get things going, I don't know what will. Over two weeks to go in the May cycle but I don't know if I can wait that long. Perhaps the employment report can get the gold shares moving. However there isn't any interest in gold right now. Mentally I'm feeling tired, did not sleep well. I'm still looking for higher prices near term for the stock indexes but not feeling overly bullish with the under performance of the small stocks. The news for stocks wasn't exactly bullish but we rallied anyway. That is a good sign for the bulls. But we'll have to see what the reaction to the employment report is. Gold is going nowhere fast. The XAU is moving sideways as well. I don't know what will break us out of this malaise. ABX is right at an up trend line on the weekly chart that is about a year old. A break of this line would be bearish. I'm counting on this area to provide support but that doesn't mean that it will. Tonight is a holiday for many of the overseas markets. The price action in the markets will be muted. We'll start the month of May tomorrow.
Tuesday, April 29, 2014
Moving higher as the Dow gained 86 points on good volume. The advance/declines were positive. The Dow is ever so close to hitting an all time high. However the small stocks are nowhere near new recovery highs and that is an issue for the stock indices going forward. Even if the Dow does break to new highs, caution is advised on being too bullish. Plenty of news tomorrow with the 1st quarter GDP and the Fed. Overbought on the major index technicals but that doesn't mean we can't go higher. End of the month tomorrow as well. GE was flat and the volume was light. Short term overbought here as well. The gold futures were off a couple bucks and the US dollar was a bit higher. The XAU was up 1 1/2. ABX, GG and NEM all rose 1/3 on light volume. ABX earnings due before the bell tomorrow. The May ABX calls that I have are slightly in the black. The reaction to the earnings will most likely make or break this trade. Mentally I'm doing OK. Volume has increased to the upside for the major stock indexes. This leads me to believe that higher prices are coming regardless of the data. That's my guess at the moment. The summation index is still trending sideways. Gold is trying to make up its mind where to go here. A break of the down trend line would be constructive. The gold shares are out performing right now and that is usually bullish. I'll be keeping an eye on the ABX report in the morning and decide what to do from there.
Monday, April 28, 2014
Bouncing around today and the Dow finished with a gain of 87 points on heavy volume. The advance/declines were slightly positive. Not sure what to make of todays price action but we did finish well off of the lows. The summation index is neutral. Plenty of data to digest this week, including GDP, employment and the Fed. So we can expect some volatility going forward. The technicals for the major indices are still overbought while the small stock technicals are mid range. You can make your case either way. GE was up over 1/8 on average volume. Good relative strength for GE here. Perhaps GE is telling us all will be OK for the stock indexes for now. Gold was off a couple of bucks on the futures and a bit more in the aftermarket. The US dollar was slightly lower as well. The XAU fell almost 2 points. ABX off 1/2, GG lost 1/3 and NEM shed 1 3/4. Volume was good. The proposed deal between ABX and NEM fell through. This led all the gold shares lower. My May ABX calls are now slight losers and the daily chart here looks bearish. It looks like this trade is going to hinge on the earnings report on Wednesday morning. I can't say that I'm feeling confident at this point. Mentally I'm doing OK. The small stocks continue to lag and that isn't a positive sign. When the Dow is leading the way, it usually means we are at the end of the road for any sustained rally. We will have to watch for the reactions to the data coming out this week. Gold stopped right at the short term down trend line from March. We really need to get through there with some volume to get gold moving higher. Earnings due for both ABX and GG this week. That should get the gold shares moving. Todays developments were not positive though. We'll keep an eye on the overnight action and take it from there.
