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Friday, August 12, 2022

The summer rally continues as the Dow gained 424 points on light volume. The advance/declines were around 4 to 1 higher. The summation index is moving up. Stock indices are overbought and staying that way. Down trend lines have been broken to the upside. The bear is dead regardless of what you might hear. I did place several orders for the SPY August puts today as I modified them as we went up. I have one in as I'm writing todays blog but it probably won't get filled either. I can try again Monday morning if I desire. However trading the short side here is dangerous as it appears prices will be run up into option expiration. That said I do think we're in for a rest at some point next week and sooner rather than later. The NASDAQ continues to lead the way higher. The Russell 2000 just broke through its 200 day moving average. We closed the week at the highs. I'll probably try the SPY puts on any strength Monday morning. But make no mistake that the trend is up. Gold was up $10 on the futures. The US dollar was higher and interest rates were mixed. The XAU gained 2 1/8, while GDX was up over 1/2. Volume was light. Still short term overbought for the gold shares. Mentally I'm feeling OK. The VIX went back down today and is again below the 20 level. The VIX has been moving lower in a steady channel since the lows of the market in June. As long as the VIX remains this way the overall trend for stocks is up. The lower the VIX goes below 20 the stronger the up trend becomes. However we have been oversold on this indicator for so long on a daily basis that I'm pretty sure it is on its last legs moving lower. It is another eason that I would like to try the SPY puts on Monday. But we'll go over the charts this weekend and figure out the plan. It could be to just remain on the sidelines. Europe and Asia were higher to close out the trading week. It's Friday afternoon and time for a break.

Thursday, August 11, 2022

Markets rallied early on the tame inflation data but spent the rest of the day selling off. The Dow rose 27 points on good volume. The advance/declines were positive. The summation index is moving up. Both the NASDAQ and the S&P 500 had one day reversals to the downside as they closed negative. Yes the July inflation numbers were low as gas prices came down and commodities sank during that timeframe. It's all about where we go from here as inflation is by no means dead. I did place an order for the SPY August puts overnight but it wasn't filled. I'm leaving it out there for now in hopes of a return to todays highs in the next couple of sessions. Running out of time in the August option cycle. The Russell 2000 has stalled today at its 200 day moving average. I would keep a close eye on what happens there but for now all signs point to higher prices going forward. Then why try the puts? Well, it won't be a straight line up and the market has been short term oversold for weeks. Gold was off ten bucks on the futures. The US dollar was slightly lower and interest rates rose despite the weak inflation data. The XAU was off 2 1/3 and GDX slipped 1/2. Volume was light. I canceled my order for the GDX September calls. Might try it again if GDX gets back to short term oversold. Mentally I'm feeling OK. The VIX was slightly higher today and is now at the 20 level. Short term oversold for weeks here and another reason to take a shot at the index puts. That would be the theory but the reality doesn't always match. I also would not be surprised if the market simply continues higher into option expiration next Friday. The trading is never easy. We'll see things shake out tomorrow and go from there. Asia was higher and Europe mixed overnight. We'll keep an eye on the overnight developments.

Wednesday, August 10, 2022

Tame inflation data led to a huge rally today as the Dow soared 535 on good volume. The advance/declines were better than 5 to 1 positive. The summation index continues higher. The NASDAQ led the way up and that's a plus. The small stocks have been leaders both on the way down and on the way back up. The S&P 500 remains short term overbought and has now crossed 4200. The bear looks to be dead. Yes we are still thinking about the SPY puts but we don't want to get in front of this move up. It could simply plow higher into the expiration next week. Down trend lines that have been in effect since the beginning of the decline are being broken on some of the major averages. The producer prices tomorrow should bode well for more gains. Gold dropped $5 on the futures. The US dollar sank, while interest rates were a bit lower after being down more early on. The XAU was up 1 1/3 and GDX had a fractional gain. Volume was light. I do still have an open order out for the GDX September calls but am considering canceling it. Mentally I'm feeling a bit frustrated as the long term money we have wasn't deployed after the market dropped over 20%. We were looking at it but did not do anything. The rally here is for real and we don't see the market getting back towards 3600 again. The VIX had a big drop and is now below the 20 level. This is what we've been waiting for but now we're here and it feels like it will simply continue lower. Oversold for an extremely long time on the daily VIX. But if it simply continues to move lower here below 20 it is another confirmation that the bear market is over. We cannot argue with the charts. I'll think about whether or not I want to take the risk of trying the SPY August puts tonight and perhaps place an overnight order. Asia lower and Europe higher overnight. We'll look for some upside follow through tomorrow.

