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.