Monday, February 29, 2016
Weaker to end the month of February as the Dow fell 123 points on average volume. The advance/declines were positive though. The summation index continues to the upside. Trying to get above the 50 day moving average for many of the major stock indices. Some downside is expected as we remain overbought on a short term basis. The McClellan oscillator is also very extended to the upside. If we do remain lower into Thursday, perhaps we'll get a chance for the SPY March calls after all. Lots of trading before then though. GE was off 1/4 and the volume was average. Gold was up around $14 on the futures. The US dollar finished little changed. The XAU rose 2 points, while GDX added 2/3. Volume was good. I still think that the gold shares need to take a rest as they have been over extended for weeks now. Money has flowed into this sector for whatever reason. I'd wait for an oversold reading before chasing this group. Both short and medium term overbought. Mentally I'm feeling OK. Some more decline this week would set up the reverse head and shoulders pattern that may emerge in some of the major stock indexes. That looks to be the set up worth trading if it occurs. However I would expect to see some beginning of the month money flows in the next couple of days as well. Never an easy trade in this game. I'm still a believer that we are not about to see any major decline in the near term. I could be wrong but the technical indicators in my mind are not set up for any carnage at the moment. As always, things could change as we go forward. Foreign markets were mixed overnight, with weakness in Asia followed by a holding pattern for Europe. Oil rose today but it didn't seem to help the US equity market. As usual we'll keep an eye on overnight developments. Patience for now but we'll look for those SPY March calls towards the end of the week if things play out accordingly.
Friday, February 26, 2016
A pause for the Dow today as it fell 57 points on average volume. The advance/declines were positive though. The summation index continues to the upside. the overall market was stronger than the Dow. The small stocks continue to be leaders. The trend remains up. Still overbought and staying that way. This can go on for a while. Declines can be bought. It doesn't appear that we will get a chance to partake in any of the gains at this point. Although there is still plenty of time in the March option cycle, the odds of being able to purchase some index calls at a reasonable price diminishes with each passing day. GE was up over 1/8 on light volume. We have now barely made it above the 50 day moving average here. Ditto for the S&P 500. Gold was off $15 on the futures as the US dollar had a strong session. The XAU shed 1 2/3, while GDX lost about 3/4. Volume was heavy. Perhaps this is the beginning of a rest for gold and the gold shares. Mentally I'm feeling OK. All indications are that the stock indices will continue to head higher. Perhaps the next trade will be the SPY puts when we get to resistance at 2000 on the S&P 500. Unless we get a multi-day pullback and a short term oversold condition, it probably isn't worth it to chase the index calls here. Still three weeks to go in the March option cycle so there is time for a trade but my feeling is the optimum chance for the calls has passed. We will have to see how next week plays out. Monday will be the end of the month and Friday brings the all important employment report. I think that it would be best to not force anything and wait for a decent signal. Patience is required at the moment. I'll be checking the charts over the weekend as usual. for now it's Friday afternoon and time for a break.
Thursday, February 25, 2016
Up we go as the Dow gained 212 points on OK volume. The advance/declines were almost 3 to 1 positive. The summation index is moving up. Overbought and staying there for the S&P 500. It appears that the low made yesterday was the chance to own some SPY March calls. We are now getting above the 50 day moving average in the S&P. The next stop should be the 2000 level unless we see a complete turnaround here. I do not think that will happen. GE was up 1/2 on average volume. Getting above the 50 day moving average here as well. Gold was off $5 on the futures as the US dollar slipped a bit as well. The XAU added 2/3, while GDX gained 1/4. Volume was lighter. We still need a pause in these stocks. Mentally I'm feeling OK. It appears that the SPY March call trade has been missed. I'll simply have to stay on the sidelines until we get a decent set up. Maybe the puts will be the next trade. We are overbought but can stay that way for a while in up trends. There is still plenty of time left in the March option cycle. However I can't force a trade to happen. The Dow is the leader here and that usually turns out to not be a good thing. But time will tell. For now we'll sit patiently and await the next move. Most foreign markets were higher overnight with the exception of China which got whacked. It did not affect trading here. Oil was higher again and perhaps the market is taking its cues from there. We'll get a GDP revision tomorrow and close out the trading week.