Tuesday, August 09, 2022

A summer session to be sure as the Dow fell 58 points on light volume. The advance/declines were around 2 to 1 negative. The summation index continues higher. Inflation data due for the next couple of days and it should be market positive. We continue to wait for the S&P 500 to reach 4200 before thinking about purchasing the SPY August puts. The NASDAQ led the way lower but we don't think this is the start of any long term decline. As long as the summation index moves forward the trend is up. Gold added five bucks on the futures today. The US dollar was a bit lower and interest rates a bit higher. The XAU and GDX had slight fractional losses on light volume. GDX is now short term overbought on some of the short term techncial indicators. Mentally I'm feeling OK. The VIX was up a bit today and remains oversold. Still waiting on the 20 level here before trying the SPY puts. Waiting pretty much sums up what the stock market did today. We'll get the CPI tomorrow and the market reaction to it and go from there. Europe and Asia were mixed. We'll see what tomorrow brings.

Monday, August 08, 2022

We begin the week with a mixed picture as the Dow gained 29 points on average volume. The advance/declines were 2 to 1 positive. The summation index is moving up. Both the NASDAQ and S&P 500 had small losses. The S&P remains short term overbought. We're still waiting for the 4200 level before trying the SPY August puts. Inflation data on tap for Wednesday and Thursday. So it still remains a waiting game for now. Gold was up over a dozen on the futures. The US dollar was slightly lower along with interest rates. The XAU rose 2 2/3, while GDX was up 3/4. Volume was average. My order for the GDX September calls is still out there but won't get filled at this rate. Might have to cancel it and look for something else. Mentally I'm feeling OK. The VIX was up slightly and remains short and medium term oversold. Looking for the 20 level here for an entry to the SPY puts. Not quite there but the VIX has remained oversold during most of the summer rally. It will not be oversold forever. However trying to figure out when it turns is the problem. For now the market is stronger than it has been all year and the bulls are in control. Sellers have retreated and I'm not sure what brings them back. This time of the year usually favors the bears but they've gone into hibernation for now. Perhaps todays candlestick on the daily Russell 2000 chart marks some kind of near term top. The Russell has led the way up. Europe and Asia were up to start the week. We'll keep an eye on the news of the evening.

Friday, August 05, 2022

It is a market that just doesn't want to go down. The Dow gained 76 points on average volume. The advance/declines were slightly negative. The summation index continues to rise. We opened with a huge gap lower on a hotter than expected jobs report. However buyers stepped up and we traded back and forth for the rest of the session. The S&P 500 along with the NASDAQ did finish in the red but came well off of their lows. The major indices remain short term overbought. I did place an order for the SPY August puts but canceled it. I guess that I will wait for the 4200 on the S&P 500 or just sit things out here. The Russell 2000 continues higher and has been the leader to the upside. Unless we see a change there the trend remains up. Gold fell $15 on the futures. The US dollar was higher along with interest rates. The XAU and GDX had slight fractional losses on lighter volume. The gold shares also had a gap lower at the open only to make a comeback for the rest of the day. My open order for the GDX September calls is still out there. Won't get filled at the price I'm willing to pay at this rate. Mentally I'm feeling OK. The VIX continued its downward trend and is getting closer to the 20 level. It has been short term oversold for quite a while but trying to figure out when it will reverse is a guessing game. I'm still inclined to perhaps attempt the SPY August puts if the VIX hits 20 and the S&P is at 4200. Things rarely, if ever, fit your trading plans. There's still two weeks left in the August option cycle. At the rate the market is going it appears that maybe traders will just bid things higher into expiration Friday. We'll see. I'll go over the charts over the weekend and try to come up with something. Asia higher and Europe lower to finish the week. It's Friday afternoon and time for a break.

Thursday, August 04, 2022

Waiting on the jobs data as the Dow fell 85 points on average volume. The advance/declines were slightly negtive. The summation index is moving up. The NASDAQ had a gain and that's bullish. Still short term overbought for the major stock averages. Looking for 4200 on the S&P to try the SPY August puts. However as long as the summation index is going up the path of least resistance is higher. Gold was up over $30 on the futures and crossed the $1800 level. We've seen an upside reversal there. The US dollar was lower along with interest rates. The XAU climbed 3 2/3, while GDX was up 7/8. Volume was good. GDX has broken through the down trend line on the daily chart that began in April. I'm leaving my open order out there but it appears that I'm too late. Perhapd an adjustment will be necessary. Mentally I'm feeling a bit tired. The VIX was lower, remains oversold and is below 22. If it gets to 20 that's a spot to try the SPY August puts as well. Not sure how much to read into tomorrows data but as always the markets response will be the key. Europe and Asia had gains overnight. We'll close out the first week of August tomorrow.