Friday, April 29, 2016
We got some downside follow through today as the Dow fell 57 points on good volume for a change. The advance/declines were negative. We were down well over 150 points during the session but made a last hour comeback. Short term oversold on some indicators. The recent breadth has not been as bad as the decline has been. I'm looking for a short term rally at the beginning of next week. Right now I think that any weakness Monday can be bought for a bounce trade. I'll probably be looking at the SPY May calls to start the next month. The decline here has been short and quick for now. I don't know if it will actually be the beginning of something more sustainable. Time will tell on that. GE was off 1/8 and the volume was light. Gold took off to the upside on a still weaker US dollar. It appears that the precious metal is finally breaking out to the upside from its sideways congestion zone. That would coincide with the dollar breaking down from the support at 94. It appears that the rally we've seen so far in gold this year is for real. The XAU was up almost 6 points, while GDX added 1 1/2. Volume was just a bit higher than average. Mentally I'm feeling OK. An interesting end to the month as volatility picked up in the last two days. Once again I must admit that I don't know why. My thinking is that we'll see some type of rally attempt in the beginning of next week and after that, who knows? My theories haven't been working lately though. Technically the short term indicators have either rolled over or are oversold for the major stock indexes. The small stocks, which were acting poorly lately compared with the big caps, are now showing some relative strength. Overall it remains a very mixed bag. Three weeks to go in the May option cycle so the premiums are where we want them for trading. There is a little volatility built into the prices now though. Some Asian markets were closed overnight and Europe was weaker. Something is going on here that we'll find out about in due time. Plenty to ponder over the weekend. I think that you have to be extra nimble trading right now. Do not fall in love with positions. I'll be checking the charts over the weekend to come up next weeks game plan. for now it's Friday afternoon and time for a break.
Thursday, April 28, 2016
To the downside today as the Dow fell 210 points on better volume. The advance/declines were 2 to 1 negative. The summation index may be moving sideways now. GDP was a little light and Japan didn't add more stimulus. However even though we sold off early, the market did make it all the way into positive territory. The final couple hours saw the market fall off a cliff. The advance/declines didn't support such a big drop today. I must admit that we are in a spot where I don't have a firm grasp as to what is going on. The short term technical indicators have now rolled over for the major indices. The small caps are already oversold. I'm inclined to believe that rallies can be shorted now. My ideal scenario for buying the SPY May puts does not look like it will happen. GE was off few cents and the volume was light. Gold was up $17 on the futures as the US dollar broke through the important 94 level. The XAU rose 3 1/3, while GDX gained a point. Volume was heavy. If the dollar continues to fall here it would be a positive for gold. Gold hasn't broken out of its congestion zone yet though. Mentally I'm feeling OK. I'm not sure this is the beginning of the down trend that I'm looking for but it could be. Some of my short term indicators will be oversold already. Perhaps today was some end of the month selling. If so we should see some more tomorrow. Not exactly knowing what is going on here doesn't exactly inspire any confidence in trading it. I'll probably let tomorrow go by and try and regroup over the weekend. If the US dollar does continue to drop, that would be a positive for stocks in my mind. But I cannot rule out a multi-week decline as we are almost in the month of May which usually isn't a good one for stocks historically. Foreign stocks were mixed with Asia falling from their highs and Europe coming back off of their lows. We'll see if we get some downside follow through as we close out the month tomorrow.
