Friday, January 29, 2016
Markets around the world rallied on a surprise easing move by the Japanese. The Dow took off like a rocket and did not look back. It climbed almost 400 points on very heavy volume. The advance/declines were 8 to 1 positive. The summation index has turned around. All signs point to higher prices. Todays GDP report was pushed into the background. There was no retest of the recent low and the SPY February calls were the right trade. Unfortunately the premiums never made it back to where I was comfortable to purchase them. Another missed opportunity. We still have three weeks in the February option cycle but the best time has passed. I do not think that we'll get another decent set up but you never know. Declines can be bought. GE rallied as well, up 7/8 on good volume. Just above $29 now as it tries to break through the $28-$29 channel that it has been in. Gold was up a couple bucks on the futures despite a huge rise in the US dollar. The XAU up another 1 1/4, while GDX added 1/3. Volume was lighter today. Mentally I'm feeling frustrated once again as I have missed out on this good move higher. The day we went down 600 intra-day was the opportunity to be aware of. Perhaps my busy schedule the prior week had me not at the top of my game. But there are no excuses in this endeavor. The market doesn't care as usual. The short term technical indicators are overbought but not by much. There is no overhead resistance until we get to 2000 on the S&P 500. So perhaps there will be a trade before expiration but the ideal time has passed. We should be positive early next week with beginning of the month money flows. Maybe a SPY put trade will present itself but it will be against the tide now. Plenty to think about over the weekend and I'll have to try and regroup. At least my ideas are back on the right track at the moment. I'll check all the charts and try and come up with something for next week. For now it's Friday afternoon and time for a break.
Thursday, January 28, 2016
Back and forth we go as the Dow gained 125 points on average volume. The advance/declines were 2 to 1 positive. The summation index is still trying to turn around here and I do believe that it will. The short term technical indicators are now mid-range for the major stock averages. I'm hoping for some weakness to get the SPY February calls but the market isn't cooperating at the moment. It may simply be too late for this trade. GDP tomorrow should provide the excuse for some movement. The small stocks are acting better here and that's a positive. GE was up about 1/4 on average volume. Basically sideways for three weeks for GE. Gold was off a couple bucks on the futures and the US dollar was lower yet again. The XAU was off a point and GDX shed 1/3. Volume was average. Gold itself is now short term overbought. Mentally I'm feeling OK. I'm still trying to get long here but the market just isn't helping me out. It has been a whipsaw kind of week so far. We do have the end of the month tomorrow, which could make things even more interesting. It could go either way. It looks like I'll have to wait until next week to put on a position regardless of what happens tomorrow. There really isn't a clear signal at the moment. I am sticking with the theory that things will work out to the upside though. Asia was mixed and the European markets were lower last night. Oil has made a slight comeback this week. We'll keep an eye on things overnight and finish off the week and month tomorrow.
Wednesday, January 27, 2016
A decline after the Fed as the Dow lost 222 points on good volume. The advance/declines were not even 2 to 1 negative. The breadth is starting to improve and that tells me that the SPY February calls are still the game plan. The summation index is also still trying to turn around here. However the small stocks are showing relative weakness at the moment. So we have plenty of crosscurrents. Oil went up today but stocks dropped anyway. So perhaps that inverse price relationship is over. Time will tell on that. Another down day tomorrow would roll over the short term technical indicators. GDP on Friday should be the next market mover. GE was off 1/3 and the volume was OK. Gold futures rose $10 today as the US dollar was down for the third day in a row. The XAU rose 1 1/4, while GDX added 1/4. Volume was average. The gold shares have gone straight up the past 6 days and that will not last forever. I don't know why. There really aren't any fundamental reasons for money to be flowing that way. Markets always go where they want to. Mentally I'm feeling a bit tired. Perhaps we are going to test the recent lows and if so that would be the ideal opportunity to purchase the SPY February calls. We will probably need to go down there in a hurry though. Sideways here is a possibility as well. I would like to wait for the GDP report before taking a position but if we are weak tomorrow, I might just do it then. Of course my hypothesis could be wrong and we simply continue down to fresh new lows. Always plenty of questions in trading. But I am pretty convinced that the turnaround from the 600 point intra-day downside last Wednesday was the bottom for now. We'll see if the foreign markets follow the US lead lower overnight.
