Friday, March 20, 2020
Another crazy day to cap off a crazy week. The Dow fell 913 points on insane volume. The advance/declines were slightly negative. The summation index is heading lower. We had a one day reversal to the downside as the market opened higher and closed lower. Overnight big gains in the futures markets didn't hold. The technical condition of the market hasn't changed as we're oversold and staying that way. The pandemic virus remains out of control, with nations closing down. There seems to be no end to the bad news there. Liquidity remains an issue for markets as everything continues to be sold. It looks like we're heading down to the 2100-2000 support level on the S&P 500. Probably will get there next week at this rate. GE finished little changed on heavy volume. Gold rallied overnight but couldn't hold it as the futures only gained around $8. It was up over $30 overnight. The US dollar had a slight decline and is the hiding place of choice. That puts a damper on gold. The XAU fell 4 3/4, while GDX shed 3/4. Volume was average. One day downside reversals here as well. My GDX April calls are somehow still showing a profit thanks to the extreme volatility that's built into the options. There's a month to go with these and it has already been quite a ride. I've seen good profits disappear and I'm not sure how much longer I'll hold on. Mentally I'm tired. Did not sleep well and the volatility during the trading session takes it toll. Now we usually see some volatility in regular trading. We just don't see it constantly to an extreme as we are now. There's no end in sight for a let up either with the VIX way overbought and staying that way. I do think that the sidelines aren't a bad place to be but I'm not there. What to expect next week? More of the same as the selling doesn't appear to be able to let up just yet. We tried to put in a short term bottom on Wednesday and Thursday but todays price action negates that. A lot of index charts appear to have a 5 wave pattern on them. We are about to see the 5th and final wave lower next week if my view is correct. That should take us to near term S&P support and would be the place to try the SPY April calls if you're so inclined. Depending on the premiums of course. They will still be out of whack and you'd better be a nimble trader to give that idea a try. I may or may not depending on how I feel at the time. I'm still wrapped up in the GDX call trade. Europe and Asia rallied to close the week but Mondays open should be just the opposite. I'll try and take a break this weekend. It's Friday afternoon and time for a rest.
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