Thursday, June 30, 2016
The market continues to rally as the Dow gained 235 points on good volume to close out the month. The advance/declines were 4 to 1 positive. The summation index is moving higher. We are short term overbought no so I decided to hold onto my losing SPY July put trade for another day in hopes of at least some pullback. This trade is going to be a 70%-80% loser. It looks like we are going to make a run at new all time highs at this rate. What we are seeing here is a classic V bottom and I certainly didn't expect that. This trade felt wrong from the start and that is something to put in my memory for the next time. GE was up 7/8 on good volume. This has been a straight up move of over 2 points this week. That simply rarely happens in this stock. I do not know the reason. Gold was off a couple bucks on the futures and the US dollar was a bit higher. The XAU gained about 1 3/4, while GDX was up 1/2. Volume was light. Mentally I'm frustrated yet again at another losing trade. One of the mistakes here was my usual not getting out early. You've got to listen to the market and for some reason sellers disappeared in a hurry after the 2 day debacle. I recognized it but did not act on it. But the market doesn't care. The game rolls on and so do I. We've got a log holiday weekend coming up and the beginning of the month tomorrow. I'd expect more inflows to the market but with the overbought condition perhaps we'll see some selling on Friday. The weekly candlestick charts for the S&P 500 have turned from bearish to bullish. I'll take a guess at new all time highs here before the July option expiration. Is it too late to buy some July calls then? Perhaps not but I would not advise chasing things now. Maybe if we come off of the overbought condition you could give it a try. I think that the next event for the market will be the employment report but that isn't due for another week. Next week will be a short trading week as well. With the summation index now trending up, expect higher prices going forward. The market reaction to the vote in England was a one time event and not a lasting market issue. The comeback this week let's you know that. Let my losing trade be a reminder to you how difficult it is to try and trade during a headline risk environment. Markets were higher in Asia and Europe overnight. We'll close out the trading week tomorrow.
Wednesday, June 29, 2016
Continuing higher as the Dow powered ahead by 285 points on OK volume. The advance/declines were about 6 to 1 to the plus side. This should turn the summation index back up. I was expecting a bounce back but this is more than that. I did place an overnight order for the SPY July puts and it was filled as the S&P went through the 2050 level. However the market just kept on going. This trade will probably be a loser and already is. My prognosis for the 50% retracement followed by another decline is wrong. There are no sellers as they sold out on the first couple of sessions after the English vote. Perhaps that was the washout and I missed seeing it. The shorts are getting squeezed to death now. GE was up almost 2/3 on the same volume as yesterday. Gold rose $8 on the futures as the US dollar was lower. The XAU was up 2 1/2, while GDX added 1/2. Volume was average. The gold shares still appear to be in a trading range to me. Mentally I'm feeling OK. A VIX break of the 16 level and close beneath there will put an end to the decline in my opinion. It has been a very volatile 4 days in the stock market. The short term technical indicators for the major averages have turned back up and have plenty of room to run. I'm stuck in a losing trade and probably the best idea would be to simply get out tomorrow. Unless there is a decent decline on Thursday, that is what I should do. My entry obviously could have been better but it would have only made for a smaller loss. This trade is a mistake from the start. There is a long holiday weekend approaching and there is no reason to stew over a losing idea. I obviously did not recognize that the market was sold out and it's bounced back stronger than I imagined. Markets around the globe rallied strongly overnight. We will end the month of June and the first half of the year tomorrow. I'd expect to see some more upside follow through to todays action unless there is some kind of overnight surprise. We'll keep an eye on things as usual.