Wednesday, April 27, 2016
The Dow gained 51 points today on better volume than we've seen lately. The advance/declines were 2 to 1 positive. The summation index is heading higher. The Fed came out with no change in interest rates. The rest of what they had to say can be interpreted either way depending on if you're bullish or bearish. The overall market was weaker than the Dow. That has been the case for a while. The news on earnings was negative and there was every reason for some kind of sell off. The market has been resilient despite poor numbers. This says that prices will go higher. The small stocks have been relatively weaker and that should eventually lead to a decline. But I do think we'll go up in the near term. GE was basically flat on light volume. Gold was up a few bucks on the futures as the US dollar was a bit lower. The XAU rose 1 1/3, while GDX added 1/4. Volume was lighter than average. Mentally I'm feeling OK. We'll get the 1st quarter GDP report tomorrow morning and that should get things moving either way. The small stocks are certainly oversold here and a bounce there could be coming. The advance/decline line for stocks continues to make new highs and that is bullish. However on the weekly small stock charts, some of them are showing potential head and shoulders tops. Theses haven't been confirmed yet but it is something to keep an eye on. Also big cap leadership is a late stage bull market symptom, not something that usually leads to a strong leg up. So the signals all around are somewhat mixed. I'll make the case for some more upside near term followed by a decline. If we can get to new all time highs or near there on the S&P 500 with light volume, that will be what we are looking for to purchase the SPY May puts. That's the scenario that I'm waiting for. We will just have to wait and see if that happens in the next few days. Foreign markets were mixed with Asia lower and Europe higher. We'll see how the markets react to the GDP number tomorrow.
Tuesday, April 26, 2016
Waiting on the Fed it seems as the Dow gained 13 points on light volume. The advance/declines were 3 to 1 positive. The first hour saw a jump up and then right back down again. The rest of the day was a meandering affair. The summation index should be moving back up after today. I do think that the market will rally from here for a bit. Overbought and staying that way. I would like to see a light volume attempt to set new highs on the S&P 500. That is the set up in my mind for the SPY May puts. We'll just have to wait and see if the market cooperates. GE was up almost 1/4 on light volume. Gold rose $5 on the futures as the US dollar was lower. The XAU added 1 7/8, while GDX gained 1/2. Volume was average. Perhaps we'll see some movement in gold after the Fed as well. Basically sideways in gold itself for the past two months. Mentally I'm feeling OK. Small stocks were mixed to day with the tech names leading some of the indices there lower. Perhaps the earnings from AAPL after the bell will get things going to the upside there. RUT had a good session. Add very good market breadth today and you can see why a case can be made for higher prices in the near term. The expensive option premiums have led me to not try the SPY May calls here although that could be a mistake on my part. Like I have said, there's always a chance that we break out to the upside through the overhead resistance. However at this juncture I'm placing the odds on that as very low. I could be wrong and often am. I expect nothing new from the Fed tomorrow. The GDP report may be more of a market event. Foreign markets were mixed overnight. We'll see what the Fed has to say tomorrow.
Monday, April 25, 2016
A quiet start to the week as the Dow fell 26 points on light volume. The advance/declines were 2 to 1 negative. This could turn the summation index sideways. Waiting on the Fed here basically. I think that we are going to move up this week after the Fed. Ideally I'd like to see us move towards new all time highs on light volume. That would potentially set up the SPY May put trade. Of course there's always the chance for a break out to the upside as well. However we would have to see the volume pick up on any breakout. GE lost a few cents on average volume. Holding the 50 day moving average here so far. No trades planned for GE at the moment. Gold gained about $10 on the futures as the US dollar was lower. The gold shares didn't follow as the XAU shed 3/4 and GDX was off 1/8. Volume was pretty light though. I don't have any trades in the pipeline here either. Mentally I'm feeling OK. The technical indicators have rolled over for the small stocks to a larger extent than the big caps. However it does look like things could turn back up here. That is a really short term view of things right now. The Bollinger bands on some of the small stock indices are contracting. This implies a pretty good move one way or the other. Which way and how soon are the questions. There is plenty of time in the May option cycle to put on a trade. I think that I will let the Fed and the GDP report pass before trying something but my thoughts could change on that. I do think that waiting to buy some index puts is the right move for now. Foreign stocks were weak overnight but not excessively so. We'll keep an eye on the overnight developments.
