Thursday, December 12, 2019
More talk of a US/China trade deal finally coming to fruition drove stocks higher today. Of course it hasn't happened yet and we've heard all this before. Nonetheless the Dow soared 220 points today on good volume. The advance/declines were almost 2 to 1 positive. The summation index is moving higher. Any end to this long trade dispute would be a good thing, just to get some uncertainty out of the way. Perhaps the tariff deadline of the 15th won't matter if something concrete is announced before the close tomorrow. But that's a lot of ifs. The major stock indices remain overbought but there is room to move a bit higher on the short term technical indicators. Some of the major indexes also hit new all time highs today and that cannot be overlooked. If we do see a deal perhaps we'll really get going to the upside with no overhead resistance to stop things. So tomorrow will probably be pretty interesting one way or the other. GE was up almost 1/2 and volume expanded. Gold fell almost $10 on the futures but made up ground in the aftermarket. The US dollar was slightly lower, coming off of the worst levels for the session. The XAU and GDX had very slight fractional losses on OK volume. The gold shares have held up rather well here but are overbought. For some reason I'm still considering the GDX January calls if we get some more pullback there. Mentally I'm feeling OK. The indicators on the VIX have rolled over and the VIX itself is moving lower. It closed right on the 50 day moving average. If a deal is announced tonight, the VIX will continue back down towards its recent low at 12. That would produce a pretty good rally in stocks if that were to occur. Hasn't happened yet. Once this US/China tiff gets over with for now the next focus for the markets will be what? Impeachment? Interest rates? Coming earnings? There's always plenty of questions without simple answers in this game. Six days to go in the December option cycle. I'll probably have to pass on trading the SPY options here. Perhaps I'll go out to February with the GDX call idea but that doesn't really match up with the seasonal rally that I'm expecting here. I'll ponder this idea later tonight. Europe and Asia were higher overnight. We'll see if this trade deal actually gets done tonight and take it from there.
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