Tuesday, June 28, 2016
Quite the bounce today as the Dow climbed 269 points on good volume. The advance/declines were over 5 to 1 positive. The summation index is heading lower but another day like today would probably change that. The VIX moved sharply down as well. Could that be it for the decline? Everybody wants to know the answer to that question. It could be but I don't really think so. There was some significant technical damage done on the over 100 S&P point drop. I think we can get to around 2050 on the S&P. That will be the area to watch in my opinion. I'll be looking to try the SPY July puts there and I have an open order in for those overnight. 2050 would be around a 50% retracement of the 2 day decline. That is the game plan for now. GE was up 2/3 on above average volume. The 200 day moving average has held for now. Gold was off about $10 on the futures and the US dollar was lower as well. Profit taking on the haven trade? Perhaps. The XAU and GDX had fractional losses. The volume was a bit above average. The gold shares are overdue for a rest. Mentally I'm feeling OK. Crazy moves in the market but opportunities as well. One less day in the July option cycle due to the holiday on the 4th. Not much attention given to the final GDP revision today as the volatility is the main driver for now. We won't get the employment numbers until a week from Friday. Obviously there is a lot of time until that. There will be a report on the banks from the Fed after the close tomorrow. That could be a market mover. We are still hostage to any kind of news from Europe as well. The short term technical indicators are oversold for the major stock indices but some of them have turned back up. It's still a time to be cautious. My thinking here remains that we will get down to the 1950 level on the S&P 500 and perhaps find some support there. But I could be wrong and often am. I plan on getting some SPY July puts at some point in the next few days and then sell them when we get to 1950. But naturally that idea could change depending on market conditions. European markets bounced overnight as well. Asia was in a holding pattern. We'll see what tomorrow brings.
Monday, June 27, 2016
Downside follow through today as the Dow shed another 260 points on very heavy volume. The advance/declines were over 4 to 1 negative. The summation index is heading down. Not completely oversold on the daily technical indicators for the S&P 500 but just about. There is some support at the 1950 level and more at 1850. I suppose you could try and play a bounce at those levels or simply wait for a bounce and then try some puts. Premiums are elevated and they move fast in a market like this. There will be opportunities but taking advantage of them is another matter. The VIX was lower today despite a huge drop and I have no explanation for that. Perhaps because the decline was not as steep. But we're still heading down. GE was off 1/2 and the volume was heavy. We're at the 200 day moving average here. Gold was up $5 on the futures but was higher early. The US dollar had another good day. The haven trade is on. The XAU and GDX rose 1/3. Volume was a bit above average. In times like these everything gets sold to meet margin calls. Mentally I'm feeling OK. Still dealing with the fall out from the vote in England and I don't know when this will be fully priced in. The trend is down and we've dropped over 100 S&P points in 2 days. Treacherous times. I think the next trade will be to wait for some kind of bounce and then try the SPY July puts. When that bounce will come, I have no idea. Indices in Asia stopped dropping last night but that didn't mean anything in the US. European markets were clobbered again. I don't want to completely throw out the technical indicators but we're in an extreme event driven environment. The prudent thing to do is probably wait until we see some kind of washout. When that will happen, I have no idea. It could be sometime this week but it could take even longer. There is no point in trying to be a hero and pick the bottom. What I will be looking for though is a sharp short covering rally that comes out of nowhere. That is the opportunity that will give you a chance to try the SPY July puts. In downtrends like this these rallies spring up out of nowhere and just as quickly disappear. That will be the trade that I am looking for. We'll keep an eye on the action overnight and see if we just keep dropping tomorrow.
Friday, June 24, 2016
Crash. That's about all I can say here as everything that was thought to be true yesterday wasn't. The market voted wrong for a change as England did decide to leave the European Union. This had repercussions around the world and a stock market bloodbath ensued. The technicals don't matter in a headline driven situation that we find ourselves in at the moment. The Dow got clobbered and lost 611 points on blowout heavy volume. The advance/declines were 5 to 1 negative. The is no underlying support in the S&P so it is hard to tell how low this thing will go. Usually it's a lot lower than you think. I'm on the sidelines but I do have some ideas. GE lost 1 1/3 on extremely heavy volume. Gold rallied along with the US dollar. The flight to safety trade that I thought was being taken off yesterday returned with a vengeance. The precious metal futures were up over $50, while the US dollar added more than 2 points. Incredible moves in one day. The XAU rose 3 1/3 and GDX climbed 1 1/2. Volume was heavy. The gold shares are trying to break out of their trading range. Another day like today should do it. Mentally I'm feeling OK. I suppose in hindsight the best move today would have been to simply buy some SPY July puts at the open. It's probably too late for any kind of trade like that going forward. We'll get follow through to the downside on Monday morning and then perhaps some type of rally attempt. That is usually the case in market panic attacks like the on today. We have seen this before. Perhaps I'll take another stab at a short term bounce trade next week. But the timing would have to be impeccable and the risk is now extremely elevated. Not to mention the option premiums are very inflated due to the massive amount of volatility that we are now seeing. Well, you don't make any money on the sidelines but you don't lose any either. Today at the open there was a gap down and then a feeble rally attempt. That feeble rally provided the opportunity to buy some index puts. I simply was not ready to take advantage of that when I should have. Three weeks left in the July option cycle and it looks like there won't be any summer doldrums anytime soon. Traders will have all weekend to think about the ramifications of what happened today. Stocks got crushed and it could just be the beginning. Charts look ugly around the globe. I'm going to have to take a very close look at what happened and try to come up with some kind of idea on how to trade it. One thing for sure is that you will have to be very nimble and not get attached to any trade. Take profits quick because we are still in store for some wild swings in the days ahead. The European markets actually started to come back from the brink before they closed today. Not so here in the United States and that should carry over to Monday morning. Plenty to ponder in the next couple of days. For now it's Friday afternoon and time for a break.