Friday, April 22, 2016
After selling off in the morning the Dow made a comeback and finished the day up by 21 points. The advance/declines were 2 to 1 positive. Volume was light. The summation index is still trending up. It was a mixed bag as the NASDAQ was down almost 40 points. We are getting a lot of crosscurrents with the numbers right now. Earnings were poor for the over the counter crowd but that did not lead to an overall decline. GE was lower on its announcement as well but it did not lead to big cap selling. With positive breadth and the failure to sell off despite bad news, this market appears to be poised to head higher. When bad news can't drive things down, what will? Perhaps my view of getting the SPY May puts is simply wrong. GE was off about 1/4 on better volume. It did however finish well off of its lows set early in the morning. Perhaps the market is telling us to get some calls here. Gold dropped $15 on the futures as the US dollar held the 94 level and is headed back up. The XAU lost 1 3/4, while GDX shed 2/3. Volume was average. If the dollar continues higher that will put a lid on gold. Mentally I'm feeling OK. Small stocks down, big caps holding up and the TRAN higher as well. The signals are as mixed as you will see them. The overall breadth is implying higher prices and the summation index is still moving up. With that we have to give the benefit of the doubt to the bulls for now. I think what happens when we get to the 2125 level on the S&P 500 may tell the story. But that's a guess, nobody knows for sure. The RUT was higher today as well so even the small caps are somewhat mixed. I will say once again though that when the big caps are in the lead we are closer to the end of a rally than the beginning. The timing for the completion of the rise is always the toughest question. I'm guessing it will occur in the May option cycle but that could be wrong. There is the possibility that we shoot through to new all time highs. Volume would really have to pick up to make that happen. I just don't see it at this point. We've got the Fed next week and 1st quarter GDP. Plenty to ponder over the weekend. I'll be checking the charts to look for some clues as to what to trade next. For now it's Friday afternoon and time for a break.
Thursday, April 21, 2016
Falling from the recent highs today as the Dow dropped 113 points on average volume. The advance/declines were negative. The summation index is still moving up. The small stocks showed good relative strength so I don't think that this is the beginning of something big. But what do I know? The short term technical indicators for the major averages have rolled over but remain overbought. My thinking is that this is a pause and we will still head higher going into the end of the month. I would like to see the 2125 level on the S&P 500 before trying the SPY May puts. But the situation is fluid as always. GE dropped 1/8 or so on better volume before tomorrows earnings. Your guess is as good as mine as to what happens here tomorrow. Gold was off about $5 on the futures as the US dollar was a bit higher. The XAU rose a point and GDX added 3/8. Volume was good. Mentally I'm feeling OK. No news from the ECB today, just business as usual. Still lots of time for the May option cycle. The ideal scenario would be some type of negative divergence for the S&P 500 or the McClellan oscillator. That would give us a signal to take the short position. There is a possibility that we simply run up and blast through the overhead resistance as well. However I don't think that scenario is the most likely. With the TRAN and the NASDAQ trailing the big stocks, the picture isn't as bullish as it could be. The volume would also have to pick up on a break out and volume has been lacking lately. On the bullish side the A/D line has broken out to new all time highs. You cannot ignore that either. So as usual the trading is never easy. I'm still considering the next trade but I am leaning towards the short side. May generally shows some weakness at some point. So we'll see. Foreign markets were mixed overnight with somewhat of a bullish bias. We'll close out the week tomorrow.
Wednesday, April 20, 2016
We finished off the highs of the session but the Dow still managed a gain of 42 points on good volume. The advance/declines were positive. No real news to speak of. The summation index continues higher. We're still short term overbought for the major averages. GE was flat on the day and the volume remains light. Earnings out on Friday. Gold was flat on the futures session but dropped in the aftermarket. The US dollar held the 94 level once again and was higher on the trading day. The gold shares had a one day reversal to the downside as they opened higher and closed lower. The XAU lost 1 1/2, while GDX shed 3/8. Volume was good. No trades in mind here. Mentally I'm feeling OK. Not much else going on at the moment. The extra week in the option cycle really adds to the premiums and makes trading early in cycle not the best idea. Unless there is a really solid signal, patience is the prudent course of action. There is no reason to trade just for the sake of trading. I'm still leaning towards the SPY May puts in the next couple of weeks. Foreign markets were generally higher overnight, with weakness in China. We'll see what the ECB has in store for tomorrow.
