Monday, October 05, 2015
The market took off to the upside today as the Dow gained 304 points on heavy volume. The advance/declines were over 7 to 1 positive. The summation index is moving higher. A double bottom is in place for all the major stock indices. Declines can be bought in my opinion. The S&P 500 has broken through the downtrend line that began in August. That doesn't mean that we will move straight up but it does mean that the tide has turned. Short term overbought now for the stock indices but we could stay that way. I would expect some weakness at some point this week but I think that buyers will be waiting. That's a guess as usual. I sold my SPY October calls this morning for a 65% gain. Should have held them longer. GE led the way higher as there was positive news on the stock. It gained 1 1/3 on extremely heavy volume. GE was a precursor for the overall market this time around. The time for the November calls has passed and I missed it. Perhaps if it gets oversold before the November expiration the calls can be purchased. Gold was off just a bit on the futures as the US dollar was slightly higher on the session. The gold shares were higher though, as the XAU rose 2 1/3 and GDX was up 2/3. Volume was good again here. The gold shares are showing better relative strength here and that's a positive. Mentally I'm feeling OK. Out of the SPY trade now. Both the entry and exit were not good on that trade. I really should have realized that today was going to be strong, given the change of direction in the summation index. But you have to move on. I may try the calls here again before expiration if we get some weakness into early next week. The next technical expectation from here for the S&P 500 would be some type of move back towards the downtrend line that was just broken. If that does occur, then trying to calls during expiration week may be worth the risk. As usual, the market will go where it wants. Barring some unforeseen catastrophe though, we're heading higher. Gold remains in the background and uninteresting. I think that the gold shares simply followed the overall market higher. Time will tell if it's a sustained uptrend or not. It is possible that a bottom is in place here though. We'll see if the foreign markets follow the Dow higher overnight.