Year End Sell-Off For Tax Reasons

We’ve had so many slowly moving but upward days that the market closed at two-year highs this past week. Our trust call recommended Monday was available for tight profits each day of the week, always able to buy below prior day close.

Many traders ask when we give a buy price of say, $10.00, and the option closed at 11.90, do they wait until $10.00, and what happens if it never makes it.

Our “best buy” and sell recommendations are just that. Recommendations. These are AREAS to buy or sell in, and never exact. The core rules are set to apply under most market conditions, which are to never buy an index option at prior day close or higher, but always hold for a discount price. These will change only when we so notify in an alert because of a specific condition.

The last several weeks, after 44 plus successful trades in a row and only two losses, have been difficult to trade. The “trade range” has kept the market very tight in movement, with very little volatility, necessary for our really successfully trading the index options.

We expect light movement this coming week, and increasing movement in early January, in which the “first five days” are often considered the “telling tale for how the market will move” for the following year.

Over all conditions we are short term bullish, and believe the euphoric upturn will continue.

It takes a 239-point or greater overall downturn in a single day would shift the market. Many services use this character as a 200 plus move singularly in day shifts the bell curve, and create a new bias. Be careful to note that we’re at over 80 plus signals of upturn without a true “bear phase”.

The difference between a dramatic move that will shift the bell curve and a period of time in which the market corrects are vastly different and merely reflect a shift in correction for oversold or overbought conditions.

We are adjusting our Dow projections because of the lack of volume, holiday conditions, and the bell curve we see in the market.

Dow Projections

11,127-Market Pivot Point, lowest low. Doubtful

11,240-11,367-Former Resistance lines turning to support

11,430-Likely support bottom on any correction

11,550-Resistance

11,624-11,647-Resistance and Likely Tops to Market

At this area the market is truly overbought, and overextended.

This week will be both the “sell off” for tax reasons, cleaning house, and the “buying new” but the big moves have already been made. Volume will be light.

The economic calendar may have several trigger points:

http://www.bloomberg.com/markets/economic-calendar/

Puts still remain the weak string, so to both OEX and Blue Chip subscribers the bell curve count still shows upside.