Monday, June 30, 2014
We closed out the month and the 2nd quarter on a down note as the Dow fell 25 points on light volume. The advance/declines were positive. Not much to really say about the price action on todays session. It was a generally quiet close to the quarter. The stock indices remain overbought on the short and medium term. We'll start a new month tomorrow ahead of the jobs report on Thursday. Expect light trading and little movement. It is a holiday week. GE was off 1/8 and the volume was light. Below the 50 day moving average here and we've broken the near term uptrend line. Gold gained over $10 including the aftermarket activity as the US dollar was lower. The XAU rose 1 3/4. ABX, GG and NEM all were up 1/4 or so on OK volume for a summer Monday. The gold shares continue to attract buyers and it appears that we are finishing the near term consolidation on our way to higher prices. I still do not want to chase the gold shares here but perhaps that is the correct move. The market sometimes will not wait for you. Mentally I'm feeling OK. A wait and see attitude will probably serve the best right now. The summer has arrived. I don't see any major moves in the stock indexes on the near term horizon. My guess would be a drift higher until we get some sort of catalyst one way or the other. Gold has found buyers and the gold shares as well. It appears that all of the sellers have left the building. This too can change on a dime. Overbought for the precious metals as well but sometimes that doesn't mean anything. I'm still trying to be patient here. We'll watch the overnight action and go from there.
Friday, June 27, 2014
The Dow finished off the week with a gain of 5 points on good volume. The advance/declines were 2 to 1 positive as the overall market was stronger than the Dow. Still short term overbought on the technicals but there is nothing out there at the moment to derail the upwards movement. A holiday shortened week coming up with plenty of economic data. However it is summer and a lot of the major players will not be in the game. GE was up 1/8 and the volume was light. No trades here for now. Gold was up a few bucks on the futures as the US dollar was a bit lower on the session. The XAU added 1/8. ABX and GG finished the day flat, while NEM rose 1/8. Volume was light. Nothing new to report with respect to the gold shares. Mentally I'm feeling OK. We'll get the end of the 2nd quarter on Monday, followed by the beginning of July the next day. I expect stocks to continue to move higher. Overbought, staying there and that has been the tune recently. There still seems to be plenty of money trying to find a home in stocks. Negative divergences don't pan out for long if they do at all. Things will change eventually as they always do. But for now all signs point to just staying the course. Gold and the gold shares had a week to digest the recent huge gains. The fact that we did not sell off is a positive. Ideally a pullback would be a good entry point for the October calls. But the markets rarely accommodate what you'd like to have happen. I do believe in higher prices going forward here though. Not much else to say here on Friday afternoon. I'll go over the charts this weekend and try to come up with a game plan for next week. Time for a break.
Thursday, June 26, 2014
The Dow fell 21 points today on light volume. The advance/declines were slightly positive. The market sold off hard early and spent the day making its way back. Looks like we could be in a holding pattern for the stock indexes for now. Actually I don't expect much to happen between now and the 4th of July holiday. But that's a guess as usual. We'll get the employment report a week from today due to the holiday next week. Still short term overbought on the stock index technicals. GE was off another 1/8 and the volume was light. Is GE the canary in the coal mine? Time will tell on that front. Gold was off five bucks on the futures. The US dollar was flat on the session. The XAU rose a bit over 3/4. ABX, GG and NEM were all up around 1/4. Volume was light. Once again the gold shares are doing better than gold itself. I am still trying to be patient here but all signs that I can see point to higher gold share prices coming. I am still looking at the September or October calls. GG is the best performer here and also looks to have the best chart set up. However the market is not going to make it easy for you. Mentally I'm feeling OK. There is nothing to suggest that we are on the verge of a major move up or down. A grind to higher prices appears to be in store for the near term. I would like to see some sort of pullback in the gold shares but the market rarely accommodates you. That said, I'd still like to wait for the holiday period to pass. I do not know the reasons for the recent interest in the gold shares and gold. All I can say is that money is now flowing into this sector. Higher prices will come. We'll close out the trading week tomorrow.
