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Friday, June 09, 2017

Volatility returned today as the market rocked and rolled for a change.  The Dow did gain 89 points on heavy volume.  The advance/declines were positive.  The summation index is still moving sideways.  However the overall market was much weaker, led by the NASDAQ which lost 113 points.  The S&P 500 had a one day reversal to the downside as it opened higher and closed lower.  It finished with a loss of two points.  I did place an open order for the SPY June puts but it wasn't filled.  I basically missed this trade as I was not quick enough to take advantage of the opportunity.  It still could work but I think the chance has passed.  I do however think that there could be a chance to play the SPY June calls next week if things line up.  GE rose 1/3 but the volume was light.  Gold dropped another $10 on the futures as the US dollar was a bit higher again.  The XAU fell 1 1/3, while GDX lost 1/3 on average volume.  We had a false break of the down trend line in gold that's been in effect for about 5 years.  This should turn traders even more bearish on gold and the next time the line is violated, there won't be a lot of believers.  I'm still looking at taking a longer term gold share call trade at some point in the near future.  ABX or GDX will be my preferred vehicles for this trade.  The next time we are both short and medium term oversold here will be the time to take the trade.  I'll go out to the September or October options.  Mentally I'm feeling OK.  A very interesting trading session today and we haven't had one of those in a while.  I did miss the put trade that I wanted to do but there is still a possibility to try something next week if things line up right.  The big 5 stocks, AAPL, AMZN, FB, GOOG and NFLX all got crushed today and that led the small stocks down.  These five issues have accounted for much of the gains in the major averages lately and when they started to fall today it simply fed on itself.  They all did bounce back some, just like the S&P.  This could be the beginning of a much needed breather for these issues or we could simply just turn around.  I'm inclined to think that things will eventually be going lower from here.  There is a glaring negative RSI divergence in the S&P 500 weekly chart.  It is only a potential event at this point, as we could somehow rally back to a higher RSI reading that would negate this pattern.  But I do not see that happening.  The problem is that we would have to roll into the July option cycle and there is an extra week of time on those options.  But it is something that I'm considering.  For now if we get a weak start to next week, I'd like to try the SPY June calls on around Wednesday.  This would be a highly risky endeavor with only two days left in the June option cycle.  But my work points to strength at the end of next week and I'd be willing to give it a try under the right circumstances.  Plenty of things to consider when checking the charts over the weekend.  Europe and Asia were higher overnight with the exception of Hong Kong.  The British election did not have the huge impact overseas as expected.  It's Friday afternoon and time for a rest.

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