Thursday, June 23, 2016
I thought today would be a wait and see type of market on the vote in England. Wrong again. The market has already voted. The Dow soared 230 points today on light volume. The advance/declines were 5 to 1 positive. This should turn the summation index back to the upside. The short term technical indicators are now all pointing higher for the major stock indices. Could this be the beginning of a thrust that takes us to new all time highs? Time will tell but it appears so to me. The only caveat again is the light volume. Markets in Europe rallied as well so it seems those in the know are pretty sure that England will be staying in the European Union. GE was up 3/8 and the volume was good. The recent gravestone doji on the daily candlestick charts isn't panning out. Gold fell $10 on the futures and the US dollar was lower as well. Is this the flight to safety trade being taken off? Could be. The XAU and GDX had slight fractional losses on light volume. The gold shares remain in a trading range. Mentally I'm feeling OK. It appears that we are seeing a worldwide money flow into stocks. Indicators have turned and some of the foreign stock indexes are approaching overbought. The indicators for the S&P 500 still have some room to move higher. It appears that the vote is over before even being counted if we look to the markets for the answer. The VIX had a sharp move lower today as well. There is room to move lower there as well. So unless there is some kind of surprise overnight, higher equity prices are in the near future. I don't have any trades in mind for the S&P at the moment. Perhaps if we get overbought I could try the SPY July puts. But that trade would be at least a week away in my opinion. If the volume remains light, that idea may be worth it. Europe and Japan rallied overnight and I'd expect more of the same tomorrow. They will be counting the votes overnight but it already seems to be a done deal. We'll close out the week tomorrow.
Wednesday, June 22, 2016
It was a one day reversal to the downside as the market opened higher and closed lower. The Dow shed 49 points on light volume. The advance/declines were negative. The summation index is trending sideways. The technical condition of the market hasn't changed. We are still awaiting the vote in England on Thursday. That will make for some interesting trading for Friday. But really this is just a market held hostage to headline risk and it gets a bit ridiculous. I would not be making any substantial trades one way or the other ahead of the results. Regardless of the voting outcome, I'll be glad when it is out of the way. GE was off 1/8 or so on OK volume. The short term technicals here are starting to roll over. Gold was off a few bucks on the futures and the US dollar was lower as well. The XAU rose 1 2/3, while GDX gained 1/2. Volume was average. The gold shares remain in a long trading range that began in the beginning of April. Mentally I'm feeling OK. The small stocks continue to be under performers and that isn't bullish in my view. Something else that I've noticed recently is the elevated level of the VIX. The thing is the VIX has been higher but we really haven't seen any huge price moves. I do not know what that implies but it isn't the usual action. The European markets have had a nice run up over the past 5 trading sessions. Maybe they know something we don't. My feeling is that tomorrow will be a waiting game around the world. I'll be trying my best not to make any stupid moves ahead of the English vote.
Tuesday, June 21, 2016
Basically a drift higher as we remain held hostage by the vote in England on Thursday. The Dow rose 24 points on light volume. The advance/declines were positive. The summation index is trying to turn back up. The small stocks are still lagging. It is a wait and see market in my opinion. We had Yellen in Washington today and the market yawned. More of the same tomorrow I suspect. The technical indicators remain weak for the NASDAQ and better looking for the bigger cap indices. I will try my best not to do anything stupid ahead of the vote in the UK. GE was up 1/8 and the volume was average. The short term technical indicators here are overbought. Gold fell $20 on the futures as the US dollar was higher. The XAU lost 1 3/4, while GDX shed 3/4. Volume was average. Gold seems to be telegraphing that England with remain in the European Union but that's just another guess on my part. Mentally I'm feeling OK. Plenty of time in the July option cycle to put on a trade if a decent signal appears. What needs to be answered is after the results of the vote on Thursday, then what? We'll get the initial knee jerk reaction but what will be the trading driver after that? The S&P 500 short term technical indicators are mid-range, so you can make a case for either way. I'm pretty sure that I will remain on the sidelines this week and let the event driven market environment take care of itself. But who knows? Maybe I'll try something after Thursdays voting results are in. Foreign markets were generally higher but not by much in Europe. We'll keep an eye on what transpires overnight but it really is simply a waiting game for now.
