Friday, July 31, 2015
A bit of weakness to close out the month as the Dow fell 56 points on average volume. The advance/declines were positive though. This should turn the summation index back up. The short term technical are mid-range for the S&P 500. I do think we are heading for higher prices. The beginning of the month money flows should kick in on Monday. Plenty of economic data due next week, with the employment report on Friday the key release. GE was flat on the session and volume was very light. Nothing doing there for now. Gold found some buyers as the futures were up six bucks on a weaker US dollar. The XAU was up 7/8 and GDX rose 1/3. Volume was lighter than it's been. ABX was flat on the day. Mentally I'm feeling OK. Three weeks to go in the August option cycle. We have yet to see the summer doldrums appear in the stock market but that could change going forward. After we get through the employment numbers, things may slow down. That's a guess as usual. As I said the short term technical indicators for the most part are mid-range for the major stock indices. So you can make a case for either direction. The small stocks have acted a bit better here and that's a positive. With the summation index turning around, I think you have to look for higher equity prices moving forward. Gold has moved sideways for a couple weeks. It could just be a consolidation after we dropped off from the $1180 area. That's what it looks like. $1080 is the new level to watch on the downside. It's held so far but there is nothing to say the decline in gold will stop there. I'm banking on the positive seasonality showing up but it's simply a guess if that will happen this time around. My ABX October calls remain big losers. I'll be going over the market data this weekend as always. For now it's Friday afternoon and time for a break.
Thursday, July 30, 2015
Almost unchanged on the session after selling off early. The Dow lost 5 points on average volume. The advance/declines were about even. GDP came in about where expected and the market lost some ground early. However we came all the way back and that is a positive. The small stocks had good relative strength as well and that is a plus. The summation index is trying to turn around here and a decent positive breadth day should do the trick. I'm looking for higher prices going forward. GE fell about 1/8 on light volume. No trades in mind here. Gold dropped on a stronger US dollar. The spot gold price fell $7 on light volume. The XAU dropped 1 3/4, while GDX shed 1/2. Volume was good here. Still no love for gold and the gold shares. My ABX October options remain mired in red ink. Mentally I'm feeling OK. We'll finish the month of July tomorrow. A couple of minor economic reports are due. Position squaring for some funds as usual. It was a positive month for the major averages. If we can get the summation index heading back to the upside, I'll once again say that we're headed for new all time highs in the S&P 500. Gold has been going nowhere or lower. We are entering the positive seasonal time of August/September for the precious metal. If we don't see some kind of rally here, I'd be surprised. The oversold condition here has lasted longer than I would have imagined. The gold shares have been decimated. The carnage seen hasn't happen since the last major bear market in gold. But bear markets don't last forever. I suppose I am hoping for some kind of bounce to cut my losses in the ABX October call trade. We'll see. We'll watch the action overseas tonight and finish up the week and month tomorrow.
Wednesday, July 29, 2015
Continuing higher as the Dow gained 121 points on once again heavy volume. The advance/declines were about 3 to 1 positive. The McClellan oscillator should be back to around the zero line, while the summation index is trying to turn around. The Fed came and went and there was nothing really new there to report. The market viewed the statement in a positive light and the early daily rally continued. I think that the decline of last week has run its course and higher prices are coming. The TRAN broke through its daily downtrend line today and that is a positive. Perhaps this is the beginning of the summer rally that I've been looking for. GE was up over 1/8 and the volume was light. No trades in mind there. Gold was slightly lower on the session despite a good move up in the US dollar. The gold shares were slightly higher as the XAU and GDX had slight fractional gains. Volume was good. My ABX October calls are still very much in the red. I did purchase ABX outright today in a non trading account. Still very oversold on all time frames for the gold shares. Mentally I'm feeling OK. Two triple digit up days in a row and we'll see how tomorrows GDP report affects things. Stabilization in the Chinese market would probably help the bullish cause here as well. The short term buy signal on Monday was valid. Now it is a matter of how high will we go. Unless we see a dramatic turnaround tomorrow, the trend is up. Gold is trying to stop its decline here in my opinion. The jury is still out there. Gold remains unloved but perhaps we will get a short covering rally here soon. That is a hope and not a prediction. Still very oversold on the precious metals. We'll watch the action tonight and see how the market reacts to the GDP report tomorrow.
