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.