Monday, June 20, 2016
The Dow did manage a gain today but we finished well off of the highs. It gained 129 points on light volume. The advance/declines were 3 to 1 positive. We were up well over 250 points in the first half hour. It was a steady erosion from there until the close. That was not exactly positive price action. The summation index may start to go sideways after today. Better news about England and the European Union over the weekend was the cause for the spike this morning. We are still driven by that event for now. It makes for more guesswork than usual. The short term technical indicators have turned back up for the major big cap averages. The small stocks remain oversold. GE was up 1/4 on good volume but finished way off of the highs. The daily candlestick here looks bearish like a gravestone doji. Gold was off a couple bucks on the futures but came off of its lows. The US dollar was lower. The XAU was up 2/3, GDX lost 1/8. Volume was light. Mentally I'm feeling OK. The price action today could have been very positive but instead we are left in the lurch. Trying to trade an event driven environment adds even more than the ordinary trading risk. The rewards could be substantial. But so could the losses. I have yet to make up my mind if I am going to put on a position ahead of Thursdays English vote. Perhaps the prudent course of action will be to stay on the sidelines and wait until we get back to a regularly traded market. Maybe if we get a light volume rally this week it will set up for the SPY July puts. The small stocks are lagging here and that is not a positive sign. There were decent gains in Asia and huge gains in Europe overnight. The fact that the US couldn't follow that is cause for concern. We'll keep an eye on the overnight developments and go from there.
Friday, June 17, 2016
Back to the downside today as the Dow fell 58 points on expiration heavy volume. The advance/declines were positive. Getting a mixed bag here with the breadth. The NASDAQ was relatively weaker. The summation index continues lower. There is a positive RSI divergence on the S&P hourly charts. Plus the short term technical indicators remain oversold. But we are still held hostage with the headline risk out of England. Perhaps the wise choice will be to let that pass and go from there. GE was off a few cents and the volume was lighter. The gold futures came back today and we are making another run at $1300 there. The US dollar dropped today. The XAU and GDX had slight fractional gains on light volume. Gold will probably move off of the vote in England as well. The short term technicals here remain overbought. Still in a trading range for the gold shares is my view. Mentally I'm feeling OK. Hard to tell which way to go here and careful study will be required over the weekend. High option premiums don't help things at this point with the July option cycle just beginning. I do not think that England will vote itself out of the European Union but I certainly don't know for sure. How can we profit from this event is the more important question. The summation index is still moving down and I do not want to go against that. But I will have to take a look at everything over the next 2 days to decide what course of action or inaction to take. Once we get England out of the way, things could slow down with the beginning of summer and the July 4th holiday coming up. That would not be helpful for the options game unless you are writing them. So we'll see. Plenty of things to ponder. For now it's Friday afternoon and time for a break.
Thursday, June 16, 2016
It was a one day reversal back to the upside today as the Dow gained 92 points on light volume. The advance/declines were about even. We were down over 150 points early on and made it all the way back and then some. Even a blind person can see that volatility is back. The summation index continues lower. Todays bounce was what I was looking for yesterday. The S&P 500 bounced back from the 2050 level, which was a nice round number. There was money to be made in the short term call option trading today. I did not take advantage of it. After yesterdays closing decline we were still in the short term oversold condition. Perhaps I will have to rethink my opinion of my short term trading tactics. GE was up 1/4 on lighter volume. No trades here for now. Gold and the gold shares had a one day reversal to the downside. The precious metal futures were up over $25 and ended down $5 in the aftermarket. The US dollar bounced all over the place today but finished little changed. The XAU fell 2 1/2 and GDX dropped around 7/8. Volume was heavy. Mentally I'm feeling OK. The next obvious question is was today the end of the recent decline or the start of a bounce in which to get short? I wish I knew the answer. I think that it's too early to tell actually. With the expiration happening tomorrow it is hard to tell what to make of the price action in my opinion. The summation index is still moving down and we'll take our cues from that for now. Some of the short term technical indicators have stopped going down but they remain in oversold territory. At this stage I'm going to let tomorrow pass and hopefully figure things out over the weekend. The VIX had a huge spike this week so perhaps the worst is over. We do have the lingering headline event of England and the European Union to deal with. We'll certainly see markets react once the votes are counted. But that's a week away. Foreign markets were generally lower overnight. We'll see how the expiration goes tomorrow.
