Friday, March 31, 2017
A down day to close out the quarter as the Dow fell 65 points on light volume. The advance/declines were positive. The summation index is still moving up. Positive advance/declines and better relative performance of the small stocks says that the market can go higher. We might need to take a little breather first. That's my hope at least because it would then provide the opportunity to purchase the SPY April calls. One caveat here is that the volume has been pretty weak and you would really like to see that pick up moving higher. No clear signal one way or the other just yet but the short term technical indicators for the S&P appear to be starting to roll over. GE lost a few cents but the volume was very heavy. The gold futures gained a few bucks as the US dollar was lower. The XAU and GDX had slight fractional gains on average volume. Mentally I'm feeling a bit tired. The month of April has arrived and there are still 3 weeks to go in that option cycle. The ideal scenario here for me would perhaps be a run down to the 50 day moving average again for the S&P in the near term. That would set up another chance to purchase some regular index calls. I do not think that I'll be trying the weekly calls again in the April option cycle. But the market will go where it wants. We could also see some beginning of the month money flows and that would limit the near term downside. The market did drop in the final half hour today but that could have been quarterly related. Plenty of economic data due out next week topped off by the employment report on Friday. So there will be a lot to take in as the week goes on. I'll be checking the charts over the weekend to see exactly what I can come up with for next week. For now I'm still a believer in higher prices going forward. For now it's Friday afternoon and time for a break.
Thursday, March 30, 2017
A drift higher today as the Dow gained 69 points on light volume. The advance/declines were positive. The summation index is moving higher. It appears that I did leave some money on the table by closing out the SPY call trade yesterday but I did not want to take the added risk. There's still room to move up on the short term technical indicators for the S&P 500 but the volume here on the rise has been light. The small stocks didn't outperform today for a change. I'm still a believer of buying on a pullback for the April option cycle, if we get one. GE gained 20 cents and the volume was better than what we've seen lately. We're still below the 200 day moving average here. Gold dropped $10 on the futures as the US dollar had a good day. The XAU and GDX had fractional losses on very light volume. Mentally I'm feeling OK. We'll finish out the month tomorrow. If the S&P continues to rise, we'll get a bullish engulfing pattern on the weekly candlestick chart. This would be a positive for the bulls. It would also make buying any weakness next week more likely to work. But it hasn't happened yet. As it stands this week was a good one if you are positive on stocks. Perhaps we can make a run at new all time highs next week. That's just a guess as we will have to wait and see what the market has to say. For now, waiting for the next signal is the plan. There's still plenty of time in the April option cycle. Asia was lower and Europe generally higher again overnight. We'll close out the week and month tomorrow.
Wednesday, March 29, 2017
A mixed bag today as the Dow lost 42 points on light volume. The advance/declines were almost 2 to 1 positive. The overall market was stronger than the Dow with the small stocks leading the way. The summation index is now moving up. All signs point to higher prices coming for stocks. Weakness can be bought in my opinion and I'll be looking for some SPY April calls. I did sell the SPY weekly call options that I purchased yesterday. With only 2 days to go for these calls, I took the profit that I had. It was 150% but I could have done a little better if I had just sold them at the right point yesterday. Once again I 've got to emphasize the capital appreciation of option trading vs. trading stocks. Owning stocks for the long haul is a solid choice. But when it coming to trading, options should be the vehicle of choice. You tie up less money for quicker gains with options than by trading stocks. Today was mostly a sideways affair, so I'll consider myself lucky to get out when I did. GE was up a few cents and the volume a bit lighter. Gold was off $3 on the futures and the US dollar gained a bit of ground. The XAU and GDX had slight fractional gains on very light volume. Mentally I'm feeling a bit tired, could have slept better. I gave the SPY weekly options a try and it worked out this time. But I certainly don't think that this is a strategy that I'll use too often. Things won't always line up like they just did. But it will be something to consider in the future. We got a bounce off the short term oversold technical indicators for the S&P. Those indicators are now mid-range. I do think that we're going to go higher from here but there isn't a solid signal right now. The S&P 500 did manage to hold and bounce off of its 50 day moving average. The better support is at 2300 but the way things have turned around it appears that we're not headed down there. I could be wrong but there is no indication to me that's about to occur. There's still plenty of time in the April option cycle for another trade to line up. That's what I'll be looking for now. Asia was mixed and Europe generally higher overnight. We'll see what tomorrow brings.
