Wednesday, November 30, 2016
We finished the last session of the month mixed as the Dow added 2 points on very heavy volume. The advance/declines were negative and the overall market was much weaker than the Dow. The summation index is still moving up. OPEC has decided to cut oil production and the Fed beige book was in line with what was expected. Technically speaking the short term indicators have rolled over but are not at mid-range yet. At this rate I may have to wait for the employment report to come out before getting into a position on the SPY. We also have a potential market mover in the Italian election on December 4th, which is a Sunday. So there is plenty to consider in an attempt to get the SPY December calls. GE was off almost 1/3 and the volume picked up to the downside. Could GE be a precursor to lower prices? Gold was off $15 on the futures as the US dollar rose again. The XAU lost a point and GDX shed 3/8. Volume was average. Mentally I'm feeling OK. The VIX picked up today but I do not think that it is the beginning of some kind of big down trend. Perhaps a move back to the breakout level of around 2180 for the S&P 500 at the most. That's my view at the moment. I still favor the SPY December calls in the coming days. I may place an open order overnight. There are some near term unknowns concerning the jobs numbers and the situation in Italy. But once we get through that, I don't see any major obstacles to higher prices. I could be wrong. One thing that is a concern is that the small stocks are not in the lead higher here and it's just the opposite. The Dow leadership is usually a late in the rally type of action. But for now I'm giving the benefit of the doubt to the recent rise in prices. The volume has been really good and the small stocks have led the way up until now. The rising summation index is also a positive. Europe and Asia were generally higher overnight but not by much. We'll move on to the month of December tomorrow.
Tuesday, November 29, 2016
Just hanging around today as the Dow fell off of its highs for the session. The most watched index rose 23 points on OK volume. The advance/declines were barely negative. The summation index is moving up. Still on the overbought side for the short term. Perhaps we'll get a chance to purchase some calls on Thursday, if the short term decline continues. Otherwise I'll have to take a wait and see approach. There's still room to go lower here as most stock indices are still pretty far above their 50 day moving averages. The prudent course of action would be to wait for a fall back towards those averages before attempting the SPY December calls. GE was off 20 cents on average volume. No hurry to do anything here. Gold barely budged on the futures and the US dollar was off a bit. The XAU and GDX had fractional losses on lighter volume. Mentally I'm feeling OK. End of the month tomorrow. There's an OPEC meeting on the docket. Plus the Feds beige book. Not sure what that will bring but trying to remain patient for now. I still think that the rally has legs, it is just a matter on the timing for getting long in the December option cycle. Not an easy task to be sure. But one that should be profitable if I can pull it off. So we'll wait and see. Asia was mixed and Europe generally higher yesterday. We'll keep an eye on the overnight developments.
Monday, November 28, 2016
The week begins with a thud as the Dow fell 54 points on average volume. The advance/declines were around 2 to 1 negative. The overall market was weaker than the Dow. The summation index continues higher though. The market could not go up in a straight line forever. I think that any pullback can be bought at this stage. If we are weaker into Thursday, I'll be looking at the SPY December calls. The short term technical indicators remain overbought but if we get back to mid-range on them I'm a buyer. I'd probably like to be long going into the employment report if the market cooperates. GE was off about 20 cents on light volume. Overextended here as well. Gold rose almost $15 on the futures as the US dollar was a bit lower. The XAU was up 2 1/2, while GDX gained 3/4. Volume was good here. I don't think this is the start of anything serious to the upside but I've been wrong before. However the fundamentals do not favor gold at the moment. Mentally I'm feeling OK. We've had quite a post election rally and today is really the first negative session for all of the stock indices. We opened lower and stayed that way for much of the trading day. Could the rally be over? perhaps in the short term but I do believe that this advance has legs. Unless the summation index turns around, I'm looking for higher prices going forward. It will be tricky because I don't think the indicators will get to all the way oversold, as they did on the last trade. However we will keep a close watch on things as they develop this week. The ideal scenario of a clear signal probably won't show up before this trade needs to be entered. I'm pretty confident of higher highs before the December expiration. Asia was mostly higher and Europe lower overnight. We'll see what transpires overnight.
