Tuesday, January 31, 2017
Another mixed market as the Dow shed 107 points on good volume. The advance/declines were positive. The NASDAQ was up a point. The overall market was stronger than the Dow and that's a positive. The summation index is moving lower but without velocity for now. My thinking here is that declines tomorrow can be bought. I'll be looking to purchase the SPY February calls. We have the beginning of the month tomorrow but more importantly, the Fed. I'm hoping for some selling on the Fed but the market will go where it wants. The market has come back in each of the previous two sessions. Selling has been met with buying. As long as that pattern holds there is no danger of a bigger decline. GE was off 1/4 on OK volume. The potential double bottom is still in place here. Perhaps today was the ideal time to try the calls. There is a potential positive divergence on the daily RSI. Gold rose $17 on the futures as the US dollar was lower. The XAU added 2 3/4, while GDX was up 3/4. Volume was about average. I'm still not a big fan of gold here. Mentally I'm feeling tired as I have a cold now. This is affecting my ability to concentrate on the trade. I again may place an overnight order for the SPY calls but we'll have to see. I think that perhaps waiting to get the Fed out of the way would be the better course of action. The short term technical indicators for the S&P have moved back to mid-range. A turn up from here could lead to a small rally to new highs and make trading the SPY calls a profitable idea. That's the theory for now. On the flip side, we could simply decline until the indicators get oversold. I'm more of a believer in the first mentioned scenario. Asia was lower with some markets still closed for holiday. Europe was down as well. Some of the European index charts have a similar look to them as the US. Holding in here is key because there just isn't any support if we go much lower in the near term. It's some thing to keep an eye on. The DAX in particular. We'll see what tomorrow brings.
Monday, January 30, 2017
A down day to begin the week as the Dow fell 122 points on average volume. The advance/declines were over 2 to 1 negative. This should turn the summation index back down. It could have been worse as we were off over 200 points in the morning. Not sure if this is the beginning of something sustained to the downside or just a Monday sell off after the weekend of Trumps tweets. We'll know more in the coming days. I did place an order for the SPY February calls but wasn't filled. I may leave an open order in overnight. I do think that perhaps Wednesday after the Fed is the ideal time to try this trade but that's a guess as usual. GE was off a nickel and the volume wasn't anything special. There is a potential double bottom on the daily chart for GE but it is short term in duration. I'm considering the March calls here now in order to give the trade a chance to work out. Gold was up a few bucks on the futures as the US dollar was little changed. The XAU and GDX had slight fractional losses on light volume. There just is not a lot of interest in gold at this time. Mentally I'm feeling OK. The S&P 500 had a good volume breakout form the recent congestion zone and today we had a snap back to the congestion zone. Conventional technical analysis implies that we will now trend higher. I am a believer in that view. There is a possibility that today was the chance to get long and we will simply move up from here. My hope is that we'll see some listless trading ahead of the Fed and then perhaps there will be a chance to purchase the SPY February calls. The short term technical indicators for the S&P 500 did roll over today. We also saw a spike in the VIX but it did finish well off its highs for the session. Plenty to think about tonight. Most Asian markets were closed last night but the NIKK was lower. Europe was down overnight as well. We'll close out the month of January tomorrow.
Friday, January 27, 2017
Another mixed day to end the week as the Dow fell 7 points on light volume. The advance/declines were negative. The summation index is trending higher. The NASDAQ was slightly higher today but there wasn't much conviction one way or the other for stocks. GDP was slightly less than expected but the reaction was slight. I'm still looking to get some SPY February calls and probably next week. We do have the Fed next week and that may give me the opportunity for the next trade. GE was off 1/3 and the volume was light. Perhaps I'll consider a trade in the GE calls here as well. I'll be taking a closer look over the weekend. Gold was little changed on the close. The US dollar was just a bit higher. The XAU rose 1 1/3, while GDX added 1/3. Volume was light. Mentally I'm feeling OK. We'll have plenty to trade off of next week as we have the Fed, plenty of economic data and round out the week with the employment report. Throw in the end of the month with the beginning of February and the chance for a least a pick up in volatility is there. The short term technical indicators for the major stock indices remain overbought. At some point this will end but for now the market seems to just want to stay in that territory. We did just have a solid break above the weeks long resistance so the trend is up. We could get a snap back to the resistance zone and that would be the ideal spot to purchase the SPY February calls. We'll see if the market cooperates. Plenty of time in the February option cycle. Asia was higher and Europe lower in general last night. I'll be checking the charts as usual over the weekend. For now it's Friday afternoon and time for a break.
