Wednesday, September 19, 2018
The rally lives on for the Dow as it rose 158 points on light volume. The advance/declines were negative. Obviously the overall market was much weaker than the Dow, with the NASDAQ in the red. The summation index is still moving lower. The small stocks are not leaders here with the RUT already oversold. A Dow up over 150 with negative breadth isn't a strong sign for the bulls. I did place another open order for the SPY October puts. Again, it will take some rally to see this order get filled. GE was up twenty cents on OK volume. Gold rose $5 as the US dollar finished little changed. The XAU rose 1 1/4, while GDX gained 1/3 on better than average volume. It appears that gold has found a bottom here. I am still looking at the GDX January calls on a pullback. Mentally I'm feeling a bit tired, did not sleep well. The leadership of the Dow here is usually a late cycle event for a rally. Bad breadth and lack of the usual leadership is also a clue that the end of this up trend could be at hand. There's also the possibility that we'll see the market break out to the upside with a decent move if the small stocks generate a turnaround here from the oversold short term technical condition. I do not favor that scenario. The breadth weakness and the lack of overall volume tells me different. We should be able to hold up here during option expiration week. But after that, who knows. Overseas market are starting to act better, with both Asia and Europe higher last night. The Dow still needs to do a little more work to hit a new all time high but it is in range with a couple hundred or more points. The VIX is back below 12. I really think that something has to give here sooner or later. We'll keep an eye on the overnight trading.
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