Friday, November 25, 2016
A very light volume levitation for the day after Thanksgiving as the Dow rose 68 points during the shortened session. The advance/declines were almost 2 to 1 positive. The summation index continues to move up. No overhead resistance and we'll just have to see how far it goes. Overbought, staying there and due for some kind of rest at some point. Where that point develops is anyones guess. GE was up a dime on the same listless volume. Gold was basically flat as the US dollar was off a bit. The XAU and GDX had slight fractional gains on anemic volume. Mentally I'm feeling a bit tired, did not sleep well. New all time highs in many indices on a daily basis now. Not a lot of press or media about it here so the rally can continue. When everybody is talking about how great stocks are will be the warning sign to head for the exits. We aren't there yet. I'll continue to look and hope for some decline to try the SPY December calls. However at the rate things are going, I may just have to remain on the sidelines. 3 weeks to go in the December option cycle. Plenty of economic data due next week including the jobs report. End of the month as well with the Feds beige book. Enjoy the rest of the long weekend.
Wednesday, November 23, 2016
Still moving higher as the Dow gained 59 points on light volume. The advance/declines were barely positive. The summation index is moving up. The overall market was weaker than the Dow, with the NASDAQ lower on the session. But as I said before, it won't matter because we are on a ride to higher prices. Still overbought on the short term indicators with no signs of rolling over. It's a holiday week rally and there is no overhead resistance for the Dow and S&P. GE was up over 1/8 on light volume. The same overbought conditions are in place here. Gold fell below the $1200 level as the futures dropped over twenty bucks. The US dollar was higher. The XAU lost 3 points and GDX shed a point. Volume was heavy. It appears the theme since the US election has been dump gold and bonds. At the same time buy stocks and the US dollar. Mentally I'm feeling OK. No break in the rally and the idea for getting some SPY December calls seems as though its time has passed. No point in chasing this rally now. Perhaps the best idea is to take a break now that Thanksgiving is here. Friday will be a light volume shortened session that will probably have an upward bias. There will still be 3 weeks to go in the December option cycle when things return to normal on Monday. Asia was slightly higher and Europe slightly lower overnight. Have a Happy Thanksgiving everyone.
Tuesday, November 22, 2016
Up and away we continue to go as the Dow gained 67 points on good volume. The advance/declines were over 2 to 1 positive. The summation index is heading higher. There is nothing to stop this incredible rally that began the day after the US election. The overall market was a bit weaker than the Dow but that won't matter. We closed above a couple of milestones. 19000 for the Dow and 2200 for the S&P 500. Tomorrow should be a get away day before the Thanksgiving holiday. GE was up 1/3 on light volume. Overbought and staying there remains the theme here. Gold was up a couple bucks on the futures and the US dollar was a bit higher as well. The XAU and GDX were slightly higher on very light volume. I do not see any imminent rally for the precious metals complex. Sideways is the most we can hope for here. Mentally I'm feeling OK. At the rate we are going, there won't be a chance for the SPY December calls. I do not want to chase this rally at this point. Patience is required but we must be open to the possibility that we are waiting for an opportunity that will never arrive. The next trade could wind up being in the opposite direction. For now we'll wait and see if we get any kind of return for the technical indicators to at least mid-range. Or a move towards the 50 day moving average at the very least. Price and importantly volume tell you that the move up is for real. It is much easier of course to trade with the trend. Whether or not we get a chance to is the question. Europe and Asia were both higher overnight. Expect a muted session tomorrow.