Tuesday, July 28, 2015
The bounce arrived as expected as the Dow rose 189 points on heavy volume. The advance/declines were about 3 to 1 positive. Even with todays action the summation index is still heading lower. In the days to come we will see if this is just an oversold reaction or the beginning of the next leg up. The short term technical indicators have turned up for the major stock indexes. But that doesn't mean that we can't turn around again. The TRAN had a very good day so perhaps the trend has turned. If the TRAN can break through the downtrend line that has been in effect since March, that would be a clue. The McClellan oscillator hit an area yesterday where previous rallies have begun. GE was up an 1/8 or so on average volume. Bouncing off the 200 day moving average here. Gold was off a bit on the futures as the US dollar had a slight gain. The XAU was up 3/4, while GDX gained 1/8. Volume was lighter than lately. ABX was flat on the session but volume remained high. Mentally I'm feeling OK. We'll get the Fed statement tomorrow and it should be on course for a rate hike in September. That is what the market expects. Yesterday was the time to purchase some SPY calls. Being preoccupied with my ABX trade obviously has its disadvantages when other opportunities are missed. This could be the case right now. The oversold signal for at least a bounce was valid and I have missed it. But you've got to keep moving on. As usual the mental capital wasted always is worth more than the money. I'm still cautious here though because of the proximity of the summation index zero line. But there is always the chance we'll hold there as well. The game is never easy. I may just buy ABX outright tomorrow if it heads lower. That will be a longer term proposition and not a trade. After the Fed tomorrow we'll get the first read on the second quarter GDP on Thursday. End of the month on Friday. So considering that it's the summer, it should be rather busy. The volume lately has been heavier than we've seen in a while as well. All eyes are on the Chinese stock market now, as the decline there has reappeared. I guess we've forgotten about Greece for now. So we'll watch the overseas action tonight and wait on the Fed tomorrow.
Monday, July 27, 2015
Still lower to begin the week as the Dow fell 127 points on good volume. The advance/ declines were about 3 to 1 negative. The summation index is heading lower and going through the zero line. Short term oversold to be sure here and a bounce should appear in a hurry. I'm not sure that a bounce will hold at this point. Some of the major stock averages are trying to put the brakes on at their 200 day moving averages. I don't know it they'll be successful. I'm still advising caution for now. GE was up 20 cents on summer average volume. GE is bouncing off of its 200 day moving average here. Perhaps GE will be a precursor for things in the overall market. But I will take a wait and see attitude for that. Gold was up around 8 bucks on the futures but that was basically catch up from Fridays aftermarket action. The US dollar was lower on the session. The gold stocks moved back down with the XAU shedding 1 7/8 and GDX off 1/2. Volume remains above average here. ABX was off 1/3 on heavy volume. My ABX October calls remain big losers. I'll be holding them until at least the earnings report due in a couple of weeks. The gold shares remain very oversold on all time frames. Mentally I'm feeling OK. We've got the Fed on Wednesday which should be a non-event. Policy should remain unchanged. GDP on Thursday may be the more important topic. That's a guess as usual. The stock market is short term oversold here. We should see some upside to relieve that condition. The problem is that the summation index is heading through the zero line and that gives the chance for a collapse. That doesn't mean that it has to happen. But it does put you on alert that it might occur because we are not in this technical area very often. That is why you have to be careful at this particular juncture. Gold remains unloved, oversold and the selling is back after a day of respite. I'm thinking that we may see more selling going into the end of the month. I don't know how much lower the gold shares can go here. Oversold, staying there and I really think that this is a long term buying opportunity in that area. I could be wrong and often am but the downside here is out of control. I am trying to buy ABX outright a bit lower from here but not in my trading account. The overseas markets were weak as well today. We'll see how they react overnight to the continued downside from the US equity market.
Friday, July 24, 2015
The market continued its decline as the Dow fell 163 points on heavy volume. The advance/declines were about 3 to 1 negative. The summation index is now heading lower. I will have to revise my thinking here as we are close to the zero line in the summation index again. There is a possibility of a collapse when we get near that line. I have been bullish since the recent decline but the market may be saying otherwise. Caution is now the word. We are short term oversold on the S&P 500. Some kind of bounce is due. We'll have to pay attention to the quality of that bounce. Today was a pretty negative day with volume and that is not a positive. GE dropped 1/2 on average volume. Not sure exactly what is going on here as well. Perhaps the market knows things that we don't. Gold found some buyers today as the futures ended up a few bucks after being lower early. The US dollar was up a bit today and also came off of its highs. The XAU rose 1 1/4, while GDX was up 1/2. Volume was very heavy again here and it was a one day reversal to the upside for the gold shares. Could the bottom finally be in for this group? Time will tell. ABX was up 18 cents on extremely heavy volume. Maybe we had some flight to safety with todays decline and the weekend coming up. Didn't do much to help my ABX October calls. I'll need to see a sustained rally to cut the loss there. Mentally I'm feeling OK. Interesting times in the stock market so far this summer. This summer has been the most volatile in this time period recently. First it was Greece and right now I don't know what it is. I would not be surprised to see things turn back around to the upside next week. But with the summation index zero line in play, we have to consider the possibility of a dramatic drop as well. I think that I'll be staying on the sidelines unless we get very oversold. I'll consider the possibilities over the weekend. ABX has bounced and it did not hit my price for buying the stock outright. I may have to adjust that order up as well. As I said before, on a longer term time frame the gold shares are at a very attractive level. Nobody wants them and they have been blown out to the downside. The fundamentals for gold are still negative though. However the seasonally favorable time period of August/September is almost upon us. Plenty to ponder in that area at the moment. I'll be checking all the charts over the weekend to try and come up with a game plan for next week. We've got the Fed next week along with the first look at the second quarter GDP. Plus the end of the month. So I'd expect the volatility to remain in place. For now it's Friday afternoon and time for a break.
