The stand-off in Washington over the "fiscal cliff" kept buyers on
the sideline last week. The market was very volatile with the general
momentum on the down side. We didn't trade much, but did catch a quick
trade on AMZN puts with a gain of +111%:
- 07:33 | HappyTrading APC ($73.15) Sold to Close 01C75 Jan 75 calls, at $1.35 -52%
- 08:15 | Ecstatic Plays AMZN ($251.30) Sold to Close 1228P255 Dec 255 put, at $4.80 +103%
- 08:12 | Ecstatic Plays AMZN ($251.00) Sold to Close 1228P255 Dec 255 put, at $5.00 +111%
- 07:55 | Ecstatic Plays CMG ($291.00) Sold to Close 1228C290 Dec 290 calls, at $3.50 -35%
Last weekend, in my Market Forecast, I wrote:
"For the new week, the market will start with a neutral stance. If the
downward momentum continues, as we'll probably not hear from Washington
until Wednesday, the nearest support for SPX is 1420. This market is
likely range-bound until we hear from Washington. SPX 1440 is still the
level to break. Until something substantial happens on the budget
deal, we could have a stock-picking environment."
Things pretty went as forecasted. The downward momentum pushed the
markets lower. But, SPX held above 1420 on Wednesday. On Thursday,
things broke down in the morning, driven by discouraging remarks from
the politicians. However, a quick bounce happened in the afternoon as
some hope arose. SPX came back up to test 1420. On Friday, when it
was apparent that no deal was going to be made before the weekend, the
market took a quick drop to the close.
For the week, the Dow was down 252.73 points; SPX fell 27.72 points; Nasdaq
dropped 60.7 points. Gold was flat while oil went higher and closed
above $90/barrel. At the time of this writing, Asian markets were mixed
and some markets were closed before the New Year. Here's where the US
markets stood after Friday's close:
SPX
On Friday, SPX fell 15.67 points to close at 1402.43, just above 1400. It closed below its daily MAs and the MACD went down.
Nasdaq
Nasdaq dropped 25.59 points to clsoe at 2960.31. It also closed below its daily MAs and its MACD also went lower.
Both SPX and Nasdaq closed below their respective daily MAs last
week. VIX has popped over 22! As I was writing this article, no budget
deal had been reached yet. For the new week...
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