Friday, December 09, 2016
I suppose at this point we can just start calling this a melt-up. The Dow rose 142 points on good volume. The advance/declines were barely negative. The summation index is moving up. No explanation to this type of price action. Dow up 142 and the breadth is negative? Go figure. Extremely overbought in the near term and still moving higher? I appears that a run up into the expiration next Friday certainly isn't out of the question. Hard to attempt a trade when the technical indicators aren't working. I'm still thinking about the SPY December puts for a short term trade but there is no divergences yet. It's probably best to just let the December option cycle go by and look to the January calls. GE was up 1/4 on lighter volume. Gold dropped a dozen on the futures as the US dollar continues its climb. The XAU fell 2 1/2, while GDX shed 3/4. Volume was good. No positive signs for gold. Mentally I'm feeling OK. The rally is overextended by any stretch of the imagination or measurement. The trouble is that there is no telling just how far up this thing can go. It defies the normal technical indications to the upside just as it sometimes does on the downside. So it is hard to say when it will end. When the indicators stay overbought or oversold for days and weeks, they are of no use. It simply isn't the normal market environment. It's tough to trade. At this rate you could just buy some SPY calls and hope that it continues to go up. That really isn't a market strategy. What I will do over the weekend is go over the charts once again and try to figure something out. It may be dangerous to try and buy the SPY puts next week because that idea just isn't working for those who've tried recently. However I do think that at some point next week it will. It is a historically weak time period for the market and perhaps the Fed tightening will bring some sellers. They have been absent for weeks. But I'll have to peruse the charts first. For now it's Friday afternoon and time for a break.