Wednesday, February 24, 2016
A one day reversal to the upside today as the Dow opened lower and closed higher. The most watched index gained 53 points on average volume. The advance/declines were almost 2 to 1 positive. We were off over 250 early and it was quite a comeback. Needless to say this isn't the type of market action you see in a decline. The trend remains up for now. The summation index is moving higher. If you were nimble and brave enough, it looks like today was the day to purchase some March SPY calls. My ideal scenario for the timing purchase is not going to happen. GE was off 1/4 but also was much lower during the trading session. Still below the 50 day moving average here. Gold was up over $15 on the futures on the early fear factor. It dropped in the aftermarket. The US dollar bounced around but finished little changed. The XAU was up 1/2, while GDX added an 1/8 or so. Volume was pretty good. The gold shares finished well off of their highs and I still say they need to take a rest. Mentally I'm feeling OK. Volatility ruled the day but it was quite a comeback for stocks. The small stocks continue to show relative strength and that is a positive moving forward. Oil moved around again it seemed the market is once again taking its cues from the crude price. But tomorrow is another day. We're still short term overbought but trying to stay there even with yesterdays decline. I'm going to have to wait it out for a decent signal and I do not see one coming right away. We'll have to see if we get some follow through upside tomorrow. Asian shares were mixed overnight, while Europe was mostly lower. The major US stock averages are potentially building reverse head and shoulders patterns. If that is true, we could rally back up to the higher resistance at the 200 day moving averages. Hasn't happened yet but we'll have to keep an eye on it. We'll see what tomorrow brings.
Tuesday, February 23, 2016
Back to the downside today as the Dow fell 188 points on light volume. The advance/declines were 2 to 1 negative. The summation index is still moving up. Fears about oil and the banks resurfaced today but I don't think this is the beginning of anything meaningful lower. We were short term overbought and some pullback is expected. Perhaps it will be enough to get the SPY March calls. The S&P 500 remains in a range between 1950 and 1820 approximately. I do think that we will get through to the upside in the March option cycle. That is the idea for now. GE was off about 20 cents and the volume was light. Gold found buyers on the stock market decline as the futures rose $15. The US dollar was slightly higher. The XAU added 7/8, while GDX gained 1/3. Volume was average. I still think we need to take a rest here or at least trade sideways for a while. Gold and the gold shares remain overbought. Mentally I'm feeling OK. The advance/declines today were not as bad as a down almost 200 market would suggest. The small stocks did not have a leading roll today as well. The TRAN was not as bad as it could have been either. Putting it all together, I think that this action is simply going to relieve the overbought condition before we move higher again. It may take a few days. The ideal scenario for me would be weakness into Monday and that would be when to try the SPY March calls. So we'll see. There is no rush as option premiums are high. Foreign markets stalled as well but there is plenty of room to move to the upside on those daily charts. We'll watch the overnight developments and go from there.
Monday, February 22, 2016
Taking off to the upside to begin the week as the Dow climbed 228 points on lighter volume. The advance/declines were over 3 to 1 positive. The summation index continues higher. Short term overbought and staying there for the major stock averages. At this rate it doesn't appear as though we will get a chance for the SPY March calls. Resistance is at 1950 for the S&P 500 but I don't think that it will contain the rally. Sellers have disappeared. GE was up over 1/3 and the volume was average for lately. I am looking at the March calls here as well while we battle the 50 day moving average. Might be too late though. Gold was off over $20 on the futures as the US dollar rallied. The XAU was up about a point, while GDX added 1/8. Divergence with the metal here but the volume was pretty light. A pause is due here to be sure. Mentally I'm feeling OK. We've rolled into the March option cycle and all signs point to higher equity prices. A pullback may not occur. What I'm hearing in the media is that the rally may not be for real. That is a sure sign that it is. Most agree with my scenario of some type of move higher and then we move back down lower. But once again, if everyone agrees on some thing in this game, it isn't going to happen. What I'm not hearing is that we run higher from here to new all time highs. Some of the longer term technical indicators had pretty decent oversold levels from the recent lows. These readings usually led to a more extended gain for the major stock averages. It is something to consider. The option premiums are high at the moment and I would at least like to see a short term oversold condition before attempting the March calls. May not happen. However I do not want to chase anything here. So patience is the name of the game for now. Europe and Asia have rallied along with the US in the past couple of weeks. We'll keep an eye on things overnight and see if the rally continues tomorrow.