Wednesday, June 15, 2016
A one day reversal to the downside today as the Dow opened higher and closed lower. The most watched index fell 34 points on light volume. The advance/declines were positive though. The summation index continues lower. The Fed had nothing new to say and we got a slight and brief move higher after the announcement. But the market came apart in the final half hour. The short term indicators remain oversold. I did get rid of the SPY June calls today but my exit was lousy. The gain was 35% but it could have been at least double that if I were more nimble. However the short term trades aren't my best efforts and I suppose I'm thankful it wasn't a loss. We are still due for some better bounce than we got today but with only 2 days to go in the June option cycle my best decision will be to move out to July. GE was up over 1/8 and the volume was good. We came off of the highs here as well. It looks like GE was not the precursor that I was hoping it to be. Gold was up $6 on the futures. The US dollar fell today and it was lower before the Fed statement. The XAU rose almost 4 points and GDX added a point. Volume was above average. The gold shares have still not broken out of the trading range that began in the beginning of May. Mentally I'm feeling tired. The short term trades can do that to you. I'm also disappointed once again with my execution of the trade. Too much fear and greed for me today. Doesn't matter now though and you've got to keep going. The bounce today was weak and that is not a good sign for the bulls. The final half hour could be expiration related. That's a guess as usual. My ideal scenario for now would be a light volume rise in an attempt to purchase some SPY July puts. However with the full July option cycle to go, the premiums are expensive. The weekly candlestick charts for the major stock indices have a bearish pattern for now. We will have to see where the week closes out. As of now the weekly technical indicators have rolled over as well. So we'll see. Foreign markets rallied overnight. The fact that the US couldn't follow them is a negative as well. I think that it's a time to be cautious.
Tuesday, June 14, 2016
Lower again today as the Dow fell 57 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 the TRAN got clobbered today. Getting to short term overbought on the major stock indices. I did go over the charts again last night and checked my indicators. I decided to place an overnight order for the SPY June calls that would be filled if we got low enough today. We did and my order was filled. It is showing a small profit. This trade is fraught with risk as the time remaining is only 3 days. I'm expecting some sort of bounce out of the Fed but I could be wrong. The trend is down. GE was up almost 2/3 on good volume. News on the stock was the driver there. Now if GE happens to be a precursor for the overall market, the SPY June call trade will work. Wishful thinking on my part. Gold was up slightly and the US dollar had another good session as well. It appears to be the flight to safety trade is back. The gold shares are not following though as the XAU lost 2 points, while GDX fell 1/2. Volume was average. Mentally I'm feeling OK. The trend has turned down for stocks but we haven't had a complete breakdown yet. It appears we are back to the event driven environment with the threat of England exiting the European Union. Unlike the Greece fiasco of last year, there will actually be a vote of the people to decide. But this vote is over a week away and the markets are not simply going to stop trading until it is decided. I'll be looking for some kind of bounce tomorrow and probably should exit this current trade if I get the chance to show a profit. Volume has picked up as we've headed lower in the past few days. That is bearish. I'm still looking at the SPY July puts. I'll possibly enter that trade if we do see some sort of upside in the next few days. But we could simply continue to head lower as well. However the VIX is over extended and did start to turn back down today. That could change tomorrow. The trading is never clear cut or easy. The small stocks have not been leaders on the downside so far. If they were to take the lead, I would think that a serious decline would be in order. I could be wrong. All foreign markets were weak last night as fear has taken over for now. All eyes and ears will be on the Fed. We'll see how the markets react to that.
