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.