Tuesday, March 28, 2017
Looking for higher prices and we got them today as the Dow rallied 150 points on light volume. The advance/declines were 3 to 1 positive. This should turn the summation index back up. I tried to get some SPY April calls but was not filled. I did however place an order for the SPY weekly call that expires on Friday. I did this due to the short term nature of the signal that was in place. That order was filled but I could have done a better job on the entry. That trade is showing a nice profit for now but it has come well off of its highs for the day. Last night the McClellan oscillator gave the signal for a significant move in the next 2 sessions. We got that move today. I decided to hold on to this trade until tomorrow, since that was the day that my work said would be positive. Perhaps that was a mistake. GE was up over 1/8 and the volume was about average. Gold lost some steam as the overall stock market moved higher and the futures dropped $5. The US dollar was higher today. The XAU lost 1 7/8, while GDX shed almost 2/3. Volume was good. Mentally I'm feeling OK. Trying a different tack, trading a weekly option. So far it has worked out OK but anything can happen. It is a trade that should be exited tomorrow and probably even today. Once again the short term nature of the position increases the risk rather dramatically. But I did not like the way the premiums on the regular April options were acting and the signal was in place. I still like the idea of the SPY April calls but will have to wait for another entry point if we get one. The turning around of the summation index is a plus for the bulls. The small stocks continue to act OK but we could actually be developing a trading channel. Time will tell on that. So I'll be keeping an eye on things overnight and take it from there. We've got the end of the month coming up on Friday as well. Europe and Asia were both higher overnight. We'll see how it goes tomorrow.
Monday, March 27, 2017
Quite a start to the week as the Dow fell 45 points on light volume. The advance/declines were slightly positive. We opened the day off 175 points on the failure of the health care bill and worked our way back. The summation index is still trying to turn around. I did place an order to get the SPY April calls but it wasn't filled. I'm leaving it open overnight. We should see some kind of rally from here. The technical work that I do points to some gains by Wednesday at the latest. Todays price action also points to higher near term prices. The small stocks continue to act well here and we probably won't see any wholesale decline as long as that is the case. GE was off 1/4 and the volume was average. Gold rallied early but came off of its highs. The precious metal futures rose $7. The US dollar was lower. The XAU added 1 1/3, while GDX gained 1/2. Volume was average. Mentally I'm feeling a bit tired with the early morning gyrations. The issue that we're having here is that with so much time left in the April option cycle, the huge moves in the price of the indexes is not being reflected in the option premiums. What I mean is that despite a daily range today of over 2 points in the SPY, the option premiums barely moved. The loss of time premium seemed to be more of an effect than the price movement in the underlying. But this is what we deal with when trading the index options. I still believe that there is a trade to be made here. I just don't know if it will happen at the price that I'm willing to pay. It also is a trade that I don't think has a lot of legs. What I'm saying is that it will be short term in nature if the order gets filled. Hasn't happened yet. The VIX came well off of its highs today as well, which tells me that the decline has probably ended for now. So we'll see. I do see that higher prices should arrive on Wednesday at the latest. Europe and Asia were both lower overnight. We'll watch what happens tonight and be back at it in the morning.
