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Friday, January 21, 2022

Down we go as the decline continues. The Dow fell 450 points on expiration heavy volume. The advance/declines were around 4 to 1 negative. The summation index is heading lower and we are falling apart approaching the zero line. It doesn't appear that it will hold things up this time around. The NASDAQ is still leading the way lower and that's a negative. The S&P 500 is short term overbought, staying that way and just closed below its 200 day moving average. We should have at least seen a bounce at some point this week but it didn't happen. Getting ugly and even if we see a bounce it probably won't hold. Rolling now into the February option cycle. Gold fell over ten bucks today. The US dollar was a bit lower and interest rates fell on a flight to safety. The XAU dropped almost 4 points, while GDX shed 2/3. Volume was good to the downside. My open order for the GDX February calls was filled and it's already a loser. Plenty of time for this trade but with the market in what looks to be freefall, the gold shares are going along for the ride. The stop loss order is in though and another day like today will get me out. Perhaps staying on the sidelines for now is the proper course of conduct. But we'll see. Mentally I'm feeling OK. The VIX was up and is almost at 30. Remaining short term overbought on the indicators. Usually the VIX doesn't stay overbought for long but it seems right now is not a usual time. Buyers have vanished. We've got the Fed next week and perhaps they'll calm the markets. Or not. Going through the zero line on the summation index to the downside is a rare event but always interesting to say the least. We're getting close to being down 10% for the S&P and perhaps that will put a temporary hold on the selling. But that's just a guess. The trend is down. Plenty to ponder over the weekend to try and figure out what to do next week. Europe and Asia sank overnight. It's Friday afternoon and time for a break.

Thursday, January 20, 2022

The market tried to bounce today and was up over 400 points in the morning. But the rally didn't hold and we fell apart in the final couple of hours. The Dow fell 313 points on good volume. The advance/declines were 3 to 1 negative. The summation index is moving lower. The NASDAQ led the way down and that continues to be a negative. The S&P 500 is short term oversold and staying there. The next support is the 200 day moving average at around 4425. More concerning is the summation index moving lower and heading towards the zero line again. The zero line has held up recently but that won't happen every time. If we fall through there things will get ugly in a hurry and the market will simply fall apart. The way it is acting seems to be saying that will be the case. Oversold and staying there is a recipe for disastor. We'll see. Gold was off just a few bucks on the futures. The US dollar was higher and interest rates were steady. The XAU lost 2 1/2, while GDX was down almost 1/2. Volume was good. My order is still out there for the GDX February calls. The problem here is that if the market collapses it will take the gold shares with it. I'll have to reassess this idea tonight. I do still think that the flight to safety trade holds water. Mentally I'm feeling OK. The VIX was lower early but then shot up past 25 to close the day. Short term overbought here and that condition usually doesn't last long for the VIX. Unfortuantely the way the market is acting at the moment isn't the usual conventional way. Sellers are overwhelming the buyers. The tone has changed and we have to change with it. Expiration Friday and what happens is up in the air. Interesting times. The small shares have broken down and it appears that the rest of the market is on its way. Europe and Asia were higher in last nights trade. We'll see how expiration Friday goes.

Wednesday, January 19, 2022

Continuing lower as the Dow tried to hold on today only to drop by 339 points on average volume. The advance/declines were better than 2 to 1 negative. The summation index is moving lower. We did see some buying today but in the final hour sellers arrived and took control. The NASDAQ still remains the downside leader. The S&P 500 is now short term oversold. I'd expect at least some kind of bounce before the end of the week. However with the summation index moving down the path of least resistance is lower. Rallies can be sold as the easy money is in the process of being removed. Unfortunately the odds now increase that things will get ugly. Hopefully we'll get a chance at the SPY February puts in the weeks to come. Gold took off to the upside today as the safe haven play is back. The gold futures jumped $30. Bot the US dollar and interest rates were a bit lower. The gold shares exploded to the upside. The XAU gained 9 1/3, while GDX rose 2 1/4. Volume was very heavy which confirms that this move is for real. I canceled the open order that I had for the GDX February calls and replaced it with another one in hopes of eventually getting filled. GDX is short term overbought but I believe this is a move worth chasing. I am definately late though. I do think that trying the February calls here is worth the risk. The markets are in the process of change and I think that gold will stand to benefit at least in the short term. Mentally I'm feeling OK. The VIX moved higher and is short term overbought. It usually doesn't stay that way for long so I'm expecting some kind of upside for the market before the end of this week. Not the beginning of a rally mind you, just something to relieve the selling pressure. Make no mistake, the trend is now down until further notice. Europe had a slight gain and Asia was lower overnight. We'll keep an eye on the evenings developments.