Friday, February 19, 2016
A day of balancing the books it seemed as the Dow fell 21 points on light volume. The advance/declines were about even again. The overall market was a bit stronger than the Dow. The summation index continues higher. We sold off early and came all the way back. Nothing has changed my view of the overall scenario. I still think that we're heading higher for the March option cycle. I'll be looking for some weakness next week to attempt the SPY March calls. GE was off a few cents and the volume was light. The 50 day moving average continues to contain things here. Gold was up just a bit on the futures as the US dollar was down just a bit as well. The XAU fell a point and GDX shed 1/4. Volume was light. Things need to pull back or pause in the precious metals complex. Still overbought here. Mentally I'm feeling OK. Not my best week of trading despite the gain in the SPY February call trade. Moving on, I'll try and remain patient for the next set up. I do think we're going to move up here for the major stock indices, despite the overall bearish picture. One of my worries is that this hypothesis seems to be the general consensus among the talking heads in the financial media. If everybody has the same point of view, you are guaranteed that it is wrong. So we'll see. Plenty of time for the March option cycle, so I really shouldn't be in any hurry. I'll be checking the charts over the weekend as usual. For now it's Friday afternoon and time for a break.
Thursday, February 18, 2016
A bit lower today as the Dow fell 40 points on average volume. The advance/declines were just about even. The summation index continues higher. We did break the down trend line that has been in effect since the beginning of the year this week in the S&P 500. The next expectation would be a pullback towards that line, perhaps to the 1875 level. That would give us a set up for the March calls. Of course that would be the ideal scenario and the market rarely cooperates in the trading game. We're approaching short term overbought in many of the technical indicators for the major averages. Patience for now. GE was off 1/4 and the volume was light. The 50 day moving average has contained things to the upside here for now. Gold found buyers as the futures rose almost $25. The US dollar was little changed again. The XAU gained 2 7/8, while GDX added a bit over a point. Volume was good. I still think that gold and the gold shares need a rest here. Mentally I'm feeling OK. The major US stock indices have broken their short term down trend lines. That isn't the case for the other major global stock markets. We will need to see the foreign markets climb higher if this rally in the US is going to have some legs. I do believe that will happen. But patience is advised for now as we are just about to begin the March option cycle. Anything goes tomorrow as it will be option expiration. We'll keep an eye on developments overnight and close out the trading week tomorrow.
Wednesday, February 17, 2016
The rally continues as the Dow tacked on another 257 points on good volume. The advance/declines were 5 to 1 positive. The summation index is now moving higher with some steam. The trend is up. I'll be looking for a pullback to purchase some SPY March calls. Of course it would have been nice to have held on to the February calls another day as the profit would have doubled. Had I been willing to take a bit more risk with another day of holding, it would have paid off. Hindsight is never wrong. GE was up 1/2 on average volume. At the top of the channel now, up against the 50 day moving average. Gold was up a bit on the session. The US dollar didn't have much of a change. The XAU rose 1 1/2 and GDX was up about 2/3. Volume was average. Certainly due for a rest here. Mentally I'm feeling somewhat disappointed for selling the SPY February calls yesterday. But what can you do? You have to keep moving forward. Two days left for the February option cycle. One thing to remember is that the longer term trend is lower now. All rallies must be viewed in that context for now. The short term trend is up. Foreign markets continue higher as well as things are moving in tandem globally. Oil is still bouncing around but doesn't seem to have the same effect that it recently has. We'll keep an eye on what transpires overnight.
