Tuesday, May 31, 2016
Lower on the Dow today to begin a shortened trading week and end the month of May. The most watched index fell 86 points on better than average volume. The advance/declines were slightly positive. We were off almost 150 at one point but made a final hour comeback. The better volume may be an end of the month result. The summation index continues higher. The advance/declines were not in line with an off 86 market and the small stocks were higher as well. I'm still looking for higher prices going forward. If we get a multi-day decline there may be a chance for the SPY June calls but that remains to be seen. The short term technical indicators remain overbought. GE was up 1/8 and the volume was average for lately. Still below the 50 day moving average here. Gold rose $10 on the futures with the US dollar higher as well. The XAU added 1 1/8, while GDX gained 1/3. Volume was average. No trades in mind here for now. Mentally I'm feeling OK. 2100 seems to be the stopping point for now on the S&P 500. If we get through there I'd venture to guess we could go to 2125. After that, who knows? Still plenty of time in the June option cycle for some type of trade. We've got the employment report due Friday and that should be the next market moving event. The Feds beige book tomorrow also might induce some price action. The relative strength in the small stocks combined with a rising summation index says that we are probably heading higher in the near term. The TRAN stalled at its 50 day moving average today. We will have to see if it can get through there as well. I'll simply have to watch and wait for now. Foreign markets were mixed with Asia higher and Europe lower overnight. We'll keep an eye on things overnight.
Friday, May 27, 2016
Still moving up as the Dow gained 45 points on light volume. The advance/declines were 2 to 1 positive. The summation index is heading higher. Nothing in the way for higher prices as the sellers have left the field for now. Short term overbought and staying there. At this rate, new all time highs are in the cards. The only problem is the volume and that is a recurring theme. Yellen came and went without any meaningful market reaction. There has been no snap back to the broken downtrend line. It appears that I have missed another trading opportunity again. GE was up a few cents and the volume was very light. Gold was off $10 on the futures as the US dollar had a strong session. The XAU fell 2 3/4, while GDX dropped 2/3. Volume was good even though it was a getaway Friday. The uptrend in the gold shares has ended. Higher rates in the US and the rise in the dollar will put a lid on gold. Mentally I'm feeling OK. I'm not sure what the next move for me will be. It is too late to join the rally in my opinion unless we see some decline. I'm also not sure that we will blast off if we hit new highs because the volume just isn't there. Perhaps the next trade will be the SPY June puts when we get to 2125 on the S&P 500. But at this point I just don't know. Missing this rally has me in not such a good mental spot. There is still plenty of time in the June option cycle to do something. However getting the market to cooperate is another story. I'll have to check all the charts and regroup over the long weekend. There is not doubt that we are heading higher. It is a matter of how much and how long. We could set nominal new highs in June. But if we don't see a pick up in volume, any breakout would be suspect. Of course none of this has happened yet and the market will as always do what it wants. Plenty to ponder. For now it's Friday afternoon and time for a break.
Thursday, May 26, 2016
A quiet and mixed market today as the Dow fell 23 points on very light volume. The advance/declines were slightly positive. The summation index is heading back up. Waiting to hear from Yellen tomorrow was the market mood for today. The very light volume is a concern and tomorrow is a Friday ahead of a long holiday weekend. I'd expect players to head out early after the Fed chiefs speech. I'm still leaning towards getting some SPY calls on a pull back. But the lackluster volume makes all trades suspect. To break the overhead resistance will take a decent push. I don't see that happening in this environment. GE was off a few cents and the volume was light. Gold dropped $4 on the futures and the US dollar lost ground as well. The XAU and GDX had slight fractional losses on very light volume. Light volume all the way around continues to be the theme. Mentally I'm feeling OK. I'll most likely let tomorrow pass as there is no reason to attempt anything before the weekend. The short term technicals for the major indices remain overbought. There is no reason to try and guess what will happen next. I will simply once again have to be patient and await a decent signal. We are in a seasonally positive spot for stocks but it doesn't last too long. Perhaps waiting to try the June SPY puts later in this option cycle will be the next trade. We'll have to see where things go from here. We do have the employment report and a Fed meeting still to go in the June option cycle. So volatility will return as well as opportunities for profit. Hopefully I'll be up to the task. For now it is watch and wait. Foreign markets were generally slightly higher or little changed overnight. We'll close out the week tomorrow.
