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.