Tuesday, February 16, 2016
Continuing higher after the long weekend as the Dow gained 222 points on average volume. The advance/declines were 4 to 1 positive. This should move the summation index back to the upside. Markets rallied around the globe for the past two trading sessions. The US market followed. The decline is over for now in my opinion. I did get rid of my SPY February calls today for a 95% profit. Of course I could have done even better as my exit wasn't all that good. With only three days left for the February cycle I simply got out. However I would not be surprised if we continue higher and these options gain even more. I really think that the selling is done for now. GE was up 5/8 and the volume was OK. Back into the trading range here with the boundaries consisting of the 50 and 200 day moving averages. Gold got slammed recently as the stock market slide has come to a halt. In the past two sessions the precious metal futures have lost over $40 as the US dollar has gained strength. The XAU shed 3 3/8, while GDX fell 1 2/3. Volume was heavy. The drop comes as no surprise as the technical indicators were extremely overbought and gold had started to move straight up. At a minimum we'll see consolidation here if not an outright decline. Mentally I'm a bit distracted as I had to go to the dentist again. But that can't be an excuse for my poor exit today. This trade had a terrible entry combined with a poor exit and still managed an almost 100% gain. That is why we play the game. Improvement on my part would have resulted in even more profit. Again, one of the keys is believing in your work and never giving up. Now that trade is history and we need to find the next opportunity. I'm looking at the March SPY calls since I believe that the decline has run its course. I do not think we'll simply go straight up from here but if we do get some pullback, calls are in order. Unfortunately the premiums are still pretty high with over fours weeks to go in the March option cycle. So I'll be keeping an eye on things. It is kind of a light week for economic data but we will see news on inflation. Make no mistake about the overall picture though. We'll probably see lower prices eventually as we move through the year. In Japan, the NIKK rose over 1000 points on Monday. That is incredible. However in bear markets rallies tend to spring up out of nowhere. I think Monday in Japan certainly qualifies for that. For the S&P 500, it appears the key level will be around the 1820 level. As long as that holds, we shouldn't see a major decline. But when that level is breached, you'll want to own some index puts. We'll keep an eye on things overnight and see what happens tomorrow.
Friday, February 12, 2016
The bounce finally arrived as the Dow rose 313 points on average volume. The advance/declines were 4 to 1 positive. The summation index is still heading lower but may be trying to turn around here. Retail sales were ignored as the stock market has a life of its own at the moment. The SPY February calls that I bought yesterday now have a slight gain. Poor entry timing on this trade is really working against me. The rally today was not exactly what I had in mind as it was orderly and not the short covering burst that I would have liked to see. I am holding this position over the long weekend. GE came back and gained over 3/4 on OK volume. We've held the 200 day moving average for now. Gold was off almost $10 on the futures while the US dollar was higher. The XAU gained 1 7/8, while GDX added 1/2. Volume was lighter than it has been. I do think that gold is going to run out of steam here. Very overbought and if the overall market starts to hold up, the reason to buy gold will evaporate. Time will tell. Mentally I'm feeling OK. One day doesn't make a trend but at least we stopped going straight down. If the positive divergence in the McClellan oscillator is for real, then the decline has ended. I do believe that is the case for now. My SPY February call trade is strictly short term and I will need to get out if we see some upside follow through on Tuesday. The short term indicators have turned up for the major stock indices. My thinking is that we will see some rally on Monday for the world markets and perhaps that will carry over into the US open on Tuesday. That is my thinking for now. Of course things could change over the weekend. I am also going to start looking out for the SPY March calls. If the summation index turns around here, the medium term picture will start to look positive as well. Hasn't happened yet but my guess is that it will. On the other hand, gold and the gold shares are due for a rest. They've had a nice run but are now getting some media exposure and that is usually a sign that the end is near. I'm not saying they won't go higher later. But right now it appears that the bulk of the gains are behind us. Plenty of time over this long weekend to check the charts and come up with some type of game plan for a shortened expiration week. 4 days to go, the risk is high and there are always other trades down the road. It's Friday afternoon and time for a break.
Thursday, February 11, 2016
Still a crazy market as the Dow fell 254 points on heavy volume. The advance/declines were over 4 to 1 negative. The summation index continues lower. I'm still not exactly sure as to what is going on here. We did come back from the abyss when the Dow was down over 400 points. The S&P 500 is trying to hang on at around the 1820 level. If we fail here things will get out of hand rapidly. I do not think that will happen this time around but perhaps later in the year. I could be wrong. I did buy some SPY February calls today but my timing was off. They are already showing a loss. My work says tomorrow will be an upside day. We'll see. GE fell 7/8 on heavy volume. We've broken below the trading range and are now trying to hold at the 200 day moving average. If GE is any indication of things to come, the market will be in even more trouble. Gold took off like a rocket as the futures soared over $50. That is the biggest move in quite a while. I will say that it is unsustainable to say the least. But what do I know? The US dollar was lower again. The XAU rose 3 1/3, while GDX gained 1 1/4. Volume was extremely heavy. Overbought and staying that way but I still believe the gold shares and gold are overdue for a rest. The flight to gold is impressive. Mentally I'm feeling a bit tired. Yellen spoke for a couple of days but she really took a back seat to market forces. Perhaps the focus returned to oil today as it hit new recent lows. The market did have quite a bounce intra-day when it was off by 400 points. There is now a possible positive divergence on the McClellan oscillator. However unless we see some upside soon, this divergence will be negated. Interesting times. My SPY call trade is for a bounce in the next couple of sessions, if we see one. A short covering rally will do the trick. We'll have to see how traders want to be positioned before the holiday weekend. There are only five days remaining in the February option cycle. It is possible that the retail sales number tomorrow will be ignored as well. Markets are still falling around the globe. I do feel confident in my own work here though and that is why I took the risk today. But in a market environment like this, anything goes. We'll keep an eye on the overnight action and close out the trading week tomorrow.
