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.