Friday, March 24, 2017
Volatility returns as the market continues to be held hostage by a health care bill of all things. We bounced around and finished with a loss of 59 points on light volume. The advance/declines were barely positive. The summation index is still trying to turn around. The overall market was stronger than the Dow and the small stocks continue to hold up well. We're short term oversold and I'm leaning towards buying weakness if we get any on Monday morning. I do not think that we are on the verge of a major pullback even if the vote on this bill isn't approved as the market wants. Headline risk is a tough trading environment. GE was up 1/8 on light volume. Gold was flat on the futures as was the US dollar. It's as if we're in suspended animation until this health care thing ends. The XAU and GDX had slight fractional losses on very light volume. Mentally I'm feeling OK. The light volume tells the story as traders are waiting to see how this vote on health care goes. I can make a case for purchasing the SPY April calls on Monday, unless we see a rally from the start. Technically this trade would make sense but when the market is fixated on the headlines, you never know what is going to come next. It would be a plus to have the summation index turn around but that hasn't happened yet. Plenty of time in the April option cycle so there is no need to be in a hurry. I'm going to have to look over the charts this weekend and determine a course of action. I do think it will be a plus to get this health care thing out of the way for now. Even if it doesn't pass. So plenty to ponder over the next couple of days and I'll have to be ready at the open on Monday. Now I have just seen that this bill has been shelved and there won't be a vote. So the indecision lingers. Once again I'll have to revamp my trading plans for next week. I suppose that I'll have to keep an eye on the news over the weekend closer than usual. This isn't the kind of trading environment that I prefer but it is what it is. Asia was higher and Europe slightly lower last night. It's Friday afternoon and time for a break.
Thursday, March 23, 2017
Held hostage by Washington as the Dow fell 4 points on light volume. The advance/declines were almost 2 to 1 positive. The summation index is trying to turn around again. The market is fixated on the health care bill as if it was the only thing in the world that matters. We are once again in an environment of headline risk. The advance/declines were pretty good today, so perhaps the market will be able to weather the storm. It now appears that the vote on this bill has been postponed and that will be seen as a defeat for the current administration. We'll have to see how the futures react to this news overnight. I'm still in the camp of buying some SPY April calls. GE was up about a dime with volume average for lately. Gold was off $4 on the futures and the US dollar was just up slightly. The XAU and GDX had slight fractional losses on OK volume. Mentally I'm feeling OK. We're now at the mercy of what happens overnight and I can only guess at what the reaction will be. All pundits called for a decline if there was any delay for this legislation. So we'll see what happens. The S&P 500 is still oversold on the short term technical indicators. I'd like to see a run down to the 2300 level but that may be wishful thinking. If we do get a sell off tomorrow, there is usually follow through on Monday morning. That would be the time to purchase some calls if all goes to plan. But the market rarely cooperates and I may be able to make a case for purchase tomorrow. Or who knows? Maybe we'll rally tomorrow. Sticking with the technicals, the summation index is still heading lower and we're oversold. We did see a short bounce this week after Tuesdays decline but it didn't amount to much. So perhaps we'll go lower before we turn this thing back around. I don't exactly have a clear signal but I do have a target of 2300 on the downside. We'll just have to wait and see. Plenty of time in the April option cycle. Europe and Asia were higher last night but not by much. We'll finish up the trading week tomorrow.
Wednesday, March 22, 2017
A mixed bag today after yesterdays drop as the Dow shed 6 points on average volume. The S&P 500 and the NASDAQ were positive. The advance/declines were slightly positive. The summation index continues lower. I can make a case for a bounce here but for now I'm going to wait to purchase the SPY April calls. The short term technical indicators for the S&P are in the oversold zone. However I do think that after yesterdays debacle, lower prices will be seen in the coming days. Ideally we'd get to the 2300 level on the S&P 500 but the market rarely cooperates with plans. So we'll keep an eye on things and see what develops. GE was up 1/8 on average volume. Gold was up a couple bucks, while the US dollar was slightly lower. The XAU had a slight fractional gain and GDX was flat. Volume was average. Mentally I'm feeling OK. The small stocks performed better today and that's a positive. The oversold nature of things here is also in the bulls corner. There's also a potential positive divergence on the McClellan oscillator to watch. However there's some background headline noise to deal with. A terrorist attack in London combined with a vote on Trumps health care proposal. The attack has already been digested by the market in my opinion. But we'll have to see what happens tomorrow. Europe and Asia were lower overnight. 2 days left in the week but it doesn't appear that a decent opportunity will present itself. On to Thursday.