Friday, April 25, 2014
A downside close for the week as the day was negative from the start. The Dow lost 140 points on light volume. The advance/declines were 2 to 1 negative. The short term technicals are starting to roll over here. Todays action should make the summation index neutral. Next week will be important on the weekly candlestick charts. If the week ends fairly down there will be a bearish pattern there which would negate the bullish engulfing patterns that are set up on most of the major stock indices. We get the end of the month and the employment report next week. Attention must be paid to all the developments. GE was up 1/8 on average volume. GE hasn't been in sync with the overall market as of late. I'm not sure what that means, I can only guess. Perhaps the market is in better shape than we think. Or maybe money is heading into the big stocks in a defensive posture. We'll stick with the technicals. GE is short term overbought. Gold had a good session as the futures rose 10 bucks and over $1300. The US dollar was little changed once again. The XAU added 1 2/3 and finished on the highs for the day. Ukraine worries would be my guess for the positive action. ABX and GG had fractional gains on light volume. NEM was up a buck on its earnings report. NEM has had a really good past couple of weeks. It has now broken a 1 1/2 year down trend line on the weekly chart with good volume. Obviously owning the May calls here would have been a great trade. My May ABX calls are still in the black. Earnings due Wednesday will probably be the key for this trade. Also any developments on a merger with NEM will affect the stock as well. Mentally I'm feeling OK. We're entering a seasonally weak period for stocks and that should be a warning for getting on the long side going forward. That doesn't mean that things can't turn around next week and go to new highs. But it does mean the odds don't favor that scenario and the upside from here is limited in my view. We are closer to the top than we are any kind of bottom. Even if we rally next week I'd still advise caution. Gold held the $1280 level this week. However it isn't really in any kind of rally yet and needs to break the near term down trend line that began in March to really be positive going forward. Volume to the upside would help as well. Any bad news on the global front would be supportive, meaning more Russian activity in the Ukraine. The technicals for the gold share indexes are mid-range, which means we could go either way. The Bollinger bands on the weekly ABX chart are starting to converge. This implies a big move coming up. Which way and whether or not it's in the May option cycle remains to be seen. Plenty of charts to check over the weekend. For now it's Friday afternoon and time for a break.
Thursday, April 24, 2014
A little volatility in the morning and then it was a drift. The Dow was flat on the day with light volume. The advance/declines were barely positive. Waiting on the next move one way or the other. The summation index continues to the upside. The overall market was stronger than the Dow and that is a positive. We'll finish up the week tomorrow. GE was basically flat as well with light volume. Gold was up $6 as the US dollar nudged down just a little. The XAU was down 1 1/4 though, which isn't bullish. ABX, GG and NEM all had fractional moves lower on average volume. Earnings due for NEM after the bell. The May ABX calls that I have are still very slightly in the black. A waiting game for this trade as the earnings are due next week. Mentally I feel OK. Not a lot of economic data was out this week and there hasn't been any unexpected news either. So it's a waiting game for the stock indices. It does however give the indexes a chance to work off the recent overbought condition. Whether or not that translates to higher prices remains to be seen. Gold is still trying to hold on to the $1280 level. There were some rumblings out of the Ukraine today but the response in gold was muted. We'll see how we close out the week for the precious metal. The gold shares did show some signs of life earlier in the week. How we finish out the week here will be watched as well. As usual we'll keep an eye on the foreign markets tonight and close out the trading week tomorrow.
Wednesday, April 23, 2014
A pause today as the Dow fell 12 points on light volume. The advance/declines were slightly negative. As expected the stock indices need to take some kind of rest here to work off the short term overbought condition. How deep the drop goes will give us a good indication of the condition of the market. The shorter the drop, the more bullish things will be. So we'll see. GE was off 1/8 or so. Comfortably above the 50 day moving average here. Not much doing in the gold futures or the US dollar today. Both finished the session little changed. Interesting though is that the XAU found some buyers and rose 1 3/4. Perhaps the gold shares here will indeed lead the price of the yellow metal. ABX and GG gained 1/4, while NEM rose 7/8. Volume was light however. My May ABX calls are still showing a small profit. Mentally I am tired as I was in meetings all day and not in my usual routine. The post will be shorter today due to that. It was a quiet session in most markets today and I would expect that to continue for the rest of the week barring some unforeseen developments. I'm going to leave it at that for today. We'll keep an eye on the overnight session and go from there.
