Friday, October 28, 2016
Another interesting session as the Dow fell 8 points on good volume. The advance/declines were negative. The summation index continues lower. We bounced around all over the place today with the overall market continuing to be weaker than the Dow. The S&P 500 challenged the support at 2120 and bounced off. Not completely short term oversold for the S&P but we will get there if Monday is negative. My thinking is that any decline on Monday can be bought. I'll be looking to purchase the SPY November calls. The premiums are still high for the strike price that I'm looking at but there will be a short term buy signal if we close lower on Monday. GE jumped 5/8 today on the possible takeover of a rival. There is no other explanation for the sudden move in GE. Volume was 2 times normal. Gold rose $7 on the futures as the US dollar was lower despite a GDP report that was a bit better than expected. The XAU and GDX had fractional gains on average volume. Mentally I'm feeling OK. My indicators are setting up for a buy on Monday if there is weakness. I'm not sure if it will be the beginning of a rally or simply another case of relieving the short term oversold condition of the market. The small stocks have been very weak of late and that isn't a good sign for calls. The Dow has had better relative strength and that is something that is also a concern. The daily chart of the Dow also has the Bollinger bands contracting to the point where we should see some type of big move one way or the other soon. It is altogether possible that we are on the verge of a breakdown. The lower summation index and small stock under performance are bearish. However we are technically nearing the condition where we should at least see a bounce after Mondays price action. I could be wrong but I'll be looking to purchase some SPY November calls. Perhaps we'll see a final shake out before heading higher. That would be the ideal scenario. There will be plenty of charts to study over the weekend. Monday will end the month of October as well. For now it's Friday afternoon and time for a rest.