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Monday, August 08, 2016

Just another summer Monday in 2016 as the Dow fell 14 points on light volume.  The advance/declines were positive.  The summation index is moving sideways for now.  The summer doldrums in full swing.  We are getting convergence of the Bollinger bands on the S&P 500.  This implies a big move is coming up.  As usual, which way is the question.  I'm looking at the SPY August and September puts again.  However with the slowness and lack of volatility lately, any trade has to be timed to perfection.  Also we're running out of time in the August option cycle with only 9 days left.  GE was off a penny and the volume was light.  Gold was off few bucks on the futures and the US dollar was a bit higher.  The XAU and GDX both had slight fractional gains on light volume.  Mentally I'm feeling OK.  A check of the charts over the weekend still shows a short term overbought condition for the S&P 500.  We did break out on Friday to the upside but there was no follow through today.  The McClellan Oscillator is trying to get back above the zero line.  If we can't get above that, there may be a chance that we will roll over and the SPY put trade will work.  However there is also an old wall street saying, never sell short a dull market.  This is about the dullest market that we've seen in quite a while.  I'm still leaning towards the put side though.  The NIKK had a strong session overnight.  The rest of Asia and Europe was slightly higher.  Not a lot of economic data due until Friday when we get inflation and retail sales numbers.  We'll keep an eye on the overnight developments.   

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