Tuesday, April 22, 2014
Overbought and staying there as the Dow gained 65 points on light volume. The advance/declines were almost 3 to 1 positive. The summation index continues higher and we will once again take our cues from there. Although a pull back or consolidation should occur imminently, I would have to say that we are in some kind of next leg up type of move. I am still not overly bullish here but you cannot argue with price. New highs look like they are coming for some of the major stock indices. The TRAN managed that today. However the lack of the small stock indices not making new highs cannot be overlooked. If the Dow does indeed make a new all time high soon, I'll be looking for some May or June puts. GE was flat on the session and the volume was light. No trades here for now. Gold was off $7 on the futures and the US dollar was slightly weaker as well. Still trying to hold the $1280 level in gold. The XAU was up 1 1/8 though. Perhaps the gold shares are ready to take the lead here or maybe that is simply wishful thinking on my part. ABX and GG had slight fractional gains, while NEM was flat. Volume remained above average here for the gold shares. The May ABX calls that I purchased yesterday have a slight profit. It will be a waiting game here for the earnings next week. Mentally I'm feeling OK. I'm expecting some kind of pause for the stock indexes in the next couple of days. The short term technicals are overbought as I mentioned yesterday. The overall market atmosphere has the feeling of wanting to go higher here but I would not chase this rally. I think this will eventually set up for a trade in the OEX puts. Gold is at the recent $1280 support level and it will need to hold on here for the bullish cause. I don't know if it will or not. However over the weekend all the press that I read was very bearish on the price of gold. This type of media hype is usually the sign that things will be going the other way. It's often a contrary indicator. But we'll have to see how things play out from here. We'll keep an eye on the overseas market action tonight and see what tomorrow brings.
Monday, April 21, 2014
An upwards drift today as the Dow gained 40 points today on very light volume. The advance/declines were positive. Some of the foreign markets were on holiday today. Short term overbought on the stock indices now and a pull back is expected near term. That's my best guess at the moment. Whether or not that begins another leg down is up for discussion. The TRAN is close to a new all time high but the volume for the up move has been light. I still advise caution when it involves light volume rallies. GE was little changed and the volume was light. GE has held up good here and that is a positive for the bulls. Gold fell about 3 bucks on the futures but was lower early on. The US dollar was just slightly higher today. The XAU was off 1/4 and finished off of its lows as well. ABX lost 3/4, GG was up 1/2 and NEM gained 1 1/2. Volume was heavy for the gold shares as there was stock specific news for the big three. GG has withdrawn its bid for a mine. A proposed merger between ABX and NEM has been called off again. I did purchase the May ABX calls today. We are oversold here on different time frames. The major support here is at $17. If that doesn't hold this trade will not work. ABX closed around 17 1/4. I may have been a day early here. Earnings due next week and that should get the stock moving one way or the other. Mentally I'm feeling OK. We've had a bounce in the stock indexes and the volume has been light. That, in my mind, is not a positive sign. I expect some selling this week and we will have to see where that takes us. Of course I could be wrong and the market breaks out to new all time highs. But I am not bullish on the stock indexes here. I believe that there is more downside than upside going forward. Gold is trying to hold on to the support at $1280. Whether or not it can will say a lot about where the gold shares are going. The XAU broke below the 90 level today and almost made it all the way back. That is something to keep an eye on as well. ABX broke it s near term support today and the volume was heavy. That is not bullish by any means. Why buy the calls then? If my prognosis is correct, then today or tomorrow would be the time to buy. If my analysis is wrong, that should show up rather quickly as well. We will have to wait and see how tomorrow turns out when all the worldwide players have returned. We'll keep an eye on the overnight action and go from there.
