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Monday, March 05, 2018

We had a one day reversal to the upside as the Dow opened lower and closed higher.  It's a good start to the week for the most watched index as it gained 336 points on average volume.  The advance/declines were almost 3 to 1 positive.  This should turn the summation index back up.  I did place an order for the SPY March calls this morning but it wasn't filled.  My guess now is that it is probably too late for them.  But we'll see.  The next question to be answered is what happens if and when we get to the down trend line in the S&P 500 at around 2750.  We had a nice move today and we'll see if we get any follow through tomorrow.  GE rose almost 1/3 on good volume.  I canceled my open order for the March calls here.  It looks like that idea would have worked out but the option premiums did not hit my target buy price.  We'll see how things play out into the expiration.  Gold was off a couple bucks and the US dollar was little changed.  The XAU and GDX had slight fractional gains on about average volume.  Not much interest in the gold shares here and the fundamentals remain negative in my view.  Mentally I'm feeling OK.  A good start to the week but there's a long way to go as we've got the employment report coming up on Friday.  OK, this time I'm sure the numbers will be out on Friday.  My thinking at this time is that if we get to the 2750 level on the SPX, I'll give the March puts a try.  If we simply blast through that level and the small stocks make new all time highs then my thinking here is wrong.  If we meander around for the rest of the week, I'll feel better about trying this idea.  Getting the calls on weakness this morning was the right move, so I feel as though I'm getting a handle on what's going on with the market.  One of my beliefs at the moment is that we saw a bearish pattern develop on the S&P last week.  Three black crows occurred on the daily candlestick chart for the S&P.  That implies lower prices going forward, today not withstanding.  If that pattern is correct, we will see the market turn back down at some point in the near future.  Hasn't happened yet.  Asia was lower and Europe higher overnight.  We'll look for some upside follow through tomorrow. 

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