Tuesday, January 26, 2016
Back to the upside as the Dow gained 282 points on what now passes for average volume. The advance/declines were 5 to 1 positive. The summation index should be trying to turn around again. I did place an overnight order for the SPY February calls but the weakness in the overnight futures did not carry through to the open. The order wasn't filled. It appears that the chance for the SPY calls has passed as the summation index is in an area that should provide some stability. We'll get the Fed tomorrow and GDP on Friday. There is still plenty of time to attempt the SPY February call trade but unless we see some weakness it will simply be another missed opportunity. I would not chase it here. GE was up 1/4 and the volume was light. No trades here for now. Gold was up $15 on the futures as the US dollar was weaker today. The XAU was up 2 1/3, while GDX climbed almost 2/3. Volume was good. Overbought now short term on the gold shares. Mentally I'm feeling OK. The stock market seems to be following the price of oil right now. I will say that once this relationship is well known, it will probably cease to exist. The markets reaction to the Fed statement will be more important in my opinion. Also the summation index moving to the upside will be another clue that calls for February will be the way to go. Technically for the S&P 500, the short term indicators have moved off of their oversold condition and are about mid-range. At the moment it doesn't appear that the recent lows will be retested. But as usual anything can happen in this game. Asian markets were weak again last night as the Shanghai broke to fresh new lows. We'll see if there is follow through tonight. The European markets held up though. Interesting times. We'll wait for the Fed tomorrow and see if we get a chance for a trade.
Monday, January 25, 2016
We began the week with a thud as the Dow fell 208 points on lighter volume. The advance/declines were 5 to 1 negative. The summation index tried to turn around but after todays action it will be heading back down. A move lower here is what we'd like to see as it will give us a chance to purchase some SPY February calls. I don't know if we'll make it all the way back to the 1820 level on the S&P 500 but anything close to that would be good. We've got the Fed on Wednesday and it is probably a good idea to let that happen before taking any positions. The lighter volume today could be a sign that the selling is petering out. GE was off 20 cents on light volume. I'm not in a hurry to trade GE anymore as it is an issue that moves sideways for an extended period sometimes. I'm guessing that we are now in one of those time frames. Gold was up a dozen on the futures as the US dollar was a bit lower. The XAU added 1 1/8, while GDX rose 1/3. Volume was average. There are still no compelling reasons to buy gold. There has however been some interest in ABX as it is up over 50% from its low of $6 last September. Mentally I'm feeling OK. Now the hard part comes as we have to try and figure out how low we go this week. I don't think that the ideal scenario of lower prices with a higher McClellan oscillator will play out. The oscillator almost made it back to the zero line but has been turned back as of today. The breadth was pretty negative today, so I'm expecting lower prices going forward into this week. So we'll see. I do believe at some point this week I'll be getting some SPY February calls. The Fed should provide some movement this week as well as the GDP report on Friday. Hopefully I'm up to the task. We'll keep an eye on the foreign markets tonight and go from there.
Friday, January 22, 2016
A strong move to the upside as the Dow gained 210 points on good volume. The advance/declines were 8 to 1 positive. We can now say with certainty that the decline has ended. The summation index is trying to stop moving down and turn around. It appears that the chance to purchase the SPY February calls was missed however declines can now be bought. If we get some weakness in the next four weeks, there may still be an opportunity to do that trade. I would not chase things here though. You really had to be on top of things Wednesday to make that trade work and I wasn't up to the task. We'll see if there is another chance. GE fell 1/3 on heavy volume. It did come off of its lows though. Earnings were not celebrated. Now there was a case of saving some money by not doing the trade. I had been looking at getting some calls before the earnings report. Which once again shows the risk of trading ahead of the earnings. Even though the technical indicators were oversold, buying the calls would not have worked today. Gold was off a couple bucks on the futures. The US dollar was higher today. The XAU and GDX had slight fractional gains on very light volume. Mentally I'm feeling OK. Markets around the world rallied overnight as things were really extremely oversold. The Japanese stock market rallied over 900 points in one session. That is incredible. However I must warn you that in down markets, rallies appear out of nowhere. I believe that to be the case for the events going on at this time. I do not see markets going back to challenge the old highs anytime soon. I do expect more weakness as the year goes on. But for now the decline in the S&P 500 has run its course. If we get some downside next week, I'll be looking at the SPY calls. We've got the Fed next week and that could be a market mover one way or the other. The first look at 4th quarter GDP will be on tap as well. Plus the end of the month maneuvering. So we'll see what happens. For now everyone will breath a sigh of relief as the downside has stopped for now. As I said yesterday, we now have bullish hammers on most of the weekly major index candlestick charts. Perhaps if I'm patient, there will be a shot at making a trade in the February option cycle. I'll be checking the charts over the weekend to come up with the game plan for next week. For now it's Friday afternoon and time for a break.