Wednesday, May 25, 2016
Continuing higher as the Dow climbed 145 points on light volume. The advance/declines were 2 to 1 positive. The summation index is now heading higher. We're heading higher from here in my mind and SPY calls can be purchased if we get a pullback. Perhaps we'll see new all time highs soon. The perfect head and shoulders top on the S&P 500 failed to live up to expectations and that pattern is now negated. The market will always do what is least expected and frustrates the most participants. That is the nature of the game. GE was up 1/4 and the volume remains light. Still below the 50 day moving average here. Gold was off $5 and the US dollar was a bit lower as well. The XAU gained 2 points, while GDX added 1/2. Volume was average. Trying to hold the 50 day moving average in the gold shares. Mentally I'm feeling OK. 2 days remain in this week and it precedes a holiday weekend. I'd like to see some kind of snap back to the short term downtrend line that was just broken in the major averages. But at this juncture it appears that we will simply head higher. We are approaching short term overbought on some of the technical indicators. But remember that in up trends the market can remain overbought for quite a while. We've got Yellen from the Fed speaking on Friday and that could be a market mover. The small stocks didn't have the leadership that we've seen lately so perhaps some near term weakness is near. That's a guess as usual. The best time for getting long the June option cycle has passed. However we may get another opportunity if the market cooperates. Time will tell on that. Stocks around the globe were higher as money is now flowing into those assets. The only caveat here is volume as it certainly has been anything but robust. Light volume rallies are not to be trusted. But as long as price heads higher we'll have to give it the benefit of the doubt. For now. We'll watch the overnight action and go from there.
Tuesday, May 24, 2016
The Dow took off to the upside today as it gained 213 points on light volume. The advance/declines were 3 to 1 positive. The summation index is still moving down but after today it may stop its decline. We got a signal yesterday in the McClellan oscillator that predicted a big move within 2 days. We got it today. It is possible that this is a second shoulder on the S&P 500 head and shoulders pattern but I doubt it. Whenever everybody recognizes something in this game, like the widely advertised head and shoulders top pattern, it never fails to not work. What we have instead is what looks like a rectangle consolidation. I think we're heading to 2100 now for the S&P. I will still be looking to purchase some SPY June calls on a pullback. GE was up 1/3 on light volume. No trades here for now. Gold fell over $20 on the futures as the US dollar was higher. Gold is taking a much needed rest. The XAU lost 5 points and GDX dropped 1 1/3. Volume was heavy. The inverse relationship between gold and the dollar is intact for now. Support for gold is at $1200. Mentally I'm feeling a bit disappointed about not already being in the June SPY calls. However there wasn't exactly a clear buy signal there. Sometimes in bear markets rallies pop up out of nowhere. It is a result of short covering with some actual buying once the move gets going. This isn't a bear market at the moment. That is why I think this is an initiation move to higher prices for equities. The leadership of the small stocks is also a clue that we are headed up. Perhaps all the way into the June expiration. That's a guess as usual. We have also just broken through a short term downtrend line in some of the major averages. Perhaps a pullback to that line will offer the chance at some calls. Of course we could always just simply head up with no retreat. We'll see. European markets were very strong overnight mimicking the Dow. Asian markets were generally weak. That should change tonight. We'll see if there is any upside follow through tomorrow for the Dow.
