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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.

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