Thursday, January 21, 2016
The Dow rose 115 points today on heavy volume. The advance/declines were 2 to 1 positive. The summation index is still moving lower. The overall market was weaker than the Dow. I still think that we're moving higher from here. I'm hoping for another move lower to purchase some SPY February calls. I did have an order in today bit it wasn't filled. I do think that the market is trying to stabilize here. The ideal scenario would be a lower print on the S&P 500 combined with a higher McClellan oscillator reading. I don't think that's going to happen. So perhaps the opportunity has passed but time will tell on that. GE was up over 1/2 on good volume. The earnings will drive this issue tomorrow and perhaps the overall market as well. I did not get the calls here as I had wanted. The premiums are higher than normal due to the volatility. We'll see what happens tomorrow. Gold was off about $5 on the futures. The US dollar was off a bit but was higher early. The XAU was up 1/2 and GDX was barely higher. Volume was pretty light. Mentally I'm feeling a bit tired. It has been a pretty wild week in the market so far. How we finish things tomorrow will be important. The weekly charts for the major stock indices appear to be putting in hammer candlestick patterns. That would be bullish going forward, which would fit in with my end of the decline scenario. So we'll have to see how it goes. The foreign markets are still going down. Especially Asia. Some stability there would also bolster the bullish cause here. Although the summation index is still heading lower we are getting to the point where it will need to turn around. Perhaps we are approaching that level. Now I don't think that things will simply go straight up once we get turned around. But there should be opportunities to own calls and make profits. There is still a lot of time left in the February option cycle. Do be aware that if the volatility declines, that will also start to erode some of the option premium. So timing as always will be key along with paying close attention to what is going on. I would not chase strength tomorrow but if we sell off early, it may provide the chance to get long. We'll see. Hopefully the foreign markets stop falling overnight but the markets, as usual, will go where they want.
Wednesday, January 20, 2016
A crazy day as the Dow fell over 500 points, then recovered most of that only to drop back in the final half hour. We finished the session with a loss of 249 points on extremely heavy volume. The advance/declines were shy of 3 to 1 negative. The summation index continues lower. Early on the carnage was significant as global markets were clobbered overnight. There seems to be a global liquidity squeeze that just won't let up. Todays intra-day comeback was impressive though. Whether it was short covering or investors stepping in, it looked like something that you would see at the end of a decline. The small stocks led the way back and that is positive. I now do think that the decline has ended and will be looking to purchase some SPY February calls on weakness tomorrow. I could be wrong but I don't think so. GE was off 1/2 on very heavy volume. I canceled my open order for the February calls here. I will reconsider this trade overnight. It has to be done ahead of the earnings on Friday if I'm going to attempt it. Gold found a bid on the sell off in the stock market. The futures were higher by around $15. The US dollar finished the day little changed. The XAU rose 1 1/4, while GDX was up 1/3. Volume was good. I doubt that this is the beginning of an extended up trend. One the stock market settles down gold will probably drift. Mentally I'm feeling OK. Quite a day in the markets as it looked like at one point the possible crash scenario may have been a day late. However with such a dramatic comeback beginning at mid-day, that did not happen. To me, that was a game changer. I'll be looking to buy some SPY February calls tomorrow. The McClellan oscillator is also very oversold and due to turn around. The only thing that would change my view would be another collapse tomorrow with no comeback. I do not think that will happen. Whether or not I try a GE call trade as well will be determined by me tonight. Again, the risk here is higher because it's an earnings play. But GE is very oversold as well and could help turn around the overall market if the report is viewed favorably. But that's a lot of ifs. We'll see if the foreign markets can hold up tonight as the worldwide sell off continues. Once again we are in a zone that I have no idea of the reasons for the market action. We've been oversold and haven't been able to break out of that condition. But I do think that the end of the decline is near if it wasn't today. It will be another challenging day tomorrow. Hopefully I'll be up to the task.