Thursday, July 23, 2015
Still lower as the Dow fell 119 points on good volume. The advance/declines were 2 to 1 negative. Better than average volume to the downside lately and that is interesting. I still don't think that we are headed for an extended decline but what do I know lately? The summation index will be heading lower after todays action. The short term technical indicators for the major averages have now more than rolled over and are heading lower. Not a good oversold reading here just yet. The tech stocks have led the decline. GE was off 1/3 today on light volume. GE recently stalled at its 50 day moving average. Gold fell about 5 bucks on the futures and the US dollar was lower today as well. The gold shares continue to get crushed as the XAU dropped 2 1/3, while GDX fell 3/8. Volume remains heavy here. I believe that this is the final washout for the gold shares. The end is probably near. ABX shed almost 1/3 on still heavy volume today. My ABX October calls are big losers. Even the snap back rally that will eventually take place won't be enough to save them. Mentally I'm feeling OK. We'll have to see how the trading week ends as it has been weak so far. With the exception of yesterday, the Dow has been leading us lower and that isn't the most bearish of scenarios. However my ideas have been off lately and that is something to consider as well. Commodities are getting throw out the window here. If you have a longer term perspective it wouldn't be a bad idea to put some money to work in that area. But we are here to trade and patience is a better course of action at the moment. If the S&P 500 continues lower for the next couple of days, the SPY August calls will be the preferred vehicle. So we'll see. We'll watch the overnight action in the foreign markets and finish off the week tomorrow.
Wednesday, July 22, 2015
Lower again today as the Dow fell 68 points on good volume. The advance/declines were negative. Poor action in the tech sector was the reason given for the decline today. Nothing to worry about is my opinion as we are working off the recent short term overbought condition. The technical indicators have turned lower but not drastically so. I'm still looking for new all time highs for the S&P 500 in the August option cycle. GE was off almost 1/4 on light volume. Gold fell $10 on the futures as the US dollar was a bit higher. The XAU and GDX had slight fractional losses on still good volume. ABX lost over 1/8 but did close off of the lows. Volume very heavy here too. Nothing to do but wait to sell my ABX October calls at this point. Mentally I'm feeling OK. The summation index has stalled here but should be heading back to the upside shortly. With the option cycle just rolling over to the next month, premiums are high. Tack on the extra week in the August cycle and you see that patience is your friend for now. With all the recent volatility, it would not surprise me to see the doldrums appearing in the coming weeks. I could be wrong. Earnings are the driver for now. Gold has yet to find a bottom and we'll see how low it can go. ABX almost hit $7 today. I still think that longer term investors can purchase ABX at these levels. However this blog is about trading and my ABX call trade looks like it's going to be a loser. Bad timing and bad tactics equals lost money. We'll watch the overnight developments and take it from there.
Tuesday, July 21, 2015
Some downside today and that's not unexpected. The Dow fell 181 points on average volume. The advance/declines were negative but not as much as a down 181 market would suggest. The overall market is stronger than the Dow here and that's a positive. I do not expect any kind of extended decline to happen. We've had a nice run to the upside so some backing and filling before we head higher is in order. If we get an oversold reading in the short term, the SPY calls will be in order. GE was off almost 1/3 on summer average volume. No trades here for now. Gold fell a few bucks on the futures despite a decent drop in the US dollar. That isn't bullish. The gold shares tried to stabilize, with the XAU up 1 1/3 and GDX ahead by 1/3. Volume remains off the charts heavy. ABX was up almost a dime with the same crazy volume. Blown out for the gold shares and in crash mode. My ABX October calls are under water and probably not coming back. I'll hold them for now and probably until the earnings report at least. I would not be surprised to see some more downside first though. Mentally I'm feeling bit tired. The short term indicators for some of the major indices are starting to roll over. My feeling is that they will not turn all the way down to oversold. With the small stocks leading the way, the trend should and will be higher for the stock indexes. It will not be a straight line up though. Plenty of time in the August option cycle to make a trade but patience is advised for now. Gold is trying to hold the $1100 area but it probably won't. The gold shares have already collapsed. If you have a long term perspective, buying the gold shares here will work in your favor. They may go lower but most of the damage has already been done. The time to get things is when nobody else wants them in this game. We'll see if the overseas markets follow the Dow lower overnight.
