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Tuesday, December 19, 2017

A pause to refresh today as the Dow fell 37 points on lighter volume.  The advance/declines were almost 2 to 1 negative.  The summation index tried to get going to the upside but is still stuck in a sideways mode.  The overall market was weaker than the Dow.  We are still very overbought any way that you look at it.  The VIX perked up a little today but it doesn't look like anything serious.  That said, a decline of some sort is due at any time now.  The distance from the 50 day moving average in some of the major indices cannot be ignored.  We are in a positive seasonal time frame but that doesn't mean that we can't see some pullback in the near term.  Even if that does occur, I still feel that the Dow 25000 is coming sooner rather than later.  GE was off over 1/8 and the volume was good.  I canceled my open order for the GE January calls and re-entered it at a lower strike price.  We've been in a sideways channel here for about a month and it looks like the bottom of the channel is about to break.  I would still like to be in this trade before the end of the year.  Gold was flat on the futures and the US dollar was lower.  The XAU and GDX were little changed on light volume.  Mentally I'm feeling OK.  The tax bill looks like it will get passed this week.  After that happens, what is left to drive stocks higher in the near term?  A pause would be healthy for the overall condition of the market.  Let the indicators work off the overbought condition and prepare for the next leg up.  Simply continuing straight up would be a recipe for disaster in my opinion.  But I've been wrong before.  The market will be in holiday mode next week so what happens the rest of this week will be important in my view.  So we'll see.  Asia was mixed and Europe generally lower in last nights trading.  We'll see how it goes tomorrow.

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