Monday, May 23, 2016
A quiet day of trading until we dropped in the final hour. The Dow fell 8 points on very light volume. The advance/declines were about even. The overall market was weaker than the Dow. The summation index continues lower. The S&P 500 has a near perfect symmetrical head and shoulders top formation. That is something that you don't see that often. A high volume downside breakdown would trigger this formation. That is definitely a possibility. I'm still waiting for some kind of valid signal one way or the other. Some of the short term technical indicators are now mid-range, while others are oversold. GE was off a few cents on again very light volume. Oversold on the technical indicators here. Gold was off a few bucks on the futures, while the US dollar was little changed. The XAU and GDX had fractional losses on very light volume. As you notice, the common theme for the markets is the lack of interest. Mentally I'm feeling OK. Light volume in the game is never a good sign. Lack of participation or interest is not a positive sign. We haven't seen a collapse but if we break the head and shoulders neckline, things will deteriorate in a hurry. Hasn't happened yet. Plenty of time in the June option cycle. The Bollinger bands are starting to contract on the NASDAQ. So perhaps things will sort themselves sooner rather than later. The summation index has continued to move lower and the decline has been orderly up until now. If we continue to be weak the next couple of days, I might try the SPY June calls. However if we break sharply lower, I'll probably have to remain on the sidelines. Sideways trading ranges make for tough trading. Foreign markets were generally lower overnight but nothing drastic. We'll see what tomorrow brings.
Friday, May 20, 2016
We got the bounce that was due as the Dow rose 65 points on very light volume. The advance/declines were 4 to 1 positive. The overall market was stronger than the Dow. The summation index is still heading down. Once again the light volume rise is a concern. The potential for a head and shoulders top that has taken 2 months to build is still there for the S&P 500. However there is also the possibility that we are simply moving in a sideways channel and are due to head back up to the upper range. The volume just isn't there for whatever reason. I am looking at the SPY June calls and purchasing them perhaps at the beginning of next week. But I will consider this idea more closely over the weekend. GE was up almost 20 cents on light volume. Still oversold on the short term technical indicators here. Gold was slightly lower and the US dollar slightly higher on todays trading session. The XAU and GDX had minor gains on average volume. This area took a breather today. Mentally I'm feeling OK. It's still a tough trading environment as we are at the moment of truth for the major averages. We are either going to break down hard or get some type of at least short term rally. The small stocks are acting better here and that has me leaning towards a positive resolution. The breadth is also improving, which is another plus. But the volume has been pretty light lately and the summation index is still heading down. We haven't seen a solid break of the 2040 level on the S&P but if that occurs we're heading lower. I suppose that the jury is still out on the near term direction of the major indices. I'll take a look at all the angles over the weekend and try to come up with a game plan for next week. Most foreign markets were higher overnight. There will be a lot to try and sort out over the next 2 days. For now it's Friday afternoon and time for a break.
Thursday, May 19, 2016
Lower today as the Dow fell 91 points on light volume. The advance/declines were over 2 to 1 negative. The summation index continues lower. The S&P 500 closed right at the 2040 level. The McClellan oscillator has gotten very negative and I would expect some kind of bounce. I am thinking about getting some SPY June calls. We are at a point on the oscillator where the market should be dropping quite hard and it is not. I do not have an explanation. The decline we have seen has been quite orderly. Of course that could change at a moments notice. So I can't exactly say that I know what is going on here. The technical indicators for the short term remain oversold. GE had a gap lower and closed off 1/4 on good volume. If GE is a precursor perhaps the market is about to let loose to the downside. Gold was off over $15 on the futures but much of that was factored in after the futures close yesterday. The US dollar was slightly higher. The XAU rose 1 2/3, while GDX was up 3/8. Positive divergence there. Volume was average. Mentally I'm feeling OK. Perhaps some volatility tomorrow as it will be option expiration. Probably the best course of action would be to let tomorrow pass and try to figure things out over the weekend. We're due for a bounce according to the McClellan oscillator but what happens after that is anyones guess. Maybe we are simply in a general market malaise. The neckline of the head and shoulders top pattern on the S&P was broken today but we climbed back up to it. That may be a fake out as well. Time will tell on that. I've been patient up to now so I suppose there is no reason to change that. Foreign markets were weak across the board overnight. We'll close out the week tomorrow.
