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Friday, April 12, 2024

Selling from the start today with a gap lower as buyers were nowhere to be found. The Dow lost 475 points on average volume. The advance/declines were around 5 to 1 negative. The summation index is moving lower. The NASDAQ led the way down today. Not sure exactly what is going on here but the market always knows more than we do. Geo-political tensions will probably be the excuse for todays drop. The S&P 500 is getting to short term oversold and is almost at its 50 day moving average. I thought that we would build on yesterdays rise but I was wrong. I suppose we should have taken our cues from the summation index but hindsight is usually correct. We keep moving on from here though with a week to go in the April option cycle. Pretty sure that we'll have to stay on the sidelines with regards to the SPY for now. Gold had a dramatic one day downside reversal as the futures fell a dozen after being up around $75. The XAU lost 2 1/2 and GDX shed almost 3/4. The gold shares were also much higher early on. Volume exploded as everybody here headed for the exits. The US dollar was higher and interest rates dipped in what looks like a flight to safety. All good things come to an end and this could be it to the upside for the gold shares and gold for now. However there is the short term up trend line for GDX that comes in at the 33 level. If we get down there on Monday I will be tempted to try the GDX April calls for a short term trade. Very risky though as we saw today just how fast markets can turn one way or the other. Mentally I'm feeling OK. The VIX spiked higher but finished off of its highest levels for the day. The short term indicators here have now turned back up and are not yet overbought. I have not had a good handle on what the VIX has been implying lately. I'm not about to try and guess what will happen here next with the VIX. We'll keep an eye on it though. Quite an interesting session today for the markets. We'll have our work cut out for us when checking the charts over the weekend. There is something going on, we just don't know what it is. I'll be watching the weekend headlines a bit more closely. Europe was mixed and Asia lower with the exception of Japan to finish the trading week. It's Friday afternoon and time for a break.

Thursday, April 11, 2024

To the upside today for the broader market but the Dow had a loss of two points on light volume. The advance/declines were about even. The summation index is moving lower. After a brief morning sell off stocks took off higher. The S&P 500 had a decent gain and the NASDAQ was up over 250. The Dow was the laggard. The inflation data came in about where expected and not as hot as we thought. The S&P is now mid-range in a channel that it has been constructing for the past month. The Bollinger bands continue to get tighter so a big move is forthcoming. Which way is the question. The short term indicators for the S&P are mid-range as well so you can make the case for either direction. Perhaps we'll get a burst higher from here for option expiration week to new all time highs. Or maybe the bears will finally take control. Sideways is the only other choice. We just don't have a good signal right now for the SPY options so we'll remain on the sidelines with regards to that. Gold jumped $44 on the futures today. It has taken on a life of its own. The US dollar finished unchanged and interest rates were a touch higher. The XAU was up 1 7/8, while GDX rose 3/4. Volume was average. My order for the GDX calls wasn't filled and I canceled it. GDX remains extremely short term overbought. The volume was lighter today which leads me to believe that perhaps this dramatic move higher is running out of steam. However the rally in the gold shares is so strong you really don't know where it will end. I would like to try the GDX April puts again but that may not be the smartest thing to do here. It could be that we might have to let the April option cycle run its course without a trade. We only saw a one day decline in GDX on the sell signal that was triggered. I'll consider what to do overnight. Mentally I'm feeling OK. The VIX was lower today after hitting a new recent high in the morning. The daily chart here looks like it wants to go lower. The short term indicators on the VIX are pointing down with room to go. It is implying higher stock prices in the near term. So perhaps we'll see the rally in stocks return as liquidity could come back into the market. That's just a guess as technically things appear to be about even right now. However the big move in the NASDAQ today could be a sign of things to come as another day like today would lead it to new all time highs. Asia was mixed and Europe lower again in the overseas trade. I would expect those markets to follow the US higher on Friday. We'll close out the week tomorrow.

