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Thursday, May 23, 2019

Heading lower as the Dow fell 286 points on good volume.  The advance/declines were almost 4 to 1 negative.  The summation index is heading lower.  We did finish off of the lows for the session but came close to breaching the support at 2800 for the S&P.  I do believe this level will break eventually and hope to own some SPY June puts before that occurs.  But the market may not give me the opportunity.  I still think that the Dow is forming a head and shoulders top here.  The 200 day moving average is holding for now but a break there will trigger the pattern.  We'll still hope for a light volume rally back towards the 50 day moving average for the set up.  But the market might not be so generous.  GE lost 1/3 on average volume.  Gold added almost $10 on the flight to safety.  The US dollar was a bit lower.  The XAU and GDX finished barely positive after being higher early on.  Not flowing gold here is a negative as interest in these stocks is almost non existent.  Mentally I'm feeling OK.  The trade war is back in the picture as worries about that have resurfaced.  No real news about that other than rumblings here and there.  But as long as the perception is that nothing will be done, the market will worry.  Just as the positive musings about the tariffs led to rallies, the inference that nothing will get done leads to declines.  It is not the best background to be trading but it is what it is.  The short term technical indicators remain more oversold than overbought.  The fact that we cannot get a sustained rally out of that is concerning for the bulls.  I'm sticking with my scenario of buying some SPY puts on a light volume rally from here.  If we simply drop now that trade is off.  the VIX is once again above the 15 level and that is something to keep an eye on as well.  One day left before a holiday weekend and I doubt we'll see a lot of buying ahead of that.  Europe and Asia were lower as we are seeing liquidation around the globe.  We'll close out the week tomorrow.

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