Thursday, April 17, 2014
Another bounce around session as the Dow lost 16 points on average volume. The advance/declines were positive. A pre-holiday expiration with no real direction. The summation index is now moving higher again. The overall market was stronger than the Dow. I'm still not convinced we are on the verge of a major rally here. We are getting back to short term overbought for the stock indices so we will have to see if that brings another wave of selling. If things are more positive than I presume, the market will shrug off the overbought condition and move higher. We'll see. GE had a positive reaction to its earning but finished off of the highs for the session. GE gained about 1/2 on heavy volume. Obviously in retrospect buying the April calls in the beginning of the week was the correct play. Gold was down almost $10 in the futures market. The US dollar had a slight gain and did finish off of its lows. The XAU fell 2/3. ABX, GG and NEM all had fractional losses on light volume. My open order for the May ABX calls wasn't filled after I adjusted the price lower. I do believe that I am going to do this trade next week and probably on Monday. I'll check everything out over the weekend and decide what I'm willing to pay. ABX earnings are due in a week and a half. Mentally I'm feeling tired, did not sleep well. It appears that the decline is over now that we've had four positive sessions in a row. I'm still advising caution. The small stocks continue to lag and that is not a bullish sign. We are also entering a seasonally weak period for stocks. I don't have any OEX trades in mind for the near term. Gold had a down week and there does not appear to be any buying interest for the precious metal despite continued unrest in the Ukraine. The gold shares were weak as well and closed on their lows. We will roll into the May option cycle on Monday. I'm pretty sure that I am going to buy some calls on weakness if we see any in ABX next week. That is the game plan at the moment. A long holiday weekend is upon us. That gives me plenty of time to check the charts and the indicators before attempting the next trade. It's Thursday afternoon and time for a break.
Wednesday, April 16, 2014
The bounce continues as the Dow gained 162 points on light volume. The advance/declines were 4 to 1 positive. Can we say that it's more than a bounce and the next rally has begun? Maybe. Todays action should turn the summation index back to the upside. The volume was light though and we cannot make it a habit to trust light volume rallies. While the snap back has been impressive for the big caps, the small caps are still way below their recent highs. So I would not be a buyer here as the upside would be limited even if we do continue higher near term. That's my best guess at the moment. GE was up almost 1/3 and the volume was a little better. Earnings due tomorrow, so that should get things going one way or the other. Gold was up a couple of bucks on the futures. The US dollar was little changed on the day. The XAU fell a buck. ABX, GG and NEM had fractional moves one way or the other. The volume was nothing special. I left in my open order for the May ABX calls. If it is not filled tomorrow I will cancel it over the long weekend. I am not exactly sure this is the right trade to do here but I'm willing to give it a shot. Mentally I'm feeling OK. It will be interesting to see where we go from here. A case could be made either way I suppose. However I would not be getting too bullish now. The sell in May crowd may just be getting started. Technically the stock indices were oversold and we have come off of that condition. Not overbought short term just yet. I will be looking for opportunities to buy OEX puts going forward. Gold and the gold shares are having a negative week. It is either the beginning of a new leg down or a chance to get long ahead of the next rise. There is also the possibility that we will simply move sideways. The technicals here are mixed at the moment. I am willing to try the May ABX calls here. Earnings are due at the end of the month. If my open order isn't filled tomorrow I will reconsider this idea over the weekend. We'll see what tomorrow brings.
Tuesday, April 15, 2014
Another session of up, down, up. We finished the day with the Dow gaining 89 points on good volume. The advance/declines were positive. We are back to a level where resistance should come in for the S&P 500. The small stocks continue to under perform but perhaps a short term bottom is in place. That's a guess as usual. Volatility has picked up but that is obvious to everyone at this point. Perhaps all we are seeing so far this week is the positive expiration bias. How the next couple of days play out will be key. GE was up 1/8 and the volume was light. Still above the 50 day moving average here. Gold took a drop today as the futures fell over $25. The US dollar was slightly higher. The XAU lost 2 points but was down more early on. The gold shares followed the overall market back from its lows. ABX off 1/3, while GG and NEM shed about 1/2. Volume picked up to the downside and the short term technicals rolled over. I did place an open order for some May ABX calls but it will only be filled if we see some more weakness there. The gold shares did better that the metal itself today and that is a good sign if you're bullish. Mentally I'm not feeling 100%. Nobody expects a rally here for the stock indices. However looking at the charts there is a potential that the decline will take a rest here. A weak, light volume rally now would also set up possible head and shoulder tops for some of the indexes. This is all speculation on my part. The market will tell us what it is going to do with the price action in the coming days. The summation index is still moving down. We should take our cues from there. I have no explanation why gold would all of a sudden drop today. The unrest in the Ukraine is escalating which should be supportive for gold. Trying to hold the $1300 level. The preceding rally had been weak. It is now a question of will the previous lows hold. Time will tell. We've got the Feds beige book out tomorrow. Might be a market mover. We'll keep an eye on the overnight action and see if the overseas markets follow the US stock indexes higher.
