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Dr. Kris has two degrees from MIT because one just wasn't enough. Her life goal was to figure out the universe and having done that (at least to her satisfaction), she decided to tackle something even more difficult—the stock market. Applying the scientific method along with an insatiably... More
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  • Intraday Market Notes: Is The Santa Rally In Jeopardy? -- December 21 0 comments
    Dec 21, 2012 3:37 PM | about stocks: QQQ, SPY

    3:30 pm ET: Failure of Congress to approve Boehner's budget "Plan B" torpedoed the market sending the VIX to a five and a half month high. The volatility index is thisclose to touching 20, the dividing line between bullish and bearish sentiment. Readings above the 20 mark indicate heightened investor nervousness which is bad for stocks. The Santa rally is in jeopardy of derailment should the VIX close above this level.

    The good news is that the Trin (Arms Index) is at bearish contrarian levels. Earlier this morning it touched 3.15 which is an extremely bearish reading. It's backed off this level (to 2.25) but even this is still very contrarian. With 45 minutes left in the trading day, it wouldn't surprise me to see stocks rally going into the close but if they don't, a pop on Monday's open is indicated (barring any further negative headline news). Note that the market will be open on Monday but will close early (1pm ET) for the Christmas holiday.

    Trade Idea: For those of you itching to make a trade with some loose change, you may wish to consider playing the Santa rally with January call options (or weekly options) on either the QQQ (Nasdaq 100 tracking stock) or the SPY (the S&P 500 tracking stock). This is a play to capture the post-Christmas rally which typically occurs every year. But because of the budget impasse, this year could be different so only play with discretionary funds. Also, since volatility is heightened, traders may wish to reduce the effect of implied volatility bloat by putting on a spread trade.

    That's it for now. Time to do some last minute shopping. Have a good weekend!

    Note to Subscribers: There is one new Stock Darling and one new Channeling Stock.

    Themes: options play Stocks: QQQ, SPY
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