Monday, July 20, 2015
The Dow rose 14 points today but came off of the highs in the final hour. The advance/declines were 2 to 1 negative on average volume. So it was a strange technical session. Short term overbought for the major stock averages. Not a lot of economic data due this week but plenty of earnings. With an extra week in the August option cycle there is no rush to trade the SPY options at the moment. GE was off a dime on light volume. No trades pending here as well. The story today was gold or to be more accurate, the gold shares. The spot gold price fell $25 on good volume. This, despite the US dollar having only a slight gain on the day. A report on Chinas gold holdings was the announced culprit. The gold shares are crashing. The XAU fell 5 1/5, while GDX dropped 1 2/3. Volume was extreme. ABX lost 15% of its value today, down 1 1/3 on drastic heavy volume. The oversold technical indicators for the gold shares are off the charts. My ABX October calls are decimated. Big losses there. We will probably get the August/September upside for the gold shares. But for ABX instead of from the 11-10 level, it will probably be from the 6-7 level. I'll hold onto the calls for now but this is definitely a cut the loss trade. Mentally I'm feeling OK. We are on the cusp of new highs for the S&P 500 and should get there this week. A pullback first would not be a surprise. The summation index continues higher and the overall trend is up. We are no longer in a constant headline news mode ruling the averages. Earnings should pave the way higher. The gold shares are crashing so I suppose that you can sit back and watch the show. I do have an order to purchase ABX outright lower from here but it isn't in my trading account. ABX in the single digits is considered by me to be a longer term investment to be held, not traded. Time should work for me there. I doubt the largest gold producer will be going out of business. I could be wrong but the odds are against that this time. I consider this crash in the gold shares an opportunity but you really can't tell how low they will go. The bounce back should be spectacular as well. The action in the gold shares is reminiscent of March 2009 for stocks to me. Blown out readings in many of the technical indicators. Just look at the Gold/XAU ratio as an example. We'll keep an eye on the action overnight and take it from there.
Friday, July 17, 2015
The Dow took a breather today as the most watched index shed 33 points on average volume. The advance/declines were almost 2 to 1 negative. A mixed session to be sure as the S&P 500 rose a couple of points while the NASDAQ hit a new all time high. The summation index continues higher. The small stocks are leading the way and that's bullish. We are short term overbought and a pause is due. But the trend is up and we are likely going to see higher prices now over the rest of the summer. GE tacked on another 20 cents as the earnings were a bit better than expected. It looks like holding on another day to the GE call trade would have worked out. It is always easy to look back and say you should have done something else but it is a waste of time in this game. You just have to keep moving forward. Gold continues to fall as it broke the $1150 level this week. The futures lost $11 as the US dollar was higher once again. The gold shares got smacked as the XAU fell 2 2/3, while GDX lost 3/4. ABX dropped almost 1/2 on very heavy volume. It looks like a downside washout here for the gold shares. My ABX October calls are already cut in half. I probably did the wrong thing today and purchased some more of these calls at a lower strike price. This is probably the case of throwing good money after bad on the heels of the trying to catch the falling knife in stock market jargon. Normally I would not even think of doing this but the indicators are off the charts oversold. Will there not be some kind of bounce between now and October? I think that the answer is yes. Mentally I'm feeling a bit tired. All systems appear to be a go for higher stock prices moving forward. The technicals on a medium term basis have turned back up for the major stock indices. This past week was a strong one for higher prices adding to the usual positive expiration week positive bias. The August option cycle has an extra week in it so there is no hurry for any positions there. Purchasing the SPY calls at the end of last week/beginning of this week was the proper move. Obviously one that I didn't make. Focusing on the gold share calls was a bad idea, considering some of those indexes had already fallen out of the support area. Combine that with the breakdown in silver and you can consider these signs that I did not pay attention to. It could prove costly. Selling GE ahead of the earnings might have been a response to already losing money in the first ABX October call trade. Everything that you do in the game has a way of influencing results for the positive or the negative. I still may have bailed out of the GE call trade regardless. The issue I'm faced with now is concentrating on the ABX trades, which may get in the way of other ideas. It isn't an easy game of trading and that takes care of weeding out some of the players. I'll have a lot to consider over the weekend. For now it's Friday afternoon and time for a rest.