Wednesday, February 10, 2016
A mixed bag today as the market tried to rally but failed. The Dow fell 99 points on lighter volume. The advance/declines were slightly positive. The small stocks managed a slight gain and the overall market was stronger than the Dow. The summation index is still heading lower. I'm not sure what to make of the situation. For some reason I'd still like to try the SPY February calls if we see weakness tomorrow. But it is a tricky situation. Getting oversold on some of the short term technical indicators. However today was a one day reversal to the downside for the Dow. I'll ponder the trade overnight. GE was flat on the session and came off of its highs. Volume was light. Gold was off a couple bucks on the futures and the US dollar was a bit lower as well. The XAU gained a point, while GDX rose 1/3. Volume was lighter than lately. Gold and the gold shares are due for a rest in my opinion. Mentally I'm feeling OK. Make no mistake that this is a very difficult market environment to trade. With only six days left in the February option cycle, the risk is high. The timing will really have to be right on to attempt something here. If we get some weakness tomorrow, I will probably try the SPY calls. I do believe that we will rally on Friday according to some of my technical indicators. But I could be wrong. I again tried to get some of the February SPY calls today but canceled the order. Japan was weak again last night but the European markets were generally positive. Oil is dropping again but isn't the headline that it was. I still think that debt is the problem but that is just my view and not a fact. The equity markets are certainly acting in a strange fashion right now. Perhaps it would be best to simply stay on the sidelines. That will be something to think about overnight as well.
Tuesday, February 09, 2016
Up and down again today as the Dow fell 12 points on good volume. The advance/declines were slightly over 2 to 1 negative. Plenty of volatility here as the market is trying to make up its mind. The summation index is heading lower. We opened down, eventually were up 100 points and then fell back to basically unchanged. We've got Yellen tomorrow and that should move things one way or the other. I did place an order for the SPY February calls but later canceled it. Tomorrow is the ideal day to get these if this trade is going to work. Any weakness tomorrow can be bought for a short term bounce trade. That is my best guess at the moment. GE was up 1/8 on light volume. No trades here for now. Gold dropped $8 on the futures despite a weaker US dollar. The XAU fell 2 1/2, while GDX shed 3/4. Volume was heavy here. Very overbought on the gold shares and due for some drop or consolidation. Mentally I'm feeling OK. Crazy market conditions right now but I do want to try the SPY February call trade tomorrow if what I perceive are the proper conditions are present. If we get down to around the 1830 level on the S&P, I'll probably give it a shot. Risk is high here and time is running out in the February option cycle. With the summation index heading down we could simply keep falling. The game is never easy. Once again, there is something going on underneath the surface. We'll find out about it eventually but the market always knows more than we do. Japan got absolutely crushed overnight and the European markets declined as well. Interesting times. We'll see how it goes tomorrow and whether I can pull off this SPY call trade or not.
