Market is stuck in tight range last few days. We have made ~5% move since lows on Nov 16th, so its healthy that we take a rest here to digest the gains. That said, the action still makes me a little nervous this time around. Market leaders continue to stay weak. Today it was PCLN's turn to come crashing down on a downgrade. It lost 5% on the day. AAPL tried to bounce a few times but each rally was sold into. Also, lot of breakouts that worked in the morning ended up failing by late afternoon. Till we see bounces that hold nicely, its perhaps advisable to take quick gains (easier said than done). The 2 levels to watch are shown by YELLOW (~143) and RED (~140.40) line. If we close above YELLOW line i think we start Christmas rally. However, if we dip below the RED, we may be in for nasty selloff. Lot of people are expecting Christmas rally, if the market does not move in the right direction we may see rapid unwinding of positions. Watch the action closely and manage your positions accordingly. I think we see this move tomorrow or Wednesday (FOMC day).
Will do some research around playing this market with SPY straddles.
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