Monday, October 21, 2019
A bullish start to the week as the Dow gained 57 points on about average volume. The advance/declines were 2 to 1 positive. The summation index is moving higher. Once again the overall market was much stronger than the Dow. Short term technical indicators remain overbought, which is generally the case in rallies. My thinking is that new all time highs in the S&P 500 can be achieved this week. Into the November option cycle now, so the premiums for SPY are high. There's nothing wrong with waiting for the next trade at this point. GE lost over 1/8 on good volume. Gold fell $7 and the US dollar finished little changed. The flight for safety has cooled down with the lack of US/China trade tension. The XAU fell 1 3/4, while GDX lost 1/2. Volume was average. The indicators for the gold shares here have rolled over again and are heading down. The Bollinger bands continue to contract but we have yet to see the strong move that it implies. Could go either way here but I am leaving in my open order for the GDX January calls. I'm also thinking about perhaps trying the November calls as well. Mentally I'm feeling OK. The VIX continues to be oversold. What looked to me like a potential bottom here may simply be a sideways zone. That would imply higher near term prices. Earnings have been coming in for the market and it hasn't been too bad despite the US/China riff. If this keeps up then new all time highs will be a forgone conclusion. It is early in the week though. Europe and Asia were generally higher overnight. Brexit is still a question mark but the markets don't seem to care anymore. It has been a long and drawn out soap opera. We'll see if we get any upside follow through tomorrow.
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