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Wednesday, March 25, 2020

It seems like forever but we actually saw the market go up two days in a row.  The Dow rose 495 points on the now normal crazy volume.  The advance/declines were over 4 to 1 positive.  This will turn the summation index at least sideways and halt the drop on this indicator at around -3000.  The rescue deal finally got finished in Congress.  What other good news is out there?  Tomorrows unemployment claims will be sky high and I'd expect the market to drop.  The past three days on the daily charts also show the classic 1-2-3 bounce from an extremely oversold condition.  The fact that we closed today over 50% lower than the high tells me that we'll be lower tomorrow.  My guess is that it will be the beginning of the fifth and final wave down in stocks for now.  If for some reason none of this occurs, I would then have to change my thesis of what's going on here.  The short term technical indicators for the S&P have turned back up but they look like they could simply roll over again.  We'll know more tomorrow.  GE was up 1/2 and the volume remains heavy.  Gold fell back after 2 giant days to the upside.  The precious metal futures dropped around $30.  The US dollar was lower today as well.  The XAU was up 2 1/2, while GDX added 1 1/8.  Volume was good here.  The gold shares also pulled back near the close.  Not close to overbought yet on the technical indicators here but also could see a roll over if the overall market starts to drop again.  It is encouraging to see the gold shares rise with a drop in the price of gold.  But the markets are so disjointed at this time that you can't really read too much into anything.  Plenty of time to go on my GDX April calls but I do not want to hold on to this trade until expiration.  I'm waiting for GDX to get overbought and we are not there.  Mentally I'm feeling OK.  The VIX was slightly higher today and the indicators are starting to turn back up.  If they do it will be look out below again.  Perhaps we'll make it down to the 2100-200 level on the S&P 500.  But I'm getting ahead of myself here as the market will let us know what it's doing.  The pandemic virus isn't just going to go away and with more testing there will be more cases.  But a lot of money is being throw out there by the US government and it will have to find a home at some point.  Getting the summation index turned around is a start but that doesn't mean that we won't close lower than we have down the road.  I doubt that we are going to see a V shape recovery for stocks.  Europe and Asia continued to rally in yesterdays trade.  We'll see what tomorrow brings.

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