Tuesday, April 19, 2016
Overbought and staying there as the Dow gained 49 points on light volume. The advance/declines were 2 to 1 positive. The summation index continues higher. The small stocks were laggards today and that's a warning sign. But there is nothing to say that we can't go higher in the near term. The S&P 500 has made it to the 2100 level with the next stop at roughly 2125. That is where I will look at the SPY May puts. Until then there is time to wait with an extended extra week option cycle for May. GE was up a few cents and the volume here remains light. Gold rose $16 on the futures as the US dollar was lower. The dollar remains at support of 94. That is the key level to watch. A break below there could send gold higher. The XAU rose 4 1/2, while GDX gained over a point. Volume was good. The gold shares are on another leg up but time will tell on how far we go. Gold itself has yet to break out of a sideways trend. Mentally I'm feeling OK. Breadth for the overall market continues to make new highs. That is one of the positives right now. Now if the small stocks were breaking out as well, that would be very bullish. But it has been my experience that when the Dow and the S&P 500 are leading the way, caution is advised. That doesn't mean that we will drop tomorrow but when the next negative divergence sets up it may be worth paying attention to. On the flip side, a high volume break through the 2125 level on the S&P would be bullish and SPY calls should be bought. We will have to let the market tell us what it wants to do. Patience, at least for this week, is warranted. Asia and Europe were higher overnight, following the US market. The ECB will issue a statement on Thursday. That could be the next market mover.
Monday, April 18, 2016
Up we go as the Dow gained 106 points on light volume. The advance/declines were almost 3 to 1 positive. The summation index is still moving up. We opened lower and closed higher for a one day reversal to the upside. The drop in oil did not affect the US market as it did the Asian exchanges. We still have to get through the 2100 and 2125 levels on the S&P 500 to get the all clear. The NASDAQ is lagging here and the volume is light. Let's just say that I'm not convinced that we are going to break out to the upside immediately. I do not trust light volume rallies. GE was up 3 cents on light volume. Waiting on earnings Friday. I'm probably not going to try any trades here but you never know. Gold was little changed despite a drop in the US dollar. The XAU was up 1/2 and GDX was flat. Volume was very light. Gold should probably move sideways before the next move either way. That's a guess as usual. Mentally I'm feeling OK. Not much economic data due this week. We will get an ECB statement later in the week. The short term technical indicators remain overbought for the major averages. We had a consolidation in price last week and we have now broken out to the top. The problem here is that the volume is lacking. I know I have said this repeatedly but it is important. So we'll see what happens. The weekly chart for the Dow has moved straight up and that will not last. Even if the Dow was to hit a new all time high in the next few weeks it would not be confirmed by the TRAN. The TRAN is well off of its all time high. What I'm saying is not to trust this rally and be prepared to get short or buy some puts in the near future. Europe was higher last night as it mimicked the Dow turnaround. We'll keep an eye on the overnight action and go from there.
Friday, April 15, 2016
Just a bit of downside today as the Dow fell 29 points on light volume. The advance/declines were slightly positive. The summation index continues higher. We are overbought on the short term indicators. However there is a potential negative divergence in the daily RSI for the S&P 500. We will have to see if it pans out. On a medium term basis, some of the indicators are over extended but others not so much. It is going to take a lot more volume to get through the 2100 and 2125 levels on the S&P with some conviction. It's possible that could happen but it will have to get going soon. We are approaching the sell in May and go away time period. GE was flat and the volume remains light. Perhaps I'll attempt a trade here before the earnings numbers next week. The more prudent course of action would be to wait for a signal though. Gold was up almost $10 on the futures as the US dollar was lower. The XAU rose 2 points, while GDX gained almost 2/3. Volume was lighter than it's been. Mentally I'm feeling not 100%. Some kind of hay fever or something. I don't know, I've never had it before but my mind is foggy. We'll roll into the May option cycle Monday. My confidence is down after the latest failed trade and that is never a good thing. But you've got to move on. The markets move along and we traders must do the same. Plenty of earnings in the next few weeks and that will probably tell the story for the overall market. The recent relationship with the price of oil and the Dow may have run its course. At this point I really do not have a solid game plan going forward. I suppose that the best idea would be to wait for a decent signal again and see if I can execute it properly next time around. There is no hurry at this point to do anything. Option premiums will be high. It is most likely time to sit back and wait for the next perceived opportunity. I'll be checking the charts this weekend as usual. For now it's Friday afternoon and time for a rest.