Monday, November 21, 2016
Onward and upward as the stock market rally continues. The Dow rose 88 points on average volume. The advance/declines were 3 to 1 positive. The summation index is moving up. Overbought, staying there and hitting new all time highs as we go. The stock market remains strong and there is no pullback to get long. The fact that hitting new all time highs isn't even press worthy lets you know there is plenty of room to go on the upside. I'm still looking at the SPY December calls if I get the chance. Doubtful at this point. GE was up 20 cents on light volume. Gold was up $3 on the futures as the US dollar was lower for a change. The XAU added 1 3/4, while GDX gained 3/8. Volume was light. The gold shares continue in the down trend that began in August. Mentally I'm feeling OK. A holiday week and buying is in vogue. There is no overhead resistance. We're over extended any way you measure it. I certainly don't want to chase things here but what can you do? I'm probably going to let this week pass unless we get a sharp drop, which I don't expect. We should drift higher into Thanksgiving and then add a bit on the short Friday session. Money is flowing into stocks. We don't need to know the reasons we just need to pay attention and attempt to profit from it. Europe and Asia were generally higher overnight. I don't expect much volatility leading into the holiday. We'll be watching things as usual though.
Friday, November 18, 2016
Friday of expiration week finished lower as the Dow fell 34 points on average volume. The advance/declines were slightly negative. The summation index is heading higher. Lackluster trading to be sure as perhaps the holiday mode has begun early. I'd still look to get long if we continue lower in the near term. A pause to relieve the overbought condition would be healthy when it comes to moving forward later in the December option cycle. Wishful thinking on my part and it hasn't happened yet. GE was off 1/8 and the volume was light. Gold fell almost ten bucks on the futures as the US dollar continues its climb. The XAU and GDX had fractional losses on lighter volume. No love for gold in this environment. Mentally I'm feeling a bit tired. It's been quite a run since the US election and I don't think anybody saw a rally of this magnitude occurring in such a short time. The market really could use a breather. The Thanksgiving holiday week is coming up and I expect slow trading to follow. It will probably be a time to get ready for the end of the month and the beginning of December. I'll be keeping an eye out for the SPY December calls as I don't foresee any obstacles at the moment to the levitation in stocks. If we can get the short term technical indicators back to mid-range, that would be enough in my opinion to try the calls again. We'll see. Asia was mixed and Europe lower last night. I'll be checking the charts over the weekend but I can already tell you that they remain overbought on the major stock indices. Patience is most likely the trait that will be required at the moment. For now it's Friday afternoon and time for a break.
Thursday, November 17, 2016
Moving up again as the Dow rose 35 points on what now passes for average volume. The advance/declines were slightly higher. The summation index is heading higher. Overbought and staying there. The overall market was once again stronger than the Dow and that's a positive. We are going higher, it just won't be as fast as we've seen. Any decline can be bought. There is nothing to derail the momentum at the moment. Option expiration tomorrow before a holiday week. I expect another day of gains. GE was up a nickel on very light volume. Gold was off $6 on the futures as the US dollar continues to climb. The XAU fell 1 2/3, while GDX shed 1/2. Volume was good. The gold shares are about to experience the death cross, with the 50 day moving average going below the 200 day moving average. The fundamentals and the technicals do not favor the gold shares here. Mentally I'm feeling OK. I did not do the short term SPY November call trade, as I was not nimble enough to pull it off. The idea turned out to be solid though. I am considering the SPY December calls if we do see some type of decline soon. But that may never come. The strength of this run up has been exceptional, as the volume indicates. I think that everyone is looking for a pullback to purchase. Thanksgiving week is generally slow but bullish, so there probably won't be an opportunity there. I suppose I'll simply have to remain patient and wait for a decent set up. Europe and Asia generally had slight gains in overnight trade. We'll close out the week with options expiration Friday tomorrow.
