Friday, October 12, 2018
Finally some upside to finish out the week as the Dow rose 287 points on good volume. The advance/declines were positive. The summation index is still moving down and through the zero line. The overall market was stronger than the Dow and that is a plus. But the breadth remains weak and I don't think we are out of the woods just yet. I canceled my open order for the SPY October calls. With only a week to go any trade here would be very risky as time and the volatility premium will be sucked out on both sides of the options. That doesn't mean that I won't attempt a trade next week. It does mean that if I do it will have to be lined up pretty good. The VIX looks like it has topped out here in the short term. Of course it looked like that three days ago as well. RUT may have put in a bottom today and if that is the case we'll stop the decline for now. But we'll have to see how it goes in the beginning of next week too. GE dropped 3/8 and the volume remains very heavy. Gold dropped six bucks as the US dollar was a bit higher. The XAU and GDX had slight fractional losses on good volume. They did finish well off of the lows for the session. Mentally I'm feeling OK. Quite a week for stocks and missing the SPY puts here was painful. But the truth of the matter is the market doesn't care and keeps on going. The bounce today was weak and I would not be surprised to see another leg down to complete a five wave pattern for the S&P 500 hourly chart. But that's a guess as usual. Maybe somewhere in the 2675 area. What I don't expect is a run back up to new all time highs anytime soon. Probably the best course of action here will be to wait for a valid signal and trade it either way. Looking back when the market has behaved like this in the recent past, shows a sideways trading pattern for at least a few months. That is probably what we can expect here. We are beginning a positive seasonal area for the stock market but you wouldn't know that looking at the past week. Plenty to ponder over the weekend. Asia was higher and Europe mixed overnight. It's Friday afternoon and time for a rest.
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