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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.

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