Wednesday, November 16, 2016
Taking a breather as the Dow fell 55 points on lesser volume. The advance/declines were slightly positive. The summation index is heading up. The overall market was stronger than the Dow, with the NASDAQ higher on the session. We were overdue for some profit taking or decline and got that today. I'm still considering a short term trade with 3 days to go on the November option cycle but will probably hold off. I'm considering the December SPY calls as well. We remain overbought on the short term indicators. I do look for higher prices going forward though. GE was flat on the day with light volume. Gold didn't do much today as the US dollar continues to climb. The XAU and GDX had fractional losses. Volume was light. Mentally I'm feeling OK. It has been quite a run for stocks but I would expect them to take a rest here with a holiday week coming up. If we can get the short term technical indicators to come off of their overbought condition perhaps we'll see an entry point for a SPY December call trade. As for trying another SPY November call trade with 2 days to go, we'll have to see weakness in the morning tomorrow and go from there. The risk would be very high to try that trade but I might. I expect stocks to finish the week higher. Plus we could see some more of the positive expiration week bias. Once again, the short term trades are not my greatest strength. Asia was mixed and Europe lower overnight. We'll keep an eye on the overnight developments and see what tomorrow brings.
Tuesday, November 15, 2016
The rally rolls on as the Dow gained 54 points on heavy volume. The advance/declines were well over 2 to 1 positive. This will turn the summation index back up. We should hit a new all time high in the S&P 500 at some point this week and it could be tomorrow. Short term overbought and staying there for the technical indicators. Any sustained weakness, if we get some, can be bought in my opinion. Price and volume tell the story and things are looking pretty bullish at the moment. The economic data came in as expected. Despite all that, I did sell my SPY November calls today. The 2 days prior to today took out most of the volatility premium and with only 3 days to go the risk of holding on wasn't worth it to me. I do think we could go higher tomorrow but we could just as easily pause. That would lead to a decline in the calls that I was not willing to risk. The profit was over 100%. As crazy as it sounds, I may try these calls again if we see some weakness tomorrow and the very short term technical indicators drop. But that remains to be seen. GE was up 1/4 and the volume was good. I'm considering the January calls here if we get some pullback to the downtrend line that was broken. Hasn't happened yet and it may not. Gold was up a couple backs on the futures and the US dollar was slightly higher. The XAU gained 3 1/2, while GDX rose 7/8. Volume was good. Maybe some bargain hunting here but there is no assurance that the decline has ended for gold and the gold shares. Mentally I'm feeling OK. This rally is incredible by any standard. Just as prices don't go down forever in a straight line, they don't go up forever either. We could simply move higher into the expiration but I do think we'll get some kind of at least short term decline in the next 3 days. I could be wrong. The market stays overbought longer than when it is oversold. So we'll have to see what happens. I might try a very short term call trade on weakness but the short term stuff is not usually my strong point. At any rate, the medium term picture is bullish as well and with the summation index heading higher now the trend will remain higher for an extended period of time. That's my guess at the moment. Slight moves and generally positive last night for the overseas markets. We'll see how it goes tomorrow.
Monday, November 14, 2016
The Dow keeps climbing as it gained another 21 points on extremely heavy volume. The advance/declines were barely positive and the overall market was weaker than the Dow. The summation index is still trying to turn around. Volume has been incredible lately and it is to the upside. I do think that this election rally has legs beyond the near term. I'm still holding on to the SPY November calls but the risk increases with each passing day. There's only 4 days left in the November option cycle. This trade still shows a profit but it appears the ideal time to sell has come and gone. I'm looking for another run to the 2180 level to get rid of them. Running out of time though and the market is short term overbought. GE lost 20 cents on lighter volume. Probably time for a rest here. Gold lost a few bucks on the futures as the US dollar continues its recent run up. The XAU and GDX had fractional gains on heavy volume. Perhaps things have gone too far, too fast for the gold shares. We'll see as the week unfolds. Mentally I'm feeling OK. Plenty of economic data out this week, beginning with tomorrows retail sales. Inflation data is coming out as the week progresses. My thinking is that traders will take care of any business this week as it is a holiday week next week with Thanksgiving. The technical indicators are overbought on the short term but we have had a pause after the initial huge run up after the election. Markets tend to stay overbought during up trends and that is what I think we are seeing now. That is why I've continued to hold on to the SPY November call trade, even though time is running out. I do think that another attempt at the 2180 level on the S&P 500 is not out of the question this week. I could be wrong. Asia was mixed and Europe slightly positive overnight. We'll keep an eye on the overnight developments.
