Thursday, December 01, 2016
A mixed bag once again as the Dow rose 68 points on very heavy volume to begin the month of December. The advance/declines were negative and the overall market was much weaker than the Dow. This is a trend that is not positive. The summation index may start to move sideways after todays price action. The big caps leading the way is not the most bullish of scenarios. I'm still looking at the SPY December calls though as we are getting to mid-range on the short term indicators. If the rally is for real and I do believe that it is, then buying any weakness tomorrow should work out for that trade. That is my game plan right here. If we see weakness after the employment report, I'll be purchasing the calls. GE was up almost 2/3 on good volume. There is now a bullish engulfing pattern on the GE daily candlestick chart. Gold was flat on the session but did come up off of its lows. The US dollar fell for a change today. The XAU and GDX had fractional losses on average volume. Mentally I'm feeling a bit tired. The recent drop this week in the small caps could prove ominous if it continues. However I still think that a move back to the 2180 level in the S&P 500 would be an opportunity to get long for the December option cycle. Perhaps my thinking is wrong here but that is the trade that I'm looking at. Of course the market could just start to head higher at the open and that would probably doom the trade. So we'll have to keep an eye on what happens tomorrow morning. Asia was higher and Europe lower overnight. Interest rates have risen dramatically since the election and the stock market hasn't really paid much attention. At some point it will and then there will be trouble for the bulls. It has been said that the money from selling bonds is going into stocks. Some of that is probably true but when only a few Dow stocks are going up vs. the rest of the market, there isn't the wholesale buying that you should see from such an occurrence. I don't normally talk about interest rates but they do effect the stock market at times. Sooner or in this case later, higher rates will take their toll on the market. They're having little effect at the moment. Asia was higher and Europe lower overnight. We'll see what happens with the jobs numbers tomorrow and the markets reaction to them.