Monday, June 13, 2016
The Dow lost 132 points today on light volume. The advance/declines were 3 to 1 negative. The summation index is now heading lower. The uptrend line from February in the S&P 500 has been broken. The short term technical indicators have all rolled over and are not oversold yet. There will be a bounce at some point this week but the question is from what level? You would have to be nimble and quick to take advantage of it. Those are qualities that I usually lack. I may try something though. Markets sold off around the globe last night. I'm also looking at the SPY July puts but it may be too late for that. This could also be the beginning of an extended decline but I am not sure of that either. GE was off almost 1/4 and the volume was better. Gold rose $10 on the futures as the US dollar was softer. The XAU and GDX had slight fractional moves one way or the other on light volume. The gold shares haven't followed gold higher lately and that could turn into a problem for the gold bulls if it doesn't change soon. Mentally I'm feeling OK. A lot of the weekly candlestick charts for the major indices have bearish stars on them. Perhaps we've reached a turning point in the market. With only 4 days remaining in the June option cycle, putting on a position for June entails a whole lot of risk. Perhaps the choice to make here is to wait for a bounce to get the SPY July puts. Or maybe trying a bounce off of the Fed on Wednesday. Or maybe just staying on the sidelines. There are always plenty of choices in the game. Having the patience to wait for the best set ups is part of the battle. Right now it appears that the quest for new all time highs has been put on hold once again. We also broke and closed below the near term support at 2085 on the S&P 500. We're right above the 50 day moving average. At this rate we will break that tomorrow. I'll have to look at all the very short term indicators to see if a bounce trade is possible. I'd expect more weakness around the world tonight as nothing has materially changed since yesterday. We'll get retail sales here tomorrow and that could be a market mover. The recent slow market grind higher has now shifted. Interesting times.
Friday, June 10, 2016
Well is looks like the selling wasn't met by buying today. The Dow lost 119 points on light volume. The advance/declines were 4 to 1 negative. This could start to move the summation index sideways. There was wholesale selling all the way around today. We haven't seen that in a while. I'm not sure what to make of it. The short term indicators have now all rolled over for the major stock indices. It appears that my scenario for new all time highs was wrong. Or at least put off for now. The VIX is at the top of its recent range, so there is a possibility that today was the worst of it. But that's a guess as usual. GE was off 20 cents on what passes for average volume today. Gold was up 5 bucks on the futures despite a good session for the US dollar. The XAU fell about 2 points and GDX shed 1/3 as the gold shares went the other way. Volume was light for lately. Not sure what to make of the action here. Mentally I'm feeling OK. Expiration week is upon us starting Monday. It looks like my upside bias prognosis is in jeopardy after todays selling in the stock market. But we'll see. We didn't get the final hour run for the exits that you normally see in an extended decline. However we also could simply just be at the beginning of a downtrend. There is an uptrend line from February that comes in at around 2085 on the S&P 500. That could be a spot to try the SPY June calls on Monday for a short term trade if we get there. Or it could be the last line in the sand before we see an extended drop. Looking at the short term technical indicators has me thinking that perhaps the calls are not the right idea here. However things could also simply turn around as the market usually does what will frustrate the most. I suppose I could waffle back and forth about what to do here but that is a task for me to do over the weekend. Overseas markets were weak as well as oil overnight. Perhaps we are back to taking our cues from oil again. We've got the Fed next week and its anybody's guess as to the markets reaction on Wednesday. So there will be plenty to think about over the next couple of days. For now its Friday afternoon and time for a rest.
Thursday, June 09, 2016
A bit lower today as the Dow lost about 20 points on light volume. the advance/declines were negative. The summation index continues higher. We finished well off of the lows for the session. Any selling has been met by buying for the past couple of weeks. That is constructive market behavior. Although the short term technical indicators for the major averages remain overbought, I think that we will see new all time highs sometime next week. I'm a believer that we will get the positive expiration bias effect to run things up before next Friday. I could be wrong. However I will look for an entry point to perhaps purchase some SPY June calls in the next couple of days. GE was off a few cents and the volume was light. Keep an eye on the 50 day moving average here. Gold rose $10 on the futures despite strength today in the US dollar. The XAU and GDX had fractional gains on light volume. Longer lower rates should be a support for gold if that is the case going forward. There is also the positive seasonal effect of the August/September time period to look forward to. Mentally I'm feeling OK. Nothing has changed with todays market action as we are basically grinding our way higher. The smaller stocks were relatively weaker but not by much. If we were to see bigger declines tomorrow that might cause a problem because the short term technicals would be rolling over. For now at least, the bulls are in control. Next week there will be plenty of economic data plus the Fed to deal with. So we should see some more volatility and price movement. The key will be to be able to take advantage of it. Short term trading isn't usually one of my strengths. I will have to guard against making a trade just for the sake of making one since I did not have any trades during the May option cycle. The battle always lies within. Foreign markets were generally lower overnight. We'll finish out the week tomorrow.