Monday, April 14, 2014
We bounced around today as the Dow was up around 150, came all the way back to almost break even and then zoomed back up in the final hour. We finished the day up 146 points on light volume. The advance/declines were 2 to 1 positive. The small stocks are still under performing but at least things held up for today. Short term we may stabilize here since we are oversold but that's a guess. The market is still skittish but we are oversold. Expiration week usually has a positive bias and that may be the case for this week as well. A short week though as Friday is a holiday. GE was up 1/4 and the volume was light. Attempting to hold the 50 day moving average here. Gold rose on the tensions in the Ukraine resurfacing. The yellow futures were up $8. The US dollar was higher today as well. The XAU gained 1 1/4. ABX, GG and NEM were all higher by around 20 cents. Volume was light to average. Not a lot of interest for the gold shares despite the unrest overseas. I'm still considering the May ABX calls but may switch to GG. But who knows? The technicals for the gold shares here are mixed. Mentally I'm feeling OK. 3 days left for the April option cycle. I do not think I will be making any trades short term here. My guess is that we will be heading lower at some time this week for the stock indices. The summation index is still trending down. Gold has had a slow steady climb for the past two weeks. Overbought on the short term for gold itself. The technicals for the XAU are mid range. The more bullish scenario would have the gold shares in the lead. Perhaps patience is the proper course of action here. The gold share earnings will be reported in the May option cycle. We'll follow the overnight action and take it from there.
Friday, April 11, 2014
Weakness persists as the Dow fell 143 points on good volume. The advance/declines were almost 3 to 1 negative. The tone for the stock indices has changed. Rallies can be opportunities to purchase puts in my opinion. The summation index is heading lower. Weekly technicals for the stock indices have all rolled over now as well. I'm not sure how far we will go down but the 50 week moving averages would be the first stop I figure. Next week is expiration week and a short week as well. We should continue lower as the reasons to buy have dried up for now. GE was off 1/8 on average volume. The daily chart looks weak and the weekly looks like it is ready to break lower from a long consolidation. Gold continues to outperform or at least not go down. The precious metal futures were off a buck or so. The US dollar had a flat, quiet session. The XAU was off 1 2/3 and the daily technicals are rolling over here. ABX lost 1/8, while GG and NEM shed about 1/2. Volume was light. I'll be tempted to try the May ABX calls if we see weakness in the gold shares next week. The gold shares are following the weakness in the overall market. This is either an opportunity or a precursor to lower prices for gold itself. Mentally I'm doing OK but now starting to feel regret over not getting any OEX puts Thursday morning. My trading so far this year has been overly cautious and not good enough. But the game goes on. We closed near the lows of the week but we are not completely oversold just yet. The NASDAQ continues to lead the way down and that is bearish. I'm still looking for some kind of short term support at around the 1800 level in the S&P 500. If not there, then the 200 day moving average would be next. Gold held up well this week but did not rally that much compared to the weakness in the US dollar. If we break 79 on the US dollar that would be very supportive to gold, in theory. Hasn't happened yet. I think that the 90 level on the XAU will be the key area to watch. If we get down there that may be the time to try the gold share calls again. However if we break through lower with good volume, that idea probably won't work. Plenty of things to consider over the weekend. For now it's Friday afternoon and time for a break.