Wednesday, June 25, 2014
Back to the upside as the Dow gained 49 points on average volume. The advance/declines were 2 to 1 positive. I do not expect any major moves one way or the other for a while. We should simply drift higher or sideways as the summer begins. The overall market was stronger than the Dow and that is a positive going forward. We have a holiday shortened week coming up next week. I think it is a time to be patient, especially when it comes to trading options. Time decay is not your friend unless you are an option writer. GE was off an 1/8 or so and the volume was light. We dipped below the 50 day moving average for GE today. Gold was up a buck on the futures, while the US dollar dropped a little on the weak GDP revision. The XAU gained 7/8. ABX, GG and NEM all had fractional gains on light volume. The gold shares need a rest and hopefully this is the beginning of it. I would like to buy the October gold share calls after the holiday in early July if the market sets up that way. We'll see. Mentally I'm feeling a bit tired, did not sleep well. The short term technicals for the stock indices remain on the overbought side. That doesn't mean they can't remain there and they have for an extended amount of time recently. If this persists we'll be seeing more new all time highs in the near future. Gold is giving the appearance that it simply wants to move higher. Intra-day declines are being bought. I am still going to try and be patient here. But I do not exactly know how patient to be. Some of the chart patterns for the gold shares have the appearance of being very bullish. As usual, it's never easy in this game. So we'll follow the overnight action and go from there.
Tuesday, June 24, 2014
Some downside today as the Dow fell 119 points on better volume but still on the light side. The advance/declines were not even 2 to 1 negative. The decent price move projected by the McClellan oscillator occurred today. I don't think this is the beginning of anything significant to the downside. This wasn't exactly a broad move lower by the major averages. We'll be sure to keep an eye on developments but a huge move lower isn't expected by me at the moment. The negative RSI divergences are in place though and I could be wrong. GE was off a dime and the volume was light. Gold was up a couple bucks on the futures as the US dollar finished the day just up a touch. The XAU fell 2 7/8 as near term profit taking kicked in. ABX and NEM fell 1/2, while GG shed 2/3. Volume here was nothing special. Yes, we want weakness to get long the gold share calls. But how much weakness? I am still going to be patient here. A 50% retracement of the recent gains would be ideal but the market rarely cooperates with what you want. The gold shares were very short term overbought. Todays price action helps relieve some of that condition. Mentally I'm feeling OK. No up trend lines are in danger of being violated with todays downside. We would have to see a few days like today to break the uptrend. I don't see that happening but who knows? The gold shares took a much needed rest today. I am still going to try and wait until after the July 4th holiday to enter a position in the October gold share calls. But we will have to see how the prices move. As I said before, I expect things to slow down as we enter the summertime period. That is not the ideal environment for option trading. We'll see if we get downside follow through overseas tonight and see what tomorrow brings.
Monday, June 23, 2014
The Dow fell just about 10 points today on light volume. The advance/declines were about even. An uneventful session for stocks today. I do expect a decent move for stocks tomorrow or the next day based on the McClellan oscillator. The only unknown is the direction. Still short term overbought on the major indices. GE was off almost 1/3 and the volume was average. No trades here for now. Gold was up a buck or so on the futures. The US dollar was a touch lower. The XAU rose 1 3/4 and continues to outperform gold itself. It has been practically a straight line up for the gold shares. ABX and NEM gained 1/3, while GG added 2/3. Volume was light here today. I still am waiting for some pullback in the gold shares but it appears that it may not occur. Patience doesn't seem like it is going to pay off here. I am a believer in this move higher for the gold shares and gold. The reasons are unknown but the market always knows more than we do. Mentally I'm feeling OK. Stocks are overdue for an extended decline. But so far, it just hasn't happened. There is still plenty of money to go around. The trend is up. The recent spike in gold, silver and the mining shares has been sharp. Overbought to be sure here. My advice would be to not chase it now. Wait for some kind of pullback and then purchase the calls of September or October. I could be wrong and often am. But this move had plenty of volume and appears to be for real. We'll keep an eye on the foreign markets overnight and go from there.
