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Friday, December 16, 2016

We had a one day reversal to the downside today as we opened higher and closed lower.  The Dow only fell 8 points though on very heavy expiration related volume.  The advance/declines were positive.  The summation index has begun to move sideways.  The overall market was weaker than the Dow.  Still short term overbought for the big cap major stock indices.  We are moving into a very favorable seasonal time frame for stocks, so I do not see any major decline coming up anytime soon.  If we can at least get the technical indicators to get back to mid-range, perhaps there will be an opportunity to purchase some SPY January calls.  Hasn't happened yet.  GE had some positive news and was up 1/2 on very good volume.  The precursor theory that I mentioned yesterday is now thrown out the window.  Gold rose $5 as the US dollar was a bit weaker for a change.  The XAU and GDX were mixed with very slight fractional moves.  Volume was good.  Mentally I'm feeling OK.  Only two weeks left in 2016.  I'd expect the rally to continue.  Most normal trading will take place next week and then we're into holiday mode for the rest of the year.  I do expect the Dow to get to 20000 before the end of the year.  But right now it is a matter of waiting for an opportunity to get the SPY January calls as the next trade.  There is not rush because this option cycle has 5 weeks instead of the normal 4.  Also at the moment I do not see any positive or negative divergences on the technical indicators that I follow.  But there will be plenty of time over the weekend to check on that.  We once again saw the Dow have better relative performance on the week than the other major averages.  As I've said before, this is generally a late stage of the rally occurrence in a longer time frame.  We'll just have to see how far that it can go.  Until we some negative divergences on the weekly charts, the trend remains up regardless.  So we'll do the homework over the weekend and see where that leads us.  For now it's Friday afternoon and time for a rest.

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