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.