Wednesday, April 10, 2024

The inflation data came in a little hot and markets sold off as the Dow fell 422 points on light volume. The advance/declines were around 6 to 1 negative. The summation index is back to moving lower. Much of the decline came early in the day with sideways activity for the rest of the session. It could have been worse but it wasn't. The Dow was the under performer today. The TRAN and the Russell 2000 had a big drop. The S&P 500 is getting to short term oversold. Tomorrows PPI should be above expectations as well so we'll have to wait and see how the markets respond to that. I'm beginning to think that the decline here will be more sideways than down. Gold was off $14 on the futures. The US dollar was higher and interest rates spiked up. The gold shares sold off at the open but then came back as the demand just doesn't stop. The XAU fell around 1 3/4, while GDX lost 1/2 after being down over a point. Volume was good. My order for the GDX April puts wasn't filled and I canceled it. GDX remains short term overbought but I am putting in an order for the GDX April calls again. It might get filled if we see another spike down for GDX tomorrow morning. The sell signal that one of our indicators gave for GDX was valid but it doesn't look to be long lasting in this case. It appears to me that the gold market is taking on a life of its own and we'll try to take advantage of that. I could be wrong. Mentally I'm feeling OK. The VIX was higher today and that fits with a down market. The short term indicators here are turning back up. Not sure what's next for the VIX but it is above both the 50 and 200 day moving averages. Asia was mixed and Europe generally higher overnight. We'll see how things go tomorrow.

Tuesday, April 09, 2024

It was a back and forth session ahead of tomorrows inflation data and the Dow finished the day with a loss of 9 points on light volume. The advance/declines were positive. The summation index is trending lower but now trying to turn back up. The market opened higher, then had a steep morning sell off only to come back in the final hour of the day. Both the NASDAQ and the S&P 500 posted gains. My open order for the SPY April puts wasn't filled and I canceled the order. The short term indicators for the S&P remain at mid-range so it could go either way tomorrow. I still believe that the inflation data will come in above expectations and expect a market sell off. But the technical set up isn't clear so I'll have to remain on the sidelines with regards to the SPY for now. Gold was up $17 on the futures. The US dollar finished unchanged and interest rates were lower. The XAU gained 3 points and GDX was up 5/8. Volume continues to be good for the gold shares. I am taking the risk here and put in an order for the GDX April puts which I am leaving open overnight. GDX will have to rise some tomorrow for this trade to be filled. This is a better technical set up and GDX is extremely short term overbought. We are also getting a sell signal on another of our short term indicators for GDX. But that doesn't mean that GDX can't simply remain overbought which is possible considering all of the money coming into this sector at the moment. How GDX reacts to the inflation data remains to be seen. We'll see what happens tomorrow. Mentally I'm feeling OK. The VIX bounced around today but did finish lower. The short term indicators have rolled over. The VIX is implying higher stock prices going forward but I'm not so sure about that myself. Running out of time on the April option cycle with a week and a half to go. Asia was higher and Europe lower overnight. We'll see how the inflation data looks and the markets reaction to it on Wednesday.

Monday, April 08, 2024

Running in place today as we basically had a sideways affair. The Dow fell 11 points on light volume. The advance/declines were positive. The summation index is trending lower. Most stock indices finished flat as the market is apparently waiting for the inflation data on Wednesday and Thursday. The S&P 500 was little changed with the short term indicators here at mid-range. I did place an order for the SPY April puts that I'm leaving out there overnight. It will take some gains in the market tomorrow to get filled. I would like to own the puts ahead of the inflation news but the premiums remain high. The data could be positive for the market which would make owning the puts a losing proposition. But I'm expecting the CPI to come in hotter than expected along with the PPI. I could be wrong. Gold was up $11 on the futures. The US dollar was a bit lower and interest rates a bit higher. The gold shares stalled today. Both the XAU and GDX had slight fractional losses on above average volume. If I do not get the SPY April puts tomorrow I may try the GDX April puts instead. This would certainly entail much risk as so much money is pouring into gold and the gold shares at the moment. However one of our indicators for GDX is at the point where things normally turn around and head lower. We'll look again at this again tonight and decide what to do. I also don't want to put on a trade just to make a trade. But we can be pretty certain that the markets are going to get moving on Wednesday. Mentally I'm feeling OK. The VIX dropped today and the short term indicators here have turned down or are in the process. This is another reason to be cautious with regards to the market downside prognosis going forward. Perhaps the inflation data will in fact be worse than expected and the market shruggs it off. Trying the SPY puts here doesn't have the best technical set up. The trading is never easy. Europe was up and Asia generally higher to begin the trading week. We'll keep an eye on the overnight developments.