Thursday, April 10, 2014
Stocks got crushed today as the Dow fell 266 points on good volume. The advance/declines were 3 to 1 negative. No reasons for the sell off and that does not bode well for the future. The summation index has turned back down again. 1840 was the key level for the S&P 500 in my mind and we have now closed below it. Lower prices to come. I had thoughts of getting some OEX puts this morning but didn't do it. My hesitation and lack of trading skill appeared once again. You simply cannot stay on the sidelines forever. Yesterdays strong buying of equity calls was a clue that things got bullish too fast. 1800 is a nice round number for initial support on the S&P 500. The 200 day moving average would be next. GE was off 1/3 and the volume picked up. Heading lower from here probably as well. Gold held up well and the futures gained $12. The US dollar was yet lower again today. The XAU followed the broader market lower, off 1 1/2. ABX and NEM had fractional losses, while GG fell a buck on stock specific news. Bearish candlestick patterns now for the gold shares unless things turn around tomorrow. Volume was heavy for GG, average for the rest. Perhaps I'll try the May ABX calls after all but not until next week perhaps if I do. Mentally I'm feeling OK. We may just see this market get ugly, even after todays negative price action. Five days left until expiration and it's possible that things will run down into that. It is a time to be cautious in my humble opinion. Gold has moved up in the past two weeks but the move hasn't been dramatic. Volume for gold hasn't been heavy either. Same action in the gold shares. If the gold shares roll over here as well, I may try the May ABX calls. If not, I'll have to look for something else. Overall the trend in the stock market has rolled over and rallies should be looked at as a chance to purchase puts. We'll see if the foreign markets follow the Dow lower overnight. Then close out the trading week tomorrow.
Wednesday, April 09, 2014
Roaring back to the upside as the Dow gained 181 points on average volume. The advance/declines were almost 3 to 1 positive. The market liked what it saw in the Fed minutes and took off. Todays action should move the summation index back to the upside. My idea of the April OEX puts doesn't look like it is the right idea after today. However I still may give it a try after looking at all of todays numbers. We'll see. GE was up almost 1/4 but the volume was light. I don't think I'll be attempting any trades for GE near term. Gold did not rally as much as the overall market as the futures only rose a few bucks. The US dollar had another weak session though. My idea that gold would drop on the Fed minutes was wrong. That is what guessing will get you. Always stick with the technicals. The XAU rose 5/8, which wasn't much considering the drop in the dollar. ABX, GG and NEM had fractional gains on about average volume. It looks like the May ABX call trade has been missed. I am maybe thinking about chasing it here but that could be dangerous. Mentally I'm feeling a bit tired. So now the question is where do we go from here? New highs? Or do we roll over again? Only six days to go for the April option cycle. I would like to put on a trade but that may be only because I haven't made one in a while. That is a recipe for disaster as well. You sometimes have to be patient in the game but you also cannot sit on the sidelines forever. Perhaps if we get a light volume rally tomorrow, I'll try the OEX puts. The rally in gold and the gold shares has been steady but lackluster. I might chase things here but I could make a case for just sitting aside as well. The technicals here are pointing up and they have room to go higher. Silver did not follow gold to the upside today and a strong rally would have these two moving in tandem. I'm going to have to think about what to do overnight and see where that leads. We'll look to see if the foreign markets follow the Dow higher tonight.
Tuesday, April 08, 2014
A slight bounce in the Dow today as the most watched index rose 10 points on good volume. The advance/declines were 2 to 1 positive. The overall market was stronger than the Dow. The summation index is still heading lower so we'll take our cues from that. I might try the OEX puts on a weak snap back here but I'm not exactly sure. I still think that the key level to watch is 1840 on the S&P 500. Fed minutes should be the highlight for tomorrow. GE was off another 1/8 and the volume remains light. No trades here for now. Gold had a good day as the futures rose $10. The US dollar got crushed today and I have no reason. I actually would have thought that gold would move much higher with that size of a loss in the dollar. Again, not sure what to make of it. The XAU gained 2 1/4. ABX, GG and NEM all gained 1/2 on light volume. Looks like it is too late for the May ABX calls. The short term technicals have turned up. If for some reason we get some decline here, I may give it a try. But this opportunity seems to have left me behind. The premiums for the options never got to what I thought was a reasonable price. Mentally I'm feeling OK. Are we putting in a near term bottom for the stock indices or is this simply a pause before we continue the decline? That is the question that needs to be answered in the days to come. I am definitely not in the bullish camp here. Gold and the gold shares have begun to move higher in the past week but the volume has been light. It is always tough to trust light volume rallies. The Ukraine being back in the news and a weak dollar are both supportive to gold. Only seven days left in the April option cycle, so the risk is elevated for any short term trade. We'll see what tomorrow brings.