Wednesday, May 18, 2016
Volatility was the word of the day as the Dow bounced around during the trading session. The most watched index finished down just 3 points after all was said and done. The advance/declines were 2 to 1 negative and the volume was average. The breadth was weak but the small stocks outperformed. Mixed signals have been the rule lately and today was no exception. The summation index is still heading lower. 2040 has still held things up for the S&P 500 so far. We've had plenty of attempts to break things here but have yet to fall through. I'm now considering the SPY June calls. But that could change. GE lost a dime on light volume. Gold fell $17 on the futures as the US dollar rallied on the release of the Fed minutes. The XAU dropped 7 1/4, while GDX lost 2 points. Volume was very heavy in a run to the exits. The uptrend line from the beginning of the year was broken for the gold shares. We are finally going to get a rest here and it is certainly due. Mentally I'm feeling OK. I'm still trying to figure out which way to go here but the signals remain ambiguous. Plenty of chances lately to break down but the market has held on. So I'm thinking now may not be the time for a decent decline. We've really just been moving sideways since mid-March in the S&P 500. Whichever way we break out should produce something more lasting in nature. That's the theory anyway. As always, the market will go where it wants. The short term technical indicators for the S&P are oversold. But we haven't seen a bounce and we haven't seen a breakdown. Like I have said, things are mixed and you can make a case either way. I've been patient but sooner or later you've got to step up to the plate. The US dollar broke what I considered an important level at 94, only to come right back up. A strong dollar usual considered bearish for stocks but I'm not always a buyer of that theory. It is negative generally for gold though. Unless we are getting an enormous flight to safety. That isn't the case today. So we'll see how the overseas markets react to todays Fed minutes and take it from there.
Tuesday, May 17, 2016
Back and forth remains the theme as the Dow fell 180 points on average volume. The advance/declines were almost 2 to 1 negative. The summation index is still heading lower. There was no upside follow through to yesterdays light volume rise. We are still above the 2040 level on the S&P 500 but it has the feel of something about to break down. The short term technical indicators are oversold. Too late for any trades in the May option cycle for me. The head and shoulders top in the S&P 500 is still there. A break below 2040 will trigger it. We've got the Fed minutes due tomorrow. I don't see any factors to drive the market higher right now. It appears that we will be heading down. GE was off 1/4 on better volume. Gold gained $6 on the futures as the US dollar was little changed. The XAU rose 1 3/4, while GDX added 1/3. Volume was average. A lot of positive gold news in the media and that is usually a sign of at least a short term top. However nothing has caused any significant drop here this year. I'm sure that will change at some point. Mentally I'm feeling frustrated as I haven't been able to place a trade in a few weeks. Patience is always a good thing but waiting around for the next decent signal gets old. On the plus side, I haven't lost any money. However it gets tiring when you put in the day to day work and have nothing to show for it. You cannot force the issue though. So perhaps tomorrow will be the day that we finally break down. Volume picked up to the downside and we are already oversold. That is a recipe for lower prices in my mind. Why didn't I buy some index puts today you may ask? It is option expiration week and with 3 days left the risk simply is too much. We could easily bump up tomorrow or go sideways for the rest of the week. I do better with longer term trades in my mind. I did consider getting some June SPY calls today but did not. There just seems to be no sustained buying power in the market right now. The foreign markets were mixed with Asia higher and Europe slightly lower. We'll see what tomorrow brings.
Monday, May 16, 2016
Another bounce today as the Dow climbed 175 points on light volume. The advance/declines were 3 to 1 positive. The summation index is still heading lower. We've held the 2040 level once again for the S&P 500. We will need to see the summation index turn around to lose the bearish bias. Once again the volume today was light. If we continue to see a rise with light volume, I'll eventually try the June SPY puts. However it is option expiration week and volatility is a distinct possibility. The head and shoulders top for the S&P is still intact. GE was up 1/3 on light volume. Gold was up a couple bucks on the futures as the US dollar didn't do much today. The XAU rose 2 1/4, while GDX added almost 1/2. Volume was average. The uptrend line from January remains intact here. Mentally I'm feeling OK. The market had an opportunity to fail this morning and it did not. I'm not sure if we are building another right shoulder here or we are going back to test the recent highs of April. There is a lot of bearishness out there and that probably means we are going higher for now. We need to see some upside with volume to be sure that we are actually going to head higher for more than a few days. The jury is still out on this market. It is probably too late, in my opinion, for a trade in the May options. So we'll see. Foreign markets were flat or slightly higher in most cases overnight. We'll see if they can follow the US higher overnight.
