Tuesday, October 02, 2018
Yet another mixed bag today as the Dow gained 122 points while the rest of the market was lower. Volume was about average and the advance/declines were negative. The summation index continues lower. The small stocks are moving down led by RUT. My thinking is that the big caps will follow but not before some upside first. That's my guess at the moment. I did adjust my open order for the SPY October puts. The S&P 500 has tried to rally the past couple of sessions but has been held back each time. We are close to new all time highs here but it certainly doesn't feel like it. I'm still looking for some strength in the next couple of days but after that who knows? So far the breakdown in RUT hasn't carried over to the overall market. This isn't the norm. The TRAN looks to be rolling over here as well, in a divergence with the Dow. There is a lot of negative signs for the market despite the headline Dow new highs. We'll see what transpires as the week progresses. GE was up 1/4 and the volume was very heavy. Gold found a bid as the futures rose $15. The US dollar was slightly higher. The XAU added 1 7/8, while GDX climbed 1/2. Volume was heavy. It appears that the gold share trade has been missed. There was a glaring positive RSI divergence at the beginning of September that I did not take advantage of. After just getting wiped out with the same GDX call trade, I did not try that idea again. Just another mistake of the many so far this year. Mentally I'm feeling OK. I'm going to have to keep a close eye on my open order out there because we are at a point where I do believe some upside is overdue. If that happens it would be the set up for the SPY October put trade. That is the idea for now. There is nothing that says it won't be the start of a new leg up in the S&P either. But I have harped on this before, the breadth doesn't support higher prices at this point. The market is narrow, with fewer stocks leading the way higher right now. But the market has a way of doing what it wants. So keeping a close eye on what is about to happen is imperative. Plenty of time in the October option cycle as well. Europe and Asia were both lower last night. We'll see what tomorrow brings.
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