Friday, November 11, 2016
The Dow just keeps on going as it rose 39 points on very heavy volume. The advance/declines were slightly positive. The summation index is still trying to turn around. It was a mixed bag as the S&P 500 was lower today but the small stocks rallied. The volume to the upside has been incredible this week and I believe it means that we'll still see higher prices in the coming weeks. A new all time high for the Dow and the S&P shouldn't be too far behind. We saw a lot happen in the markets this week. It probably won't be this volatile going forward. I sincerely doubt it. We are short term overbought on the major stock indices at this point. Some backing and filling is bound to take place. My SPY November calls are still in the black but here is only a week to go in the November option cycle. Getting out of this position with the best profit will be tricky. Or that time may have already passed. Plenty to think about over the weekend regarding that trade. GE was up another 1/3 on good volume. Probably too late for the January calls there. Gold got clobbered again as the higher dollar along with higher interest rates have taken the shine off of the precious metal. The XAU dropped 5 3/4, while GDX lost over 1 3/4. Volume was very heavy again. We'll have to see how low we go here. Mentally I'm feeling OK. The price action and volume this week was extremely positive for stocks. The INDU, TRAN and RUT are just some examples. I don't expect a repeat of last week going forward but I am certainly positive on the outlook for equities. Price and volume are things that you can usually count on for direction. The S&P is overbought in the short run but there's still room to go higher medium term. Exiting the SPY November call trade will be my main focus next week. I could maybe give it until Wednesday of next week for the exit. Anything beyond that would even entail more risk. As I said before, I may have already missed the ideal exit point. I'll be checking out the charts over the weekend. Hopefully we'll see the usual positive expiration week bias but there are no guarantees. It was quite an interesting trading week to be sure. For now it's Friday afternoon and time for a break.
Thursday, November 10, 2016
The rally continued for the big caps as the Dow added another 218 points on extremely heavy volume. The advance/declines were lower though and the NASDAQ was lower. The summation index is still trying to turn around. The overall market was much weaker than the Dow and that is usually not a positive sign. However with the volume expanding to the upside in such a big way, I still think that we're going higher before expiration next week. The Dow is at a new all time high and I would expect at least the S&P 500 to do the same. Longer term, it isn't usually bullish when you have the Dow leading the way. But all we need is the summation index to start moving up and we'll see higher prices on all the major averages. GE gained 3/4 on more than double normal volume. And it was higher than that during the session. I'm still considering the January calls here on a pullback if we get one. Gold was off about $10 on the futures as the US dollar continues to climb. The XAU dropped 6 points, while GDX shed 1 7/8. Volume was extremely heavy. The higher dollar along with higher interest rates makes gold unattractive at the moment. Mentally I'm feeling OK. I did put in a limit order to sell my SPY November calls but it wasn't filled. Close but it didn't happen. At this point it appears that I'll hang on to them until next week. They are in the black and unless we see some extended decline in the next 6 days, this trade will turn a profit. Money is pouring into US stocks right now and we are just getting to short term overbought. Another plus day tomorrow and we'll be there. Friday is a partial US holiday, with the bond market closed. Perhaps the stock market will quiet down for a day. Any declines can be bought in my opinion. Asia was higher and Europe lower overnight. We'll finish up a crazy market week tomorrow.