Thursday, April 14, 2016
It was a day to consolidate the recent gains as the Dow rose 18 points on light volume. The advance/declines were negative. The summation index is still moving up. No volatility today as we traded in a narrow range for the whole session. Price on the S&P 500 is right up against the top of the Bollinger band. Upside could be limited from here for a few days. The short term technical indicators on the major averages are back to overbought. One thing lacking here is volume and that could be a problem down the road if it doesn't pick up. GE barely moved and the volume was light. Gold dropped $20 on the futures as the US dollar was up just a bit. Gold was overbought and the dollar has risen the past 2 days. The XAU shed 2 1/2, while GDX lost 2/3. Volume was average. Mentally I'm feeling a bit tired. Losing trades don't help the cause. We've got option expiration tomorrow and then we roll into a five week May option cycle. So there is no hurry to put on the next trade. Not to mention that we are now in earnings season and markets get moved around by the numbers. We won't get into the validity of the earnings. We are only interested in what the price action is and how we can profit from it. We've got resistance at 2100 and then 2125 for the S&P. If we can get above 2125 there is no overhead resistance. You can buy calls when we get through that number. I do not know when that will happen but be ready when it does. April is generally a positive month so maybe we can get there in the next couple of weeks. That's a guess and we would really have to see volume pick up to have a chance at a break out. Foreign markets were generally higher overnight. We'll see how the expiration goes tomorrow.
Wednesday, April 13, 2016
Another strong day to the upside as the Dow gained 187 points on OK volume. The advance/declines were 3 to 1 positive. The summation index is moving higher. The economic numbers were weak, oil dropped and the US dollar was higher. No of that mattered as the Dow moved up. The market moves in its own way. I sold my SPY April puts for a 90% loss. Holding puts during expiration week is like playing with fire. It will work in severe downtrends but I got burned. I should have dumped this position yesterday when it was obvious that the consolidation was breaking to the upside. My trading tactics were poor once again. The next stop for the S&P 500 should be the 2100 level. GE was up over 1/8 and the volume remains light here. Earnings are due here next Friday. Gold fell over $15 on the futures with a stronger US dollar. The XAU lost 1 1/2, while GDX shed 2/3. Volume was average. The short term technical indicators for the gold shares are overbought. Mentally I'm feeling frustrated for taking such a big loss on the recent SPY put trade. I somehow lost my sense of urgency yesterday when I really should have bailed out of the position. Perhaps I was distracted by the dentist appointment. Or maybe it was the case of being in the trade and wanting it to work at all costs. It could have been a slight winner if I would have executed it properly. The sideways consolidation with a dropping McClellan oscillator should have been a warning sign. When the oscillator drops, price should go with it. Other technicals were mixed or mid-range. I suppose my interpretation was OK at the beginning of the trade but I didn't make the necessary adjustments. It is simply another loser. Now where do we go from here? The May option cycle has an extra week in it so the premiums will be high. May usually isn't a bullish month for stocks. I'll have to wait for the next clear signal and go from there. Foreign markets rallied strong overnight. It appears as though we are beginning a world wide rally in stocks. Most charts have turned up and the technical indicators have as well. Perhaps earnings here won't be as bad as forecast. But that is usually how the game is played. Lower estimates are followed by numbers that exceed the negative predictions. And the game goes on. We'll keep an eye on things overnight as usual.
