Tuesday, October 22, 2013
The song remains the same as the Dow gained 75 points on good volume. The advance/declines were almost 3 to 1 positive. The employment data was weak but that just means more easy money from the Fed. The liquidity flow lives on. The summation index is heading higher. The major stock indices continue to hit new all time highs. There is no overhead resistance. Both short and medium term overbought at this point. Seems like there is nothing out there to derail this freight train higher. We'll see how long it can go on. GE was off 1/8 and the volume was good. Short term overbought here as well and probably time for a breather. Any move back to the $25 level can be an entry point for calls in my opinion. Gold had a nice move higher on a weaker US dollar and weaker jobs number. The precious metal futures rose about $25. The XAU gained 4 points and is back to the 50 day moving average. ABX and NEM almost gained a buck, while GG added 1 1/4. Volume was good for the gold shares. ABX broke above the declining tops line from late August and that is a positive moving forward. My November ABX calls are now solidly in the black. Short term oversold now for the gold shares. Mentally I'm feeling OK. I'd expect some type of sideways price action for the stock indexes at this point. Perhaps some backing and filling before moving higher. We will not stay overbought forever. It seems like everything is going right for the stock market and that could be dangerous. But there is nothing out there at the moment to end the upside party. Gold is also back to its 50 day moving average as well. I expect some hesitation here as well. The US dollar is getting close to its longer term support at the 79 level. I would expect that level to contain prices near term. However if it doesn't that would certainly be bullish for gold. We'll have to see how things play out here. The gold shares have been acting better lately. But the weekly chart for gold itself is about to form the death cross of the 50 week moving average breaking down through the 200 day moving average. So I'm not exactly certain is will be clear sailing for the gold complex. We'll watch the developments overnight and go from there.
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