Wednesday, June 08, 2016
Continuing with the higher drift as the Dow gained 66 points on light volume. The advance/declines were 2 to 1 positive. The summation index is heading higher. The march continues to new all time highs in my opinion. Overbought, staying that way and nothing in the way for now. It appears that the run up into the June expiration is in place. The TRAN continues to the upside. Some of the small stock indices are lagging but RUT is looking good. At the risk of sounding like a broken record the only caveat remains the light volume. GE was up over 1/8 and the volume was a little better. Still below the 50 day moving average here but a rise above will strengthen the case for new all time highs on the S&P. Gold was up over $15 on the futures as the US dollar was weaker again. The XAU rose 3 points, while GDX added over 3 /4. Volume was average. We are at the top of the recent trading range for the gold shares. Mentally I'm feeling OK. It is looking less and less that I will be able to put on a trade for the June option cycle. I'm looking for higher prices but can't seem to get the market to cooperate with an entry point. The June SPY puts don't seem like a good idea at this time. There isn't much else to do but watch and wait. Not trying to force the issue here seems to be the best idea that I have at the moment. Foreign markets were mixed overnight. We'll see what tomorrow brings.
Tuesday, June 07, 2016
We drifted higher for much of the session but fell in the final hour to finish with a gain of 18 points on the Dow. The advance/declines were positive and the volume remains light. The summation index continues higher. I'm still a believer in higher prices going forward but we may have hit a short term top today. If so, perhaps the SPY June calls will be back on the table. The small stocks were underperformers and that's a negative. The TRAN came to life though and closed above its 50 day moving average. Running out of time for the June option cycle, so the risk increases with each passing day. GE was flat on the session and the volume remains light. Like the Dow, GE finished well off of session highs. Gold lost a buck on the futures as the US dollar was a bit lower again. The XAU fell 1 1/4 while GDX shed 1/3. Volume was very light. Mentally I'm feeling OK. Are we still heading to new all time highs on the S&P? I'd like to think so but we have to remember that the volume is still lacking. Even if we make it that far it doesn't mean we are in for an extended gain unless we see some kind of huge volume breakout. That really doesn't seem possible considering the climate lately and the time of year. What I'd like to see in the next couple of days is a pullback under 2100 that would potentially set up an expiration week trade in the SPY June calls. The market rarely cooperates with the best laid plans though. If that doesn't materialize I'll simply have to wait for the opportunity for some SPY July puts on a light volume advance to new all time highs. Those are the scenarios on my trading list for now. We do have the Fed meeting next week but that seems to be a foregone conclusion of no change. So we'll see. Foreign markets were higher overnight. We'll keep an eye on the overnight developments.
Monday, June 06, 2016
Higher to start the week as the Dow gained 113 points on light volume. The advance/declines were better than 2 to 1 higher. The summation index is heading up. There is nothing in the way of hitting new all time highs soon. The question will be what to do when we get there. It is possible that the market will simply keep moving higher because there will be no overhead resistance. The only problem here has been the volume, as it remains weak. You cannot argue with price but there is no power behind it. I do not think that simply a drift higher will be enough. GE was up over 1/8 on light volume. Gold rose almost $5 on the futures as the US dollar was a touch lower. The XAU added about 7/8 and GDX was up 1/8 on average volume. Not a lot of follow through to Fridays stellar gains for the gold shares. Mentally I'm feeling OK. It doesn't appear that we will get a chance for the SPY June calls in the next 9 days. Perhaps if we make it past 2125 on the S&P, I'll start looking at the SPY puts for a short term trade. We remain overbought on the short term technical indicators for the major stock indices. Not a lot of economic data due out this week. So it probably is a good idea to remain on the sidelines for now. Of course things could always change in a hurry. Foreign markets were generally slightly higher overnight with the exception of NIKK. We'll see what tomorrow brings.
