Friday, February 17, 2017
The beat goes on as the Dow rose 4 points on about average volume. The advance/declines were negative. The overall market was stronger than the Dow. The summation index is still trending higher. Quite a week we just saw as the market is severely overbought and needs to take some kind of break in my opinion. The breadth on the rise hasn't been good and I really do not think that this levitation has much more room on the upside for now. Some type of consolidation or decline is way overdue. I'll wait for the next signal before entering the next trade. A negative divergence at some point would be the ideal scenario. GE was off a few cents on lighter volume. Gold was off around $5 on the futures as the US dollar bounced back. The XAU lost 1 7/8, while GDX shed 3/8. Volume was a little less than average. Mentally I'm feeling OK. A losing trade this week with mistakes both getting in and getting out. Not much money lost but the mental capital decline is always more important. I suppose that perhaps I'll just stay away from the short term trades for now. Looking back on the radar, there is no denying that this has been quite a nice move higher in the past couple of weeks. The market was able to run up all the way to the end of expiration week. There were no sellers. The problem for the bulls going forward is the extreme overbought nature of things today and the poor breadth that accompanied this move higher. That doesn't mean that we can't go a bit higher in the near term. However a repeat of the roughly 500 or so point move in the Dow for the past week and a half probably won't be repeated. I'll be looking at the SPY March puts at some point in the coming days. Money is flowing into US assets though as the major foreign markets have yet to break out above their near term resistance. Asia was lower overnight and Europe mixed. A long holiday weekend is upon us and that will give me plenty of time to come up with some type of game plan for the next trade. For now it's Friday afternoon and time for a break.