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.