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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.

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