Friday, May 13, 2016
Another downer as the Dow fell 185 points on light volume. The advance/declines were 2 to 1 negative. The summation index continues lower. The overall market was stronger than the Dow. But you cannot argue with price. 2040 is the near term support for the S&P 500 in my opinion. Low volume means no interest and I do not see a catalyst for higher prices at this time. The short term technical indicators have rolled back over. There is now only a potential head and shoulders top being formed here in the S&P. However I have seen this pointed out in the media and when everybody sees the same thing it usually doesn't work. The economic data wasn't really a mover. The market seemed to fall on its own weight. GE was off almost 1/2 on good volume. Gold was up $4 on the futures despite a rise in the US dollar. The XAU rose 1/2 and GDX added 1/4. Volume was light. Mentally I'm feeling OK. Just a week to go in the May option cycle. The TRAN has broken down and it is a leader at times. The small stocks are better performers here but it hasn't translated into higher prices. They are just going down less. The environment is negative but we have not seen any downside washout. It is a tough trading time. A quick bounce higher would wipe out any current gains in the puts. I'll probably just stay on the sidelines next week but you never know. If the head and shoulders top is valid, things will get ugly in a hurry. If we hold the 2040 level in the S&P, a trade in the calls could prove profitable. But like I said before you don't want to get into a guessing game. I'll consider the probabilities over the weekend and take it from there. It still appears that a case can be made either way. However it does seem that the power to buy stocks has waned. Perhaps there are liquidity issues that I'm not aware of. That's just a guess but the light volume does mean something. I'll be checking the charts this weekend as usual. For now it's Friday afternoon and time for a break.
Thursday, May 12, 2016
We bounced around today and the Dow finished with a gain of 9 points on light volume. The advance/declines were barely negative. The summation index is still moving down. We were up down and back up again today as the market is deciding what to do. I think things could go either way as I said yesterday but I've still got the bearish bias. With only six days to go in the May option cycle, it appears to be too late to put on a trade. The risk is very high either way. I may have to move out to the June options. We should move off of the economic data tomorrow. GE was off 1/4 and the volume picked up. A firm issued a sell rating on GE today. Technically the 50 day moving average contained the recent bounce. Gold fell $10 on the futures as the US dollar was higher. The XAU fell 1 3/4, while GDX shed 1/2. Volume was average. Gold should probably move tomorrow as well with inflation and retail sales news. Mentally I'm feeling OK. I'm now leaning towards staying on the sidelines with regards to a May option cycle trade. There are both potential short term head and shoulders patterns both ways on the S&P 500 index daily candlestick chart. The smaller one is bullish and the larger one is bearish. These are potential patterns as they have yet to play out one way or the other. Most of the short term technical indicators are exactly mid-range right now. So you do not want to play a guessing game when trading. The summation index is heading lower and the small stocks were relatively weaker today. Along with the TRAN. Those are bearish signs. Volume was also very heavy in TRAN. That could be a short term washout. Or not. So I think that at this time the prudent thing for me to do would be to let tomorrow go by and then take a look at things over the weekend again. That's the idea at the moment. Foreign markets were generally lower overnight. We'll close out the trading week tomorrow.