Friday, April 05, 2024

Bouncing back as the Dow rose 307 points on light volume. The advance/declines were positive. The summation index is moving lower. The jobs report was better than expected and markets rallied. The NASDAQ led the way higher and that's a plus. The short term indicators for the S&P 500 are turning back up. Does the rally simply continue from here? That is the question and I'm not so sure. Today could be just the beginning of a snap back to the recently broken up trend line. The weak volume provides a clue there. Inflation data out next week and my idea says the numbers will be high. But we'll have to see what the expectations are. How the market reacts to the data on Wednesday and Thursday will determine the path for next week. I'm looking at the SPY April puts but the technical set up is not as solid as I would want. Gold just continues to power higher regardless of the data. The futures there climbed $34. The US dollar was up but off from the best levels on the day. Interest rates rose. So as you can see for gold it doesn't seem to matter what rates, the dollar or the stock market is doing. The XAU was up 3 3/4 and GDX climbed over a buck. Volume was heavy and the money just pours in to the gold shares. GDX is extremely short term overbought and about as far away from its 50 day moving average as it can get. Can it get move overbought? Yes. Can it get further away from the 50 day moving average? Sure. But the gold shares along with gold are moving straight up. And we all know how that ends. The trouble is you don't exactly know where and when it will turn around. That said, I am now looking at the GDX April puts for a short term trade. We already missed this leg up in GDX but it has to run out of steam at some point. The problem is that so much money is behind this move trying the puts could be the equivalent of stepping in front of a freight train. Mentally I'm feeling a bit tired. The VIX was lower today but still closed above its upper Bollinger band. The short term indicators are trying to turn down. Not sure what to expect next here for the VIX but moving lower seems to be the most likely probability. That would coincide with stocks moving back up. There will be plenty to ponder when going over the charts this weekend. There's still two weeks to go in the April option cycle so plenty of time for some type of trade. Europe and Asia were lower to close out the week. It's Friday afternoon and time for a break.

Thursday, April 04, 2024

It was a dramatic one day downside reversal for the Dow as it gapped up to start the day only to roll over and finished with a loss of 530 points on average volume. The advance/declines were 2 to 1 negative. The summation index is beginning to move lower. Sellers took over halfway through the session and didn't stop. The short term up trend line for the S&P 500 has been broken. The short term indicators there have rolled over and are heading down with room to go. I had been looking at the SPY April puts but it may be too late. Perhaps the market knows more about tomorrows employment numbers than we do. Or maybe things bounce back tomorrow like today never happened. It will be interesting, that much we can count on. Gold was off ten bucks on the futures. The US dollar finished flat and interest rates were slightly lower. The XAU dropped 1 2/3, while GDX shed 1/3. Volume remains good for the gold shares. GDX remains short term overbought. I still want to try the GDX April calls if we get some pullback within the next couple of weeks. GDX remains pretty far from its 50 day moving average and that condition won't last forever. Mentally I'm feeling OK. The VIX jumped and closed above its upper Bollinger band. The short term indicators for the VIX are getting to short term overbought but not completely there yet. Yesterday the VIX daily chart had the appearance of wanting to go lower but in fact did just the opposite. Not everything appears as it is and the indicators move where they want just like the market. We can only put the probabilities on our side but thay won't work every time. Europe and Asia were mixed in the overnight trade. We'll see how the market reacts to the employment data tomorrow.