Wednesday, November 09, 2016
Now that was an interesting 24 market hours. The US election was an upset as Donald Trump prevailed. I was wrong on that guess. Markets around the world collapsed on the realization that Trump was going to become president of the US. The S&P 500 futures were down over 100 points. It was incredible. Even more incredible was the comeback. The market came all the way back and then some. The Dow finished today up 256 points on extremely heavy volume. The advance/declines were positive. The summation index is still trying to turn around. The weak advance/declines for the past 2 sessions is puzzling. I would have thought that we'd see at least a 2 to 1 or 3 to 1 ratio there. You can't argue with price though. My SPY November calls are still in the black. GE was up almost 1/4 on heavy volume. Gold, which had rallied $50 overnight finished with a gain of $5 on the futures. The US dollar was stronger. The XAU was up 2 2/3, while GDX added 2/3. Volume was heavy but the gold shares finished well off of their highs. Mentally I'm feeling OK. The stock market crashed and came back all in a 24 hour period. Well, the futures market did. The cash market fell a bit this morning but then rallied hard. We are getting to short term overbought but aren't there yet. Of course we could always remain overbought once we get there. I'm inclined to take whatever profit I have in this SPY trade tomorrow but I do think that we're going higher before expiration. Friday is a semi-holiday for Veterans day and the bond market will be closed. What happened in the markets last night was crazy and I hope we don't see anything like that again anytime soon. There is no way to trade that kind of market action using options when the options market is closed. The volume today was huge and we did break some downtrend lines on various indices. So I still think that we're going higher. It is a matter of how much before expiration and when to sell out the current SPY November call position. I can make a case for holding on until next week but that's something I'll have to think about tonight. Asia got rocked last night, while Europe was able to follow the US and finished with decent gains. We'll keep an eye on the overnight action.
Tuesday, November 08, 2016
Still moving higher today as the Dow rose 73 points on good volume. The advance/declines were positive. The summation index is still trying to turn around. We'll get the election results tonight and go from there. The market is still not short term overbought yet. My SPY November calls are still in the black. I'll seriously be thinking about selling them if we get follow through upside tomorrow morning. But I do think that this is the start of a longer term move higher. If we can get the summation index turned back up, that would strengthen the rally theory. The VIX has room to move lower as well. GE was up 1/8 on OK volume. We've made it back to the 50 day moving average here. Gold was off $4 on the futures and the US dollar was higher as well. The XAU and GDX had slight fractional moves one way or the other. Volume was average. Mentally I'm feeling OK. With most of the earnings out of the way and the election season in the rear view mirror, what will be moving the market next? That will the question on traders minds and I certainly don't have the answer. I do know that the summation index is poised to turn back up and that would lead to a sustained move higher. Hasn't happened yet but I do think that it will. I think that with 9 days in a row lower for the S&P, the market pretty much sold itself out for the short term. Unless there is a Trump upset victory tonight, we're going higher and to new all time highs before the year is out. That's nothing that anybody is talking about now and the market likes to do what is least expected at times. This could be one of those times. Europe and Asia were generally higher but not significantly. We'll see what tomorrow brings.
Monday, November 07, 2016
An oversold bounce and then some. The Dow soared 371 points on good volume. The advance/declines were about 5 to 1 positive. I don't think the summation index will be turned around after todays market move but it is on the way to doing so. Extremely oversold is where we were and we're not overbought yet. Short covering and some new money came into play today. My SPY November calls have moved all the way back into the black. I think that this is the start of a move higher and I think that I'll hold these calls until Wednesday. Of course I could change my mind. I certainly did not expect a 46 point move up in one day for the S&P 500. GE was up 7/8 on good volume. Over the weekend I considered buying some January calls here but it is probably too late for that. I still may if we get a pullback but I don't see that happening in the near future. Gold got whacked as the flight to safety ended. The precious metal futures fell over $20 as the US dollar was higher. The XAU fell 2 1/3, while GDX lost a point. Volume was good. I'd expect gold and the gold shares to be lower to sideways until after the next Fed meeting. Mentally I'm feeling OK. We gained all that we lost last week in a day. That wasn't expected by anyone. Small stocks had huge moves today and the TRAN broke out above overhead resistance. I think that the move higher has legs. The advance/decline volume was almost 10 to 1 positive as well. We'll have to see how the rest of the week plays out but if the gains hold, the medium term picture will turn bullish as well. So we'll see. Europe and Asia were higher overnight as well. The market may be on hold tomorrow to get the election out of the way but I do think that we'll be moving higher. New all time highs before the year is out? As we've recently seen, anything is possible.