Friday, June 20, 2014
We finished out the week to the upside as the Dow gained 25 points on expiration heavy volume. The advance/declines were positive. New all time highs were seen on some of the major stock indices. It has been quite a run. There are some potential negative divergences in some of the technical indicators, including the McClellan oscillator. They are only potential though, as a continued move to the upside will negate them. The oscillator is projecting a major move in the stock market within the next couple of days. As usual it doesn't project which way. It is something to be aware of. GE was up a few cents and the volume was good. No trades here as I will need to see some weakness to purchase the longer term calls here. Gold was up a couple bucks on the futures to close out a stellar week. The US dollar finished the day little changed. The XAU was off 2/3 as the recent gains need to be digested here. ABX and GG had fractional losses, while NEM was up 1/3. Volume was good. Patience will be needed here to obtain some October calls in the gold shares. The recent explosion to the upside is valid in my reasoning. The volume confirms the move. I am still in the camp of waiting for some type of move backwards or at least some sideways consolidation. But it may not happen. The weekly chart of GG looks the most promising with a pretty good reverse head and shoulders pattern in the making. The weekly GDX chart has the same look. Mentally I'm feeling OK. Things are getting very bullish for the stock market in the media. The short term technicals are overbought once again. Option optimism via calls is the highest I've seen it on one of my indicators so far this year. The VIX is near its low for the year as well. I'm not saying that a major decline is right around the corner but this won't go on forever. On the plus side there is no overhead resistance and perhaps we'll get some kind of summer rally. Liquidity is still out there because it takes money and credit to move things higher. Gold had a huge move higher through all of the near term resistance this week. That was impressive. The gold shares led the way higher and that is bullish going forward. I do want to purchase some gold share calls and that looks like it will be the next trade for me. I plan on going out to the October contract but September may work just as well after what we witnessed this week. There are plenty of charts to study over the weekend. Summer begins tomorrow and usually the market will slow down as the major players head out for vacations. That is something to consider when trading options. The sidelines are sometimes the place to be when the trading gets slow. However as always, the markets will do and go where they want. For now it's Friday afternoon and time for a break.
Thursday, June 19, 2014
The Dow rose 14 points today on light volume. The advance/declines were positive. We've now reached short term overbought on the stock indices. There is also a possible negative divergence on the daily RSI for the stock averages. The summation index is basically moving sideways. The trend remains up for now though. GE was up 1/4 on better volume. Still above the 50 day moving average here. Gold exploded to the upside today. The futures rose over $40. I suppose the gold shares strength of the past week or so was precursor. But the move today for gold was strong and with volume. I do believe it is for real. The XAU was up 4 3/8. ABX up 2/3, GG added another 1 1/4 and NEM was up 3/4. Volume was strong. There hasn't been any pullback in the gold shares. Very overbought now in the short term indicators. But that doesn't mean we can't go higher. I still want the October gold share calls if we get any weakness because the set up on some of the charts is very bullish. But it is too late to try them now. Mentally I'm still trying to not get too down on myself for missing out on this huge precious metal move. It isn't easy. The ideal time to purchase the gold share calls has passed. The stock indexes are due for a pause. Whether or not that develops into something more remains to be seen. We are entering what I consider a slow period for the market. Summer is approaching and will be here next week. Option trading gets even trickier than usual. Time decay is the prime element. However if there is a valid signal one way or the other, you have to act on it. But there will probably be plenty of slow, do nothing market days. The summer doldrums. Be aware of that. Gold had a huge break above all the near term resistance on heavy volume. We already knew there were problems in Iraq. Why all of a sudden gold decided to jump today is beyond me. All we need to know is that it did and the dynamics of the gold market have changed. Getting long and getting calls are the way to go. I won't chase things here but I will be ready on a decline. We'll close out the week tomorrow.
