Friday, May 19, 2017
Still moving up but we did finish off of the highs for the day. The Dow gained 141 points on good volume. The advance/declines were 3 to 1 positive. That should stop the decline in the summation index. The small stocks are not out performing here and that is a concern. They are however, oversold. Not sure what we've seen this week as I thought that we have a distribution top in place after Wednesdays debacle. But when the market goes down it simply goes down. It doesn't really rally like it has in the past two days. The problem there is that it simply could be expiration related and not the start of a new trend higher. So many questions and so few answers. GE finally came to life. It gained more than 1/2 on good volume. Gold was up a couple bucks on the futures which was disappointing considering the drop today in the US dollar. The XAU and GDX had fractional gains on light volume. Mentally I'm feeling OK. Quite a volatile weeks for stocks as we were shaken out of complacency, courtesy of Trump. Perhaps the worst is over for now but you never know when another surprise in the headlines might come up. Some will argue that it's always the case but I do think the odds go up when you've got a guy like Trump to deal with. The market did ignore most of the noise up until this week. As always, the market knows more than you and me. Sticking with the technical indicators for the S&P, they've already turned back up. One of the problems now is that by rolling into the June option cycle the premiums are already pretty high. Add in the recent volatility and prices are more than they normally would be. So any trade here had better be right because volatility premium will be coming out of the options as we move forward. I'm now more inclined to believe that Wednesday was an aberration. However I will spend the weekend trying to determine where we go from here and how to trade it. There's no rush to trade. I do think that the lack of small stock leadership puts a lid on any upside going out from here. I could be wrong and I'll have a couple of days to assess the situation before moving ahead. There's plenty of work to do. For now it's Friday afternoon and time for a rest.