Monday, February 08, 2016
Just another crazy day in the markets as the Dow fell 178 points on very heavy volume. The advance/declines were 4 to 1 negative. This should turn the summation index back lower. It could have been worse as at one point we were off 400 points. Only a last hour comeback saved the day this time. We are short term oversold on some of the indicators but not all of them. I did place an order for some SPY February calls but later canceled it. I'm looking for a bounce trade here but probably missed it today. Obviously there is something going on under the surface that I am not privy to. GE was off just over 1/3 on lighter volume. Still in a trading range here. Gold soared during the session as the futures were up over $30, which also included the aftermarket rise on Friday. The US dollar was lower today. The XAU was up 1 1/2, while GDX added 3/8. Volume was good here again. However the gold shares finished well off of their highs and it looks like this run upwards is over. I could be wrong but the technical indicators are blown out to the upside and there is only one way to go from there. Mentally I'm feeling OK. I still may try a bounce trade this week if we head back down. My guess is that we got some short covering late today. My guess is the underlying problem here for the market lies in debt. The banks are getting crushed here and I believe that they are holding a lot of what will be worthless oil and gas paper. That's my theory for today. But that doesn't explain the drop in the small stocks and the tech shares. It could be a case of selling whatever you have to meet margin calls. This is all speculation on my part. The only real question is where is the market going and how can I make some profit from it. A bit more downside would put the short term technicals in a better spot to try something long. But there is no guarantee that we just don't keep going down here either. The game is never easy. Plus we have Yellen blabbering for a couple of days on capital hill. Perhaps simply sitting things out here is a more prudent course of action. However if we do get oversold this week before Friday, I am probably going to try the SPY February calls. The European markets plunged last night and I don't see any turnaround there tonight. Parts of Asia are closed this week for a holiday but we'll see how Japan reacts overnight. We'll see what tomorrow brings.
Friday, February 05, 2016
Still moving back and forth here as the Dow fell 211 points on good volume. The advance/declines were 3 to 1 negative. The summation index is still moving up though. The employment report headline number was lighter than anticipated but the market chose to focus on the stronger details. The reaction to the numbers is always more important than the numbers themselves. The overall market was weaker than the Dow and the small stocks got slammed. I expected higher prices today and we got just the opposite. Now I am not sure what to make of things. 1875 or thereabouts has held things for the S&P 500 lately. We are just about there now. The short term technical indicators have rolled over for the most major stock indexes. GE was off 2/3 on good volume. Right back into the trading channel for GE. Gold was up a bit on the futures but soared higher in the aftermarket. The US dollar bounced back today. The XAU rose 2 2/3, while GDX added 7/8. Volume was heavy again. Money is flowing into gold but there is plenty of resistance at 1175-1180. We are almost there. Not to mention a pretty solid down trend line on the weekly chart that spans 2 years at those levels. So the odds favor gold at least taking a breather soon. Mentally I'm feeling OK. 9 days to go in the February option cycle as expiration week is cut short by a day due to the presidents day holiday. The picture is now mixed in my mind for the overall stock market. I will have to check everything over the weekend to be sure. The action in most stocks today was negative and if we take out 1875 on the S&P 500, lower prices will follow. Whatever trades you make here have to be very short term due to the back and forth nature of the environment. I don't see a clear signal right now but that could change after some research in the next couple of days. It is a tougher than usual market to trade right now. Once again the sidelines isn't the worst place to be right now. But you don't make any money there. Perhaps 1875 will hold things up for the S&P but that would be a guess and not really supported by the technicals at the moment. There's plenty of work to do over the weekend. There isn't much economic data next week until retail sales on Friday. I'll try and relax for the next couple of days and be ready for next week. Right now it's time for a break.
Thursday, February 04, 2016
More bouncing around today as the Dow rose 80 points on good volume. The advance/declines were positive. The summation index continues higher. Oil is still a topic but it was lower and the stock market higher. However the Dow was stronger than the overall market and that is not a plus. But on the plus side, the TRAN soared and that could bode well for tomorrow. I don't have any idea how the employment report will be received or what it will say. The market reaction will be the key. I still think this market is going higher. GE was up 1/2 on good volume and is once again trying to break out of the top of its trading range. If GE is a precursor, then tomorrow should be an up session or stocks. Gold was up another $15 on the futures and is now above $1150. Another good drop in the US dollar today. Perhaps the dollar is telling us to look out for a weak jobs report tomorrow. The XAU was up 2 1/2, while GDX gained 3/4. Volume was heavy again. Price and volume tell the story and that means that the rise in the gold shares is for real. That said, the short term technical indicators here are extremely overbought and a pause is overdue. Mentally I'm feeling OK. The major stock indices are short term overbought but that doesn't mean that they can't continue that way for a while. I still do not have a decent signal to trade off of though. If we see some decline, I'd be willing to attempt the SPY February calls. But time is running out and there will be only 9 trading days left in the February option cycle after tomorrow. So we'll see. The signs today are pointing towards higher prices tomorrow but the market as usual will go where it wants. I've remained patient so far so there is no reason to rush into a trade here. Foreign markets were mixed overnight but leaning to the positive side. All eyes on the employment report tomorrow.