Wednesday, June 18, 2014
Upside and more than expected as the Dow rose 98 points on light volume. The advance/declines were over 2 to 1 positive. The Fed spoke and the market liked what it heard. The trend remains up. Plenty of liquidity in the marketplace. Money continues to find a home in stocks. The positive expiration bias remains in place. Some of the major stock indices hit new all time highs. There is no upside resistance. And on it goes. Enjoy the ride. It won't last forever. GE was flat on the session but did come off of its lows. Gold was little changed in the regular session but was up six bucks in the aftermarket. The US dollar was lower on Fed speak. The XAU climbed 2 1/3 as the gold shares continue to outperform the metal itself. ABX and NEM were up 1/3 or so, while GG gained a buck. Volume was good. I have missed this upside move in the gold shares and it does not feel good. There hasn't been any move back towards the down trend line that was broken. GG is the strongest of the big three and has a pretty good potential reverse head and shoulders pattern on its weekly chart. One of the reasons that I think the gold share rally has plenty of legs is the fact that nobody is talking about it. I still want to get some October gold share calls at some point. Mentally I'm frustrated. My timing has been off. Things have not gone my way in the first half of 2014. My trading tactics have been poor. My risk management has been non existent. This is not the way to go about trading if you want to be successful. I will have to do better. The stock market continues higher. I still believe that we are in for some kind of decent decline between now and autumn. The volume has been light for the last 500 points on the Dow. We are in the 2nd year of the presidential term. The Fed is pulling back on the bond buying. January was a down month. Sooner of later all of these factors will come home to roost. The gold shares have been acting well. I do think that this is for real. I can only hope that I will get the chance to make some money off of it but I will not chase it at this point. We'll see if we get some follow through on todays market upside tomorrow.
Tuesday, June 17, 2014
A drift higher today as the Dow gained 27 points on light volume. The advance/declines were positive. Positive stock market action is expected this week but I don't see any huge breakout move higher coming anytime soon. There are no divergences for now and the longer term uptrend lines are still intact. We'll get the Fed out of the way tomorrow and then we'll probably focus on the geopolitical situation. The short term technicals are turning up. GE was up a nickel and the volume was light. No trades here for now. The gold futures were off a few bucks but came off of the lows for the session. The US dollar was slightly higher. The XAU was up 1/2 and came off of its lows as well. ABX, GG and NEM all had slight fractional gains on light volume. Still waiting for a move back towards the broken downtrend lines for the gold shares. Short term overbought here now. Mentally I'm feeling OK. Just hanging around now for the stock indexes. We were very overbought and then relieved that condition. So now we are in a wait and see mode in my opinion. The seasonals here are not positive for stocks. The ideal scenario would be to build some sort of top over the next few weeks. Gold has found some buyers with the Iraq tensions. Resistance remains at $1280. The gold shares have acted better here and that is where I am looking for my next trade. We'll keep an eye on the overnight developments as we wait on the Fed tomorrow.
Monday, June 16, 2014
Kind of a wait and see type of Monday as the Dow gained 5 points on light volume. The advance/declines were about even. The market is waiting on Iraq and the Fed. The economic data out today was pretty much in line with expectations. Technically the stock indices are short term oversold at this point. I think that the downside is limited here in the near term. Plus we have the positive expiration week bias in play. I have no OEX trades in mind right now. GE was off almost 1/4 and the volume was what passes for average lately. Still above the 50 day moving average here. The gold futures finished the session little changed but came off of the highs. The US dollar was slightly lower. The XAU fell 3/8. ABX lost a nickel, while GG and NEM dropped around 1/4. Volume was light. Simply waiting for a snap back here to get long the October gold share calls. This is the only imminent trade that I am looking for. Mentally I'm feeling OK. I'm expecting some upside for the stock indexes in the next couple of days, barring some type of unforeseen event. That's my take on the technical condition of things there at the moment. Gold was turned back at its 50 day moving average. That has generally been the case since the beginning of April. As long as gold holds above the $1240 level, it has a constructive tone to it. The gold shares have outperformed gold recently and that is a plus. Gold remains off of the media radar and that is also a plus. But anything can and will happen in this game. We'll keep an eye on the overnight developments and take it from there in the morning.