Tuesday, April 12, 2016
The market took off to the upside today as the Dow gained 164 points on better than lately volume. The advance/declines were 4 to 1 positive. The summation index is now heading back to the upside. It appears that the market followed the rally in commodities, most notably oil. My SPY April puts got clobbered. There was a chance to sell them early with a slight profit but I did not take advantage of it. It is now a cut the loss trade. Holding on to puts with the expiration week usual positive bias is just plain dumb. I should have seen the urgency to simply get out of this position. My mind did not focus, for whatever reasons. Stocks moved up across the board and that is a good sign for the bulls. GE was up about 1/8 on light volume. Gold and the US dollar both finished the session little changed. The XAU rose 1 1/4, while GDX added a bit more than 1/8. Volume was average. Mentally I'm feeling off a bit. Back from the dentist and not happy about hanging on to this losing trade. 3 days left in the April option cycle and it appears that we are going to break out to the upside from this recent congestion zone in stocks. Unless we see a sharp turnaround tomorrow, the converging Bollinger bands are the precursor to an upside break out. The small stocks are still much lower overall on a medium term basis than the big caps. So it is possible that any impending rally is not to be trusted. But first we need to get finished with this week and this trade. The breadth recently has been decent despite the sideways to down action. That should have been a clue that I paid attention to. The bearish candlesticks on the S&P 500 the past 2 days have not panned out. The short term technical indicators on the major averages have now turned back up. I'm expecting higher prices in the near term. We'll get some economic data out tomorrow along with the Feds beige book. Regardless of the numbers, it should be interpreted as bullish by the market. Asia and Europe were both higher overnight and I'd expect them to rally following the US overnight. We'll see what tomorrow brings.
Monday, April 11, 2016
It was a one day reversal to the downside as the Dow opened higher and closed lower. The most watched index fell 20 points on light volume. The advance/declines were positive though. The summation index is still moving down. The Dow was up 150 points in the morning but just like Friday, it could not hold onto the gains. The small stocks showed relative weakness throughout the session and that was a key once again in my opinion. The overall market was weaker than the Dow. My SPY April puts are back in the black after losing half of what they were worth on Fridays close. A moderate loss turned into a moderate gain. That is the volatility of having a position during expiration week. GE was off a few cents and the volume remains light here as well. Gold found buyers for whatever reason. The gold futures rose about $15 with a slight decline in the US dollar. The dollar is at support of 94 and needs to hold here or there will be a pretty good drop in my opinion. The XAU soared 4 1/2, while GDX gained 1 1/4. Volume was OK. The gold shares have broken out from the sideways congestion to the upside and appear to be on the next leg higher. Mentally I'm feeling OK. Only 4 days to go in the April option cycle so the risk is high as we saw today. Things can turn around at any time. Holding puts during the usually positive expiration week could be a recipe for disaster. That said, when the Dow is in the lead it usually isn't bullish. The short term technical indicators have rolled over for the major indices and are mid-range. So things could still go either way here despite todays price action. There are a couple negative candlesticks for the last two days on some of the charts. But we haven't broken into a down trend yet. So as usual there are plenty of questions and the April options are running out of time. We've got plenty of economic data to digest this week and it is the beginning of earnings season. Plus the Feds beige book. So it should be an interesting week. Throw in a dentists appointment tomorrow and I have my hands full at the moment. Foreign market were generally higher overnight with the exception of Japan. We'll see if they follow the US lower overnight.
Friday, April 08, 2016
An interesting session as the Dow gained 35 points on light volume. The advance/declines were 3 to 1 positive. The summation index is still heading lower. We opened the day strong as we were up 150 points in the morning. But prices faded for the rest of the session until a slight comeback in the final half hour. I can't say that I know what is going on here. The breadth today was much better than a 35 point gain would suggest. But I did notice early on that the small stock were lagging, which they did all day. My SPY April puts are now slightly back in the black. This has been an up and down trade for sure. Looks like I'll be holding this position into next week. GE was up a bit over 1/8 on light volume. Gold rose $5 on the futures as the US dollar was lower yet again. We are at support for the dollar here at around the 94 level. We'll see if it holds. The XAU gained 2 7/8, while GDX added 2/3. Volume was good here. The gold shares are trying to break through the top of the recent sideways pattern. Mentally I'm feeling a bit tired, could have slept more. It has been a back and forth market all week and today did not establish a trend either. April can have the habit of being sideways and it has played out that was so far. I almost sold the SPY put position at a loss this morning but decided to wait and see how the day ended since the NASDAQ wasn't leading things higher for a change. I do think that something is going to happen here soon because the Bollinger bands on some of the major indexes have converged to their closest level in quite a while. That implies a big move one way or the other. I don't know if it will occur next week but something is coming. Better breadth today is a positive but the lack of volume certainly isn't. We've got expiration week on tap and that usually has a positive bias. There will be plenty to think about over the weekend. I'll try and come up with some kind of game plan to exit the current SPY April put position. For now it's Friday afternoon and time for a break.