Thursday, January 26, 2017
A mixed session today as the Dow rose 32 points on OK volume. The advance/declines were slightly negative. The overall market was weaker than the Dow but it was really just a muted session after the run up from the past couple of days. I'm still a believer in the SPY February calls on a pullback. We'll get the first look at 4th quarter GDP tomorrow and it could be a market mover. However it is a look backward before the election results and the market seems to be looking ahead at the moment. GE was off a nickel and the volume was light. I'm also looking at the calls here as well. Gold dropped almost 10 bucks on the futures as the US dollar was higher. The XAU shed 2 1/8, while GDX lost almost 2/3. Volume remains light. Mentally I'm feeling OK. Nothing to do now but wait for the next opportunity and I think that it will come in due time. I'm seeing some potential negative divergences on some of the daily charts for a few of the major stock indices. But they haven't played out yet and they could be negated with more positive price action. I do expect the market to continue to trend higher. So patience is the theme for now and hopefully an opportunity will present itself in the coming days. Asia was higher and most of Europe a touch lower overnight. We'll finish out the trading week tomorrow.
Wednesday, January 25, 2017
Well we made it. The Dow closed above the 20000 level for the first time in history today. The most watched index gained 155 points on good volume. The advance/declines were about 2 to 1 positive. The summation index is moving higher. There is no overhead resistance and any declines can be bought in my humble opinion. I thought that this may have been for real yesterday and now we know. I'm also just kicking myself for not getting on board which is what I should have done despite the short term overbought condition. However we now know that calls will be the way to go if and when we see any weakness. Still plenty of time in the February option cycle but the optimum entry point has passed. GE was up 1/3 on the same volume as yesterday. Perhaps the next trade will come here. Although GE has a reputation for moving sideways for extended periods of time. Gold fell back $11 and the US dollar was weaker as well. The XAU lost 1 1/2, while GDX shed 1/3. Volume was light. If the dollar remains weak, it should support gold. In theory anyway. Mentally I'm a bit frustrated for missing this spike higher. Every indication yesterday pointed to the fact that it might be happening but I did not pull the trigger. Even though we are extended here, the path of least resistance is up. I do still think there will chances to make a winning trade going forward though. I'll wait for some type of pullback but if we don't get one I will have to change my strategy. For now I'll have to be patient yet again. Europe and Asia were higher as money around the globe is now flowing into stocks. We'll keep an eye on the overnight trading.
Tuesday, January 24, 2017
A rally springs up form nowhere as the Dow gained 112 points on good volume. The advance/declines were almost 3 to 1 positive. This should turn the summation index back up. The S&P 500 did hit a new all time high. There is no overhead resistance for the S&P and I am looking at the February calls. The problem is the technical indicators are short term overbought. However when we are in rally mode, the indicators can stay overbought for a while. The Dow is now less than 100 points away form the 20000 level. So I will consider putting in an open order for the SPY calls tonight. GE was up 1/4 on average volume. I'm considering the GE calls here as well. The technical indicators here are oversold on a short term basis. Medium term we are in the middle. Again, this is something that I'll look over tonight. Gold dropped $6 on the futures as the US dollar was a bit higher. The XAU and GDX had minor fractional gains on OK volume. The gold shares did fall back from their intra-day highs. Mentally I'm feeling OK. The VIX is pretty low here which is another thing to consider before the next trade. But I do think that we could also be about to break out to the upside from the recent trading range. The volume was good to the upside today and that hasn't been seen in a while. One day doesn't make a trend though. Perhaps the more prudent course of action would be to wait for the short term indicators to come off of their current overbought levels. As you can see I'm a bit torn about what to do here. I guess the question is whether the six week consolidation that we've just seen is a top or not. If it isn't, we are about to take off to the upside in my opinion. There will be plenty to think about tonight. Last night Asia was mixed and Europe was slightly higher. We'll see what tomorrow brings.