Thursday, July 16, 2015
Moving higher as the Dow gained 70 points on average volume. The advance/declines were over 2 to 1 positive. The summation index is moving higher. Some of the major stock indices hit all time highs today but not the S&P 500. But that should happen in the days ahead. The trend is up. Declines, if there are any, can be bought. GE was up over 1/4 on OK volume. I decided to book the profit that I had here and not wait until tomorrow. This already is looking like the wrong move. I managed a 50% profit there. We'll see what happens with the earnings tomorrow. Gold fell another $5 today as the US dollar had another good session. The XAU and GDX had fractional losses on light volume. ABX got crushed, losing 3/8 on heavy volume. My ABX October calls were almost cut in half. This trade has already blown up in my face. Plenty of time left but ABX appears to be in a free fall. Very oversold on all of the technical indicators. Mentally I'm feeling OK. I'm cutting things short today since it is getting rather late. We'll watch what happens overnight and close out expiration week tomorrow.
Wednesday, July 15, 2015
A pause in the action today as the Dow fell 3 points on summer average volume. The advance/declines were negative. The summation index continues higher. We aren't simply going to go up in a straight line but the trend has turned positive. Weakness can be purchased in my opinion. The economic data out today was in line with expectations. The Fed didn't say anything unexpected and will conclude this procedure tomorrow. We may get some gyrations in the next couple of days before expiration but I think the wholesale selling is done for now. GE was up about 1/8 on light volume. My GE July calls are showing a slight profit. I'm still holding on for the earnings report on Friday, which will make or break this trade. The technical indicators for GE have turned up on a short term basis and there is room to go higher there. Anything can happen here. Gold fell on a stronger US dollar. The precious metal futures were off $5 and were lower than that during the trading session. We have closed below the $1150 level. The XAU fell 1 2/3 and GDX dropped 1/3. Volume was better to the downside. I did purchase some ABX October calls today. They are showing a slight loss. Oversold and staying there on a short and medium term basis for gold and the gold shares. Todays trade could be the proverbial trying to catch a falling knife idea. That never ends well. However I was willing to take the chance here, so we'll see what happens. ABX has broken the $10 level. Earnings are due the first week in August. Gold is showing no signs of stabilizing so this trade may simply just be a mistake. We'll see. Mentally I'm feeling OK. The McClellan oscillator had a nice move higher from the recent lows and that is saying this rally has legs. The weekly technical indicators for the major stock indices have turned around as well. So I'm of the belief that a summer rally has begun. Perhaps earnings will now be the catalyst for higher equity prices. That's a guess as usual. Waiting on GE earnings. It's possible that gold and silver are about to break down here. There is no buying interest and the indicators have rolled over again. If that is the case, we'll probably know pretty soon and I'll have to cut the loss on the ABX trade that I put on today. I'll be keeping an eye on things. Looks like there is trouble in the streets of Greece so we'll have to see if that affects the markets. I'll be watching what happens around the world overnight. Tomorrows blog will be later than usual due to a scheduled commitment.
Tuesday, July 14, 2015
Up we go as the Dow gained 75 points on light volume. The advance/declines were positive. The summation index is moving up. The short term technical indicators for the major stock indices have all turned up and are moving higher. The small stocks have shown relative strength and that's a positive. The only caveat is the light volume but it is summer. The positive expiration bias appears to be in place. I'd expect new all time highs to appear as we move forward. It won't be a straight line up but the tide has turned in my opinion. GE gained almost 20 cents on light volume. My GE July calls are now showing a very slight profit. I'll still be holding until the Friday earnings release unless we get some crazy upside in the next 2 days. Highly unlikely. Gold was little changed on the session despite a weaker US dollar. The retail sales report today was less than expected and the dollar sold off a bit. The XAU and GDX had slight fractional losses again on light volume. The gold shares remain oversold on a short and medium term basis. I am still considering the ABX October calls. Mentally I'm feeling OK. It seems that Greece and China don't matter anymore after 4 days up in row. We're due for a pause at the least. Perhaps the Yellen appearance before Congress tomorrow will throw some cold water on this parade. But I don't think that it will matter going forward. The trend is up and perhaps this is the summer rally that I was looking for a month ago. The technicals are pointing higher. Still no love for gold. Perhaps the malaise here will simply carry on. It will be risky to try the gold share calls. But what trade doesn't have risk? I'm keeping an eye on things. My guess is that the dollar will rally on the Fed testimony tomorrow. We also have the Fed beige book. So it will be a day filled with the Fed. We'll see what happens in the foreign markets tonight and see what tomorrow brings.