Friday, June 13, 2014
We bounced around today but the Dow finished with a gain of 41 points on very light volume. The advance/declines were positive. It is a wait and see market now with the turmoil in Iraq. We have moved to short term oversold though, so some upside is probable. Plus we are moving into option expiration week. I do not expect any big moves though because the summer seems to have come early this year. If there are no new fighting outbreaks in Iraq over the weekend we should be higher on Monday. The opposite if there are. GE was up a nickel and the volume was very light. A wait and see attitude here as well. Gold added a couple of bucks on the futures in the aftermarket. The US dollar was a touch higher. The XAU was up another 1/2. ABX, GG and NEM all had fractional gains to top off a good week. The volume in ABX was good, average for the other two. The gold shares have now broken their near term downtrend lines. The next technical expectation is to snap back toward those lines. That will be the chance to purchase some gold share calls if you are so inclined. That is probably when I will get some October gold share calls. That is the plan for now. It is possible that gold will simply rally from here but we are almost at the $1280 level and that should provide some pretty good resistance. Mentally I'm doing OK. So is this the beginning of a significant decline for the stock indices? It's unclear for me at the moment. We do not have any negative divergences that I can see yet. I think we need to build some sort of top before we see a decent decline. Perhaps the summer will provide the necessary time. That's all a guess as usual. The markets will go where thay want. We have finally seen some interest in the gold shares. If it is simply Iraq related, the rally probably won't last. It is something to keep an eye on. On the plus side there has been no mention of the gold shares or gold in the media. So what has happened there lately is under the radar. That is a positive going forward. The upside seasonal time for gold is in August and September. I will be trying to get some kind of position before then. Despite already having some losing trades in ABX this year, I am not ready to abandon the idea that there is money to be made there. I could be wrong. It's Friday afternoon and the official start to summer is only a week away. I'll be checking the charts as usual over the weekend. Time for a break.
Thursday, June 12, 2014
More of the overdue downside today as the Dow fell 109 points on light volume. The advance/declines were negative. Problems in Iraq are the excuse for todays decline but the vastly overbought market has something to do with it. Retail sales were weaker than expected. Still plenty of the overbought condition to work off for the stock indices. The TRAN took a decent hit today on the higher price of oil. Could inflation be coming back? Too early to tell there. The TRAN just violated its short term uptrend line. The major stock indices have not. But maybe, just maybe we are at the end of this crazy ride higher. GE was off about 20 cents and the volume remains light. Gold continues to find a bid as the futures rose $12, following the price of oil. The US dollar was lower today. The tensions in the Ukraine ceased doing much for gold after the first couple of weeks. We'll see how things develop with the problems in Iraq. The XAU rose 2 points and I have missed out on this up move in the gold shares. My timing seems to be off on everything lately. ABX and NEM gained around 1/4, while GG added 7/8. Volume was better for the gold shares. GG is the leader here. I will have to wait for a pullback if I want to try the October calls. That would be the prudent thing to do. Mentally I'm feeling frustrated once again as I sold my OEX June puts near the top. Not that the trade would be a positive one but I could have cut the loss a little better. But it doesn't really matter now. Where we go from here is all that matters. I do not think we will be going down in a straight line. I think we should let the market build a top before the next attempt at some OEX puts. Summer is almost upon us and after the June option cycle ends, I suspect the trading will slow down even more. Gold is now right up to its down trend line that began in March. A valid break there would be bullish. The gold shares have already broken through to the upside. We'll keep an eye on the overnight action and close out the week tomorrow.