Wednesday, February 03, 2016
Up, down and all around as volatility ruled the day. The Dow finished up 183 points on heavy volume. The advance/declines were positive. The small stocks were lower on the day though. The summation index is still heading up. Not sure what to make of todays action except that is almost impossible to trade off of it. We were off almost 200 points early on and then bounced around before coming all the way back and then some. Perhaps this morning was the chance to get some SPY February calls but it was impossible to know that at the time. There is no clear technical signal at the moment. Oil made a comeback and that market is gyrating out of control as well. So the market atmosphere is turbulent to say the least. Fridays jobs report should provide some more excitement. GE was up 3/8 and the volume was average. Still in a trading range here. Gold found buyers as the futures here rose $15. The US dollar got crushed today for its worst session in quite some time. The XAU soared 3 3/4, while GDX gained over a point. Volume was very heavy. Oil and gold rose in tandem for a change. Overbought for gold and the gold shares now. Mentally I'm feeling a bit tired. Trying to figure out exactly what is going on here is a headache. Today could have been the day to buy the index calls but the short term technical indicators are still overbought. I am still trying to remain patient and wait for a decent signal. It seems the trading is becoming more compressed and is traveling at a speed that is not matching up with my techniques. Or perhaps I am simply not up to the task at the moment. The Dow was much stringer than the overall market today and that is not a plus. Oil and currencies are bouncing around violently. The environment is pretty tricky right here and now. There is nothing wrong with heading to the sidelines until things sort themselves out. We'll see how things go overnight and tomorrow as the markets set up for Fridays employment report.
Tuesday, February 02, 2016
Lower today as the Dow shed 295 points on average volume. The advance/declines were 4 to 1 negative. The summation index is still moving higher. We are right at the short term rising trend line for most major stock indices. What happens next will be the key as to if we will get a chance for a SPY February call trade. If the line doesn't hold we can wait for an oversold signal to get long. The short term technical indicators here have begun to roll over. I'm still a believer in the calls at some point here. But I don't want to be early. If the short term line holds then this idea is off. GE was off 3/8 and the volume was average for lately. Gold and the US dollar ended the day basically flat on the session. The XAU was down 1 1/8, while GDX dropped 1/3. Volume picked up to the downside. I think that the gold shares simply followed the overall market lower. Mentally I'm not 100% as I had to go to the dentist and have a tooth pulled today. Needless to say, that is a distraction. But as always, the market doesn't care. I don't think that today is the beginning of anything big to the downside. I am going to try and remain patient for a good signal to try the SPY calls. If for some reason things fall apart here, then my prognosis on things here is wrong. There is still plenty of time in the February option cycle for things to get short term oversold and a call trade to be put on. Obviously we did not see any beginning of the month money flows today. Foreign markets were generally lower yesterday. It seems as though oil is back on center stage for some reason. We'll see how long that lasts.
Monday, February 01, 2016
A day to digest the huge gains of Friday as the Dow was off 17 points on light volume. The advance/declines were barely negative. The summation index is moving higher. The trend is up. Any declines can be bought. If we get some weakness this week perhaps the SPY February calls will be back in play. The employment report on Friday will be the focus for the week. Plenty of time left in the February option cycle but we will have to wait for a solid set up. GE was down almost 1/2 on lighter volume. We're still in a range here of 28-29. Sideways for a while now and that is the problem sometimes when trading the GE options. Gold was up $13 on the futures as the US dollar fell back today. The XAU rose 1 3/8, while GDX gained around 1/3. Volume was light. Todays gains were probably a reflection of the weaker dollar. That's my guess at least because nothing has changed when it comes to gold. Mentally I'm feeling OK. I suppose that I'll keep an eye on things ahead of Friday to see if anything interesting develops. The short term technical indicators for the major indices are now overbought. But I don't think there is some big decline coming up. With the turnaround in the summation index, the market has the all clear for higher prices going forward. The weekly charts are looking bullish, with plenty of room to move up on the technicals. We will simply have to wait and see if we get enough pullback in order to get long before the February expiration. That is the idea at the moment. We'll keep an eye on the overnight developments and go from there.