Wednesday, May 11, 2016
Back to the downside today as the Dow fell 217 points on light volume. The advance/declines were not even 2 to 1 negative. The summation index continues lower. It appears that yesterday was the opportunity to purchase the SPY May puts. The signals here are mixed and I'm still in the bearish camp for now. I suppose that if we do see a light volume rally tomorrow it could be worth shorting. But we are running out of time in the May option cycle and any trade attempted would have very high risk. The fact that we got zero upside follow through is not a positive. We have options expiration week coming up and that usually brings some volatility. There is no point in guessing what will happen. GE was off 1/8 and the volume was light. Gold rose $14 on the futures as the US dollar was lower. The XAU gained 2 2/3, while GDX added 2/3. Volume was OK. Still waiting for a correction in the gold shares. Mentally I'm feeling frustrated as I would like to put on a trade before the May option cycle ends but can't seem to find a spot. Todays price action was bearish. The rally yesterday sprang up out of nowhere on light volume. That is typical of a negative market. Perhaps if we see some early strength tomorrow it will be an opportunity to get the May SPY puts. But the market rarely cooperates with the best laid plans. The small stocks and the overall market were not as weak as the Dow. That could mean something positive. Or not. There wasn't wholesale selling of everything today, which is usually the sign of trouble. So once again I think we are in a position where it could go either way though I'm bearish. My option indicator is leaning towards the bullish side as there are more puts being purchased. I don't know if I have the discipline here to simply sit it out unless a valid signal comes through. As usual the battle in trading is most of the time with yourself. I'll see how it goes tomorrow. Foreign markets were generally lower with no major declines. We'll keep an eye on things overnight.
Tuesday, May 10, 2016
A short covering rally and then some as the Dow soared 222 points today on light volume. The advance/declines were 3 to 1 positive. The summation index is still moving lower but appears ready to turn around. Another day like today would do the trick. We climbed past the 2075 level on the SPX, which I thought would hold things. We now may be headed back up to test the 2100 level. The light volume is a cause for concern though. The short term technical indicators for the major indices have all turned back up. I am no longer sure about trading the May SPY puts. GE rose almost 2/3 on below average volume. Heading back towards the 50 day moving average and the short term down trend line here. Gold was up almost $5 on the futures and the US dollar was a bit higher as well. The XAU rose 3 1/8, while GDX gained 7/8. Volume was good. Up trend lines from the beginning of the year remain intact for gold and the gold shares. However this cannot last forever. Mentally I'm feeling a bit distracted with another visit to the dentist today. But you cannot let things get in the way of the trade. Today was much stronger than I expected and it could be a significant change. Or it could be an oversold bounce that doesn't last. Perhaps I will wait for the SPX to get to 2100 and then try the SPY May puts. Or maybe I should just sit on the sidelines. Some of my indicators are leaning one way and some the other. When in doubt, stay out is the popular saying. I'll have to consider what to do overnight. If the volume remains light, I'll consider the May puts. There is another signal that I like to use on a 50 day chart when it appears. If that happens, I'll also consider trying the puts. So I suppose for now it's back to a wait and see game. Foreign markets were higher overnight with Asia much stronger than Europe. We'll see how it goes tomorrow.
Monday, May 09, 2016
A mixed bag to begin the week as the Dow fell 34 points on light volume. The advance/declines were slightly negative. The NASDAQ and the S&P 500 had slight gains. The summation index continues lower. It was the kind of day that frustrates both the bulls and the bears as we are basically going nowhere. Less than two weeks to go in the May option cycle. I'd still like to try the SPY May puts but will have to see some kind of attempt to make it back to 2075 on the SPX. We've yet to see a short covering rally. My ideal scenario would be strength into sometime on Wednesday. But the ideal scenarios rarely come to pass. GE lost 1/4 and the volume was light. Gold got clobbered today as the precious metal futures lost almost $30. The dollar was higher but not enough to cause that much damage in gold. The XAU fell 6 points, while GDX shed 1 2/3. Volume was average. This area is in need of a rest. Mentally I'm feeling OK. Not much economic data out this week until retail sales along with producer price inflation on Friday. I think that we are overdue for some kind of bounce for stocks but there haven't been any buyers. The drift is not friendly to taking outright options positions. The short term technical indicators for the major averages remain in the oversold zone. Normally that would bring some kind of attempt at some upside but everything has remained weak. Running out of time in May for an options trade but I'm still looking. Each passing day increases the risk though. Foreign markets were mixed overnight and are not providing any direction as well. Perhaps the sidelines are the best choice at the moment. We'll keep an eye on what happens tonight.
