Tuesday, February 20, 2018
Lower today and that was to be expected as the Dow fell 254 points on average volume. The advance/declines were 2 to 1 negative. This may stall the summation index. The overall market was stronger than the Dow. We were short term overbought, so some selling should and did come in. It may not be the beginning of anything big to the downside though, with the small stocks acting relatively well. If we can hold up here until Thursday, I'll be inclined to give the SPY March puts a try. If we simply go lower from here, that trade will be nullified. The premiums on the SPY options remain high. However weakness is expected this week and this may simply be the beginning. GE lost 1/3 and the volume was good. The March calls are still in play here for me if I decide to take on that trade. Overall weakness in the market should take GE with it. That is happening as of today. I'm not looking for some kind of huge rally for GE but it the entry timing is good there will be opportunity for profit. Gold fell $16 on the futures as the US dollar continues to rise. This is the normal relationship between those two. The XAU dropped about 2 1/2, while GDX shed 2/3. Volume was average. Mentally I'm feeling OK. I had a long weekend to digest what's going on and came up with getting the SPY March puts if the market cooperates or the GE March calls if we drop all week. I'm really hoping that the market holds up here for me in the next two sessions because that is a trade that would work rather quickly. The SPY moves faster but that can work to your advantage as well. The only drawback at this point is the expensive option premiums. The GE trade would have to be held for a longer period of time and may simply turn into a sideways affair. As always there are pluses and minuses to every idea. We'll see if we get downside follow through tomorrow and try to figure out things from there. Asia was lower last night, with China on a holiday. Europe was higher. We'll keep an eye on tonights market action.
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