Friday, October 25, 2013
The rally continues as the Dow climbed another 61 points today. The advance/declines were positive but the volume was light. The bigger stocks led the way higher on the session. There is nothing to suggest that the rally can't continue. The summation index is moving higher. I'd still like to see some consolidation before going up again but the market will do what it wants. New all time highs are being made in the major indices and there is no overhead resistance. We're overbought for the stock indices on a short and medium term basis. This condition won't last forever. GE was off a few cents on light volume. Still waiting on a pull back to get some GE calls. However this week may just have been a consolidation before moving higher. Gold was up a couple bucks on the futures as the US dollar didn't do much today. The XAU edged higher by 2/3. ABX, GG and NEM all had minimal fractional gains on average volume. Still short term overbought for the gold shares. It's been a nice couple of weeks for the gold bulls. Plenty of potential market moving data out next week. Probably the most important for myself will be the ABX earnings due on Halloween. Definitely a trick or treat affair. Mentally I'm feeling OK. The stock indexes continue to the upside with the easy money policy firmly in place. There is a Fed meeting coming up next week and I don't see any changes taking place that would derail the stock buying binge. Money needs a place to go. There's plenty of economic data due out as well. I'd expect more record highs to come. Gold has been moving along with the overall market. A weaker dollar has helped things along here in my opinion. We are getting close to major dollar support at the 79 level though. I'd expect that level to contain the dollars decline since we are short and medium term overbought on the greenback. That may put a ceiling on golds advance for the near term. Just a guess but it does have some technical reasons behind it. The reverse head and shoulders pattern on the weekly ABX candlestick chart is still in place. If ABX can break the neckline at 21 with good volume, that pattern would be valid. It measures out to $28 eventually. Hasn't happened yet but the possibility is still there. It's the last Friday afternoon in October and time for a break.
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