Friday, May 06, 2016
It was a one day reversal to the upside as the Dow opened lower and closed higher. The most watched index gained about 80 points on light volume. The advance/declines were almost 2 to 1 positive. The summation index is still pointing down. The employment report was a bit weaker than expected but it wasn't the market mover that it could have been. The short term technical indicators are still oversold for the major indices. Most indexes have held for now at their 50 day moving averages. Two weeks left in the May option cycle. GE was up 1/4 on average volume. I'm not exactly sure what we are seeing in the price action here. Gold was up $17 on the futures as it liked the smaller than expected jobs number. The US dollar was initially lower but finished the day with a small gain. The XAU rose 3 1/3 and GDX added almost a point. Volume was good. The uptrend line in GDX that began in January remains intact. The gold miners continue to attract capital. Perhaps I should be concentrating on simply trading the calls here. Mentally I'm feeling OK. Oversold on the stock indexes but I'm still considering the May puts. The market doesn't seem to have any buying interest. Now that could change at any time but it has been a drift lower for two weeks. I have yet to even see a short covering rally that springs up out of nowhere. That is really what I'm looking for sometime next week in order to try the SPY May puts. As long as the summation index doesn't turn around, that will be the next trade. There was a chance today to try the May calls for a bounce but I did not have the conviction. Or the guts. So we will have to see what next week brings. I don't think that we are going to see some kind of rally that leads to another leg up and new highs. But the market will go where it wants. There is a chance that we rally off of the short term oversold condition. However right now I'm of the opinion that the market is weak and volume is light. Liquidity doesn't appear to be there. I could be wrong. Plenty of charts to look at and strategies to ponder over the weekend. For now it's Friday afternoon and time for a break.
Thursday, May 05, 2016
Running in place ahead of the jobs numbers as the Dow rose 9 points on almost average volume. The advance/declines were slightly negative. The summation index continues lower. The market can't get anything going to the upside despite the oversold condition. That usually spells trouble for the bulls. I'd still like to try the SPY May puts but will have to see some kind of short covering bounce first. Still a little over 2 weeks left in the May option cycle. The risk is that we have reached a short term trading bottom and we see a rise back to the 2100 level for the S&P 500. The decline has been orderly so far with no panic. That is why I think we still have room to go lower. The 50 day moving average has held things so far for the S&P 500. GE was off 18 cents on average volume. Oversold here as well. Gold was up $5 on the futures despite a rise in the US dollar. The XAU was up 1 7'8, while GDX added 3/4. Volume was good. Probably just a bounce here after 3 days of decline. That's a guess as usual. We could get some movement in gold off of the employment report tomorrow. Mentally I'm feeling OK. Once again there was a chance today to buy the SPY May calls for a bounce but I remained on the sidelines. Perhaps the last losing trade is still affecting me going forward. Anything could happen tomorrow. I've been waiting for some decent move to the upside to buy the puts but the market hasn't cooperated. The tone is still negative with the small stocks leading the way down here. The TRAN was negative today as well. All rallies in the general market have been sold recently. We really haven't seen anything positive for the market in the past couple of weeks. All I can do now is hope for some upside to get short. If we panic out to the downside, I'll have to try and trade the bounce. That's about all I've got at the moment. Foreign markets were mixed overnight. We'll see how things go with the jobs report tomorrow.