Tuesday, March 21, 2017
It looks like things have changed in a hurry as the Dow got clobbered today. The most watched index fell 237 points on good volume. The advance/declines were about 4 to 1 negative. The summation index tried to turn around but is now heading back lower. Trend lines have now been violated to the downside. We are not yet completely short term oversold, so there should be some more price erosion to come. The 50 day moving average for the S&P 500 is around 2325 but better support is at 2300. I'll look to those levels to try the SPY April calls. I still think that will be my next trade attempt unless this turns into an all out rout. GE shed 1/3 and volume was less than average. Gold found a bid on a lower US dollar. The yellow metal gained $10. The XAU rose 1 1/8, while GDX added 1/3. Volume was good. I still think that the fundamental backdrop for gold is negative. Mentally I'm feeling OK. Today was certainly a surprise to me but the market is due for a rest. Some may say overdue. The McClellan oscillator made it back through the zero line but has been turned away. What I will try to do is wait for the short term technical indicators on the S&P to get completely oversold and then purchase the April calls. It won't be easy. On the plus side there will be plenty of time for the trade to work itself out. If we simply continue lower here, perhaps on weakness Thursday I can try to take a position. But it is tough to try and pick a bottom. The VIX is already at the top of its recent range but the indicators aren't overbought yet. So there are plenty of crosscurrents along with questions after todays market action. What I suppose I'm trying to point out is that the game now has changed. I'm going to try and not be in too big of a hurry to do something. At least that's the thought for now. Asia was mixed and Europe lower overnight. We'll see what tomorrow brings.
Monday, March 20, 2017
Slightly lower to begin the week as the Dow fell 8 points on light volume. The advance/declines were negative. The summation index is still trying to turn around here. No clear technical signal one way or the other for the S&P 500 on the short term. The Bollinger bands are converging though, which implies some type of big move is coming. Which way is always the question. The VIX remains low. The QQQ and COMPQ remain very overbought and have been for quite some time. This condition cannot last forever. I'd like to purchase some SPY April calls at some point though. GE was off 1/8 on light volume. Gold rose four bucks and the US dollar was barely higher. The XAU added a point and GDX rose almost 1/4. Volume was pretty light. Mentally I'm feeling OK. At this point we're waiting for the next catalyst to move stocks. Not a lot of economic data due this week. So we wait. No clear buy or sell signal for the S&P at the moment. So we'll have to remain patient for now. We have plenty of time n the April option cycle for some kind of trade to develop. Ideally we would head lower to set up a call trade but the market rarely delivers what you want. Asia was mixed and Europe slightly lower in overnight trade. We'll be keeping an eye on things tonight.
Friday, March 17, 2017
The price movement was muted for the option expiration today as the Dow fell 20 points on expiration heavy volume. The advance/declines were positive. The summation index is still trying to turn around. We were up and down today but without a lot of volatility. I'm not sure exactly where we are going from here. A case can be made for both directions. The short term technical indicators for the S&P 500 are now mid-range. The medium term picture remains overbought. There isn't a clear signal for a set up right now. There's plenty of time in the April option cycle and we will wait for a valid opportunity if one presents itself. GE was up 1/8 and the volume was pretty good. Gold was slightly higher as was the US dollar. The XAU and GDX had fractional losses again on light volume. Mentally I'm feeling OK. Where we go from here is the question and at the moment I don't have an answer. Patience is required in the game and now is one of those times. I'll try and listen to what the market is saying. I'm still leaning towards the bullish side here and am looking for new all time highs. I could be wrong. Once again, there is no rush here to put on a position. The option premiums are high since we just rolled into the next cycle. I'll continue to check the charts over the weekend to try and clarify what I should be doing here. Asia was mixed and Europe higher overnight. However the price closes were slight once again. It's Friday afternoon and time for a break.
Thursday, March 16, 2017
Some digestion of the gains made yesterday as the Dow lost 15 points on light volume. The advance/declines were positive. The summation index is still attempting to turn back up here. Not a whole lot to report on todays market action. We spent much of the day in negative territory. We've got the expiration tomorrow to wrap up the week. Not any surprises in the economic data or from the Fed so we are just moving along sideways here in the bigger picture. I don't have any trades in mind at the moment. I am leaning towards the bullish side though. GE was pretty much flat and the volume was light. Gold finished the session up over $5 on the futures as the US dollar continued its drop. The XAU and GDX had fractional losses on average volume. Mentally I'm feeling OK. No rush at the moment for the next trade as we wind down expiration week. Aprils option cycle has an extra week and that will be reflected in higher premiums. My job here is to simply wait for the next decent signal and take it from there. At the moment I'm leaning towards new all time highs for the Dow and the S&P in the near future. We did work off the short term overbought condition in the indices but we never did reach fully oversold. We did however each some very low levels in the McClellan oscillator but without the significant decline expected. I'm not sure what that means but momentum lows were attained at least. All we can do it continue to monitor the situation and be patient. That's my best guess right now. Both Europe and Asia were higher in last nights trade. We'll close out expiration week tomorrow.
