Holiday Weeks Always Make for Weird Markets

A happy (belated) Thanksgiving to you and yours!

Last week we wrote briefly about the current state of the markets, from a technical perspective. Conclusion: a short-term pull-back would not come as a surprise in the near future given that the S&P is testing the top of a multi-year range. However, we pointed out that many market participants will be on vacation with the Thanksgiving holiday and most companies will hold off on major announcements; thus, the adage “Never short a dull market” seemed relevant. Sure enough, the market continued to chop this week and never did fade, though our suggestion to consider selling out-of-the-money Calls or Call Spreads around 208 for the iShares S&P 500 ETF (SPY) worked out beautifully.

 

The SPY has been overbought on a number of technical indicators for the last few weeks yet has refused to quit – a good example for novice traders of why you shouldn’t lean too heavily on these signals. Regardless, the uptrend still markets a major point of resistance; keep an eye out for a short-term pullback.

On Monday we closed a chart-driven short-term trade for a 20% return on the equity alone (much more for those who utilized options) in just two weeks. A fairly simple chart-driven strategy, we actually closed the idea way too early, as it continued higher by another 15% through the week. Kudos to PropThink readers, of which we heard from a few, who let it ride for 35% in less than a month.

This market week was shortened due to the U.S holiday, but we still found time to issue a new trade idea. On Wednesday, we outlined for PropThink Premium members a catayst-driven idea that could play out for more than 25% by mid-December, just a few weeks out. Read on by clicking here, as this stock’s still within a reasonable purchase range. It’s a name that we can’t truly get excited about from a fundamental standpoint given the company’s sordid development history, but there’s reason to believe the stock’s going higher in the near-term.

PropThink Premium is our proprietary research and trading service. Our team of contributors (researchers, traders, and professional money managers) put together their best ideas in healthcare and biotech for just $99 monthly. But right now, we’re offering an additional $200 off our annual subscription (5 months free!). So, skip the lines this shopping weekend with coupon code SKIPTHELINES at PropThink.com/Premium-Yearly in order to take advantage of this Thanksgiving special.