Monday, January 23, 2017
Lower to begin the week as the Dow fell 27 points on light volume. The advance/declines were positive though. The summation index is trending lower but not at a rapid pace. The small stocks are still showing better relative performance but the S&P 500 was the weak link today. It is a mixed bag of results as we remain in a trading range malaise. No volume means no interest as the market continues to wait for direction. GE was off 3/4 on pretty heavy volume again. GE closed below its 200 day moving average. If GE is a precursor of things to come, then the overall market will drop down from here to lower prices. Time will tell. Gold found a bid and was up $10 on the futures. The US dollar was lower. The XAU added 2 1/2, while GDX rose 2/3. Volume was good. I still don't believe that gold is about to take off here to the upside. Mentally I'm doing OK. Waiting on some kind of signal to enter the next trade. Plenty of time in the February option cycle. Some of the major indices have reached the short term oversold level but it is not unanimous. We also have some indexes perched on their 50 day moving averages, while others remain above. I still think that the ultimate resolution will be higher prices and I am looking at the SPY February calls. However the timing of this potential trade is the main question for now. If things line up properly, I'll attempt the trade. If not I'll just have to wait. Asia was mixed but the NIKK dropped hard. Europe was lower in overnight trade. We'll keep an eye on the overnight developments.
Friday, January 20, 2017
We ended the week on a positive note as the Dow gained 94 points on average volume. The advance/declines were a bit short of 2 to 1 positive. The summation index did turn down yesterday. The overall market was weaker than the Dow. The market took off to the upside after the open and with the exception of the Dow, never got back to the early morning levels. I sold my SPY January calls in the morning for a 25% loss. I suppose I was lucky just to get that. Considering this trade was over a 50% loss yesterday, I'll take it. There never was a chance in todays session to get that trade back to break even. The market was being held back by something. If GE could of had a decent day maybe the trade could have been savaged. But the earnings news there disappointed and GE lost 2/3 on very heavy volume. The medium term indicators for GE have now rolled over but it is holding at the 50 week moving average for now. Gold was up $6 on the futures as the US dollar was lower today. The XAU added 1 1/8, while GDX gained 1/4. Volume was light. The fundamentals still do not favor gold at this time. Mentally I'm feeling OK. Sideways for six weeks now on the S&P and it is frustrating for directional traders such as myself. I still think we'll eventually get above the 20000 level on the Dow but the question is when? Most of the major stock indices remain short term overbought with the exception of the Dow. I will simply have to wait for what I think is a decent signal and go from there. We'll roll into the February option cycle on Monday. The premiums will be high. Some economic data due next week but nothing that looks market moving at the moment. I'm still leaning towards the SPY February calls but I'll have to check things out over the weekend. The market did not act as I expected this week and that is a cause for concern on my part. But now that I'm out of the last trade perhaps fresh eyes will be upon things. Plenty to ponder over the weekend. Asia was mixed and Europe very slightly higher overnight. It's Friday afternoon and time for a break.
Thursday, January 19, 2017
Lower today as the Dow fell 72 points on light volume. The advance/declines were 3 to 1 negative. This should turn the summation index lower. Today was the first solid weakness in breadth and must be taken into consideration. My work indicated that there would be some strength in the past couple of sessions but that did not materialize. There are no buyers and the market is simply slowly dropping on its own weight. Volume has dried up. The usual positive expiration week bias did not appear. My SPY January calls are solid losers and I'll be taking the loss tomorrow. I'm disappointed to start the year on a sour note but what can you do? GE was off a couple cents but the volume was good. Earnings due before the bell tomorrow and that should influence the market. Gold was off around $7 on the futures. The US dollar was up a bit. The XAU and GDX had slight fractional losses on lighter volume. Mentally I'm doing OK. Not happy about taking a loss on the first trade of the year but it looks like I simply held on for too long. I expected upside this week and it didn't happen. When the market doesn't do what is technically expected it's time to take notice. Perhaps the sideways congestion in the S&P 500 is actually a double top. But I will say that some of my indicators are in a longer term oversold area. That implies that any downside will not last. Expiration Friday will be the final day for this trade and nothing short of a 200 point rally will save it. I'll try and cut the loss as best that I can but it is already too late for that. Perhaps I'll begin looking at the SPY February calls. Asia was mixed and Europe slightly lower in overnight trade. We'll close out the week tomorrow.