Friday, June 03, 2016
Lower on a weak jobs number today as the Dow lost 31 points on light volume. The advance/declines were slightly positive. Down almost 150 in the early going, the market made a comeback for the remainder of the session. The summation index continues to the upside and the short term technicals remain overbought. We have sold off at the open the past 3 days only to make a comeback each time. Sooner or later we are going to get going. The question is, which way? I'd still like to see a run to the 2125 level on the S&P before considering some puts. But today the overall market was weaker than the Dow for a change. The volume still remains an issue as well. GE was off 1/8 and the volume is still light. Gold soared as the US dollar got clobbered on the poor employment numbers. The precious metal futures were up over $30 as the dollar dropped a point and a half. The XAU rose 8 3/8, while GDX added 2 1/2. Volume was heavy. The gold shares are still in a trading range but after today it appears they may be on the verge of breaking out to the upside again. Hasn't happened yet. Mentally I'm feeling OK. 2 weeks left in the June option cycle. The risk increases with each passing day but I'm hoping an opportunity will present itself. The market has had chances to sell off this week and yet buyers have come in. That tells me that perhaps higher prices are on the way. I'm not saying it will be some kind of explosive rally. However it's possible that we could grind our way higher into the expiration. That's a guess as usual. The volume remains light here, so no rally can be trusted as yet. Maybe if we get weakness early next week I'll try the June SPY calls going into the Fed meeting. But I'll have to consider the possibilities over the weekend. I would like to try something in the June option cycle because I think once the Fed is out of the way, the summer doldrums could start. If the volume lately is any indication, it will be a long and boring affair for a couple months. We'll see. For now it's Friday afternoon and time for a break.
Thursday, June 02, 2016
Another one day reversal to the upside as the Dow opened lower and closed higher. It gained 48 points on light volume. The advance/declines were almost 2 to 1 positive. The summation index continues to the upside. We've gotten above 2100 on the S&P but the volume has been lacking once again. The advance/decline line continues to make new highs though. Overbought, staying that way and I don't see any changes at the moment. The trend is up until further notice. GE was off a few cents and the volume was very light. Gold was flat on the futures and the US dollar was slightly higher. The XAU and GDX had slight fractional gains on very light volume. Mentally I'm doing OK but did have another visit to the dentist today. We'll get the employment numbers tomorrow and as usual the market reaction will be the key. I don't know what to expect one way or the other but I do think things will have a positive resolution. The small stocks continue to gain ground and that's a plus. It would help the bullish cause if we could get the TRAN above its 50 day moving average but that hasn't happened yet. My idea here is to let things make their way up to around the 2125 level on the S&P and take a look at the SPY June puts there. Subject to revision as we move along. With the good breadth and upward trending summation index, there is no reason to be overly bearish. Sellers have seemed to have left the arena for now. NIKK took a hit last night but the other foreign markets were little changed and mixed. The OPEC meeting was a non market event. We'll wait to see what the employment report has to say and close out the week tomorrow.
Wednesday, June 01, 2016
It was a one day reversal to the upside as the Dow opened over 100 points lower and finished the day up 2 points. The advance/declines were 2 to 1 positive and the volume was light. The overall market was slightly stronger than the Dow. The summation index continues higher. Very good breadth for a market only up a couple of points. I'm still looking for higher prices in the near term despite the technically overbought condition in the major indices. Tomorrow should be a waiting game on the employment report due out of Friday. GE was off 1/8 and the volume was light. Gold was down a few bucks on the futures despite a drop in the US dollar. The XAU and GDX had slight fractional moves one way or the other on very light volume. I'd expect gold to move on the employment report as well. Mentally I'm feeling OK. The small caps continue to be relatively better performers and I don't expect any major decline as long as that is the case. The S&P 500 is stalling here at 2100 but suspect that we will get through there in the coming days. I could be wrong. My thinking is that there will be better resistance at 2125. However we know that the market will go where it wants. The Dow has managed to hold above its 50 day moving average as have other major indices. The only problem here is the volume which has been pretty weak on the rise. I do not trust light volume rallies. So where I do think we can go higher in the short term, I don't think this is the start of a leg up that breaks out. Unless we get a high volume rally through 2125. I don't see that happening just yet. Patience is still the theme here and perhaps now some SPY June puts if we move higher. Foreign markets were weak overnight and we followed their cue early. We'll watch the overnight developments and expect a quiet session tomorrow.