Thursday, April 26, 2012
Three days in a row to the upside as the Dow gained 114 points on what passes for average volume these days. The advance/declines were 2 to 1 positive. Summation index continues to the upside, so higher stock prices can be expected in the future barring some unforeseen event. The stock indices are in rally mode. Calls are the way to go here. We've got the 1st quarter GDP tomorrow but whatever the number is, it looks like we will simply continue to the upside. GE was up about an 1/8 on light volume. Things are looking constructive there as well but there is no hurry to put on a trade. Gold had a good day as the futures rose $18 with the US dollar a bit weaker. The gold shares did not follow as the XAU fell 2/3. ABX was flat, GG lost 2 1/3, while NEM was up 1/4. Volume was extremely heavy in GG as the earnings disappointed and the stock got crushed. NEM announces its earnings report before the open tomorrow. My ABX May calls are still losers with the exception of the lower strike price purchase. I'll wait for the earnings next week and go from there. The volume on the May ABX calls was really big today. We'll see how that plays out going forward. Mentally I'm feeling OK. The stock indexes are in rally mode and we will see if we can take out the March highs. I believe that we will but time will tell. Tomorrows GDP report should be a mover for the US dollar and hence gold as well. We're still oversold on the gold shares and still in the extreme buy zone on the Gold/XAU ratio. Hasn't meant any price upside though in the past few weeks. My feeling is that it won't stay that way forever.
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