Tuesday, January 19, 2016
A volatile start to the week as the Dow bounced around and finished the day with a gain of 27 points on heavy volume. The advance/declines were 2 to 1 negative. The summation index continues lower. We tried to rally today off of the short term positive divergence in the McClellan oscillator but could not hold on. My check of the charts over the weekend revealed that there is a chance that we could have one more final wash out before we get going to the upside. The odds do favor that the decline has ended though. However we have to look at all possibilities and with continued poor breadth it's possible for one more down draft. So the puzzle still remains unsolved for now. We did not crash today and that's a plus. If we get a nice rally tomorrow, the lows are probably in. GE was flat on the day on average volume. I did place an order for the February calls here but it wasn't filled. I'm leaving an open order in overnight. Earnings due Friday and I would like to have a long position before then. Gold was off a couple bucks on the futures as the US dollar was slightly higher. The XAU fell 2 1/2, while GDX shed 2/3. Volume was good. The drop in the gold shares does not bode well for gold. Gold and the gold shares are dead money. It looks like the gold shares are as low as they could possibly go and still nobody wants them. Mentally I'm feeling OK. I'm back to the normal schedule. I do believe that this week is the key as to where we are going for the February option cycle. Getting calls will be the proper choice. The timing will be the overall challenge. If we do move higher from here, waiting for a pullback will be required. If we get some high volume washout to the downside, getting in near the bottom will be the strategy. We are going to have to let the market dictate the trade in the SPY. There is also an extra week in the February option cycle to factor in. So as usual it won't be easy. I'd like to own GE calls before Friday as it is oversold and good news on the earnings front should be rewarded. However it is a risky ordeal as the earnings can cut both ways. So we'll see. The market did shrug off bad news from China and that is a plus. We'll keep an eye on the overnight action as always and go from there.
Friday, January 15, 2016
Expiration Friday and the Dow got clobbered. The most watched index fell 390 points on extremely heavy volume. The advance/declines were 5 to 1 negative. The summation index continues lower. But didn't I just declare the market decline over just yesterday? I did. I also said that there could be another near term low with possible divergences setting up. That's what I think today was. We did get a lower intra-day low in the S&P 500 but the McClellan oscillator reading was higher. That's a short term positive divergence. Now I could be completely wrong in my prognosis. If the stock market crashes on Tuesday or continues with another day like today, my end of the decline hypothesis is incorrect. That said, I could be looking at buying some SPY February calls on Tuesday. GE lost 1/2 on good volume. There's still a point and a half here until we get to $27. Gold saw some interest as the futures rose $15. The US dollar was slightly lower at the close. The XAU and GDX had slight fractional losses on light volume. The gold shares still have no interest and the fundamentals remain negative in my opinion. Mentally I'm feeling very tired after a long, busy week. I will not be spreading myself thin like I did this week again anytime soon. Full attention must be paid to the market. Earlier this week I alluded to the fact that the powers that be may try to influence the game this week because it was expiration week. I believe todays price action was a reflection of that. Running things down allowed the major players to exit their January option positions at the best prices. It is something that cuts both ways depending on the market slant. You cannot fight big money. You can though observe and try to piggyback if you can. There is obviously something going on here behind the scene that we are not privy to. I'm sticking with the technical indicators and they say that the decline is now behind us unless we crash on Tuesday. The crash scenario only can happen technically when we go through the zero line on the summation index and we just did. So it is a possibility but I am banking on the extreme oversold condition of stocks here to stage a turnaround. I could be wrong but it will sort itself out next week. That, I am pretty sure of. There will be much work to do over the weekend. Charts must be studied and the trade for Tuesday must be set up. So there will be plenty to ponder. There will be an extra day to think about things with the Monday holiday. For now it's Friday night and time for some rest.