Wednesday, January 18, 2017
A mixed bag today as the Dow fell 22 points on light volume. The advance/declines were positive. The summation index is still trying to move up. The NASDAQ and S&P 500 were higher today. It appears that the market is in a holding pattern for whatever reasons. That is certainly unusual for option expiration week. I'm still of the belief that we are going to head higher. However with only 2 days to go for the January options, I'm in a very risky position. My SPY January calls are in the money but in the red as well. The short term indicators for the S&P 500 remain overbought. The economic data out provided no surprises and the Feds beige book was met with a collective yawn. The market is still looking for direction here. GE was off a few cents and the volume was lighter. Gold fell 8 bucks today as the US dollar bounced back. The XAU dropped 1 1/8, while GDX shed 1/3. Volume was good moving lower today. Mentally I'm feeling OK. I had thought that the Dow would have a good rise this week and take us to the promised land of 20000. At this point it would take quite a 2 day rally to get there. It doesn't appear to be in the cards for now. The market is perhaps waiting to see what Trump has to say in his speech on Friday. I really do not want to hold on to this trade until then but it may be my only shot to get out without too much of a loss. The S&P 500 did go up 4 points today but I was looking for more than that. I do think that we'll be higher again tomorrow but it may not be enough to save the trade. The light volume isn't a positive sign as well. The longer the inverse head and shoulders pattern on the S&P 500 keeps going sideways, the more the pattern becomes negated. It may not work at all unless we see a high volume breakout to the upside. Right now that doesn't seem to be how the market will go from here. Europe and Asia were generally higher overnight. We'll keep an eye on the developments in trading tonight around the world.
Tuesday, January 17, 2017
Weaker to start the shortened trading week as the Dow fell 59 points on about average volume. The advance/declines were negative. The summation index is trending upwards but it has a sideways tone to it. Small stocks were relatively weaker and that is a negative for the bulls. We did come back in the final hour and that is a plus. The market was down over 100 at one point. I'm still a believer based on my work that we'll be higher in the next couple of sessions. It may not be enough to save my SPY January calls though as they are back solidly in the red. I've obviously held this trade for too long. Trump said something about the US dollar today and that sent markets lower. It appears that he may become a market wild card, one way or the other. That is something that technical analysis won't help. GE was off about a dime on average volume. Gold was up a dozen on the futures as the US dollar got whacked on Trumps comments. The XAU added 2 points, while GDX rose about 2/3. Volume was good. We'll see how long this lasts. Mentally I'm feeling OK. I thought if we could get through today without too much damage my SPY January call trade would work out. The time premium is really getting sucked out here now as there are only 3 days to go in the January option cycle. I'm still looking at selling out on Thursday but we may not get high enough to make a difference. I do not really want to hold on until Trumps speech on Friday. So we'll see. Lots of bearishness in the media on the stock market today and that is a plus for the bullish cause. There is some economic data due in the next couple of days and the Feds beige book release tomorrow. The short term technical indicators for the S&P 500 remain overbought and the reverse head and shoulders pattern on a daily basis is still intact for now. Asia was mixed and Europe lower overnight. We'll see what tomorrow brings.