Wednesday, March 15, 2017
Expecting a rally today and we got it as the Dow rose 112 points on good volume. The advance/declines were 6 to 1 positive. The summation index is still heading lower but appears to be in the process of turning around. The Fed raised rates as expected and the market took off. We did finish off of the highs for the session though. I did sell the SPY March calls that I purchased yesterday but probably could have held on for more gain. But with only 2 days left in this option cycle, I got out. The gain was 150% but it could have been a bit better. Not sure what the next trade will be. GE was up almost 1/4 and the volume was a bit light. I don't see any trades here in the near term. Gold was up over $15 on the futures as the US dollar fell pretty good despite the rate hike. Evidently it was already baked into prices. It was not the reaction that I expected but I suppose traders were happy that there still may only be 2 more rate hikes this year. It's all really just a guessing game when it comes to the Fed. The XAU jumped 5 3/4, while GDX added 1 2/3. Volume was heavy. We'll see if this has legs or was just a one day wonder. Mentally I'm feeling OK. So that was a trade that worked and I expected it to. That is why you put in the time and effort every day and do the work. It is also why trading options can be a pretty lucrative game as opposed to the time involved trading stocks for similar capital appreciation. But it is riskier and certainly isn't an easy game. The technical expectations will come through for you more than not. That trade lined up in plenty of time before it happened. It isn't always that easy but the numbers don't lie. It's possible that we could see new all time highs before Fridays close but we could stall here just a bit as well. I didn't get greedy but maybe I should have. However there are no perfect trades. The short term technical indicators for the S&P 500 have now turned back up. A high volume breakout above 2400 would be the most bullish scenario. But if and when that happens is the question. I'll be looking out to the April option cycle now and there is an extra week for that time frame. Asia was generally mixed and Europe slightly higher. We'll see how they react to the Feds decision tonight.
Tuesday, March 14, 2017
Selling ahead of the Fed as the Dow fell 44 points on light volume. The advance/declines were about 2 to 1 negative. The summation index continues lower. Not a lot of volume for expiration week as the market awaits the Feds latest move. All signs point to an increase in the Fed funds rate. I did place an open order for some SPY March calls and it was filled. Todays decline was what I consider a gift, as it allowed me to take the position that I have been waiting for. I do believe that we'll be heading higher tomorrow. This isn't a trade that I expect to hold too long and will most likely be out of tomorrow unless I get greedy. GE was off 1/3 on light volume. Gold was down $5 as the US dollar finished higher. The XAU lost 2 1/3, while GDX dropped 2/3. Volume was good to the downside. If the Fed does raise rates tomorrow you would expect some more decline in gold and some more strength in the US dollar. Mentally I'm feeling OK. In the trade I've been waiting for now and I'm feeling pretty confident about it. It is showing a slight gain at the moment. My work has been pointing to tomorrow to be positive. It is a matter of how much and how quick. That doesn't mean we can't go lower tomorrow but the odds favor higher prices. You can never be 100% sure of anything in this game but I've put in the work and we'll see what happens. The short term technical indicators for the S&P have rolled back over again. Despite that, I still think that this trade will have a positive outcome. Europe and Asia were lower overnight but once again the moves were slight. We'll see how the market reacts to the Fed decision tomorrow.