Thursday, January 14, 2016
Todays bounce was more like it as the Dow gained 227 points on very heavy volume. The advance/declines were 2 to 1 positive. The summation index is still heading lower but the McClellan oscillator did turn around. We've gone through the zero line on the summation index but I now believe that the decline has ended. Now we may close marginally lower than todays low in the days to come but this down draft is done in my opinion. My technical indicators have reached oversold levels that aren't usually seen and ones that do mark the end of declines. We'll probably go lower as the year wears on. However for now I'll be looking at calls going forward. GE gained over 3/4 and the volume was good. If it heads back down, the February calls could be the next trade. Gold dropped almost $15 and the US dollar was a bit higher. The XAU lost 1 1/2, while GDX fell 1/2. Volume was average. Gold just can never get going. Mentally I'm tired. There is only so much you can do at a time. So my guess is that the decline stops here. I do think that it will prove to be the correct choice. If we do have new near term lows there should be some positive divergences that set up. That will be the opportunity to purchase some SPY February calls. That could be my next trade as well. We'll have to wait and see how things play out. We'll see if the foreign markets can rally after the Dow overnight.
Wednesday, January 13, 2016
Heading down as we go through the zero line on the summation index. The Dow fell 364 points on extremely heavy volume. The advance/declines were almost 8 to 1 negative. The bounce was weak yesterday and the breadth numbers didn't lie. We are getting near the 1880 level on the S&P 500 where I thought that perhaps things would hold up. But we are on dangerous turf. The technical indicators are very oversold and there isn't any upside from those oversold levels. Collapse is a term that would best describe the environment. Some readings are getting off the charts. We should see a washout at some point but I'm not going to try and guess when that will be. Caution advised. GE was off 3/8 and the volume was good. Maybe we will get down to $27 here and I can try the February calls. Earnings due a week from Friday. Gold gained back what it lost yesterday as the US dollar was flat. The gold shares didn't follow as both the XAU and GDX barely moved. Volume was light. Still no love for the gold shares. Mentally I'm still overbooked this week and feeling tired. My guess here is the powers that be will look for the best expiration level for the market to take profits. So Fridays close could get interesting. But I would not try any trades right now because we are in a zone of no return. We could go 500 points either way in a hurry when things get like this. It is a rare time indeed. If you have a long term view on things, you can start looking for bargains. But be aware that things could get even lower as the year goes on. So we'll see. I wish that I could be of more help but my focus isn't all there right now due to external circumstances. My January prognosis for higher prices to begin the new year was wrong anyway. So hold on to your seats. It will be interesting to see what happens around the world tonight. Stay tuned.
Tuesday, January 12, 2016
We bounced around and ended the day higher as the Dow gained 117 points on very heavy volume. The advance/declines were negative though. Not sure what to make of it but the breadth hasn't been positive lately. The summation index is still heading lower. The jury is still out on what will happen here. I'm still cautious due to the close proximity to the zero line for the summation index. GE was up a few cents and volume was average. Gold was off around $8 on the futures as the US dollar was little changed. The XAU dropped another 1 1/2 and GDX shed 1/3. Volume was average for lately. It appears that the rush to gold is over. Mentally I'm feeling tired as I have a busy schedule this week and it is taking its toll. You can only do so much. I think that the bounce that we have seen so far is anemic. It doesn't bode well if you're looking for a bullish future in the medium term. We need to see some stronger upside soon or I believe this market will simply roll over again. Time will tell on that. It looks like Europe is following the US lead, with the Asian markets still moving down. We'll keep an eye on the overnight developments as usual.
Monday, January 11, 2016
A mixed bag today as the Dow gained 52 points on heavy volume. The advance/declines were 2 to 1 negative though. The small stocks were lower. The summation index continues strong to the downside. Getting even more oversold each day and some kind of decent bounce is long overdue. It is expiration week and expect some more volatility. I would expect a 200+ point upside move for some day this week, considering the extremes in the short term indicators. That's my best guess at the moment. GE was up 1/8 but finished well off the highs. Volume was good. Gold was off around $10 on the futures as the US dollar rebounded. The XAU fell 2 3/4, while GDX shed 1/3. Volume was a bit above average. Mentally I'm feeling tired as I did not sleep enough and have many non market commitments this week. It takes a toll. You really need to devote yourself to the game if you want a realistic chance for profit. Nothing less than your best effort is required and expected. It is another reason why I will wait to roll into the February option cycle for the next trade. I'm looking for a bounce and sooner rather than later. The only trouble will be the zero line in the summation index. It spells market melt down is we swiftly travel through it. We are there right now. The only outcomes will be for things to stop and turn around or crash. So now is a time to really keep an eye on things. It's a danger zone. Even if we get the bounce that I'm expecting things could turn right back around and get ugly. The sidelines offer safety as usual. We'll see what happens overnight and take it from there.