Friday, January 13, 2017
Quiet trading before the long holiday weekend. The Dow shed 5 points on light volume. The advance/declines were positive. The summation index is still moving up but not at a rapid pace. The overall market was stronger than the Dow and that is a plus. I think that if we can make it through Tuesday without a lot of damage we'll be heading to the promised land of 20000 on the Dow next week. That's my guess at the moment. I'm still holding the SPY January calls and will until Thursday of next week. That is the strategy according to my technical work. I could be wrong. GE lost a few cents on lighter volume. Gold was off a couple bucks on the futures and the US dollar was a bit lower as well. The XAU and GDX had fractional gains on light volume. Mentally I'm feeling OK. The economic data was in line with expectations and there were no surprises from the bank earnings. It would not surprise me if we come back from the weekend to some selling on Tuesday but we should move higher after that. The inverse small head and shoulders pattern is still valid for now on the S&P 500. The short term technical indicators still remain overbought but can stay that way during up trends. Although we have just been going sideways now for 5 weeks. My SPY January calls are slightly in the black. This trade has seemed to last forever. I did have a chance to exit with a decent profit a week ago but decided to hang on. I still am a believer that this trade is going to work out but the market will go where it wants. You can make a case for a decline here as well based on the technicals. But the small stocks continue to show relative outperformance and that is bullish. However with only 4 days left until expiration the risk going forward is much higher than I normally would accept. So we'll see how it all plays itself out next week. An extra day over the weekend to figure out what to do but my mind is pretty much made up. For now it's Friday afternoon and time for a break.
Thursday, January 12, 2017
Weakness as expected today as the Dow fell 63 points on lighter volume. The advance/declines were negative. The summation index is still trying to move higher. It could have been worse as the Dow was off over 175 points in the morning. There's still bound to be some selling ahead but tomorrow will be important as far as my SPY January call trade goes. This trade is showing a loss with only 5 days to go before expiration. We have economic data due tomorrow and it will be the last day to trade before a long holiday weekend in the US. You can make a case for the market to go either way here. I knew that if I held the position this long, I'd be holding it into the expiration week. That is where I find myself today. I do expect some upside in the middle and towards the end of next week. But from what level on the S&P is the question. GE lost a few cents and the volume was a little better. Gold was flat after being higher during the day. The US dollar was lower. The XAU and GDX had slight moves on average volume. Mentally I'm feeling OK. I guess Yellens speech isn't until tonight. It may impact the market but interest should turn to earnings and data by morning. We've been sideways for about 5 weeks now. The market is either building a top or getting ready to break out to the promised land of 20000 on the Dow. I'm thinking that expiration week ahead of the presidential inauguration will tell the tale but that's just a guess. Technically the S&P 500 is still in the short term overbought zone. I think that if we can get through the next couple of sessions without any major damage we'll go higher after that. But the risk really ramps up holding onto the SPY January call trade with each passing day. The trading is never easy. But at this juncture I'm basically locked into holding onto the trade until sometime near the end of next week. We'll see how it goes. Europe and Asia were generally lower overnight. We'll close out the week tomorrow.
Wednesday, January 11, 2017
We bounced around today during the press conference from the new president Trump but eventually finished the session with a gain of 98 points on the Dow. The advance/declines were 2 to 1 positive and the volume was average. The summation index is trying to move higher here. Perhaps we can make it to the 20000 level by the end of the week but I would not be surprised by some more near term weakness. The overall market was weaker than the Dow today. We did close on the high of the day though and that is a positive. My SPY January calls are back in the black but this trade is in a precarious position. The volatility of the option premium is high due to the fact that the strike price is so close to being in the money. Add the fact that the time decay is accelerating as we get closer to expiration and you can see that this isn't an easy trade to monitor and hold. We'll see how things go from here. GE was up a dime on light volume. Some of the short term indicators here are oversold so maybe GE can get something moving to the upside. That would help the Dow get to the promised land. Gold was up 5 bucks on the futures today as the US dollar was lower. The XAU and GDX had slight fractional losses on a bit better than average volume. The gold shares have not followed gold higher lately and that is not a positive. Mentally I'm feeling OK. The Dow turned around today and TRAN is back moving to the upside. Perhaps the 20000 will be reached this time around. The S&P 500 also has a chance to move to new all time highs if we can get past the 2275 on good volume. If we can get things moving higher, there is no overhead resistance. I would not rule out another bout of weakness first in the near term, if we are lower tomorrow. The short term technical picture for the major averages is mixed at the moment. Some are still short term overbought, while others are in the short term oversold area. Economic data due Friday but we do get a speech by Yellen tomorrow. That has the potential to be a market mover. It looks like I'll be holding onto the SPY January call trade longer than anticipated. The risk increases with each passing day as there are only 6 trading days left in the January option cycle. Europe and Asia were generally higher overnight. We'll keep an eye on overnight trading.