Monday, March 13, 2017
It was a day of hanging around as the Dow fell 21 points on light volume. The advance/declines were positive. The summation index continues lower. The small stocks had good relative strength. I did place an open order for the SPY March calls but it wasn't filled. I'm still a believer in this short term trade. I will try again tomorrow if we get some weakness. The market is simply waiting on the Fed here and I do expect some kind of move higher on Wednesday. The light volume is not a concern as things should get going by the middle of the week. No doubt a very risky endeavor, with only 4 days to go in the March option cycle. GE was down 3/8 and pretty much lost what it gained on Friday. Volume was average. The gold futures were up a couple bucks and The US dollar was bit higher as well. The XAU and GDX had slight fractional gains on average volume. The fundamentals for gold remain negative in my opinion. Mentally I'm a bit sluggish as I am not feeling 100%. This is a time that I have to be on top of my game, with a short term trade in the works. I will try and get some extra rest tonight. If the market simply continues with a light volume rise here, I'll have to pass on this trade. The short term technical indicators for the S&P 500 aren't completely oversold but they are trying to turn around. I believe that they will but as usual anything could happen. I expect another rise in rates on Wednesday but the opposite market reaction than expected due to the technicals. I could be wrong. For now I'll continue to monitor things and hopefully get a chance to get long tomorrow. Europe and Asia were generally higher overnight. We'll see how it goes tomorrow.
Friday, March 10, 2017
Looking for a bounce and we got one today as the Dow rose 44 points on light volume. The advance/declines were 2 to 1 positive. The summation index is still moving lower. We had a gap at the open, came all the way back to unchanged and then churned our way higher into the close. It wasn't a great bounce but it has started to alleviate the short term oversold condition. I'm still a believer in the SPY March calls next week and plan to purchase them on any weakness Monday or Tuesday. I think we will rally after the Fed, regardless of an interest rate hike. I could be wrong. But the technical work right now suggests an up day on Wednesday. GE was up almost 2/3 on heavy volume. There was some noise about an activist investor here. Gold was flat on the session and the US dollar dropped despite a stronger employment report. Not sure what was going on there but it appears to be a sell the news event. The XAU rose 2 and GDX added 5/8 on good volume. Mentally I'm feeling a bit tired, did not sleep well. Only 5 days left in the March option cycle so the risk will be high in an attempt to trade next week. The short term technical indicators for the S&P 500 are trying to turn back up here. However they haven't gotten completely oversold yet. The Bollinger bands are beginning to converge and that will put some restriction on just how far prices can go in the near term. Today opened with every reason to be a solid upside session and the performance certainly did not live up to that expectation. So you have to take notice of the change in the market mood. I do think that a short term S&P call trade can be successful next week but the entry point will have to be pretty solid. I will have to go over all the charts and everything in my mind this weekend to try and come up with a plan that will work. There is also the possibility that this trade is too late but todays market action says that we may stall ahead of the Fed and that will be the opportunity to get some calls. Sounds good in theory but we will have to see what the market has to say. So I'll do the work over the weekend and we'll see what happens. Europe and Asia were higher last night with the NIKK leading the way. The moves in Europe were rather muted once again. It's Friday afternoon and time for a rest.
Thursday, March 09, 2017
The Dow added 2 points today on average volume but we did come well off of the lows for the session. The advance/declines were 2 to 1 negative. The summation index is heading lower. The McClellan oscillator is now even more oversold than yesterday. A bounce is now overdue just as when we were overbought a decline was overdue. Today had the feel as if at least a short term bottom has been put in. The short term oversold nature of the market right now along with the potential hammer on the S&P daily candlestick chart tells me that we should see some upside soon. I will be looking to purchase some SPY March calls tomorrow if we see some selling after the employment report. That is the plan. GE was off 1/8 on lighter volume. Gold was off $8 on the futures and the US dollar was bit lower. The XAU and GDX were both fractionally lower again on light volume. Mentally I'm feeling OK. Once again I must remark how much the McClellan oscillator and summation index have gone down with the representative price move lower in the major averages. Normally what we have seen in the oscillator and summation index would have led to a precipitous decline in the averages. That hasn't been the case here as we are only off around 2% from the recent highs. Hopefully tomorrow we'll see some selling and the opportunity for the SPY March calls will present itself. It will be a different story if we take off to the upside on the open. That will be a harder trade to make. So we'll see. The set up is there in my opinion and it is time to act on it. I feel confident that we will see upside after the Fed on Wednesday as the technical work points to an upside day there. Asia was mixed with Europe generally higher overnight. We'll see how the market reacts to the jobs report tomorrow.