Wednesday, May 04, 2016
The Dow fell another 100 points today on almost average volume. The advance/declines were negative but not as much as a down 100 market would suggest. The summation index is heading lower. Oversold on the short term technical indicators and some of the medium term indicators are also in the range where some upside should be seen. If I had the guts I would have tried the SPY May calls today but I'm waiting for an entry point for puts. There is some support here at 2050 for the S&P 500 but if and when that fails we should start to drop more rapidly. GE was off 1/2 on good volume and we took out the 50 day moving average. If GE is a precursor for the overall market then you get the idea of what could happen. Gold was off $10 on the futures as the US dollar was up again. The XAU dropped 4 points and GDX fell 1 1/4. Volume here was good again as the rally in gold has come to a close for now. Mentally I'm feeling OK. It has been a pretty orderly decline so far with no signs of panic. That in itself tells me that there is probably more room to go on the downside. I cannot chase it here and expect to make any money on a put trade. We'll need to see some kind of attempt for some upside in order to get positioned. There is also the possibility that the decline will simply end. There's always some risk out there. The small stocks have already dropped pretty good and any turnaround in AAPL will get things going to the upside in my opinion. I'm going to stick with the theory that any rally here can be shorted if we happen to get one. So I'll try and be patient. I will also probably let the employment report get out of the way before trying the next trade. But we'll see what happens between now and the close on Friday. Overseas markets were weak but not drastically. We'll watch what happens overnight and go from there.
Tuesday, May 03, 2016
The Dow dropped 140 points today on average volume. The advance/declines were 3 to 1 negative. This should move the summation index lower. My thinking is that we have something going on here and it will be to the downside. The technical indicators are already oversold though. But the tone of the market has turned negative. Today everything was sold and that usually means that there is something going on underneath the surface. What that is, I don't know. I suppose that I'll be looking for some type of near term light volume rally to buy the SPY May puts. But we may just drop from here. I suppose in hindsight that yesterday was the day to get short. GE was off 1/4 on light volume. Still holding on to the 50 day moving average. Gold fell $7 on the futures as the US dollar was higher. The XAU fell 3 1/2, while GDX lost 3/4. Volume was good to the downside again. It is shaping up as a poor week for the miners so far. Mentally I'm feeling OK. Volatility has picked up in the past week and it is something to pay attention to. I'm not sure what it all means but the market is starting to roll over. Of course this could all change tomorrow but I don't think so. With the already oversold conditions, it's dangerous to try the puts. However we also must recognize what is happening here. Selling has sprung up out of nowhere and we must pay attention. The employment number on Friday could be trouble. That's a guess as usual. There's still plenty of time left in the May option cycle. I would like to have a better handle on things here but I don't. Is it possible that we hold up here and head to new highs? Anything is possible in the game. But I'm going to be looking for lower prices. What is needed is the proper entry point and waiting for some upside is my thought right now. If we simply continue lower from here, then the trade has been missed. Foreign markets that were open were generally lower. That trend will probably continue overnight. We'll see what tomorrow brings.
Monday, May 02, 2016
Back to the upside today as the Dow gained 117 points on light volume. The advance/declines were positive. The summation index appears to be trending sideways. We were higher from the start and the opportunity to get the SPY May calls appears to have passed. If we continue higher into the end of the week there might be a chance to switch back to the SPY May puts. But we will have to see light volume and poor breadth for that idea to work. There is a chance that we run up to new highs here as well. That is the least expected scenario and that gives it perhaps the best chance of occurring. GE was up 1/8 and the volume was very light. The 50 day moving average is still showing support here. Gold was up a couple bucks on the futures despite another good drop in the US dollar. The gold shares lagged as the XAU fell 2 1/8 and GDX shed 3/8. Volume was good. Perhaps it is time for another pause for the gold shares. Maybe even some decent decline as some of these issues have more than doubled since the beginning of the year. Mentally I'm feeling OK. I'm still looking for higher prices near term as things got bearish pretty quickly. However right now there isn't a clear signal one way or the other. Getting long Friday on the decline was the near term play. So now we'll have to wait. The employment report on Friday could be the next big catalyst. But we don't want to get into a guessing game. If things line up OK, I'll look at the SPY May puts on Thursday. If we are choppy into Friday, I may have to sit things out. We'll let the market decide for us what to do. Japan has been very weak in the past two sessions so we should see some kind of bounce there hopefully. The other Asian and European markets were generally weaker but not as much as Japan. We'll see if they follow the US higher overnight.