Tuesday, January 10, 2017
Lower for the Dow once again as it lost 31 points on average volume. The advance/declines were almost 2 to 1 positive. The summation index is starting to trend sideways. Once again the NASDAQ was higher in a repeat of yesterdays price action. However the market has dropped in the final hour of trading in the past couple of sessions and that is not a good sign for the bulls. We also tried to rally today and lost all of the gains. To me, the price action looks tired. My SPY January calls are back to break even. I still think that we'll get through the 20000 level on the Dow but it may be later rather than sooner. I also now may have to hold on to this SPY trade longer than I wanted to, which would mean holding it during expiration week. GE was off about a dime on light volume. A 3 week down trend in place here. Gold was up a couple bucks today and the US dollar was a bit higher as well. The XAU and GDX were up slightly on average volume. Mentally I'm feeling OK. No hard economic data due until Friday along with some bank earnings out on that day as well. We do have the new president Trump in a press conference tomorrow and a speech by Yellen on Thursday. They both have the potential to be market movers but we will simply have to wait and see. The price action in RUT was at least positive today and the NASDAQ hit a new all time high. Once again we have to see the major averages turn back up in a hurry because the short term technical indicators have rolled over. Todays price action was not positive for the big caps. That said, there is a potential chance that we are forming a small reverse head and shoulders on the daily charts for the big caps. If that is the case then the SPY January call trade will work itself out to show a profit sometime next week. That could simply be wishful thinking on my part. For now I'll continue to hold the trade knowing that the risk increases with each passing day. Asia was generally lower and Europe mixed overnight. We'll see what tomorrow brings.
Monday, January 09, 2017
We began the week with a thud as the Dow fell 76 points on light volume. The advance/declines were almost 2 to 1 negative. This could start the summation index to turn sideways. The short term technical indicators are rolling over here and we'll need to see that change in a hurry or my SPY January call trade will be in jeopardy. It is now barely showing a profit. No real news today and there really isn't anything on the radar to boost stocks in the near term. The VIX is at a range that has produced near term declines in the recent past. However the NASDAQ was up today and that is a small plus. But the lack of volume today is another negative sign. GE was off over 1/8 on light volume. Gold rose $8 on the futures as the US dollar was lower. The XAU and GDX barely budged today despite as rise in gold and the drop in the US dollar. That is not a good sign for the bulls. We would normally like to see the gold shares leading gold itself. Mentally I'm feeling OK. Only 8 days left in the January option cycle. With todays negative price action, I may have to hold on to this trade longer than I originally planned. However the technical picture doesn't look near term positive here and it's possible the market will roll over here. The contraction of the Bollinger bands is another warning sign that something is about to happen. Positive or negative. We don't know exactly which way things will go here. But with the market more overbought than oversold, the odds seem to favor a decline. We'll see. There will have to be a catalyst in the next few days to move things higher. I do not see one on the horizon. Stocks appear to be following oil lower here. It's something to keep an eye on in the near term. Asia was mixed and Europe generally lower overnight. We'll keep an eye on the overnight developments.
Friday, January 06, 2017
The Dow almost touched the 20000 promised land today but fell back. What we're really looking for is a close above that level. The most watched index gained 64 points on light volume. The advance/declines were slightly negative. Low volume and weak breadth are not the conditions you'd like to see for an advance past 20000. So we will still have to wait. The summation index is moving higher and that is a plus. The small stocks are still looking good but the weakness in RUT is a concern. The employment report had no real surprises and after initial weakness, the stock market moved higher. My SPY January calls are still in the black. GE was up a dime on light volume. Gold gave back $8 after a pretty good week. The US dollar was up today. The XAU shed 2 2/3, while GDX lost over 3/4. Volume was average. Mentally I'm feeling OK. The S&P 500 is near term overbought and price is touching the top of the Bollinger bands. It appears that perhaps a pause is due. Weak volume on todays rise is another sign of at least short term exhaustion in my view. I could be wrong. There are 2 weeks to go in the January option cycle but with one less day due to a holiday. I'm still a believer in 2300 for the S&P but I don't know if we'll get there before expiration on the 20th. I may have to exit this SPY call trade next week. We'll see. The jobs numbers weren't anything special. I'm not sure what the next catalyst higher will be. There are sellers here just short of 20000. Perhaps when we get them out of the way the market can move higher and the focus won't just be on that particular number. Hasn't happened yet. So there will be plenty to think about over the weekend. I'll be searching for clues in the charts as usual. Asia was mixed and Europe once again had little price movement overnight. It's Friday afternoon and time for a break.