Wednesday, March 08, 2017
The Dow fell 69 points today on better volume. The advance/declines were over 2 to 1 negative. The summation index is heading down. Buying pressure has now turned into selling pressure, although the point moves so far haven't been as extreme. The McClellan oscillator is now in a very negative reading that usually produces at least a bounce. I do not think that the rally has ended and I do not believe that a huge decline is in the works. The small stocks have held up rather well and that tells me that the decline should be muted. I'm looking at the SPY March calls but with the employment number looming I may have to wait until next week. The problem is that time in the March option cycle is running out. GE was off a few cents and the volume was average. Gold fell $8 on the futures while the US dollar was higher again. The XAU and GDX had fractional losses again on light volume. Mentally I'm feeling OK. It is looking more and more as if the 300+ point move last week was a blow off top. We are somewhat oversold here but that doesn't mean that we can't move lower. I'm looking for some strength in the middle of next week but we have to get there first. It would also probably be wise not to take a position ahead of the jobs report. Wait to see how the market reacts to the numbers would be the prudent course of action. But the market usually doesn't wait for you either. I'm going to remain on the sidelines for now. Asia was mixed and Europe higher overnight but the moves in Europe were rather small. We'll keep an eye on the trading tonight.
Tuesday, March 07, 2017
Continuing lower for a change as the Dow fell 29 points on average volume. The advance/declines were 2 to 1 negative. The summation index is heading lower. The market is perhaps rolling over here but I do not expect any huge decline. I can make a case for getting some SPY March calls but next week would be the ideal time. With the technical indicators on the short term rolling over for the major averages, the trend is lower for now. I'm not so sure about trying the SPY puts here as we have already fallen off of the recent high. We will have to see how things play out ahead of Fridays employment report. GE was off another 1/8 and volume picked up a bit. Gold fell $10 on the futures. The US dollar was just a bit higher. Not a good seasonal time for gold. The XAU and GDX had fractional losses on lighter volume. Mentally I'm feeling OK. Just a slight drop so far for the major averages. With the exception of RUT, we are still off from the 50 day moving averages of most indices. RUT led us up so we'll have to keep an eye on if it's going to lead the way down. March in general is favorable for stocks. I therefore do not expect any kind of sustained decline here. Perhaps staying patient and waiting to obtain some calls ahead of the Fed is the best course of action at this stage. But we will have to see how the next couple of days play out. The jobs report could be an event worth trading. Some global markets are on the verge of breaking out. This could also be a positive sign for the US market going forward. However right now we'll concern ourselves with the March option trading. Asia was generally higher and Europe lower in overnight trade but the moves were small. We'll see what tomorrow brings.
Monday, March 06, 2017
A downer for a change to begin the trading week as the Dow fell 51 points on light volume. The advance/declines were 2 to 1 negative. The summation index is moving lower. We'll take our cues from that. The short term technical indicators for the major averages have rolled over. I'm not sure if we'll get a chance for the SPY March puts as it already appears to be too late. The only hope for that trade is a light volume run up in the next couple of sessions. If that doesn't happen, we'll look for the SPY March calls ahead of the Fed next week. We could just be in a sideways consolidation for a while. GE was off 1/8 and the volume was light. No trades in mind here for now. Gold was little changed on the futures as the US dollar was a bit higher. The gold shares fell though. The XAU shed 2 1/4, while GDX dropped 1/2. Volume was a little less than normal. No love for the gold shares here. Mentally I'm feeling OK. Only nine days to go in the March option cycle. The timing of the next trade will have to be right as there will be no room for error. However with no risk comes no reward. I do anticipate doing something before the March option cycle ends. For now I'm simply waiting for a near term set up. If we continue lower, I'll try the SPY calls. If we go higher, I'll look for the puts as long as the summation index is heading down. So we'll see. Plus we have the jobs report on Friday to deal with. So it is time to pay attention and we'll see how it goes. Asia was mixed and Europe lower overnight. We'll keep an eye on this evenings trade.
