There is more zombie talk today concerning the Fiscal Cliff as the back-and-forth bickering continues. The red zombies are moving forward with Plan B while the head blue zombie said he will veto any bill that tries to get passed. As the soap opera plays out, we continue to feel as though a deal will get done but our prediction of an agreement by Friday is in jeopardy. Unless a deal gets done in the next 24 hours, there is a good chance that Obama packs his bags and heads to Hawaii.
We know politicians hate working overtime and they love their 2-week breaks and recesses but they are running out of time. Meanwhile, the market continues to churn at the top of its range but there is risk we drift lower if the shenanigans stretch out until the end of the month or if Obama hopes on Air Force One.
We could care less about the political rhetoric because we will be ready to play the next trend that will develop into January. We opened up the playbook in December and have been long call options but we have been closing them out for sweet profits as we wind down the current batch of trades.
We are still planning for a push to 52-week highs with possible fluff but at some point, we do feel the market could pullback 5%-10%. We will talk more about this over the weekend but for now, let’s enjoy the profits we are making.
Much of this morning’s economic news was positive but the zombie talk has kept the indexes in a tight range today.
The Dow is down 7 points to 13,245 while the S&P 500 is up a point to 1,437. The Nasdaq is lower by 3 points to 3,041 and the Russell 2000 is up nearly 2 points to 849.
As we expected, the small-caps have shown the most strength this week and Tech and the Financial stocks are holding up well with a slightly bullish feel. We are also seeing some nice pin action in our favorite sector, Biotech, as Vivus (VVUS, $13.79, up $0.15)
has been on the move over the past couple of weeks.
We have a lot to talk about with our current trades as well as a NEW TRADE we have for you. Please make sure you read all instructions carefully and use limit orders to get the best fills. We are in position to end 2012 with a bang and we are already looking forward to playing the current volatility that is coming our way.
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