Wednesday, June 11, 2014
Finally some downside today as the Dow fell 102 points on light volume. The advance/declines were negative. The overall market was stronger than the Dow. This helps start to relieve the extreme overbought condition of the stock indices. I don't think it's the start of anything big to the downside but my guesses have been way off lately. Perhaps now we can start to build some kind of top for a more meaningful decline later on. This would take time though. Seven days to go in the June option cycle. GE was off 1/4 on light volume. It looks like we've stalled here after a three day run up. Gold was flat on the session as was the US dollar. The XAU was up 1 1/2 though as lately the gold shares have outperformed the precious metal. That is a positive. In the past couple of weeks the gold shares have quietly risen over 5%. Some down trend lines have been broken. ABX, GG and NEM all had fractional gains on better volume. Getting to the overbought range on the technicals here but not all the way there yet. I would not chase things here but keep an eye for the next move lower. That could be the entry point for the October calls. Unless things are getting ready to move much higher from here for gold. If that is the case, it may be too late. Mentally I'm feeling OK. The TRAN is starting to roll over here and that could be a leading indicator. Or not. No uptrend lines have been violated yet for the TRAN. One down day doesn't make a decline for the stock indexes. I still think the risk here is that we will be moving lower more than higher. But I said that 50 points ago for the S&P 500 and was wrong. There still seems to be plenty of money looking for a home in stocks. I like the way the gold shares have acted lately, moving higher under the radar. Perhaps there is some accumulation going on. Or it could just be a dead cat bounce. Time will tell. I'll be keeping an eye on it but I have already lost some money in gold this year. Retail sales data out tomorrow should be the main event for the stock market. We'll see what happens.
Tuesday, June 10, 2014
Quiet summer like trading as the Dow gained 2 points on light volume. The advance/declines were negative. The technical conditions remain the same. Long overdue for some downside. I dumped my June OEX puts for a 95% loss. Bad timing, no trade management and that was a textbook case of how not to do things. No excuses though as I had many opportunities to cut the loss but did not take them. How was I to know that the normal technical signals would not work this time? Probably when they failed to work early in the trade. GE was off a few pennies on light volume. I'm still going to get some calls for next January here at some point this year. Gold had s slight rally as the futures rose six bucks. This, despite more upside in the US dollar. The XAU was up 1 3/4. ABX added 1/4, GG rose 7/8 and NEM up 1/8. Volume remains light. Still oversold on gold and the gold shares but we are working off the short term oversold condition. I'm not ready to jump in on the gold shares here just yet. Mentally I'm doing OK. Another losing trade was closed out today and now my trading account is in the negative for the year. Eight days to go in the June option cycle and I probably won't be attempting another trade soon. The stock indices really need some kind of break in the upside in my opinion. This has been a light volume levitation and I do believe it will end badly. That said. obviously buying the OEX calls instead of the puts was the way to go. However the technicals said otherwise at the time. Trading the various markets is not an easy game and can be frustrating at times. If it was easy, everybody would be doing it and everybody would be rich. We know this isn't the case. Gold and the dollar both moved higher today and that hasn't been the relationship lately. Not sure that it means anything. I'm still looking out to the October gold share calls. We'll keep an eye on the foreign markets overnight and go from there.
