Friday, September 18, 2015
Plenty of selling today as the Dow lost 290 points on extremely heavy expiration volume. The advance/declines were a little over 2 to 1 negative. That tells a story that the decline was not as bad as it seemed. The breadth wasn't as horrible as it should have been for a market close to 300 points down. The summation index continues higher. The latter half of September is notoriously weak and we should see that come into play this time around. But my thinking is that this will set us up for getting some calls. I could be wrong. GE fell over 1/2 on very heavy volume. We'll let the short term overbought condition work itself off and than take a look at the November calls there. Gold was up $8 on the futures despite a rise in the US dollar. The XAU and GDX had slight fractional gains on lighter volume. The usually seasonal strong period of August/September for gold and the gold shares has been a sideways affair this year. I finished off closing out the ABX October call trade by dumping my remaining options for a 95% loss. That ranks up there as the worst trade of the year. Way too much money on one idea and I compounded the mistake by purchasing more options at a lower strike price because I was so sure that idea would work. What happened was ABX got very oversold and stayed there. That doesn't take away from the fact that my tactics were flawed. The market, whichever one you're in, goes where it wants. Hopefully with that trade out of the way now, I can focus on the next profitable idea. Mentally I'm feeling OK. The daily candlestick charts of the major averages now have a bearish pattern as opposed to just a single dark star. It implies lower prices moving forward. Will we test the recent lows now? I did not think so before but we will have to wait and see. There is a good chance that today was simply an expiration related decline. Mondays price action will be important. It looks like that buying the SPY puts after the announcement yesterday would have worked. However the market was moving very fast and the short term nature of that trade kept me on the sidelines. Gold found buyers this week but we have not seen a sustained rally there for months. So it would be hard to say that this is the beginning of something long lasting there. I'll be checking the charts out over the weekend to try and come up with some ideas for the October option cycle. For now it's Friday afternoon and time for a rest.