Friday, November 04, 2016
Down yet again today as the Dow could not hold onto its gains and lost 42 points on good volume. The advance/declines were barely positive though and the overall market wasn't as weak as the Dow. The summation index continues lower. The employment report was just a tad weaker than anticipated. There is something going on here but I certainly don't know what. The extreme oversold condition of the market is dangerous but we still haven't seen a collapse. My SPY November calls are still losers and it will take quite a miracle to get back to break even, if that's even possible. The bounce that I'm waiting for has never arrived. Oversold on all levels. GE was up 1/8 or so on good volume. Gold was up a couple bucks on the futures and the US dollar was a bit lower. The XAU and GDX had slight fractional losses on average volume. Still short term overbought for the gold miners. Mentally I'm feeling OK. Very extreme technical conditions at the moment. This is something that is rarely experienced. My guess is that we are going to get a giant relief rally after the election next week. I do not think that we are going to crash. The market has had that opportunity to collapse all week and it simply meanders its way lower. The technical position that we're in is rare. I suppose anything could happen but I would be shocked if we didn't get a huge move to the upside at some point in the coming week. It may not last but it would be a chance to exit the SPY calls at a smaller loss. Or who knows? Perhaps it would be the beginning of a sustained move higher. 2 weeks to go in the November option cycle. Once again I'll say that I do not know what is going on here with the market. I do know that the market usually knows more than we do. The extreme condition that we see today will probably resolve itself with something just as extreme. Next week should be one of the most interesting market weeks that we've had in a while. That is my prediction. I'm also expecting a multi-hundred point move on some day during next week. And my guess it that it will be to the upside. I cannot stress enough the strangeness of the stock market at the moment. The weakness is coming from something but I do not think that it's the US election. Clinton should win and Congress should be split by party. Perhaps there's something else that the market knows and we'll eventually find out. I don't know. Asia and Europe were mildly lower overnight, again with the exception of the losses in NIKK. Plenty of charts to study over the weekend. For now it's Friday afternoon and time for a break.
Thursday, November 03, 2016
The downtrend continues as the Dow fell 29 points on good volume. The advance/declines were negative. The summation index continues lower. The overall market was weaker than the Dow. I have no explanation for what we are seeing here. We are at a point where we should have seen a bounce or a collapse. Neither has occurred. The decline is slow and orderly. Oversold on all indicators with no short covering or relief rally. My SPY November calls are solidly in the red. I suppose at this rate I will at least wait for the election before dumping them. This is one of the strangest market periods that I've seen. GE was off another 1/4 on light volume. Gold was off around $5 on the futures as the US dollar continues to the downside. The XAU rose 1 2/3, while GDX gained 1/2. Volume was average. Still overbought on the short term for the gold shares. Mentally I'm doing OK besides being confused about the goings on here. Perhaps the employment report tomorrow will bring some added volatility. That's just a guess. The VIX is already in the 20's and overbought. But at the rate things are going here, that won't mean anything. An extremely puzzling market situation is what we have here, only because the oversold condition persists without any relief. The trend is obviously down and the small stocks have been the leaders. Near term support has been violated on many charts and the 200 day moving average is now in play in several instances. I've been looking for a bounce all week and it hasn't happened. I guess I can't rule out the status quo move lower until the election. That is something that I did not count on or expect. When the normal technical indicators don't work, it usually means we're in extraordinary times. It certainly doesn't seem like that to me. But the market always has the final say and the support I saw at 2100 for the S&P 500 hasn't held either. Asia and Europe were mostly lower with NIKK having the biggest decline. We'll finish up the week tomorrow on the jobs report. Interesting times.