Monday, June 09, 2014
A quiet Monday as the Dow continues to rise. It gained 18 points on light volume today. The advance/declines were positive. Overbought on multiple time frames and some negative action is beyond overdue. As I said before when the technical signals don't work, I am at a loss as of what to do. My June OEX calls are at a huge loss as well. The sidelines are probably the place to be for now. GE was up 1/4 and the volume was light. If GE is any indication of things to come, then higher prices still are in the future. No trades in mind for GE at this juncture. Gold was up a buck or so on the futures and the US dollar moved higher. The XAU was off 1/4. ABX and GG had slight fractional moves and NEM was down 3/8. Volume remains light here. The fundamentals for gold remain bearish, with a rising US dollar and the continued taper from the Fed. Perhaps looking out to the October calls on the gold shares is the wrong strategy. Oversold for the gold shares and staying there. The exact opposite of the stock indices. Mentally I'm feeling OK. The TRAN finished well off of its highs today and there is a slight negative divergence in the daily RSI. That may or may not mean anything. I do think that we are in some type of blow off high for the major stock indices here. Let us not forget that the first five days in January were negative as was the month of January. Add in that we are in the second term for a lame duck president and the prognosis for some kind of banner year for the stock market doesn't fit. In the shorter term I would be even more surprised if we don't see some kind of downside this week at some point. Gold remains unloved and is going nowhere. I'll keep an eye on it but perhaps will not try a trade there until next month. We'll see. A light economic calendar this week so be prepared to be bored. The summer doldrums could come early this year. We'll keep an eye on tonights market developments and go from there.
Friday, June 06, 2014
The employment report has came and went as the Dow continues to climb higher. The most watched index gained 87 points on light volume. The advance/declines were almost 3 to 1 positive. The summation index continues higher. The stock indexes are extremely overbought and there isn't even a hint of a pullback. It defies both logic and gravity. However the market can remain irrational longer than you can remain solvent. My June OEX puts are essentially dead. I'll sell them next week. Shorts have been squeezed and the volume remains very lackluster. Signals just are not working right now. I will be heading to the sidelines. There is no overhead resistance. GE had a good day too, gaining 1/3 on better volume. Overbought here as well. Gold sold off a little but came back to be unchanged. The US dollar was little changed on the session. The XAU was flat but did come back from earlier losses. ABX, GG and NEM had fractional moves one way or the other on light volume and little conviction. Despite an incredible rise for overall stocks, the gold shares are going nowhere. Mentally I'm feeling OK. Daily and weekly overextended for the stock indices but higher we go. The negative seasonal pattern normally seen is nonexistent. You cannot fight price and I have tried to do that with the usual losing results. There is still plenty of money flowing into stocks from somewhere. When the normal technical signals don't work, that has to tell you something. I'll be headed to the sidelines after selling out the June OEX put trade for a substantial loss. Gold remains unloved and unimportant in the investment world for now. Oversold and no real bounce to speak of. I will be getting long the gold share calls again at some point this summer. But none of my ideas have been working lately. The sell signals for the stock indexes are not working. I think that we are in some kind of blow off top. How far it can go is anybodies guess. I do think that when it ends, it will not end well. But I do not know when it will end. I'll be checking the charts over the weekend as usual. For now it's Friday afternoon and time for a break.
Thursday, June 05, 2014
We got some movement today and it was to the upside as the Dow gained 98 points on light volume. The advance/declines were over 3 to 1 positive. The ECB is now lowering interest rates to have a negative return. What? That is my reaction as now the European central bank has decided to penalize you for not moving your money. This won't end well. But for now all is good. My June OEX puts are dead. I hold them another day only to see the employment report. The stock indices are overbought, have been and are staying that way. The obvious signal is to get short but instead it is a short squeeze. GE reversed yesterdays loss and the volume was a little better. Gold rose nine dollars on the futures as the US dollar fell. The XAU gained 1 2/3. ABX, GG and NEM had fractional gains on light volume. Probably too soon to try the gold share calls again. Patience is the idea here. I'm still looking out to the October option cycle. Mentally of course I am frustrated and disappointed in yet another poorly timed and mismanaged trade. The market remains overbought and the signal to sell is just not working. There is no overhead resistance and my prognosis for the rising wedge was wrong. You cannot argue with price and it keeps going higher. It looks like we are going to be in some kind of blow off top perhaps. Volatility remains very low. Gold found some takers today but I doubt we are at the beginning of some kind of rally. But who knows? Most of what I've been thinking has been wrong lately. The market knows everything. So we'll get tomorrows employment report and see how we trade off of that. My guess would be that higher prices are coming.