Thursday, January 05, 2017
A pause before the employment report as the Dow fell 42 points on average volume. The advance/declines were negative. The summation index is still moving higher. A mixed bag today as the NASDAQ was higher. The major indices are stalling here at the near term resistance. If we can get through there will be more price gains ahead as there will be no overhead resistance. I do expect that we'll move higher. The small stocks continue to be acting relatively better. My SPY January calls are still in the black. GE was off about 20 cents on light volume. Gold found buyers as the futures rose $16 on a much weaker US dollar. The XAU was up 4 1/2, while GDX climbed 1 1/4. Volume was good. The gold share indexes have just broken the daily down trend line that began back in August. That is a positive. The fundamentals remain bearish for gold in my opinion but perhaps that is changing. Mentally I'm feeling OK. Maybe tomorrows jobs numbers can get things moving higher again. On the short term we are more overbought than oversold at the moment. The Bollinger bands are also contracting now which implies some real movement one way or the other in the near future. We've had a positive start to the year so far and we'll see if that can continue. Plenty of time left in the January option cycle, with about 2 weeks to go. Asia was mixed overnight, while Europe had little price change again. We'll see how the market reacts to tomorrows data.
Wednesday, January 04, 2017
Continuing higher as the Dow rose 60 points on average volume. The advance/declines were about 6 to 1 positive. The summation index is moving up. Once again the overall market was stronger than the Dow. Add in the very positive breadth and we have the making of a run past the promised 20000 level. Perhaps the employment report on Friday will be the catalyst for that. Just a guess but the technical picture has improved in the first couple of sessions in the new year. Unless there is some kind of drastic change in the picture, we're going higher. My SPY January calls are still in the black. I'm looking for the S&P to reach the 2300 level before expiration. That's the idea for now. GE was flat on the session and the volume was very light. Gold was up a couple bucks which wasn't much considering the decent drop in the US dollar. The XAU added 1 1/3, while GDX was up almost a 1/4. Volume was pretty light here though. Mentally I'm feeling OK. The economic data combined with the Fed minutes weren't any factor in todays trading. My thinking is that tomorrow could see some weakness ahead of the jobs report but that's a guess as usual. The market is acting pretty good here in my opinion but we all know that could change on a dime. The short term technical indicators are approaching overbought territory but aren't completely there yet. The small stocks are leading the way here and that's a plus. If we can get through the 2275 level on the S&P there will be no overhead resistance again. Hasn't happened yet. For now the idea is to hold onto the SPY calls until at least next week. Japan was higher overnight but the rest of Asia and Europe were barely changed. We'll see how things go tomorrow.
Tuesday, January 03, 2017
A positive start for the new year but we did fall off of the early highs. The Dow rose 119 points on average volume. The advance/declines were 3 to 1 positive. This should move the summation index higher. The overall market was stronger than the Dow. I'm still looking for Dow 20000 in the beginning of the year here. I don't think that it will be a straight line though. My SPY January calls are now at a slight profit. I think that they can be held until next week but we'll have to see how the market goes. The short term technical indicators are starting to move back up for the S&P 500. GE was up a few cents on average volume. Indicators here are starting to move back up as well. Gold gained $8 on the futures and the US dollar was higher as well. The XAU added 3 1/8, while GDX was higher by over 3/4. Volume was good. Mentally I'm feeling OK. It looks like we have got some beginning of the month money flows today. I do expect some near term strength going into Fridays jobs report. The employment numbers should determine where we go from there. I think that there's room to move up here but we could go back into a sideways pattern as well. I do not think that there is a big decline coming for now. The VIX is coming down off of an overbought condition too. So I think that the path of least resistance for now is up. Europe and Asia were generally higher overnight. We'll see how the 2nd trading day of the year goes tomorrow.