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Wednesday, October 22, 2014

Back to the downside today as the Dow fell 153 points on good volume.  The advance/declines were 2 to 1 negative.  We were positive early in the day and that created a short term overbought condition.  I do not think this is the beginning of a downside move like the one we just saw.  The summation index is now heading higher.  We did get back to the declining tops line on the S&P 500 and have been turned away.  I did get some November OEX puts this morning and they are in the black.  However this should be a short term trade, probably around a week or so unless something major develops.  I do not think that we are going to go all the way back down to test the recent lows.  I could be wrong.  GE was off 1/4 and the volume was average.  I'm looking at the March calls here.  Gold was down $6 on the futures and a bit more in the aftermarket.  The US dollar was up on the session again.  The XAU fell 2 3/4.  ABX and NEM were off by about 1/4, while GG dropped 7/8.  Volume was average.  Perhaps this will be the final washout for the gold shares but that is a guess as usual.  The trend remains down for the gold shares.  Mentally I'm feeling OK.  So the next trade has begun and the entry was good.  We got some strength in the morning and I was able to get my order filled.  The stop loss order is in place to contain the loss if we rally.  I'll be keeping an eye on the technicals but this trade should not last long.  I will be looking to switch back to the November OEX calls perhaps next week.  The only caveat with this trade is that the option premiums have so much time left that the price movement on them is muted.  The gains, if any, will certainly not be like the last trade.  The overall market and the small stocks are acting better than the Dow so far.  Gold is still unloved.  The gold shares are being sold off again.  This story never seems to change.  Eventually it will.  We'll see what kind of reaction to todays decline we see in the foreign markets and take it from there. 

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