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MARKET ANALYSIS

Further “Obamaistic” behavior has the bulls putting in a volatile turkey trot of sorts in front of the holiday. For the two day period the S&P500 (SPY) is up a “gobble, gobble” 4.63% and carving up some bears in the process.

Highlights for the market’s more “Obamaistic” behavior of the last two sessions:

• Surprise $800B consumer / small business plan including new Term Asset-Backed Securities Loan Facility sends averages firing higher out-the-gate Tuesday.
• Seasonal holiday bias helped along by magnitude of historic correction and ingrained bearish sentiment.
• Bulls hit the pedal in autos (GM, F) on bailout speculation and Suzuki CEO stating bankruptcy at GM is “100% impossible.”

Highlights for keeping it interesting and “less Obamaistic” intraday: 

• Bearish industry mobile device report and Hewlett’s (HPQ) outlook on Tuesday impact gadget land (RIMM, AAPL).
• Aussie miner BHP Billiton (BHP) axes $68.0B hostile bid for rival Rio Tinto (RTP).    
• Traders on again, off again worries over cost of global bailouts including ECB’s 130.0B euro plan under consideration.
• Oodles of cruddy-sounding data including GDP, consumer confidence, spending, new home sales, claims, durable goods, Chicago PMI and Michigan’s “BOOOyah!”
• Latest financial (XLF) bomb from Oppenheimer’s Whitney regarding Q4 write-offs of $44.0B and TARP funds ‘plugging holes’ not growth.
• Early woeful reactions to Deere (DE) and Tiffany (TIF) guidance and Toyota (TM) debt downgrade to AA from AAA by Fitch.

 Market Snapshot

Figure 1: Dow Industrials (DIA) Descending

The only straight line it seems is the bulls unabashed sprint, umm turkey trot of the past four sessions. The rally is the longest such bid since May, while gains of nearly 1,200 points from the forbidden nectar lows—speaks for itself.

Entering Friday’s “laughabull” half day (why not make it a full session as they’ve already !$@%! up a long weekend?) and the major indices are stretched within the framework of a “Bull Raid!” or umm, bear market rally. That being said and as pointed out in our last update—bulls of the last few days at least, have a lot to be thankful for with prices where they are.

For this corner the resistance situation that we’re currently faced with means having already reduced / schnitzeled bullish risk down to size. It doesn’t mean shorting outright per se. However, “selling the rips” before a top that has the Fast Money crew yapping smugly away over and well after Macke’s grumpy ol’ “I sell 500 point rallies” (Monday’s show) seems a better way to navigate the market—in conjunction with options of course. Just don’t tell that to our other late night host with the most.

The following factors and anecdotal evidence might be considered relevant in determining a suitable, limited-risk strategy in the coming days and weeks ahead.

MARKET LAB
Bullish Technicals

• Seasonally kind Q4 tendencies.    
• Test of 2002 lows S&P500.
• Day No. 4 of Rally Attempt 11/24.

Bearish Technicals

• Lack of growth bases and sector leadership.
• Bountiful descending triangle / bear flag style / W4’s triggered.
• Naz’ & Dow ‘room to move’ to 2002 lows and pattern projections.Resistance / short-term overbought conditions in major indices.

 
RADAR WATCH

As discussed above, with the latest and greatest price action, bulls are well within a key resistance area. As the percentage gobble in the broader market has occurred in turkey trotting style and on lighter volume—being thankful means acting appropriately. For bulls this means adjusting or exiting altogether and realizing stronger situations other than Friday will arise. If we’re to see a trend change and reignited growth stock leadership, it can and most certainly will be—waiting for us after the unofficial four and one-half day holiday.

RADAR SCREEN
The following optionable stocks look to have a combination of technicals and fundamentals that might warrant further investigation based on a trader’s own methodology and risk acceptance. The list is not a recommendation and is intended for educational purposes only.

The Bulls

Table 1: Bull Watch list

Non-Directional

Table 2: Basing Watch list

The Bears

Table 3: Bear Watch list
 

Chris Tyler
Staff Writer & Options Strategist
Optionetics.com ~ Your Options Education Site
Visit Chris Tyler’s Forum
 
The information offered here is based upon Christopher Tyler’s observations and strictly intended for educational purposes only, the use of which is the responsibility of the individual. 

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