Friday, March 03, 2017
The Dow spent most of the session in negative territory but did manage to finish the day with a gain of 2 points on what now passes for light volume. The advance/declines were slightly positive. The summation index is now moving lower. We're still overbought on the short term technical indicators for the major averages, so there is some room to go lower. Yellen spoke today but it didn't have much effect on the market. There will be a better chance of some market movement when we get the Fed meeting over on the 15th. I'm not sure what will happen here in the near term but I will try and figure it out over the weekend. Perhaps if we are higher early next week, I could try the SPY March puts. GE was off a few cents and the volume was light. The short term technicals here appear to be rolling over. Gold was up a couple bucks on the futures as the US dollar took a hit. The XAU was up 1 1/8, while GDX added 1/4. Volume was good. If rates do rise as Yellen promises it will not be positive for gold. Mentally I'm feeling a bit tired, busy day. I'm taking a look at things here and am still surprised at the positive run we've had. Wednesday does look like a blow off top to me but I could be wrong. Perhaps we are about to simply enter another sideways period before heading higher once again. I will need to go over all the charts this weekend to try and come up with something. With 2 weeks to go in the March option cycle I'm sure there will be opportunity somewhere. We've got the employment report next week as the main economic number to watch but that isn't until Friday. Right now I think the ideal scenario would be a light volume levitation on Monday and Tuesday in order to purchase some puts. But I'll try and get things figured out over the weekend. Asia was lower and Europe mixed overnight. It's Friday afternoon and time for a break.
Thursday, March 02, 2017
Downside today as the Dow fell 112 points on good volume. The advance/declines were shy of 3 to 1 negative. This should move the summation index lower. Way overdue for some type of pullback and today could be the start. Yesterday now looks more and more like a blow off top. I'll be looking for an entry point for the SPY March puts. A light volume return to the 2400 level on the S&P 500 would be the ideal scenario. The short term technical indicators are still overbought, so there is room to go lower. GE was flat on the day and the volume was light. Gold took a hit today as the futures lost $15. The US dollar was higher. The XAU lost 4 and GDX shed a point on good volume. March is historically the worst month for the yellow metal and it is living up to that so far. The fear of higher interest rates is taking over. Mentally I'm feeling OK. We'll now have to see if things get interesting as we could have some doji stars on the weekly candlestick charts of some for the major stock indices. Depends on how we close tomorrow. The VIX is also not in sync with the changes in prices lately. For example today the VIX was lower along with stock prices. They usually move in the opposite direction. It's something to keep an eye on although I don't exactly know what it means, if anything. The overall market was weaker than the Dow as well and we haven't seen that in a while. So perhaps we're in for a pause in the festivities but one day doesn't make a trend. March in general is a good month for stocks so maybe some sideways activity is what we'll see. Time will tell on that. I suppose that I'll let tomorrow pass and go from there. Asia was mixed and Europe lower in last night s trade but the moves were muted. The exception was a decent rise in NIKK. We'll close out the week tomorrow.
Wednesday, March 01, 2017
A blast off higher today as the Dow roared ahead by 303 points on heavy volume. The advance/declines were 2 to 1 positive. The summation index should be moving back up. Trump sounded like a president but didn't really say anything. It didn't matter. The market took off like a rocket. This is a freight train running loose that you don't want to step in front of. Extremely overbought and moving in a straight line. This will not end well but who knows where the end is? Today squeezed all the rest of the shorts ahead of Trumps address to congress. I'm not sure where we go from here but I'll continue to look at the SPY March puts. GE was up 3/8 on good volume. Gold was off a few bucks on the futures as the US dollar rallied. The XAU and GDX had slight fractional gains on average volume. I still think that the fundamentals for gold are negative. Mentally I'm feeling OK. We just rose over 1000 points in a month. This is amazing in itself. It has the feel of a blow off top but we'll only know that in hindsight. The market can stay overbought longer than you can stay solvent, or so I've heard. I'm still waiting for a negative divergence that may never occur at this rate. It is virtually impossible for me to buy calls here because the technical indicators remain out of whack. So I'll simply have to wait until I see something worth making a trade on. Still plenty of time in the March option cycle. The VIX has room to move down on the short term indicators so even some more upside from here isn't out of the question. We'll see. Europe and Asia were both higher in yesterdays trade. I'm not sure what we'll see tomorrow but these are very interesting times.