Friday, January 08, 2016
The market tried to bounce today but it just didn't happen. The Dow fell 167 points on heavy volume. The advance/declines were 2 to 1 negative. The jobs number was better than expected and we began the day higher. But the selling came in immediately and continued. The summation index is heading down. At this rate we will be heading for the zero line here again and things could get worse. Oversold, staying there and that is a problem. I'm still looking at the 1880 level on the S&P 500 as a major area. If that doesn't hold we'll be dropping in a hurry. Expiration week coming up and hold on to your seats. I don't know what is worse. Continuing to drop or trying to rally and failing. Something is happening under the surface that I don't know once again. I'm still advising caution. GE got sold off again, down 3/8 but with lighter volume than yesterday. Oversold here as well. I'll consider the February calls over the weekend. Gold was off $4 on the futures, while the US dollar was only slightly higher. The XAU was off 1 1/3 and GDX fell 1/3. Volume was lighter. Gold should retreat once we get a bounce in the overall market. Mentally I'm feeling OK. Quite a negative week to begin the new year. It's ominous in my opinion. We are overdue for a short term bounce as any rally attempt is being sold. Like I said, I don't know what is going on here. Things could get worse if we go through the zero line on the summation index. We are getting close. Monday should be interesting. My advice is that the sidelines are best for now unless you want to try and pick a bottom. If that's the case, I'd look for some calls at the 1880 level on the S&P if we get there. For me, after already starting the year with a loss, I'm going to wait until the February option cycle. Considering that China held up overnight and we still fell pretty good today tells me that something is wrong somewhere else as well. Where that is, I don't know. It will all come out eventually. The time to buy is when everybody is selling. But I don't know if the selling is completed. I wish I could be of more help. The stock market is in a free fall. Tread lightly. I'll be checking the charts over the weekend as usual. For now it's Friday afternoon and time for a break.
Thursday, January 07, 2016
Continuing to fall and picking up speed as the Dow dropped 392 points on extremely heavy volume. The advance/declines were 7 to 1 negative. The summation index is heading down. Oversold and staying there. How much further can this go? The recent lows are at around 1880 for the S&P 500. That would be a good place to start to look for some support. This is beginning to look like a repeat of the markets drop back in August caused by the Chinese yuan manipulation. Same thing here. It's too late to get short but there will be quite a bounce at some point. I don't know when that point might be. Employment data due tomorrow and I suppose anything goes with the market reaction to that. We'll have to get through tonight first. GE got clobbered and fell 1 1/4 on very heavy volume. Getting oversold here in a hurry. I might have to try the February calls here next week. However the next support is at $27 with the 200 day moving average and we are still a couple points away from that. It's something to consider. Gold found buyers on the fear factor. The futures here rose about another $15. Back above $1100 but not a lot of noise about it. I'd expect gold to lose steam once the markets settle down. The US dollar lost a point today as well to support the rise in gold. The XAU added 1 2/3, while GDX gained 2/3. Volume perked up. I myself would have to see a lot more gains before I believe that gold has turned around. Mentally I'm feeling OK. The TRAN is still weak and the small stocks are getting pummeled. Quite a bearish beginning to the new year. The Chinese stock market is in free fall and trading has been halted a couple times in the past few days. That is a problem. I thought maybe we would see some kind of bounce here because some of the short term indicators are at extremes. That is dangerous but it is where we are. Even if we get a bounce I'm not sure how long it would last. There are no buyers at the moment. So we'll see. Caution is still advised and the sidelines are a safe place as always. Of course you don't make any gains there but you don't lose anything either. We'll brace ourselves for what comes out of China overnight and see how the market reacts to the employment data tomorrow.