Thursday, April 07, 2016
The back and forth continues as the Dow fell 174 points on light volume. The advance/declines were 3 to 1 negative. The summation index is heading lower. The short term technical indicators for the major averages have now rolled over. That doesn't mean that we're heading straight down. The small stocks continue to out perform even on the down days. That tells me that the decline probably isn't going to be drastic. It could all turn back up tomorrow, as that has been the case so far. April is still viewed as a positive month for stocks. My SPY April puts are back in the black. If we get some follow through downside tomorrow, I should probably sell the position. I can make a case to wait until Monday but the risk with only 6 days left increases with each passing day. GE was off 1/4 on average volume. Perhaps GE is telling the story after all. Although the downside in the averages we've seen so far hasn't kept up with the pace of the decline in GE. Gold rose $18 on the futures. The US dollar was slightly higher. The XAU added 1/4, while GDX gained 2/3. Volume was good to the upside. The drop in stocks probably contributed to the gains in the precious metals today. Mentally I'm feeling OK. I suppose I'm always feeling better when the trade goes my way. But you can't fall asleep at the wheel. The nature of the market lately has been a back and forth sideways routine. It is a tough trading environment. I suppose I could let the market action on Friday tell me what to do but I don't always hear what it has to say. There's room on the indicators to go lower. The summation index is dropping. The volume is low indicating lack of interest. So there are some reasons here to remain bearish. But we do have expiration week coming up with its positive market bias. The over the counter stocks are not as negative as the big caps. You would like to see the little guys leading the moves one way or the other. Plus the recent trading has been choppy and sideways. That condition could simply continue, which frustrates both the bulls and the bears. So it never is easy or just black and white in the game. Last night Europe was lower and Asia mixed. I'll keep an eye on what happens overnight and see if the downside from the US carries over. We'll close out the trading week tomorrow.
Wednesday, April 06, 2016
The Dow took off to the upside today as it rose 112 points on light volume. The advance/declines were 3 to 1 positive. This should move the summation index back to sideways. The overall market was much stronger than the Dow, with the small stocks leading the way. My SPY April puts are back in the red. I probably should have just sold them today. Once again my trading tactics are weak. Price would have to turn around tomorrow again for this trade to have a chance but I doubt it. Oil rallied today and that along with todays gains should send foreign markets higher overnight. We are seeing some back and forth in stock prices and it isn't uncommon to see April in a sideways pattern. That doesn't bode well for trying to trade some type of extended move. I'm still thinking that things will run up into the April expiration and then we'll see where we go from there. GE was off a few cents on average volume. Gold fell $5 on the futures as the US dollar lost some ground again. The dollar is close to the low end of its range at 94. I'd expect that level to hold but that's a guess as usual. The XAU and GDX had very slight fractional gains on light volume. Mentally I'm feeling disappointed yet again for not simply exiting this SPY put trade. The overall strength of the small stocks here is telling you that the rally is not dead yet. I suppose I'm mistaking the weakness in the TRAN as a leader because that hasn't happened to the overall market. The summation index also has a tendency to trend sideways in April and it appears that's what we are getting right now. The weakness in GE also has not precipitated any lasting downdraft in the major averages. GE led the way up but is not doing so as it heads lower. But there are no excuses in the game. Perhaps I can get to break even on this current trade but I wouldn't count on it. What we don't have here is any kind of strong volume. If that somehow picks up here it's possible that we can break through the overhead resistance in the S&P 500. Hasn't happened yet. Asia was mixed overnight and Europe was generally higher. Oil had a big gain today and that should help the bullish cause overseas tonight. 7 days left in the April option cycle. On to Thursday.