Monday, July 13, 2015
More upside to begin expiration week as the Dow climbed 217 points on light volume. The advance/declines were almost 3 to 1 positive. The summation index is now moving higher. I believe that we are back in the buy weakness mode. The decline has run its course in my opinion. The volume to the upside here has been light, so a return to test the recent lows could be in the cards. However prices are moving higher and we cannot deny that. Too late for the SPY July calls though. I could be wrong. GE was up 20 cents on light volume. My GE July calls are still losers but not as much as they were. Waiting on the earnings due Friday here. That is what this trade has turned into. Gold was off slightly on the futures despite the big gain in the US dollar. The XAU and GDX had slight fractional gains on light volume. The gold shares did turn around today, after selling off early. I'm still looking at the October gold share calls. Today was potentially the day for the ABX calls as ABX ran down to $9.75. I might try and purchase the October calls here tomorrow or Wednesday. Mentally I'm feeling OK. The market is still in the headline risk mode but I feel like the worst is behind us. Greece still has another deadline for it's bailout on Wednesday. This is an ongoing soap opera. I think that only a Greek exit from the euro would stir things up again at this point. Unless the Chinese stock market starts to crash again. We've got Yellen in front of Congress in a couple days but I do not expect any surprises there. Earnings are on tap from the major banks in the coming week. They could get things moving one way or the other. I was cautious as of last week but with the turnaround in the summation index and the major average technical indicators moving up now, the all clear signal has been given. It's possible that the gold shares simply followed the market higher today. Nothing has changed fundamentally there. Still oversold on a short and medium term basis. The options are certainly cheap enough but if continue to simply decline, that won't matter. I'll consider this idea again overnight. We'll watch the overnight action and go from there.
Friday, July 10, 2015
A relief short covering rally today as the Dow gained 211 points to finish off a wild week. The advance/declines were 4 to 1 positive and the volume was light. The China stock market snap back along with the potential Greek deal were the reasons given today for the rise. We'll take what we can get. Perhaps we'll know by Monday if the Greek deal is for real but that saga won't all of a sudden go away. As for China, half the stocks on their exchange aren't even open for trading. But considering the US market price action yesterday, today was encouraging. But we're still in the headline risk situation. I'd like to think that we are putting in a bottom here at the 200 day moving average. Perhaps the summation index can start to move higher again but until it actually does, we don't have the all clear just yet. GE was up 1/4 and the volume was light. Looks like I'll be holding on to the GE July calls until the earnings are out in a week. They are still showing a loss. Gold bounced around today but finished the session little changed despite a drop in the US dollar. The XAU and GDX had fractional losses again on light volume. The gold shares remain oversold on both a short and medium term basis. I'm still looking at the October calls for the precious metal shares. I may start placing my order next week. Mentally I'm feeling OK. This was quite a crazy week in the markets. Back and forth we went with volatility in the forefront. However where we go from here is what matters most. Option expiration week is coming up but I'm not sure the usual positive bias will appear. Plenty of economic data is on the agenda along with Yellen chattering in front of Congress. Not to mention the ongoing global concerns that plague the environment at the moment. So attempting to trade the SPY next week will be treacherous. I will probably have to wait until things calm down and we get a valid technical set up. I think that we will be moving higher next week but that is strictly a guess. Obviously, anything could happen. We'll once again have to follow the headlines over the weekend. Gold and the gold shares remain mired in a downtrend. The fundamentals are negative. There is no interest there. The time to buy things is when nobody else wants them. We are certainly at that stage with the precious metals complex. I'll be checking the charts over the weekend to determine if now is the time. Otherwise I'll most likely be holding the GE July calls until the earnings on Friday and staying out of any SPY July trades next week. Plenty to ponder this weekend. It's Friday afternoon in the summer and time for a rest.
Thursday, July 09, 2015
Another volatile trading session as the Dow started the day up well over 200 points only to give most of it back and finish with a gain of only 33 points on average volume. The advance/declines were positive. The summation index is heading lower. The price action today isn't a positive. So now this Sunday is the next last chance for Greece to stay in the euro. But that could change as it has already in the past and the effect is that markets are still being held hostage. I almost want to say that you can throw the technicals out the window in this type of game. The short term indicators have rolled back to oversold and staying there. It appears the path of least resistance is lower. GE added 1/8 on average volume. We were much higher early here as well. My GE July calls are still losers. Gold didn't do much today as the US dollar was higher. The XAU and GDX were mixed with slight fractional moves. Volume was light. Oversold and staying that way as well here. This condition is what I'm afraid might plague the major stock indices for some time. I'm still on the hunt for the October gold share calls. Mentally I'm feeling OK. Tomorrow should be lower for the stock indexes ahead of the Sunday headline about the Greek drama. This is getting to be like a broken record. Eventually this will be out of the way but we aren't there yet. Remain cautious and once again the sidelines aren't necessarily a bad place to be. I'm still holding the GE July calls but I am certainly not confident that this trade will work itself out. Getting close and going through the zero line on the summation index has once again proven to be a traumatic event. We aren't finished yet. Rallies are not holding and we continue to lower levels. The market will be a buy at some point but we haven't found that area yet. It is still a headline driven environment. Silver has made a 2 day comeback after breaking down from the consolidation zone. It's something to keep an eye on. SSEC had a nice gain yesterday but we will have to see if it was just a one day wonder. ABX looks like it's heading to $10 and I've got my eye on the October calls there. There is plenty to pay attention to this summer. No doldrums in July, that is for sure. So we'll see what comes out of the foreign arena tonight and close out a crazy market week tomorrow.