Tuesday, January 18, 2022

A decidedly down day to start the week as the Dow fell 543 points on good volume. The advance/declines were almost 6 to 1 negative. The summation index is now moving lower. The NASDAQ again led the way south and that is not a good sign. The S&P 500 has just moved into short term oversold territory. The market is adjusting to the fact that there will be less liquidity. In other words there won't be as much money sloshing around to chase stocks. How long the selling lasts is anyones guess but the weekly indicators are not yet oversold. Gold was off a few bucks on the futures but held up rather well despite the negative backdrop. The US dollar was higher along with interest rates. The XAU was off about 1 1/2, while GDX shed 1/3. Volume was light as it has been to the downside in the past 3 days here. I did place an open order for the GDX February calls although GDX is not yet short term oversold. Silver had an impressive day to the upside and gold did not drop much as it appears the safe haven factor may be coming into play. It will take more of a drop in GDX to get this order filled. Mentally I'm feeling OK. The VIX jumped above the 20 level today and the indicators are heading north. We are touching the upper Bollinger band here so perhaps things will turn around tomorrow. Or not. Support for many of the smaller stock indexes has been broken, with a trip to the 200 day moving averages in range. It is expiration week though and I would expect to see buying at some point. But it appears that the tide has turned for equities and rallies will be sold. Europe and Asia were down with the exception of China. We'll see how things go tomorrow.

Friday, January 14, 2022

A mixed bag for sure today as the Dow fell 202 points to close out the week. The advance/declines were negative. The summation index is still drifting higher. The Dow did come up from the lows of the session as it was down 450 at one stage of the day. Retail sales were weaker than expected and that was one excuse for the decline. The NASDAQ and the S&P 500 posted gains for the day. The S&P had a one day reversal to the upside as it opened lower and closed higher. It is doing its best to try and hang on here but it's now down below the 50 day moving average. We also have tops beneath tops on the daily chart here which has a down trend line in place. Perhaps if we make it back to that line we can try the SPY puts. Or maybe the line will be taken out and we'll head for new all time highs. I'm more of a believer of the former. Gold was off 5 bucks today. The US dollar was higher along with interest rates. None of that fits with a weaker retail sales numbers but the market goes where it wants. The XAU lost 1 1/2, while GDX shed 1/4. Volume was light again to the downside. I am trying to remain patient here but I would certainly like to try the GDX February calls. Mentally I'm feeling OK. The VIX reversed back lower today and closed below the 50 day moving average. The short term indicators are mid-range. Not getting a good idea of what this indicator is trying to tell us now. Maybe we'll see the usual expiration week upside bias coming up. I certainly don't know and will remain on the sidelines most likely. It's a long holiday weekend on tap with plenty of work to do regarding what's going on here. I'll be going over the charts as usual to try and come up with some kind of game plan going forward. Europe and Asia were lower to close out the week. It's Friday afternoon and time for a break.

Thursday, January 13, 2022

It appears that the bounce is complete as the Dow fell 176 points on about average volume. The advance/declines were negative but not as much as a down 176 market would suggest. The summation index is drifting higher. The overall market was much weaker than the Dow with the NASDAQ leading the way lower. That's not a positive. It looks like the S&P 500 is on its way to test last weeks lows as most of the short term technical indicators have rolled over. It is probably too late to buy the SPY January puts. Could things turn around tomorrow? It's possible but we'll need some kind of excuse to be buyers ahead of the long weekend. Gold dropped five bucks but did come up from its lows. The US dollar was a bit lower as were interest rates. The XAU fell 1 7/8, while GDX shed 1/2. Volume was light. I'm back to looking at the GDX February calls but in no hurry. The Bollinger bands are starting to contract in the precious metals complex, implying that a big move is on the way. Which way is the question but I'm leaning to the long side. Mentally I'm feeling OK. The VIX spiked higher and closed above its 50 and 200 day averages. It also finished above the 20 level. The short term indicators have turned up with room to go higher. This indicator is now saying volatilty is on the rise and prices are in decline. It fit the bill today. With only 5 days left in the January option cycle, the risk is high to take on a SPY trade. I'm pretty sure that I'll let tomorrow pass and take it from there. That seems to be the prudent path for me at the moment. Europe and Asia were mixed overnight. We'll finish up the trading week tomorrow.

Wednesday, January 12, 2022

The market continues to trudge higher as the Dow gained 38 points on light volume. The advance/declines were slightly positive. The summation index is turning back up. The inflation data came in high as expected but did not cause any widespread selling. If we stay higher into Friday, I may try the SPY January puts. However the short term technical indicators for the S&P are mid-range. So that may not be the best idea. But if we do make it back to short term overbought on one of my indicators I'll probably do the trade. Gold continued higher today as the futures rose eight bucks. The US dollar dropped and interest rates were steady. The XAU gained 2 2/3, while GDX added over 1/2. Volume was average again. I canceled my open order for the GDX February calls as this trade was missed. The sharp rise in the gold shares this week makes me believe that this move up is for real. I'll be looking to attempt the GDX calls on any weakness but the ideal time to try this trade has passed. I was early on my attempt here with the last losing GDX trade. Mentally I'm feeling OK. The VIX was lower, remains short term oversold but not extremely so. Not really getting a good signal one way or the other from here. My thinking is that the 3 day rally that we've seen in stocks could stall here. We'll get more inflation data out tomorrow and retail sales on Friday. We also have a holiday weekend comng up in the US. I'll remain on the sidelines for now and wait to see how we go for the rest of the week. Europe and Asia were higher overnight. We'll see what tomorrow brings.