Friday, October 21, 2016
The Dow lost 16 points today on what passes for average volume these days. The advance/declines were barely positive. We sold off early and spent the rest of the day trying to get back to even. The overall market was stronger than the Dow, with the small stocks leading the way. That is a positive. I'll be looking to get some SPY November calls on weakness next week. Another test of the recent lows would be the ideal scenario for me. GE was off about a dime and followed the overall market pattern for the session. Down early and trying to come back. My idea of purchasing the calls and puts only would have worked if you sold out of both positions in the first 5 minutes of trading. The profit would have been small and certainly not worth the risk. The calls would have been wiped out and the gain on the puts would have barely put the 2 trades into the black. The price movement on the earnings wasn't big enough to make that idea worth it. But of course, you don't know that ahead of time. The gold futures were flat with the US dollar higher yet again. The XAU and GDX had fractional losses on very light volume. Mentally I'm feeling OK. We made it through option expiration week and it was pretty tame considering that it's October. I'd like to think that the market is going to hold in here and some type of rally is about to begin. The short term technical indicators for the major indices are still mid-range. The summation index is trying to turn around here in my opinion. We're at an important point for the S&P. If we roll over and take out the support at 2120, we could see a decent decline. But it seems to me like the market wants to hang in here with the recent price action. What I don't want to see is more of the same sideways price action that leads to nowhere. With the November option cycle now in play, we have a full 4 weeks of time premium left. More sideways inaction will erode the premium and make outright speculation even more difficult that it already is. But we all know that you can't tell the market what to do. It will get where it's going in its own time. I'm sticking with the SPY November calls theory for now. Europe and Asia were mixed last night with slight price moves. I'll check the charts over the weekend as usual. For now it's Friday afternoon and time for a break.