Wednesday, July 08, 2015
Crazy summer days as the NYSE had to shut down for 3 hours today because of a computer glitch. This is the world that we live in. Whatever we did yesterday was effectively erased as the Dow fell 261 points on good volume. The advance/declines were 5 to 1 negative. The summation index is heading lower. The short term technicals have turned back down for the major stock indices. Greece, China and now the US are all causing problems. I'm beginning to believe that we are at a point where the market is about to crack. The US market has held up well despite the troubles around the world. But after today, you can't say that anymore. Throw in the proximity to the summation index zero line and it's a recipe for trouble. I could be wrong. GE was off almost 60 cents on average volume. The uptrend line form January on the daily candlestick chart has been decisively broken. My GE July calls are now losers. This looks like it will be a cut the loss trade unless there is a dramatic turnaround soon. But that is highly doubtful with this market environment. Waiting another week for the earnings is probably not a good idea. Gold rose about $10 today on the futures as the US dollar was weaker. The XAU and GDX had fractional losses on lighter volume today. Oversold and staying there for the gold shares. Mentally I'm feeling a bit tired. Yesterdays market action gave some hopes for the bulls but today that has been wiped out. I do not see anything that would change the bearish scenario in the short term. Caution is advised and the sidelines isn't a bad place to be. It is looking like a worldwide sell off of stocks and commodities. A universal margin call if you will. We'll know when it's over when we get some type of panic sell off. Hasn't happened yet. The Fed minutes were a non event today, so you know we're not in the normal market circumstances. The safe havens of gold and the US dollar are not attracting money like they usually do. So it is a dangerous time to be playing this game as usual. No summer doldrums so far for this year. We'll keep an eye on all the headlines tonight and see what kind of surprises we get tomorrow.
Tuesday, July 07, 2015
A one day reversal to the upside today as the Dow gained 93 points on heavy volume. The advance/declines were positive. We were off 200 points within the first couple hours of trading today. It was quite an impressive comeback. Perhaps we now have an all clear for some more upside but the Greek drama remains. Greece now has until Sunday to work out a deal. Except nobody knows how that is going to happen. The TRAN turned around today and the small stocks did as well. The short term technical indicators have rolled back to the upside. But we are still in a headline driven environment. GE turned around as well and was up 16 cents on OK volume. The GE July calls that I purchased yesterday now have a slight gain. Gold was off over $15 today and we dropped below the important $1150 level at one point. The US dollar had a good session but did come off of its highs. Commodities in general took a hit today. The XAU fell 3 points and GDX lost 7/8. Volume was heavy. Silver broke support today and could be leading the precious metals complex lower. I'm still looking at the October gold share calls but will have to careful here because we could be in for a washout to the downside. Mentally I'm feeling OK. We'll have to see if the stock indices can build on the todays turnaround. We've got the Feds beige book tomorrow as maybe Greece can stay in the background for few days. Doubtful, but we'll see. We also have the Chinese stock market falling apart as well. Todays price action should lead to higher prices in the near term though. But the market will go where it wants. 8 days left in the July option cycle. We will have to see what the summation index has to say. I don't think todays action turned it back up yet. But the market turnaround was encouraging. Gold needs to hold on here or we could be heading much lower. That's a guess as usual but with the breakdown in silver today, gold probably isn't too far behind. We will keep an eye on things there. We'll see what happens overseas tonight and take it from there.
Monday, July 06, 2015
Another day, another Greek sell off as the Dow fell 46 points on average volume. The advance/declines were not quite 2 to 1 negative. We sold off hard on the open, with an over 150 point loss but it wasn't as bad as it could have been. We spent the rest of the session coming back. The summation index continues lower. Markets around the globe sold off on the Greek referendum results. It's still a headline driven market. However given the uncertainties, the market held up rather well. Perhaps the market knows more than we do. I'm not trying any SPY trades here. GE dropped almost 1/2 on light volume. I did place an order for the GE July calls and it was filled. So we'll see what happens. The relative strength for GE today was poor. But I have liked this technical set up for a while and today finally have entered the next trade. I may hold on until the earnings due on expiration Friday. Unless this thing tanks and then I'll have to take the loss. Gold rose $6 and the US dollar was a bit higher today. Not exactly a huge flight to safety. The gold shares found some life again as the XAU rose 7/8 and GDX gained 1/4. Volume was average. ABX had a strong session on better volume. I'm not going to chase the gold shares here. But it is possible that we have put in the bottom. Mentally I'm feeling OK. So we continue with the Greek drama and what will happen tomorrow? It is really impossible to predict what will happen. The way the stock market has held up though perhaps means that things will be getting better for prices before they get worse. That's a guess as usual. Technically the major stock indices remain oversold on a short term basis. Staying on the sidelines is an option and perhaps the best strategy at the moment. We are still in a zone where things could fall apart. I am trying the GE trade here but it appears that if it doesn't hold now, the uptrend line in place on the daily chart will be violated. We just nudged through it today. So tomorrow it will be important for GE to hang in there. Gold and the dollar did not react as strongly as one would suspect today. Perhaps the theory of Grexit has already been priced in. But tomorrow could be another story. We'll see how the foreign markets do overnight and await the next headline from Europe.