Monday, April 07, 2014
Heading lower as the Dow fell 166 points on good volume. The advance/declines were almost 3 to 1 negative. The summation index is trending lower. The trend is down and everybody knows it. Perhaps we can get some near term stabilization but it doesn't change the overall bearish picture. The small stocks are leading the way lower. We closed off of the lows for the session but are not yet completely short term oversold. We are getting weekly rollovers on the technicals as well now for the big caps. The small caps have already accomplished this. I don't think that it is a time to be bullish. GE was off 1/8 or so and the volume was light. No trades here for now. Gold was down $5 on the futures and the US dollar was lower as well. Not the usual inverse correlation there. The XAU was lower by 1/3. ABX and GG were off 1/8, while NEM rose 1/3. Volume was light. I'd still like to try the May ABX call trade at some point. But I would like to see some more weakness for the gold shares first. May not happen. Mentally I'm feeling OK. The S&P 500 is at its support at around the 1840 level. This is the area of previous support along with the 50 day moving average. It really needs to hang in here or we will be going much lower. I don't think this area will hold though. Perhaps the OEX April puts are in order on a bounce. Something to consider. The volume for gold has been pretty light recently so the interest here is limited. Perhaps I would be better off in some other type of trade. The Dow and the OEX broke their up trend lines today from February. Perhaps getting some puts on a snap back to that line is a better idea. Running out of time for the April cycle with expiration due next Thursday due to a holiday. Plenty to think about tonight. We'll see if the foreign markets follow the Dow lower overnight and take it from there.
Friday, April 04, 2014
An interesting day to say the least as the Dow fell around 160 points on good volume. The advance/declines were 2 to 1 negative. The jobs number came in about as expected and we briefly rallied at the start. But then things turned around as the small stocks got crushed. So it was a one day reversal to the downside for the major averages. The short term technicals have now rolled over here, although todays advance/declines weren't all that negative. It is probably not a time to be looking at OEX calls and perhaps the puts will be the way to go here. GE lost about 20 cents and the volume was nothing special. The daily candlestick chart here is now bearish. We broke out of the wedge on light volume and that was a clue not to get too bullish. Perhaps some puts might be in order here but I'll have to check it out over the weekend. Gold had a good day, the futures rose almost $20. The US dollar didn't do much on the employment news. I'm not sure why gold rallied today. The XAU did not follow and was up only 5/8 after being higher early. ABX and GG had fractional gains, while NEM was flat. Volume was light. I'm still considering the May ABX calls but I will look at this idea again over the weekend. When gold itself rallies good and the gold shares don't, it isn't bullish going forward. Mentally I'm feeling OK. We had an initial positive reaction to the jobs number in the stock market but then it was selling for the rest of the day. I'm not exactly sure what to make of it but I'd remain cautious regarding stocks. Perhaps the market as always knows more than we do. It sure looks like a rollover for the big caps today. Gold had a nice rally today but the gold shares followed the overall market weakness. I think the next thing to watch here will be the Fed beige book on Wednesday but that's a guess as usual. The short term technicals for the gold shares are moving higher and that is a plus. However I'd like to see a better entry point for the May ABX call trade. That might simply be wishful thinking at this point. I'll be checking all the charts over the weekend. For now it's Friday afternoon and time for a break.