Wednesday, November 02, 2016
Oversold and still moving lower as the Dow fell 77 points on good volume. The advance/declines were 3 to 1 negative. The summation index is heading down. The Fed announcement came and went. We got a little rally there but could not hold on. We are at a spot technically that deserves some upside unless we crash. I do not expect the market to fall apart here. The bounce that I'm looking for is long overdue. The readings on my indicators point to this being an ideal time to buy, even for the medium term. The roughly 2100 level on the S&P 500 should hold and I'm looking for higher prices from here. My SPY November calls are well in the red but even these have a chance to get back to break even with just over 2 weeks in the November option cycle. So we'll see. GE was off over 1/3 on average volume. It was a new closing low for GE in its slide. Gold was up about $20 but fell in the aftermarket. The US dollar lost ground again. The XAU and GDX had one day reversals to the downside, opening higher and closing lower. They lost 1 1/2 and 1/3 respectively on heavy volume. Mentally I'm feeling OK. It appears that fear and uncertainty have gripped the market. Unless something is going on under the surface that I'm not aware of, these fears will prove unfounded. The technical indicators are so oversold that we almost have to move higher. Some of the major indexes are either at or near their 200 day moving averages. They should find support there. The only thing that would negate the positive near term outlook here is a market crash. When you get the extreme readings we are seeing now along with all the negative market media, it's time to take the other side. I could be wrong but I really don't think so. I still expect a decent bounce and it should happen before the close on Friday. I don't see any surprises with the US election and there should be a relief rally in a week for US equities. I'm sticking with the theory that SPY calls are the way to go here. Europe and Asia had decent losses overnight. We'll be keeping an eye on the overnight action.
Tuesday, November 01, 2016
Volatility returned today as the Dow fell 105 points on very heavy volume. The advance/declines were 3 to 1 negative. The summation index is still heading lower. We were off just over 200 at the lows of the session. The S&P 500 broke the support at 2120 and dipped below 2100. I think that 2100 should hold things here but the market will go where it wants. Remaining short term oversold for the major averages and that could be dangerous as we saw today. However I am still a believer in the SPY November calls at this juncture and I did purchase some today. Of course I was early and paid more than I wanted to for them. I should have waited to see if we were going to hit the 2100 level once we broke 2120. Hindsight is never wrong and does you no good in the heat of the battle. I'm rusty for sure but what I saw today is opportunity to me. GE lost about 1/4 on average volume. Gold found buyers with the drop in equities. The precious metal futures rose $16 as the US dollar was lower. The XAU gained 2 1/3, while GDX added almost 2/3. Volume was good again. Short term overbought on the gold shares. Mentally I'm feeling OK. I'm not sure where this decline is heading but I do expect a bounce right now. With the market recovering half of what it lost today, perhaps we've seen the worst of the selling for now. My owns short term indicators are very oversold and some kind of upside is coming. Whether or not it's enough to get my SPY November calls in the black is another question. Timing is everything when it comes to trading options for the short term. If we do simply continue to trade lower then be ready for some type of collapse. But I do believe we'll at least hold up here for a couple of days. We've got the Fed announcement tomorrow and that should really be a non event. The jobs report on Friday will probably be viewed as more important. Plus whatever headlines come out of the election propaganda before the 8th. Plenty of noise for the markets to sift through. We'll stick to the technicals and expect some upside bounce tomorrow. Asia was higher and Europe lower overnight. I'm expecting the 2100 level to hold for the S&P 500 and perhaps will look to try the calls again if we get back there.