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Thursday, June 01, 2017

The Dow took off to the upside today as the most watched index gained 135 points on good volume.  The advance/declines were about 5 to 1 positive.  This will turn the summation index back up.  Beginning of the month money flows and some short squeezing was probably the cause of todays price action.  The volume was good and there is no overhead resistance.  I adjusted my open order overnight for the SPY June puts and then canceled it during the morning today.  My idea of getting puts here looks simply wrong after todays price action.  Many of the major stock indices are breaking out to new all time highs.  Volume is good, so the move up is for real.  We're both short and medium term overbought but in bull market rallies that condition can last for a while.  GE was up 1/3 on average volume.  Gold was off five bucks and the US dollar was a bit higher.  The XAU and GDX had slight fractional losses on very light volume.  Mentally I'm feeling OK.  The Dow closed at a new all time high, finally catching up to the other major averages in that regard.  It looks like there is room to go higher as well.  It now appears that the decline that we saw yesterday was the opportunity to get long.  I'm not sure how long the run up will last but some of the individual charts in the Dow look bullish.  I do still think that the June SPY puts will work at some point but I do not know when that point is.  Perhaps early next week if we continue higher.  The VIX is very low again and I suppose I could make a case for getting some S&P 500 puts tomorrow.  There are some potential negative divergences in the RSI for the small cap indices.  But we don't see anything like that for the big caps.  So I'll take another look at things tonight and go from there.  Europe and Asia were higher overnight.  We've got the employment report tomorrow and we'll gauge the stock markets reaction to those numbers.  We'll also see if the foreign markets rally off of the US price action today.  We'll finish things for the trading week on Friday.

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