Thursday, April 03, 2014
A waiting game today as the Dow was basically flat on the day with light volume. The advance/declines were negative. The overall market was weaker than the Dow. The summation index is still moving higher though. Even so, the small stocks remain weak and that will eventually play out to lower prices. Tomorrow is all about the jobs report and the market reaction. Even if we do move higher, I still do not see an extended rally coming up. I could be wrong and often am. GE was up almost 20 cents and we've broken out of the wedge to the upside. The only caveat is the volume, which is pretty weak. Short term overbought for GE now but that doesn't mean it can't stay that way. Gold was off six bucks on the futures which wasn't so bad considering that it was a good day for the US dollar. The XAU was off around 7/8. ABX, GG and NEM all had fractional losses on light volume. I did not try the May ABX calls today but I'd still like to make that trade if the option premiums get to where I'll willing to buy. I may even be a buyer tomorrow if we get enough weakness. But I have no idea how gold will react to the employment report. Mentally I'm feeling OK. The major large cap stock indices are overbought. Like I said before even if we get a rally tomorrow, I believe the upside is limited. The small stocks are really lagging here. I would not chase stocks to the upside here. Gold is trying to hold up in the $1280 range and the gold shares have acted better in the past week. Well, at least they have stopped going straight down. It appears to me that volume is coming in to the upside for the gold shares. I am looking to be a buyer of the May ABX calls. Gold and the gold shares are trying to consolidate here. We'll watch the action overnight and then brace ourselves for tomorrows jobs numbers.
Wednesday, April 02, 2014
Still moving higher as the Dow gained 40 points on light volume. The advance/declines were positive. The summation index is moving higher. The Dow appears to be ready to join the other indices with new all time highs. I'm still concerned about the small stock under performance here but you cannot argue with price. I'd expect tomorrow to be a day of backing and filling before Fridays employment report. But what do I know? We broke out of the consolidation to the upside and unless there is a sharp turnaround, the trend is up. GE was up over 1/8 but the volume was light. Trying to break out of a wedge pattern to the upside but we'll need to see more volume to be convinced. Gold found buyers today despite a higher US dollar. The precious metal futures rose $10. The XAU gained 2 points. ABX and NEM jumped 3/4, while GG added 1/2. Volume was good and all of these issues gapped higher. It appears that the gold share call idea will work. Unfortunately none of my orders were filled the past couple of days. I'm still going to try the ABX May calls at some point but will have to wait for some pull back. May not happen. However the gold shares are doing better than gold and that is a positive. So is todays volume, which tells me the bullish side is the one to be on going forward. Mentally I'm feeling a bit tired. A good week so far for the stock indexes. I still think we are much closer to a top than to a bottom though. I would not be in a hurry to chase this rally. It is much healthier for the bulls when the small stocks lead and not lag. Perhaps we can get to 1900 or so on the S&P 500 in the days to come. But I do not envision a long extended rally. I liked the bounce in the gold shares today as it had very good volume. Volume means interest and there hasn't been much here lately. Plus there wasn't any attention given to todays action in the media. That's a plus. Hopefully there will be some weakness in the next couple of days to try some calls. If not, it will simply be another trade that was missed. In retrospect, I should have adjusted my open order on the May ABX calls higher. But we'll have to see what happens in the days to come. We'll keep an eye on the foreign markets overnight to see if the rallies there continue as well.
Tuesday, April 01, 2014
Moving on up as the Dow gained 75 points on average volume. The advance/declines were over 2 to 1 positive. The summation index is moving higher. We hit new all time highs on a number of stock indices. The Dow is almost there as well. The small stocks are not breaking out to new highs and that will be a problem if it persists. The month long consolidation patterns are being broken to the upside and that is good news for the bulls. We can expect higher prices moving forward. GE was flat on the session and the volume was light. GE isn't close to a new recovery high. Not sure what that means in the overall scheme of things. Gold was off a few bucks on the futures. The US dollar was flat on the session. The XAU managed to gain 1/3. ABX, GG and NEM all finished the day little changed on light volume. No interest in the gold shares here. I tried the May ABX calls again but wasn't filled. I have my idea of what I'll pay for these options but the price hasn't gotten there yet. Not to mention this idea may not be the right one anyway. Technically oversold though, so I'm going to give it a try. Mentally I'm feeling OK. No overhead resistance for the stock indexes that have broken out and we aren't extremely overbought on a short term basis. The employment report looms on Friday. However if things keep up like this, the news will be viewed as positive now matter what the numbers are. Interesting game. Gold continues to drop and the technicals remain oversold and staying there. Perhaps being bullish on the gold shares here isn't the best idea. Money seems to be finding a home somewhere else. But like I said before, going out to the May option cycle gives the trade time to work. We'll follow the action overnight and go from there.