Tuesday, April 05, 2016
Heading lower as the Dow fell 133 points on still light volume although it was higher than yesterday. The advance/declines were just over 2 to 1 negative. The summation index is heading down. I do not think that this is the beginning of something big to the downside but I could be wrong. April is generally a positive month for stocks. The short term technical indicators are now starting to roll over for the major averages. Perhaps we will make it down to the 200 day moving averages. That would be the 2015 level on the S&P 500. Or things could turn around to the upside tomorrow as you know how things go in this game. My SPY April puts are back in the black. I would like to hold them until Thursday but who knows? GE was off 1/4 and the volume was lighter than yesterday. I'm not considering any trades here at the moment. Gold found a bid as the futures were up around a dozen. The US dollar was up just a bit. The XAU rose 2 points, while GDX added 5/8. Volume was good. Mid-range for the short term indicators here. Mentally I'm feeling a bit tired, did not sleep well. I'm trying to decide when to sell the SPY April puts. This week would probably be the most prudent as time is running out with only 8 days left to go. Plus the usually positive expiration week is coming up. We've got the Fed minutes tomorrow and that could get things going in either direction. World markets are weak at the moment and that supports the downside theory. The summation index has turned down and that supports lower prices as well. But the moves lower in the markets are always quicker, with the turnaround rapid as well. So we'll have to keep a close eye on the game for the rest of the week while in this SPY April put position. I would like to give it a couple more days but I could decide just to bail out tomorrow. Interesting game and a challenge as usual. Japan has led the way lower overseas as the yen has rallied and negative interest rates there haven't spurred growth. The NIKK looks like it wants to challenge the lows of February. We'll keep an eye on the overnight action.
Monday, April 04, 2016
Lower to start the week as the Dow fell 55 points on light volume. The advance/declines were close to 3 to 1 negative. This should move the summation index lower. But one day doesn't make a trend. No follow through to Fridays positive action so we will have to keep an eye on things. No market moving data out this week. Perhaps the Fed minutes on Wednesday will provide some trading fodder. My SPY April puts are still in the red but did gain a little ground today. GE fell about 3/4 on good volume. It was downgraded by the street today. Perhaps GE will lead the way down as it just led the way up. But that's a guess on my part. Gold fell around $5 on the futures and the US dollar was off just a touch. The XAU lost 2 points, while GDX dropped 5/8 on average volume. Sideways on the gold shares for about a month now. Mentally I'm feeling OK. Light volume means no interest, so perhaps we can see a multi-day decline for a change and I can dump my SPY April puts. Of course the market never listens to me. The TRAN is trying to hold its 200 day average here. It too was a leader on the way up and perhaps now can reverse that role. The short term technical indicators for the major stock averages remain overbought. The small stocks held up rather well today and there cannot be any meaningful decline when the over the counter issues are holding up. Perhaps we will simply remain overbought into the expiration next week. As always the market will go where it wants. Some foreign exchanges were closed overnight but the rest were generally higher. NIKK stopped going down. We'll see what tomorrow brings.
Friday, April 01, 2016
It was another one day reversal to the upside as the Dow opened off over 100 points, turned around and finished with a gain of 107 points on light volume. The advance/declines were slightly negative. The summation index continues higher. There were no surprises in the employment report. Overseas markets were very weak and the Dow followed that for about half hour. But the money flowed into the US and stocks rallied for the rest of the session. Overbought, staying there and we have now gotten through what I considered important for the S&P. The longer term down trend line at 2060. The volume was weak but I cannot ignore price. My SPY April puts are now in the red. In retrospect, I should have sold them this morning. But I still can't believe that we are simply going to move higher despite the technical conditions that require some sort of multi-day pullback. GE was up 1/8 on average volume. It appears that GE is leading the way and there is no overhead resistance there. Gold fell over $10 on the futures as the US dollar finished the session little changed. The XAU and GDX had slight fractional gains on lighter volume. Mentally I'm feeling frustrated as the SPY April put trade has now moved against me. As I said yesterday it looked like things could go either way and they did both in one session. I suppose I just wasn't quick enough, again. The market looks like it will stay more overbought for a longer period of time. As foreign markets drop you would expect the US to follow suit. Instead money is finding its way over here and the rally from February continues despite the technicals. I am now getting the feeling that things will be run up again into the April expiration in two weeks. I could be wrong. The SPY April put trade is now a cut the loss proposition unless something dramatic happens at the beginning of next week. I wouldn't count on that at this rate. There should still be some beginning of the month positive money flows. I'll be checking the charts and considering what to do next over the weekend. For now it's Friday afternoon and time for a break.