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Friday, July 24, 2020

A bit of some downside follow through as the Dow fell 182 points on light volume.  The advance/declines were shy of 2 to 1 negative.  The summation index is now moving sideways.  Could the market actually be on its way to rolling over here.  It's entirely possible.  What is also entirely possible is that we rally with the Fed next week.  I certainly don't know what will happen.  The technical picture is now mixed which leads to my indecision here.  I'm going to have to try and sort things out over the weekend.  The light volume could be a cause for concern if you're bullish.  The market needs energy to drive it higher.  GE was off over !/8 and the volume was light.  Gold continues its impressive run and closed above $1900.  New all time highs will probably come next week.  The US dollar continues to drop and has been supportive to gold for weeks.  The XAU added 4 1/4, while GDX was up 7/8.  Volume was light.  Any selling in the gold shares is immediately met with buyers.  This won't last forever but it is certainly the case for now.  I still like the GDX August calls but cannot find a spot to buy them.  Perhaps will get a chance if the overall market starts to drop in an extended decline.  That may just be wishful thinking as well.  Mentally I'm feeling OK.  The VIX still remains below its 200 day moving average.  It had a pop and a drop today.  The medium term technical indicators for most of the major stock averages are still overbought and have plenty of room to fall.  They could also continue to remain overbought as well.  Two down sessions are not a trend.  We have a lot to get through next week, highlighted by the Fed announcement on Wednesday followed by the first look at 2nd quarter GDP on Thursday.  These events will be market movers in my opinion.  Throw in a possible agreement on the next coronavirus stimulus package and you can see that it shapes up to be an interesting week.  I'll be going over the charts this weekend to try and come up with some type of game plan going forward.  Obviously it won't be easy.  Asia was lower overnight.  Europe took a bigger hit as well.  It's Friday afternoon and time for a break.

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