Wednesday, January 06, 2016
Continuing lower as the Dow dropped 252 points on good volume. The advance/declines were about 3 to 1 negative. The summation index is heading lower. Oversold, staying there and the market is in trouble. I have no idea why. The Fed minutes today were basically a non event. Employment news due Friday. I can't say that I have a good feeling about how the year has begun. I sold my SPY January calls for a 99% loss. One of my goals for the year was to limit the big losses and my first trade violated that. I'm certainly not happy about the outcome. Poor entry and just as poor exit. It doesn't get any worse than that. My bullish view of a Santa Claus rally and beginning of the new year strength was dead wrong. GE dropped today as well, off 1/2 on good volume. We're back to the 50 day moving average here and it will be important to hold on. Gold found some interest as the futures gained $15. The US dollar was off slightly on the day. Perhaps gold as a safe haven is coming into play here. We'll need to see more upside to believe that this is anything more than a short term blip. The XAU and GDX had small fractional gains on light volume. The gold shares are not leading the way higher and that is usually not a sign of strength. Mentally I'm feeling frustrated as a big loss to start off the year isn't what I had in mind. I should have exited this trade as soon as the technical indicators started to roll over. But I was firm in my belief that a rally would occur. Always stick with the technicals. So where do we go from here? We are short term oversold so a bounce would not be out of the question. In the short term the odds favor calls at the moment. But with the summation index starting to head lower it appears a decline is in progress. The TRAN hitting fresh recent lows today isn't a positive either. Caution is probably the best way to describe how to go forward from here. Weakness in China is being blamed for the decline but there is probably something going on besides that. Lower commodity prices are also given as a reason. What we do know is that money is leaving stocks whatever the reasons. 2016 is getting off to a rough start and I don't think this will be a good year for the bulls. The January options expire next week so I will probably remain on the sidelines and wait for the February cycle. We'll see if the overseas markets follow the Dow lower and go from there.
Tuesday, January 05, 2016
A mixed bag today as the Dow gained 9 points on average volume. The advance/declines were positive. The small stocks were weaker on the day, not a good sign. It was pretty much a meandering session. At least we didn't have downside follow through to yesterdays debacle. Getting short term oversold on the technical indicators but a case can be made for further downside. My SPY January calls remain on life support, with the only question of whether they will expire worthless or not. GE was pretty much flat at the close. The indicators have rolled over here as well with room to go lower. Gold was up a couple bucks on the futures. The US dollar had a strong day to the up[side. the XAU and GDX had slight fractional moves lower on light volume. Mentally I'm feeling a bit tired, did not sleep well. Santa Claus failed to appear this year for the stock market. That is not a good sign in my book. It never is when the usual bullish seasonal patterns don't show up. So I will have to keep that in mind going forward with the trades. The summation index did turn back down yesterday but not by much. I think that the price action tomorrow will be important for the short term picture. If we can hold up then perhaps we'll get some traction higher going forward. If not, the bears will be in control. So stay tuned. The foreign markets were mixed but they too did not collapse after Mondays down draft. Needless to say I don't have a firm grasp of what exactly is taking place here. We'll get the Fed minutes tomorrow and that has the potential to be a market mover. Then Fridays employment report. So there will be reasons for the market to move. As usual the direction is the question. Unfortunately I don't have a good answer at the moment.
Monday, January 04, 2016
The market got clobbered to begin the 2016 trading year. The Dow fell 276 points on heavy volume. The advance/declines were 2 to 1 negative. We were off over 400 during the session. Todays action should turn the summation index back down. However the breadth once again was not as bad as a down 276 market would suggest. Bad news from China was the excuse. The Santa Claus rally didn't show up this year and that usually is not good news for the stock market. My SPY January calls are dead. It isn't the way I wanted to start the year. I'll hold onto them until we get a reflex rally, if that happens. GE was off 3/8 and the volume was good. I'm still considering getting some calls here but we'll need to see the indicators oversold on at least a daily basis. Gold found buyers on a flight to safety as there were some negative weekend headlines from the Middle East. Precious metal futures rose $13 and the US dollar gained 1/3 as well. The XAU rose 1 1/8, while GDX added 1/3. Volume was OK here. Probably just a one day affair for this sector. Mentally I'm feeling OK. The comeback in the final hour was a positive for equities after the previous two days saw just the opposite. I don't think that it is the beginning of a rally though. But who knows? I could be wrong. But the short term technical indicators haven't gotten completely oversold yet. Plus we are at risk for another negative headline at any time. However that particular risk is present all the time. The technicals say there is more work to do to the downside. The only thing that would negate that would be a 200 plus point move to the upside tomorrow. I suppose today is a happy new year for the bears. Plenty of economic data out this week, capped off with Fridays employment numbers. We'll see how things shape up overnight as all the major stock exchanges were lower yesterday. Could be a wild ride.