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.