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Wednesday, February 22, 2017

The overall market lagged but the Dow managed a gain of 32 points on average volume.  The advance/declines were negative.  The same technical conditions remain.  We are over extended any way you look at it.  The Dow has gone about straight up for two weeks.  There is no telling how long this can last but when the end comes it probably won't be pretty.  We are already in one of the longest bull markets in history.  I can also make a case for this being the last leg up of an A-B-C-E-F pattern or a 5 wave higher move on a multi-year basis.  If that is the case, then this is the final run higher before a bear market sets in.  However that is the bigger picture and we are looking at what to trade in the March option cycle.  GE was off about 20 cents on average volume.  I'm no longer considering a trade here.  Gold finished flat one the session as the US dollar was just a bit lower.  The XAU lost 1 3/4, while GDX shed about 1/3.  Volume picked up to the downside which is not a good sign for the bulls.  Mentally I'm feeling OK.  We saw just a bit of weakness here and there among the major stock indices.  I would like to get some SPY March puts at some point.  However it is hard to try and step in front of this runaway freight train of higher prices.  What I really need to do is try and wait for a negative divergence in the technical indicators.  The battle as always is with myself.  Is it possible that things will run up into the March expiration as happened in February?  Well anything is possible at this point.  Another factor to consider is that the VIX is not correlating to the actual price movement lately.  I don't know exactly what that means but it is puzzling at the moment.  So I will continue to be patient for now as it is a short week as well.  Europe and Asia were generally higher overnight.  We'll see what tomorrow brings.

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