Wednesday, June 04, 2014
More of the same as the Dow added 15 points on light volume. The advance/declines were barely positive. The overall market was stronger than the Dow and this bodes well for the bulls. Still overbought and staying there for the stock indices. Nothing new to report. The Fed beige book came and went. Perhaps the employment report on Friday will get things going. My June OEX puts are still losers. The low movement, low volatility environment we are currently experiencing isn't helping the options game. Unless you're writing them. GE was down 1/4 and the volume remains light. Perhaps GE is the canary in the coal mine. Probably wishful thinking there. Gold was flat again as the US dollar was a bit higher. The XAU was flat. ABX, GG and NEM were all little changed on light volume. There is no new news for the gold shares. It's a waiting game to get long again here at some point. Mentally I'm feeling OK. Slightly more than two weeks to go in the June option cycle. Unless we get some downside before the end of the week, I'll probably have to dump the June OEX puts that I own. This trade will be a loss barring something out of the ordinary in the near term. Tomorrow will probably be a wait and see what happens on Friday kind of day. Gold remains a non event on the long side. We'll keep an eye on what develops overnight and go from there.
Tuesday, June 03, 2014
Another day of not much as the Dow fell 21 points on light volume. The advance/declines were negative. The overbought technical condition of the stock indices continues. The participation remains weak. The stock market has the feel of summer already. It is a drift higher with no conviction. We did see a drop in the TRAN today and perhaps that is a precursor to the future. But that is a guess as usual. My June OEX puts remain losers. GE lost a few cents and the volume remains very light. Gold didn't do much today and the US dollar was a bit lower. The XAU was up 1/3. ABX and GG were little changed, while NEM gained 1/4. Volume continues to be low. No trades for the gold shares here for me but I am looking out to the October calls. Mentally I'm feeling a bit tired, did not sleep well. We are waiting for something to get the markets going but there is nothing going on. Maybe the employment report will get things moving. Perhaps tomorrows beige book. I cannot hold on to these June OEX puts forever because one strong up day will increase the loss. Some of the technicals are saying that some type of decline is imminent. However we haven't seen anything but minor selling. Gold and the gold shares continue to have no interest on the long side. It looks like it is going to be a long boring summer at this rate. We'll see what tomorrow brings.
Monday, June 02, 2014
Kind of a mixed bag to start off the week and the month of June. The Dow rose 26 points on paltry volume. The advance/declines were slightly negative. The overall market was weaker than the Dow. The summation index continues higher. The technical condition of the market remains the same. Overbought and staying there. My June OEX puts are still losers. I still do not trust light volume rallies and that is what we have. I expect that we will see some type of decline soon. GE was up a few cents and the volume is still very weak. My next trade for GE will involve getting some January calls over the summer or fall. I expect some kind of significant market decline for autumn of this year and that will hopefully set up an opportunity for this trade. Gold lost a couple bucks on the futures today as the US dollar continued higher. The inverse relationship here remains intact. The XAU was off 3/8. ABX, GG and NEM all had fractional losses on light volume. The song remains the same here. There is no interest in owning gold or the gold shares. Mentally I'm feeling OK. Although I'm looking for some type of decline for the stock indices this week, it probably won't be enough to save my June OEX put trade. There are just a little less that three weeks to go in the June option cycle. I'm not sure that a big enough drop is in the making here. This trade is in the cut the loss mode unless we see something dramatic to the downside this week. That is wishful thinking. I've said all that I can say about gold. It is unloved and has no interest on the long side. We'll keep an eye on the foreign markets overnight and take it from there.