Thursday, July 02, 2015
Really just a waiting game today as the Dow fell 27 points on light volume. The advance/declines were barely positive. The employment report came in about where expected and wasn't a market event as it usually is. The stock indices are still being held hostage by Greece. The vote there supposedly on whether or not to stay in the euro is Sunday. And then what? How long will it take to count the votes and there still has to be some kind of deal on the debt situation there regardless of the vote. I took the cautious approach and did not make any trades before the long weekend here. We are still short term oversold on the major stock indexes. The summation index is trying to turn around here. GE was up 1/4 on light volume. Two weeks to go in the July option cycle with earnings due on expiration Friday. I still like the technical set up here and will get some calls if the price of GE hits the uptrend line on the daily chart at around 26.50. Gold fell $5 on the futures, while the US dollar was a bit lower. The gold shares found some buyers though. The XAU rose 1 1/4 and GDX gained 1/3. Volume was average. This is the first time in a while that we have seen the gold shares outperform gold. I'm still a fan of the ABX October gold share calls. But it is possible that GDX may be the safer play if there is such a thing. Something to think about. Mentally I'm feeling OK. I really think that the market is going to head higher from here regardless of the Greek drama. We're oversold and due for a summer rally to start. Plus the summation index appears to possibly be putting in a double bottom here near the zero line. That would mean the imminent collapse that I thought would occur at the beginning of the week isn't going to happen. I think that the fact that we saw absolutely no downside follow through from a down 350 market tells us so. I could be wrong. I think that next week I'll be looking to purchase some GE calls and perhaps the ABX calls as well. The market will still be at the mercy of headline risk. But the news could very well be viewed as positive and a relief rally with short covering could ensue. That is really the scenario that I think will happen. If traders wanted to sell they probably did it before this holiday weekend. That's my best guess at the moment. There isn't a lot of economic data due next week. Not that it matters in an event driven environment like this. I'll be checking the charts over the weekend along with watching the headlines out of Europe. It's a long summertime holiday weekend. Time for a break.
Wednesday, July 01, 2015
We started the month off with a nice gain as the Dow rose 138 points on good volume. The advance/declines were positive. The summation index continues lower but could turn around with a positive day tomorrow. It is beginning to look like Mondays decline was a one day wonder. The market is shrugging off the turmoil in Greece. Anything can happen with the vote in Greece over the weekend but it looks like the market has other things on its mind. We'll get the employment report tomorrow. The short term technical indicators for the major averages are starting to turn up from the oversold region. GE gained almost a dime on average volume. I did place another overnight order for the July calls but it wasn't filled. I still think that I'm going to attempt this trade in the next couple of weeks if the option premiums get to where I'd like them. The technical set up remains intact. Gold was off a few bucks on the futures as the US dollar had another good day. The XAU dropped 1 3/4, while GDX fell 1/2. Volume was average. The gold shares appear to be breaking down here and that can't be good for gold. But I'd still like to try the ABX October calls at some point here in July. Mentally I'm feeling OK. I'm getting the feeling that the market is going to go higher here. A 350 point loss with no follow through is not common. If we break down tomorrow, then this idea is wrong. But I can see a scenario where the Greek vote is to stay in the euro and the markets rally on Monday. We'll have to get through the employment report first though. So we'll see how the market does tomorrow and decide what to do from there. The employment report could have an effect on gold as well. A good number should help the US dollar and therefore depress gold. Or vice versa depending on the data. But I must say that things are not looking good for the precious metals and the fundamentals remain bearish. Then why attempt a trade with the calls? Things do not stay down forever but more importantly the gold shares are oversold on a short and medium term basis. The probability of some type of advance form these levels is better than 50% in my opinion. All we can do is put the odds in our favor because the markets as usual will go where they want. We'll watch what happens overnight, get the employment report tomorrow and then close out a shortened holiday week.